Spike in geothermal development expected | NevadaAppeal.com

Spike in geothermal development expected

Cory McConnell
Kim Lamb/Appeal News Service Shawn Henry, above, shoots 376-degree steam into a sand pit. The procedure is often used when geothermal facilities are started to check steam flow.

Congress finalized a long-sought tax credit for renewable energy producers this week, opening the door for what alternative power advocates hope will be a boom in “green energy” development.

Nevada is regarded as possibly the greatest renewable energy resource in the West. The state is rich in wind, sun and underground aquifers of scalding water.

“Tapping these resources will strengthen our economy by creating jobs and providing a steady source of power, and it will strengthen our nation by reducing our dependence on foreign oil,” said U.S. Sen. Harry Reid, who was a major force behind the tax credit.

Tucked into a massive corporate tax bill, the measure gives geothermal, solar, biomass and other alternative energy producers the same tax credit that wind-power providers have enjoyed for nearly a dozen years.

The credit, 1.8 cents per kilowatt hour of energy produced from new power plants, has helped wind become the fastest-growing power industry in the nation. Meanwhile, development of industries that didn’t get the credit back in 1992 have inched along just fast enough to keep pace with a state law mandating power providers get 15 percent of their electricity from renewable resources by 2013.

The tax break is meant to help offset the extra costs of renewable power operations. Alternative energy companies must string power lines out to the resource rather than just building a plant near power lines and having the resources shipped in like oil and coal-fired plants do.

According to Sierra Pacific Power Co., it can cost between $175,000 and $250,000 per mile to stretch such lines, depending on the terrain.

Although the credit passed Monday will continue only for the first five years of a new plant’s life, half as long as the wind-power credit, industry officials say it will still help expand the potential for development.

“There’s still work to be done on this,” said Dan Schocht, vice president of geothermal giant ORMAT International. “Still, this bill is a major step forward.”

To qualify for the credit, new plants must be up and running by the end of 2005. Only plants already being developed will meet that deadline. ORMAT has two plants in Northern Nevada that will likely be online before 2006, according to a company spokesperson. A plant being developed by a newly-formed company on the playas of Salt Wells, about 20 miles east of Fallon, may also meet the deadline.

Schochet and Reid are expecting to renew the credit from year to year, however.

“We’re very optimistic were going to be able to renew this,” said Reid spokesperson Sharyn Stein, “Now that it’s in place it’s going to be a lot easier.”

Schochet thinks there’s even a chance the credit won’t be needed in a few years.

With oil prices skyrocketing and the cost of fossil fuels overall showing no signs of falling, Shocket said renewable energy will likely be able to compete with traditional power plants on its own soon.

The credit is also just one of a few developments that industry officials say will help spur alternative energy growth after a recent stall.

Sierra Pacific Power Co. and its sister-company, Nevada Power Co. fell behind a state-mandated schedule of bulking up its renewable energy portfolio this year when several projects were put on hold.

One of the problems, a Sierra Pacific spokesperson said, is developers haven’t been able to get loans for new projects because lenders are weary of handing out cash based on a contract from Sierra Pacific, which is on shaky financial footing.

Among Sierra Pacific’s money woes is $336 million still owed to Enron, a company that filed for bankruptcy and is alleged to have wreaked havoc on the energy market by artificially inflating prices. But a federal judge on Monday vacated an earlier bankruptcy court decision that Sierra Pacific must still pay the beleaguered company for power which was never delivered.

Nevada’s Public Utilities Commission also took steps to ease lenders’ concerns last month, setting up a trust fund that would ensure power producers get paid regardless of how Sierra Pacific is doing.

Schochet guesses renewable energy will compete straight-up with fossil fuels in places like Nevada in two to three years.