US geothermal industry exploring ways forward to push development
Geothermal Plant by Calpine in The Geysers, California (source: flickr/ thinkgeoenergy, creative commons)
Alexander Richter
25 Jan 2012
The U.S. Geothermal Energy Industry is looking for ways to help push the development not only in California and sees the extension of the federal production tax credit and state task forces as something that could help move things forward.
The recent GEA Geothermal Energy Finance Forum held in San Francisco last week, saw industry experts, finance and government representatives discuss ways of how the industry can push development in the United States.
As usual the call for federal support is mentioned, here the federal tax credit, but also the favourable renewable energy scheme that creates a demand for renewable base-load power.
There is a global growth in geothermal development, but it seems like the U.S. is lagging behind the big drive in Asia, South America, Africa and other parts of the world.
The problems in the U.S. are various. The stimulus funding that had helped push the industry through the 2008/ 2009 financial crisis, has mostly been spent or is running out. The loan guarantee did not help as much as hoped simply as most of the projects had not reached the required stage in development in time to qualify. The ongoing uncertainty about federal tax credits is also not providing any comfort. With production tax credit always being limited for a time frame there is no certainty for developers for the long run. The current Renewable Energy Production Tax Credits are set to expire in December 2013.
Geothermal Energy is still a valid, popular energy source as it provides utilities under the Portfolio Standard scheme in California a valid base-load power source option to help fulfill the required renewable energy sourcing requirement under the scheme. But at the same time the projects take a long time and utilities need some of those plants to come online a lot faster than they currently do.
This is at the same time tricky with a lack in funding for the most critical part of the geothermal development process, the drilling phase. Drilling finance is the most crucial elements as it essentially moves the project from an early-stage project to a bankable project for construction. In this sense a step of German re-insurance giant MunichRE can be seen as a positive step as it would provide an insurance product to the drilling that might help attract investors or banks to take part in financing drilling for developers.
On the other hand there are several voices that state that the industry in general is at cross-roads and would need a new approach both in gaining more government support, but at the same time become generally more attractive and accepted by key stakeholders, among them clearly banks and investors.
Government can and should play a role in helping the industry in the particularly critically early phases. While mapping and R&D efforts are clearly useful elements, until this day drilling and the need for attracting investment and finance for it has not been addressed adequately through politics in the U.S. Schemes in other countries and concepts discussed, e.g. at last year’s GRC Annual Meeting, could provide a support scheme that might not even be a big burden on the stretched government finances.
The Forum in San Francisco also discussed the idea of a Geothermal Task Force for California that could take forward ideas, develop concepts, and engage in discussions with politics on what would be needed to help push development and abolish existing hurdles for development.
At the end of the day it is also the discussion of what the industry can do better to gain a better traction in politics and gain more support or at least attracting the same support as other renewable energy technologies have been able to enjoy over the years.
Marketing and representation is clearly one element in this and several groups have been discussing on what the industry can do … a “Got Milk”-style campaign was mentioned, the naming of the different utilization options of geothermal energy (power, heat, geo-exchange), promotion, press work etc … we need to stick together to get the message across that Geothermal Energy is “THE RIGHT THING TO DO”.
The work of the industry associations, and I know I am somewhat biased, is in this sense crucial and industry needs to support the associations in their work to promote and lobby on behalf of the industry. They provide the tool and structure for a unified voice towards the public, government and other potential stakeholders for the industry.
Source in parts: Clean Technica
