Tasmanian geothermal development might see some government support

Alexander Richter 22 Feb 2010

According to news from Tasmania, this Australian island state to the south of mainland Australia is sitting on top of a huge source of geothermal or hot-rock energy as early exploration studies of KUTh Energy suggest.

“But despite the potential, the emerging industry believes it has been short-changed by government investment.

The Federal Government handed out nearly $290 million worth of grants for geothermal exploration between 2002 and last year but Tasmania got the smallest share of just $1.8 million, or 0.6 per cent of the total.

In contrast, South Australia received $206.3 million, or 71.3 per cent, to conduct geothermal exploration alongside oil and gas drilling operations.

KUTh Energy managing director David McDonald, of Hobart, said Tasmania had greater geothermal potential than South Australia.

His company recently finished drilling 36 pilot holes in an exploration tenement that stretches from the mouth of the Tamar River to Hobart.

They struck hot granite which would be perfect for generating geothermal power – a process that involves superheating water deep underground and using steam to drive turbines.

“We have identified and independently verified a resource of 260,000 petajoules and even if we can only convert 1 per cent of that into electricity, we would be able to produce 280 megawatts a year over a 30-year period,” Mr McDonald said.

“That’s 25 per cent of Tasmania’s total energy requirements per year and it would stop all the power coming down Basslink from the mainland to Tasmania.”

The next step is to drill the 5km-deep holes needed for a commercial trial but the $35 million needed for that process will be almost impossible to raise through private investors alone.

“I think the federal and state governments both recognise in this early stage of development you need to have the support to stimulate private-sector investment because there is an element of risk involved,” Mr McDonald said.

He said Premier David Bartlett’s promise last week of a $2 million grants program for renewable energy would do little to stimulate investment.

But Mr Bartlett yesterday foreshadowed a major election promise for the sector.

“I have talked with industry players extensively and we are certainly going to work with the geothermal industry but you might have to wait a while for the detail around that,” he said.”

Source: The Mercury