Geothermal industry sees offshore growth
September 30, 2012
The Geothermal Energy Association bills its annual expo that opens in Reno next weekend as the largest gathering of companies in the geothermal industry in the world.
And it’s the rest of the world that will be getting of much of the attention on the expo floor and the associated meetings of the Geothermal Resource Council as economics and politics take some of the steam out of the geothermal industry domestically.
More than 2,000 people ranging from engineers to equipment manufacturers to utility finance experts are expected to spend time at the event, which runs from today through Wednesday at the Peppermill Resort and Casino.
“The U.S. market is a bit lackluster,” acknowledges Karl Gawell, executive director of the Geothermal Energy Association.
But double-digit growth in international markets provides optimism for the geothermal industry, even for executives of the Reno-based companies who had grown accustomed to taking a short drive to the projects near Fallon or along the Interstate 80 corridor.
Among the strongest international markets, Gawell says, are European nations that have made a strong commitment to geothermal and other renewable resources as a weapon against climate change.
Indonesia and Japan have launched initiatives that specifically target geothermal development, not just any renewable-based source of power. And the nations of East Africa also are proving to be good markets for geothermal companies as their improving economies provide the capital to finance geothermal facilities to meet growing demand for electricity.
Reno-based Geothermal Development Associates, for instance, in February commissioned a 2.5-megawatt geothermal plant it developed for the Kenya Electric Generating Co. The Reno company provided engineering and procurement.
Ormat Technologies of Reno, meanwhile, said in August that it nailed down $310 million in financing for a geothermal complex in Kenya. The Ormat financing involves participation by the Overseas Private Investment Corporation, an agency of the U.S. federal government.
Gawell says federal agencies such as the Export-Import Bank are becoming more adept at financing geothermal projects, and that’s further spurring the international growth of the industry.
Domestically, the geothermal industry’s headaches come from Sacramento, Carson City – and Williston, N.D.
“Our energy markets have always been policy-driven, and it’s the state level that drives development,” says Gawell.
Nevada and California are among the states mandating that utilities buy a growing portion of their power supplies from geothermal and other renewable sources.
But the ardor of state regulators tends to ebb and flow with their perceptions of supplies and prices of fossil fuels – they don’t want to stick consumers with higher-price renewables if natural gas to fuel power plants is cheap – and inconsistency drives geothermal executives nuts.
“If your business is on-again, off-again, you’re not going to make technical progress, and you’re not going to make economic progress,” says Gawell.
The flood of natural gas pouring onto the nation’s markets from North Dakota’s Williston Basin and other fracked oil fields is bringing immediate headaches to operators of some geothermal plants. Some deals allow the electric utilities that buy power from geothermal plants to reset the price they pay periodically to reflect changes in production costs at fossil-fuel plants. When natural gas is cheap, utilities pay less to some geothermal operators.
And it’s sometimes tough to finance a new geothermal plant with bankers and investors who are focused on today’s cheap natural gas.
While the GEA Expo will feature a nearly full exhibit hall of booths from geothermal suppliers, the Geothermal Resources Council will be conducting technical seminars – sample subject: “Reservoir Stimulation, Coupled Processes, Induced Seismicity” – and touring geothermal resources in the Fallon area.
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