Share on Google Plus Share on Twitter Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 4 (4 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Stats   1 comment

General News

Geothermal Elbowing its Way into the Mainstream

By (about the author)     Permalink       (Page 1 of 1 pages)
Related Topic(s): ; ; ; ; ; ; ; ; ; ; (more...) ; ; , Add Tags  (less...) Add to My Group(s)

View Ratings | Rate It

opednews.com Headlined to None 6/14/10

- Advertisement -

The Oil Catastrophe in the Gulf offers an obvious chance to bring alternative energies into the public dialogue. That is only one reason this is a perfect time to present the argument for geothermal; other reasons are discussed below.

As I've mentioned a few times, geothermal looks to be approaching a rolling boil.

A few more positive indicators on the sector presented themselves over the past week.

First came news last week that the state of Alaska will reduce royalty rates for geothermal projects on state lands. Previously, state geothermal royalties had been set at a towering 10 to 15% of gross revenues. Under the new legislation, this will fall to 1.75% during the first ten years of income-generating production. After ten years, the rate increases modestly to 3.5%.

This is a major boost for Alaskan geothermal. A 10% royalty is hefty, even for more established industries like oil and gas. It would push most geothermal projects to the brink of viability.

More importantly, the rate change is a sign that things are happening in the sector. The Alaskan government didn't decide on the shift out of the blue. They are seeing increased geothermal activity, which necessitated the policy re-think.

Case in point being geothermal major Ormat Technologies, which announced last week that it will accelerate work on its MountSpurr geothermal leases in Alaska. The project will likely see drilling of the first test wells this year.

We also got another signal last week that geothermal is elbowing its way into the mainstream. The U.S. Department of Energy announced it will provide developer U.S. Geothermal with a $102 million loan to help construct a 22 MW power plant at the company's Neal Hot Springs project in Oregon.

- Advertisement -

This is a groundbreaking move from the DOE. And a potential game-changer for the industry.

One of the big challenges for junior geothermal players is the leap from exploration to production. Building a power plant is a big expense, requiring significant debt financing. However, most small geothermal players have few assets to finance against, other than some holes in the ground and a bunch of temperature data.

As such, these companies have historically been mauled on rates for their project debt. They've often been forced to go to non-traditional funding sources, which charge interest rates ranging up to 15%. A serious cost of capital.

DOE loans like the one to U.S. Geothermal will carry ultra-low interest rates. Giving qualifying project developers a big leg up in making the jump to production.

Revolutions never happen over night. They build over years, with the signals going from subtle to strong. Judging from the geothermal news lately, we're getting toward the latter.

- Advertisement -

Source: Full article at: http://oilprice.com/Alternative-Energy/Geothermal-Energy/Geothermal-Elbowing-its-Way-into-the-Mainstream.html

By. DaveForest for OilPrice.com

 

I have an interest in the financial markets, commodities and Geopolitics.

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon


Go To Commenting

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Africa's Increasing Importance in Worldwide Energy Security Affairs

The Myth Of Nabucco: Greed, Delusion and $11.4 Billion

Government Insiders: Get Ready for the Gulf Dead Zone

They Died Before the Oil Ran Out

The Great Geopolitical Battle Over Energy Transit Routes

Canada's Oil Sands Set to Become Biggest Source of U.S. Oil Imports, Report Says

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
1 people are discussing this page, with 1 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)
But what you are visualizing is earth shaking in i... by Jay Farrington on Monday, Jun 14, 2010 at 3:11:53 PM