Washington, D.C., March 30, 2011 – The United States currently leads the world’s countries in installed geothermal energy capacity and continues to be one of the principal countries to increase the development of its geothermal resources.
As of March 2011, geothermal electric power generation is occurring in nine US states: Alaska, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, Utah, and Wyoming. Other states, such as Colorado, Louisiana, Mississippi, and Texas are soon to be added to the list. The United States has a total installed capacity of about 3,102 MW.
In 2010 one company, Nevada-based Ormat Technologies, brought its 15 MW Jersey Valley power plant online later in the year. The Jersey Valley power plant is located in Pershing County, Nevada and its completion increased installed geothermal capacity in that state to about 442 MW.
The reduced levels of geothermal capacity coming online in 2010 has been partially attributed to the economic downturn, which made potential investors in geothermal project development and construction more risk-averse. This slowed, somewhat, the pace at which geothermal resources were being developed.
However, as the economy recovers and federal and state policies incentivizing investment in geothermal remain in effect, the geothermal industry is expected to see increased geothermal capacity entering advanced stages of development and being brought online in 2011 and the coming years.
While advanced geothermal projects enter or near the construction phase of their development, geothermal companies in the US are also acquiring and developing early stage geothermal resources. In 2011 the geothermal industry is developing 123 confirmed geothermal projects.
When accounting for projects not confirmed (i.e. “unconfirmed”) by the developing companies this number increases to 146 projects. The geographic spread of confirmed geothermal projects alone is significant, with projects in various phases of project development located in 15 different states.
The number of confirmed geothermal projects recorded in this report account for about 3633 – 4050 MW of geothermal resources in development. Accounting for unconfirmed projects increases these levels to 4448 – 5040 MW.
The total number of confirmed project megawatts is spread among 15 different states in the western US, with smaller scale pilot projects beginning to be developed in the states around the Gulf of Mexico.
While a projects resource capacity value provides an estimate of the amount of recoverable electricity (MW) from an underground reservoir, a projects PCA (Planned Capacity Added) estimate is the portion of that geothermal resource which a developer deems viable for production via a geothermal power plant.
Currently geothermal industry companies are developing 1377 – 1393 MW of confirmed PCA projects. When accounting for unconfirmed projects the range of PCA in development is 1613 – 1664 MW. Of this, 756 – 772 MW are advanced stage (Phase 3 – 4) geothermal projects expected to be completed in the next three to four years.
While the majority of advanced stage projects are currently located in Nevada and California, projects are also nearing construction and production in Oregon, New Mexico, Idaho, and Hawaii. Smaller capacity projects (< 1 MW) are also nearing completion in Alaska, Louisiana, and Mississippi.
As the geographical reach of the geothermal industry expands, developers are increasingly exploring for and developing conventional hydrothermal geothermal resources in areas where little or no previous development has taken place.
Of the 146 projects surveyed, 111 of them are developing conventional hydrothermal resources in “unproduced” areas, 15 of them are developing conventional hydrothermal resources in “produced,” and 10 are expansions to existing conventional hydrothermal power plants. The remaining projects are five geothermal and hydrocarbon coproduction four enhanced geothermal systems (EGS) and one geopressured system project.
Geothermal installed capacity currently remains concentrated in the western US, but the exploration for and development of new resources, as well as the application of new technologies is expanding the geographic extent of the industry. Projects featuring the development of conventional hydrothermal resources as well as EGS pilot projects are increasing in the western US.
At the same time, pilot projects focusing on generating geothermal electricity from low temperature fluids left over as a byproduct from oil and gas production, as well as projects aiming to harness electricity from geothermal fluids under high geological pressure, are emerging in states along the Gulf of Mexico.
While the number of states with geothermal installed capacity and projects in development is significant, the reach of the geothermal industry is still more extensive. Companies offering various products, services, and expertise in both the industrial and service sectors are needed to support additional geothermal development. Vendors supporting the development of geothermal resources abound throughout the US.
In addition to states with both online and developing geothermal projects, and those with developing projects only, companies whose goods and services support the development of geothermal resources for power generation are found in 28 other states. In total, companies developing geothermal resources have identified vendors needed to support their operations in 43 states.
The increased progress in the development of geothermal projects has been fueled by federal incentives and funding which help offset the risk and high capital cost of geothermal development.
With certain conditions, geothermal power projects are eligible for the full Production Tax Credit (PTC) if placed in service by December 31, 2013. In addition, the American Recovery and Reinvestment Act of 2009 (ARRA) has made projects eligible for the PTC also eligible for a grant in lieu of the tax credit from the Treasury Department.
