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Nevada’s Big Bet on Geothermal


July 30, 2010

Herman K. Trabish



Read More: http://www.greentechmedia.com/articl...-on-geothermal

Most of Nevada remains sparsely populated, but the state now generates more geothermal power than all but eight of the world's nations, according to the Geothermal Energy Association (GEA). And that's only an indication of geothermal's potential as a player at the renewables table. "It was only five or six years ago that people had no idea what geothermal could be," Karl Gawell, the Executive Director of the GEA, said. "There was tremendous uncertainty and utilities were totally skeptical." During the renewables expansion that has taken place from 2005 to 2010, geothermal's installed capacity in Nevada doubled from 200 megawatts to over 400 megawatts. Projects currently in development could add as much as 3,000 megawatts to Nevada's grid.

"Some of the major utilities, like NV Energy, have become real believers," Gawell said. "A few years ago, geothermal was in just four states: Utah, Nevada, California and Hawaii. Now every state from Alaska to Texas has geothermal projects." A lot of money is being bet on geothermal, particularly in the upfront equity financing of test wells. Though the science of identifying geothermal's deep pockets of hot water is improving, a geothermal exploration well remains a bet of as much as half the project cost, made on the presence or evidence of a hot spring.

But large and small companies alike are making that bet. Calpine, a veteran independent power producer in the natural gas industry, is active. So is CalEnergy Generation, a part of Warren Buffett's MidAmerican Energy. Nevada Geothermal Power, a company on the Canadian stock exchange, is playing. So are startups U.S. Geothermal and Ram Power. The recession slowed, but did not stop, development. A developer cannot get bank financing today until 80 percent of the work to prove the resource has been done. Just a few years ago, Gawell said, bank financing came with as little as 30 percent of the work done.