06.10.09Lisa Cohn, Writer, Real Energy Writers

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For Michael Yackira, president and chief executive officer of Reno-based NV Energy, deciding whether to purchase geothermal energy to meet the state's renewable portfolio standard is a no-brainer.

It's been commercially viable for a long period of time," Yackira said. "For us, it's always been the most competitive of the three forms of renewable energy." Geothermal power plants, which harvest heat from the earth, are especially attractive because they produce energy continuously, unlike wind and solar plants. Energy acquires geothermal energy at prices only slightly higher than the price of power from natural-gas-fired plants. NV geothermal prices aren't as volatile, he said.

In about 1987, NV Energy recognized the benefit of taking advantage of Nevada's abundant geothermal resources and signed its first contract for geothermal power. In 1997, it implemented one of the first RPSs in the country. Now, the utility is focusing on geothermal power to meet an RPS requiring utilities to acquire 20 percent of energy from renewable resources by 2015.

NV Energy last year signed a joint ownership agreement with Ormat Nevada, a subsidiary of Ormat Technologies, to co-develop the Carson Lake geothermal project near Fallon, NV, becoming the first utility in the country to co-develop a geothermal plant. The project will add up to 40 megawatts to the 300 megawatts that NV Energy now purchases. And the utility has proposed building a transmission line that will help move to populated areas the 1,500 to 2,000 megawatts of geothermal power expected to come online in the state in the next decade, Yackira said.

With 58 projects under development, Nevada leads the nation in geothermal development at a time when the industry is experiencing strong growth, according to a report released March 4 by the Geothermal Energy Association (GEA) based in Washington. Since August, the industry has seen a 25 percent increase in new projects, and overall production potential jumped by 35 percent, according to the report.

State RPS requirements are helping drive the growth, said Karl Galwell, GEA's executive director. Nevada is the leader in part due to a strong RPS, he said.

"The state has a good RPS. It's easy to understand and not overly complicated. Ii has helped create a market for geothermal energy," Gawell said. In addition, the industry is supported by the University of Nevada, Reno, which has received federal support to help identify regions with geothermal potential. What's more, the Bureau of Land Management in Nevada has a strong, supportive leasing program that in August yielded a record-breaking $28.2 million.

"Couple those things with the federal tax incentives and you've got all the things you need," Gawell said.

Like Nevada, California has abundant geothermal resources. However, harvesting those resources isn't easy in that state, Gawell said. California is flush with reserves that could yield commercially viable prices. Yet transmission roadblocks prevent their development, he said.

About 30 percent of Pacific Gas & Electric's renewable resources are geothermal, according to spokeswoman Jennifer Zerwer.

Geothermal's commercial viability varies from project to project. "The projects all have different costs of development depending on how deep they are. People develop the cheap and easy ones first," Gawell said. As the cost of fossil fuels increases, projects become more economically viable.

Yackira said that it takes a long time to develop projects, but, for his utility, the benefits outweigh the challenges. "You have to find a site, drill to ensure you have a fuel source and develop the field. It takes five years, 20 to 30 megawatts at a time, but it's still very beneficial, "he said.

Many utilities aren't ready to invest in geothermal energy. Portland General Electric in Portland, Ore., would like to bring geothermal plants online to meet its RPS, but they don't make financial sense, said spokesman Steve Corson.

"In general terms, it's interesting as a potential baseload renewable resource. The challenge for us is it's very location-specific and there are transmission challenges that need to be addressed to get it to us. At this point, it hasn't been cost-effective for us," Corson said.

In spite of the fact that some utilities are hesitating, many new geothermal companies are entering the industry. "It's exciting. A sign of a healthy industry is one with lots of new entrants," Gawell said.

In fact, before the economy slowed, "money was falling out of the sky," said Lisa Shevenell, director of the Great Basin Center for Geothermal Energy at the University of Nevada, Reno.

"Up until recently, there were a lot of investors, new companies and people coming out of the woodwork. With the financial situation, it's unclear how it will develop in the future," Shevenell said. "It will be interesting to see how it goes forward. There's a lot of interest."

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EnergyBiz magazine is the thought-leading, award-winning publication of the emerging power industry. This article originally appeared in the May/June 2009 issue.

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Reader's Comments

Date	Comment
Ferdinand E. Banks 6.10.09	What's the problem. Twenty years or so ago a student of mine from Iceland told me that the economy of that country was a little shaky, and I told him to tell his 'congressman' that if that country constructed a couple of bauxite smelting plants (for producing aluminum), Iceland could become one of the richest countries in the world (per capita). He didn't pay any attention to me of course, but it seems that they are thinking in those terms now. The problem is that they are not thinking fast and hard enough, which is why 'the miseries' have icrossed Iceland's threshold. Unfortunately the total supply of geothermal is so small that most countries do not have access to a big slice...I think.
Jerry Toman 6.16.09	The way forward is clear... If Geothermal technology, which provides a *warm-temperature-source" were to *marry-up* with the Atmospheric Vortex Engine, which accesses a very "cold-temperature-sink", the combination would take off (economically) like a rocket ship, with the sky (literally) being the limit.

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