The grant is equivalent to a 30 percent tax credit for the eligible portions of their capital investment. Projects which are in construction by the end of calendar year 2011 and are placed in service by the end of calendar year 2013 may receive the cash grant.
Geothermal developers have cited the cash grant as a particularly important factor in sustaining development through the economic recession. Since 2009 about $262.9 million and $4.6 million in cash grants have been provided to utility-scale geothermal projects and geothermal heat pump projects respectively. Projects receiving cash grants span 19 different states.
Another incentive driving the increased development of geothermal resources in the US is the Department of Energy Loan Guarantee Program. The Energy Policy Act of 2005 (EPAct 2005) authorized loan guarantees through DOE to renewable energy projects that reduce green house gas emissions and employ new or improved technologies.
In 2009 ARRA amended the Loan Guarantee Program, adding section 1705 to authorize loan guarantees for renewable energy projects that commence construction no later than September 30, 2011.
Since 2009 Nevada Geothermal Power received a $78.8 million for its 49.5 MW Blue Mountain “Faulkner 1” power plant, which it brought online in 2009. U.S. Geothermal also received a $98.8 million loan guarantee for its Neal Hot Springs project, which is currently under development in Malheur County, Oregon.
Recovery Act funding is also having an important influence on the US geothermal market. In October 2009, the DOE announced the results of its competitive solicitation under ARRA for geothermal technology projects.
DOE announced awards that could result in up to $338 million in ARRA funding to geothermal research and development, and would require an additional $280 million in recipient cost-share.
As of March 2011, GTP ARRA awards totaled nearly $363.7 million when accounting for ARRA funding to national labs. Total cost share contributes an additional $302.8 million, bringing the combined ARRA/cost share geothermal technology investment to more than $666.4 million.
Funding for geothermal technology projects via ARRA is distributed among six categories, including Innovative Exploration and Drilling Projects (IET, up to $97.2 million, 24 projects), Coproduced, Geopressured, and Low Temperature Geothermal Demonstration Projects (Geo Demo, up to $18.7 million, 10 projects), Enhanced Geothermal System Demonstrations (EGS Demo, up to $44.2 million, 3 projects), Enhanced Geothermal Systems Components Research and Development/Analysis (EGS R&D, up to $80.8 million, 45 projects), Geothermal Data Development, Collection, and Maintenance (National Geothermal Data System/NGDS, up to $33.7 million, 4 projects) and Ground Source Heat Pump Demonstrations (GHP, up to 65.5 million, 37 projects).
Additionally, ARRA provided $23.7 million in funding to national labs throughout the US for research and development in various geothermal technologies. It is planned that 122 projects in 39 states will receive DOE ARRA funding with recipients ranging from private industry, academic institutions and tribal entities to local governments, and DOE National Laboratories.
A review of ARRA awards administered through the DOE Geothermal Technologies Program reveals that the impact of stimulus funding has not yet peaked for geothermal. At the end of 2010, of the 122 projects receiving ARRA funding through the DOE GTP: 1 has been completed, 18 are more than 50 percent complete, 98 are less than 50 percent complete, 1 has not been started, and 4 are unaccounted for on Recovery.gov.
The vast majority of projects that have yet to be completed indicate that much of this total will be spent in the coming years, boosting job growth within the geothermal sector.
The Department of Energy Geothermal Technologies Program also supports the advancement of geothermal technology through annual appropriations. In 2010 GTP allocated about $17.2 million of federal funding to seven companies with projects intended to develop and demonstrate new geothermal technologies utilizing low temperature geothermal fluids, geothermal fluids recovered from oil and gas reservoirs, and highly pressurized geothermal fluids.
Of the seven companies’ projects, four will advance the technology and implementation of binary systems designed to generate electricity from lower temperature resources. Two projects are designed to generate electricity from geothermal fluids under highly pressured geological conditions. The seventh project will use fluids produced as a byproduct of hydrocarbon production from oil and gas wells. The aggregate industry cost share for the seven FY 2010 projects is about $63.8 million.
Federal tax incentives, the Department of Treasury Cash Grant and the DOE Loan Guarantee program combined with strong state renewable portfolio standards are expected to drive growth in the geothermal industry in the near term. Additionally, with the majority of ARRA funding to various projects being less than complete, stimulus funding still stands to be a significant driver of further geothermal development in 2011.