Geothermal grows despite uncertainty

The Geothermal Energy Association on April 3 released its annual report, showing steady growth in an uncertain business climate.

The U.S. geothermal industry added approximately 91 MW of newly installed capacity in the past year, according to the annual update on the industry from the GEA.

The Annual U.S. Geothermal Power Production and Development Report shows that the industry currently has 3,187 MW of installed capacity, outpacing every other country in the world. As a renewable, baseload energy supply, geothermal has the potential to replace coal and other non-renewable power sources, the industry says.

The growth came from the addition of five projects. “Given the uncertainty with the state renewable portfolio standards and questions about federal support, I think it’s a pretty good outcome,” GEA Executive Director Karl Gawell said.

Geothermal developers currently have 147 projects under development in 15 states.

Developers discussed industry prospects on a conference call when the report was released. Paul Thomsen of Ormat Technologies (NYSE: ORA) said the company brought two projects online and has more than 200 MW under development.

Early this year it completed expansion of the 25 MW Puna Geothermal Facility in Hawaii by adding another 8 MW. “What’s unique about this is it offers an on-peak price of 9 cents per kWh, which is a significant departure from the avoided cost in Hawaii and hopefully sets a precedent for future development on the islands,” he said.

Currently, geothermal electric power generation is occurring in eight U.S. states, including Alaska, California, Hawaii, Idaho, Nevada, Oregon, Utah and Wyoming. An additional seven states—Arizona, Colorado, Louisiana, New Mexico, North Dakota, Texas and Washington—have geothermal capacity in development.  California continues to lead the way when it comes to geothermal energy. The Golden State ranks first in overall installed capacity, with 2,615 MW already online, and it has nearly 2,000 MW of capacity in development. Nevada is also ahead of the pack, with 59 projects currently in development, more than any other state.

In the past year, capacity was installed by four different geothermal companies. Energy Source completed its 49.9 MW Hudson Ranch I project in Imperial Valley, Calif. during the first quarter of 2012, while Ormat Technologies finished 26 MW worth of projects over the past year. Terra-Gen completed a 1.9 MW expansion project in Nevada, and U.S. Geothermal expanded electricity generation at its San Emidio resource that replaced old generating equipment at the site with a new 12.75 MW power plant.

“As the economy strengthens, our industry is expected to bring even more geothermal capacity online in the coming years,” Gawell said. “In 2012, another 100 MW of capacity is expected to come online representing nearly $1bn of investment in the clean energy economy.”

Most plants need between four and eight years of lead time before the geothermal resource is on tap, the industry group said.

But growth is threatened by expiring tax credits at the end of 2013. Low natural gas prices are also having an impact, as power demand sinks and price pressures on renewables continues.