Overview of the Geothermal Power Industry (excerpt)
Unlike wind and solar, geothermal electricity competes with other baseload power sources such as coal, natural gas and nuclear, while satisfying renewable energy standards. Yet, geothermal is not being deployed at a particularly brisk pace. Not only is geothermal's 10,000 MW in global capacity less than 10% of the capacity of wind power (121 GW worldwide), the technology's growth rate was a rather anemic 3.4% over the last five years. CCBJ estimates the global geothermal industry at $6.8 billion in 2008 revenues, compared to $56 billion for wind and $28 billion for solar. (See dedicated CCBJ editions from 2008.)
Geothermal Developers Grapple with Financial Realities of 2009
2009 has turned into a year of holding on, hunkering down and trying to survive for the new wave of pure-play geothermal project developers that emerged in this century, driven by the California energy crisis, the adoption of renewable energy standards in western states and the emergence of climate change and energy security concerns. As recently as a year ago, developers could obtain debt financing before they had validated and drilled production wells-had "steam behind the pipe" in industry parlance. Not so today. Venture capitalists are only investing in technology firms with a strong upside potential, like those aiming to gain a position in the emerging enhanced geothermal systems. Private equity investors would prefer to buy geothermal companies or their operating power plants rather than invest in new geothermal projects.
Geothermal Power in Developing Countries
With the best geothermal resources located along the Pacific Ring of Fire, there are enormous opportunities for developing geothermal power in Asian and Latin American countries. The eastern and southern Mediterranean and the East Africa Rift zone also present large geothermal development opportunities. But developing geothermal power plants in many emerging markets is fraught with high risks. Foreign firms with the needed expertise often find it difficult to work in many developing countries because of the lack of frameworks to manage risks, delays in administrative processing, frequent requests for local patronage, contracts being violated and projects being shut down for murky political reasons.
ARRA Update: Federal Procurement Picks Up at GSA, DOD and DOI
Federal government agencies are flush with cash to spend quickly on services and products related to energy efficiency and renewable energy projects. While the U.S. Department of Energy (DOE) is the largest recipient and disburser of ARRA funds for energy efficiency and renewable energy, other federal, state and local agencies also have new money to spend on these segments by September 30, 2010. As noted in our first edition of 2009, given the size and the phased implementation of the ARRA, CCBJ will cover aspects relevant to our readers over several editions in 2009. In this edition, we focus on federal procurement for services and products associated with energy efficiency and renewable energy by three federal agencies: General Services Administration (GSA), Department of Defense (DOD) and Department of Interior (DOI).
Ormat Leads Market With Technology and Vertical Integration
In the geothermal power industry, there is only one truly vertically integrated corporation: Ormat Technologies. Ormat produced $344.8 million in revenues in 2008, 16.5% growth over 2007. Its power sales revenues from geothermal and recovered energy generation (REG) plants accounted for 73.2% of revenues while product sales accounted for 26.8%. Ormat built 109 MW of company-owned geothermal and REG capacity in 2008 and increased its portfolio to 505 MW. Although Ormat dominates the low-temperature binary segment of the geothermal power market today, competitors have emerged in the last several years. United Technologies Corp. is its most high-profile competitor on the power systems technology front...
EGS Could Vastly Expand Geothermal Power but RD&D Funding Needed
While the U.S. resources for conventional geothermal power - also known as "hydrothermal" because underground hot water provides the steam supply for power plants - are limited to the West and capable of growing to between 30,000 and 40,000 MW, geothermal plants using EGS could be built almost anywhere. A Massachusetts Institute of Technology (MIT) study projects that EGS technology could enable geothermal power to supply 100,000 MW of capacity in the United States, nearly 10% of current installed electrical generating capacity. But after three decades of research and field testing, there are no EGS power plants pumping electrons to a utility grid. "So far there have only been test power plants run on true EGS experiments where they've actually fractured the rock and circulated the water," said EGS expert David Blackwell, co-author of the MIT report and a professor of geophysics at Southern Methodist University at the March 2009 Geothermal Innovation and Investment conference in San Francisco.