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September 12, 2008
Investors Take Note of Clean and Sustainable Geothermal Energy Production
by Robert Kropp
New technologies such as EGS offer potential for large-scale electricity production and lead to
high-visibility investments.
SocialFunds.com --
The rush to develop alternative energy sources has intensified in the last year, as rapidly rising
oil prices have finally raised serious questions about the future of fossil fuels. Solar and wind
power may have been the early favorites of the environmentalist and SRI communities, but recently
geothermal energy—an application reputed to be as old as human civilization in some parts of the
world—has gained many adherents.
 Geothermal energy is provided by extreme heat
from deep inside the earth which rises to the surface in natural streams of hot steam or water. In
the United States, most geothermal reservoirs of hot water are located in the western states, where
wells have been drilled into underground reservoirs for the generation of electricity.
According to an assessment by the
Geothermal Energy Association , "Nine western states together have the potential to provide
over 20 percent of national electricity needs." Furthermore, "Unlike wind and solar resources,
geothermal resources are available 24 hours a day, 7 days a week."
Investors and
environmentalists have taken note, finding in geothermal energy a renewable technology capable of
providing clean energy in significant quantities without reliance on variable environmental
factors. One of the companies benefiting from the surge of interest in geothermal is Ormat Technologies Inc.
Founded in 1965
and headquartered in Reno, Nevada, Ormat Technologies is one of the established companies in the
field of geothermal energy. Paul Thomsen, Director of Public Policy and Business Development, said,
"Ormat is a vertically integrated pure play in the field of sustainable energy, and is the leading
developer of technology for the geothermal industry. Our hydrothermal geothermal power plants
produce over 1000 gigawatts of electricity worldwide, with 400 megawatts occurring in the United
States."
Thomsen referred to a co-production project that Ormat will undertake in
cooperation with the U.S. Department of Energy in Wyoming. "We will use hot water brought up during
oil field production to generate commercial electricity." The heat from the water will be utilized
before the water reaches a bioremediation pond on the site.
Thomsen credits increased
Congressional attention to such matters as carbon tax and alternatives to fossil fuels for Ormat's
financial strength. In addition, the extension of production tax credits makes it more likely that
geothermal can exceed the goal of more than 15,000 megawatts of geothermal power online nationally
by 2025.
Other prominent companies in the geothermal field include Sierra Geothermal Power and Nevada Geothermal Power ,both of whom can expect to
benefit from Senator Harry Reid's proposed Clean Renewable Energy and Economic Development Act. The
bill will provide financing for power transmission lines and interconnections to carry power from
renewable energy zones to areas with growing electricity demand.
Reid’s bill limits
Federal financing of high-voltage transmission lines to those that carry at least 75 percent
renewable electricity, and applies the same limitation to new lines built across Federal lands.
The biggest limitations of using geothermal energy to generate electricity are
geographical. There are few places on earth where magma is close enough to the earth’s surface to
generate electricity economically. Yet the thermal energy in the uppermost six miles of the earth’s
crust amounts to 50,000 times the energy of all the oil and gas resources in the world, according
to the U.S. Department of Energy.
When
Google.org, the charitable branch of the search engine company, announced last month that it
would invest $11 million in Enhanced Geothermal Systems (EGS), investors took note of a
cutting-edge technology that has the potential for accessing the Earth's vast resources of heat to
help meet the energy needs of the United States.
In EGS, wells are drilled, in some cases
to depths of up to two miles, and water is injected under high pressure, which creates an
artificial geothermal reservoir at depth. Water is circulated through the reservoir, extracting
heat from the rock for use in producing geothermal electric power.
The U.S. Department of
Energy (DOE) estimates that the application of EGS technology is capable of providing at least
100,000 MWe of electricity within 50 years. With a modest R&D investment of $1 billion over 15
years, a recent report by MIT estimated that 100 GWe of electricity could be installed by 2050 in
the United States.
Beneficiaries of Google.org's investment include AltaRock Energy Inc., a technology company, and Potter Drilling, a developer of deep
hard-rock drilling technology.
Don O'Shei, Chief Executive Officer of AltaRock Energy,
told socialfunds.com, "The Google.org investment certainly brought us increased media attention,
but it was in fact only part of a $26.25 million round of private placement financing.
"AltaRock has spent much of the last year in a technology development phase, and will use the
financing to create a project that demonstrates EGS in action. After the end of next year and
successful completion of the EGS project, AltaRock hopes to begin commercialization of EGS."
Socialfunds.com asked O'Shei what government can do to support the development of renewable
energy. O'Shei pointed out that "Production tax credits have been helpful. However, their renewal
cycles have been so short that it is difficult for companies to consider them reliable in the long
term."
For years the recipient of less media and investor attention than other renewable
energy sources such as wind and solar, geothermal can now boast several solid companies, developing
technologies, and heightened interest from the socially responsible investment community.
While its more ambitious undertakings may take years to develop, the geothermal industry
anticipates that carbon tax credits and other initiatives will help spur further investment and an
accelerated timeline for development.
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SRI World Group, Inc. All Rights Reserved.
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