A geothermal energy developer may transfer ownership of a power plant after an analysis showed that output would decline by about 56% by 2020.
Nevada Geothermal Power Inc. (NGP), said projections at its Blue Mountain geothermal field in Nevada show that output is expected to fall below 34 MW this year and will drop to about 15 MW by 2020.
Vancouver-based Nevada Geothermal said in a statement that it is in discussions to transfer ownership of the site to its lender. The company previously said declining revenue from the plant would make repayment of loans difficult. NV Energy Inc. (NVE) buys Blue Mountain’s power under a 20-year contract.
Nevada Geothermal has a mezzanine loan from EIG Global Energy Partners LLC, which had an $88m balance according to a May 2012 filing.
The company also received a $98.5m loan from John Hancock Financial Services Inc. in 2010 to refinance and fund expansion work at Blue Mountain. That loan was guaranteed by the federal program that has backed clean energy ventures, including Solyndra.
Nevada Geothermal updated projections of the geothermal field’s production last performed in October of 2011, a condition of the loan guarantee, and they revealed further production declines without additional investment. Drilling more wells would not necessarily improve plant output, the company said.
“Base case temperature declines are projected to be on the order of 8ºF/yr in the near-term rather than declines of around 3ºF/yr as projected in the 2011 GeothermEx report, and power output is projected to fall below the currently nominated average supply amount of 34 MW this year decreasing to about 15 MW by 2020,” according to a company statement.