The ongoing debate between traditional energy production methods and renewable energy alternatives continues to rage. But what if part of the answer is right beneath our feet? U.S. Geothermal Inc. is one company that thinks so, and today it is a leading renewable energy company focused on the development, production and sale of electricity from geothermal energy.
“Conventional fossil fuels and nuclear power use their fuel source to boil water to generate power, but we use heat from the earth,” CEO Dennis Gilles explains.
“Geothermal is also different from wind and solar because they produce power intermittently and have less predictability than geothermal. Our operation runs 24 hours a day, allowing it to achieve about 98 percent availability minus two percent downtime for maintenance.”
Strong Foundation
Simply put, geothermal energy is energy recovered from the heat of the earth’s interior. U.S. Geothermal operates geothermal power projects in Neal Hot Springs, Ore., San Emidio, Nev., and Raft River, Idaho, and has a number of projects under development. The company’s total power generation is approximately 45 MWs, and its strategic goal is focused on achieving 200 MWs of generation by 2020 through internal development and strategic acquisitions.
The Raft River project was the first of U.S. Geothermal’s projects to come online. The company acquired the property in 2002, and started construction of a 13 MW net capacity power plant in June 2006. Commercial power generation was achieved in January 2008. Idaho Power Company is purchasing its power under a 25-year, firm price power purchase agreement.
“Raft River is a 13 MW plant running at 9.4 MW due to ownership contractual restraints that we have now removed with our recent acquisition of the majority of Goldman Sachs’ interest in the project,” Gilles says. “The plant also just had its first major maintenance overhaul in eight years during 2015.”
The company’s other operating plants came online in 2012. The first phase of San Emidio achieved commercial operation in May 2012, while Neal Hot Springs began commercial operation in November 2012.
“Neal Hot Springs was designed as a 22 MW annual average plant, and it can generate 30 MW in winter and 14 MW in summer. We are looking to hybridize its cooling system so we can do some wet cooling in summer and increase its summer output by about 5 MW,” Gilles says. “As for San Emidio, it is a 10 MW plant, and our focus there is on development of a second separate plant to duplicate what is there now.”
Moving Ahead
U.S. Geothermal’s developing projects include the Crescent Valley project in Eureka County, Nev., a project at the Geysers, Calif., and the second phase at San Emidio. Another project is El Ceibillo, which is an advanced-stage geothermal prospect located about 8.5 miles from Guatemala City in Central America.
The company acquired its Crescent Valley properties in a merger with Earth Power Resources in December 2014. The WGP project at Geysers came to U.S. Geothermal when it acquired Ram Power Corp.’s Western GeoPower subsidiary in April 2014.
“What we do is make sure we understand the resource capability before developing the plant,” Gilles says. “We look for relatively shallow resources to keep drilling costs and risks as low as possible. Once we have done that, we move forward with developing our plant and put power purchase agreements in place at a confirmed price for 25 years, which helps with financing projects.”
In 2015, the company made a number of advances with its development projects. At the WGP Geysers project, the three production wells with the highest flow rates were tested. The company has approximately 30 MW of steam drilled, tested and ready for production at Geysers, and it is pursuing discussions in support of a power purchase agreement for its most advanced stage development project.
At El Ceibillo, the company has drilled four wells with depths ranging from 1,460 feet to 5,650 feet to test a high-temperature anomaly identified by a 2014 temperature gradient drilling program. With the completion of the drilling of well EC-2A, the company successfully intersected a commercial geothermal resource at El Ceibillo. U.S. Geothermal expects to be able to produce from 25 to 50 MW of electricity when the project is completed.
Additionally, U.S. Geothermal took a significant step toward bringing some of these projects to fruition when it acquired all of the major and long lead equipment for the construction of three binary geothermal power plants at a significant discount this past November. The equipment was part of an order for six power plant units by another geothermal developer, but only three were installed.
The components for the three units being purchased are all new and unused, and have been held in storage. The three equipment packages represent about 70 percent of the components needed for complete plants and will meet the major and long lead equipment requirements for the company’s proposed 25 MW Crescent Valley I power plant and the 10 MW San Emidio II power plant.
“We just closed that transaction and the equipment is being relocated,” Gilles says. “It will help us to develop our projects on an accelerated basis, jump-starting development and making the costs of those plants more competitive.”
With a strong portfolio in place and the potential of other projects on the horizon, U.S. Geothermal is excited about the future. Opportunities to invest in geothermal power generation in the United States and beyond are extensive. Controlled organic and acquisitive growth should help the company bring more geothermal power to the grid.
“There are many resources to be developed and few players in the geothermal field,” Gilles says. “Solar and wind are intermittent power sources, and energy storage is an issue. Geothermal power doesn’t have those constraints, and we are an excellent source to meet the demand for clean renewable energy.”
