U.S. Geothermal announces final ownership interest in Neal Hot Springs

Neal Hot Springs project site, Oregon (source: U.S. Geothermal)

Alexander Richter 24 Feb 2014

U.S. Geothermal Inc. announced today “that it has finalized the strategic and financial partnership with a subsidiary of Enbridge Inc. The Neal Hot Springs Geothermal Plant, located near Vale, Oregon, was developed and is being operated by USG Oregon LLC, a subsidiary of U.S. Geothermal. Enbridge, a North American leader in delivering energy, acquired an equity position in the project, which achieved Final Completion on August 1, 2013. The Enbridge equity investment, along with a loan guarantee from the U.S. Department of Energy (“DOE”), funded the remaining construction costs. Total investment in the development and construction of the project by U.S. Geothermal was USD $14 million.

Following the receipt of the previously announced Section 1603 Federal Investment Tax Credit (ITC) cash grant payment, and the Oregon Business Energy Tax Credit funds, and after the receipt and disbursement of all remaining construction reserve funds, which was finalized on January 27, 2014, the final ownership interest in the Neal Hot Springs project was calculated in accordance with the terms of the partnership agreement. Ownership interest in the project is final with 60% for U.S. Geothermal and 40% for Enbridge. As a result of the final agreement, U.S. Geothermal has received a USD $6.2 million cash distribution from the partnership.

“Our strategic partnership with Enbridge has proved beneficial for both parties, allowing for the successful construction and operation of the Neal Hot Springs geothermal project,” said Dennis Gilles, Chief Executive Officer of U.S. Geothermal Inc. “We look forward to a long and successful partnership with Enbridge on this and potentially other geothermal projects in our portfolio of quality geothermal resources.”

“As an energy delivery company, Enbridge is proud of its growing list of renewable and alternative energy projects,” said Chuck Szmurlo, Vice President, Alternative and Emerging Technology, Enbridge Inc. “Over the past decade we’ve invested more than $3 billion in a variety of green power projects, creating a strong base of assets which now includes interests in wind, solar and waste heat recovery facilities that, together, have the capacity to generate over 1,700 megawatts of emissions free energy. Neal Hot Springs represents our entry into geothermal energy, which we believe will play an important role in North America’s shift toward a greener energy production mix. We look forward to our relationship with U.S Geothermal and the potential to find further opportunities to partner together.”

The Neal Hot Springs facility was the first geothermal project to obtain a loan guarantee under the DOE’s Title XVII loan guarantee program, which was created by the Energy Policy Act of 2005 to support the deployment of innovative, clean energy technologies. The project deployed the first of its kind binary cycle process, utilizing a supercritical cycle that uses R134a refrigerant as the working fluid, and an innovative air-cooled condenser, as well as pre-fabricated, modular construction of major plant components.”

Source: Company release via MarketWired