Helping Hand Doe Lets Loose 70 Million To Advance Geothermal And Backs A 350 Million Loan

The seal of the U.S. Department of Energy In Washington, D.C., DOE Secretary Steven Chu is making up to 70 million in new funding over three years for technology advancements in geothermal energy to accelerate the technology's development. At about the same time, Ormat Technologies, Inc. announced that its subsidiary, Ormat Nevada Inc. received an offer of a conditional commitment from the DOE that would provide a partial guarantee for up to 350 million in loans that would support 121 MW in geothermal power projects.

The research funding will go to those innovating exploration technologies to locate geothermal energy resources and will back improvements in resource characterization, drilling, and reservoir engineering techniques. President Obama has a stated goal of generating 80% of the country's electricity from clean energy sources by 2035 and geothermal resources will to be a key contributor to the nation's renewable energy supply.

A major goal of the Department is to reduce the upfront cost of geothermal energy systems, expand their use and ultimately make them competitive with conventional sources of electricity. Thus DOE is targeting funding to research and develop innovative technologies.

Secretary Chu said "The United States remains a global leader in geothermal energy development, and we can leverage our experience to develop more energy here at home while increasing our competitiveness in the global clean energy economy."

The U.S. Geological Survey says new geothermal resources could add up to 30 GW of renewable energy to the U.S. energy supply, and enhanced geothermal systems, through the development of engineered reservoirs and other methods, have the potential for an even greater impact. This competitive funding opportunity will support the Department's goals of lowering the cost and financial risk associated with confirming and characterizing geothermal resources and overcoming key technical challenges to reservoir creation and sustainability in enhanced geothermal systems.

The funding will target six key areas: Advanced Exploratory Drilling Technologies, and specifically those focused on reducing the cost of exploratory drilling; Advanced Well Completion Technologies, also with an eye on lowering the costs; Tools to Isolate Fracture Zones within a Well; Observation Tools and Data Collection System for Reservoir Stimulation; Geophysical Exploration Technologies, including remote sensing, improved data processing and advanced seismic surveying technologies; and Geochemistry and Rock-Fluid Interactions to better characterize geothermal resources and prediction of reservoir temperatures.

Ormat Nevada will use the loan backing on three facilities: McGinness Hills, Jersey Valley and Tuscarora. The company already has a 20-year power purchase agreements with Nevada Power Company, a subsidiary of NV Energy. The lender-applicant is John Hancock Life Insurance Company (USA), who submitted the application under the Financial Institution Partnership Program.

Dita Bronicki, CEO of Ormat Technologies said, "The DOE 1705 program provides us with financing terms that enables us to finance a portfolio of facilities that are being developed in two phases. This innovative approach to project finance was made possible thanks to the DOE loan guarantee. We are thankful to the DOE's Loan Programs Office and the rest of the team that moved the project thus far, and will continue working towards the closing of this transaction."