U.S. Geothermal Inc. (TSX: GTH) (NYSE MKT: HTM) on Nov. 9 announced that it has entered into an agreement to acquire all of the major and long lead equipment for the construction of three binary geothermal power plants at a significant discount.
The equipment was part of an order for six power plant units by another, unnamed geothermal developer, but only three were installed. The components for the three units being purchased are all new and unused, and have been held in storage. Upon closing of the transaction, they will be moved to a U.S. Geothermal-owned site.
The equipment is from the same manufacturers, and is of a similar size and design, to that installed at the company’s Neal Hot Springs and San Emidio power plants. The design output of the acquired units totals approximately 35 MW. Actual output of each unit will be determined by resource conditions found at the sites at which the equipment is ultimately installed.
“Since we already operate this same equipment at two of our projects, it will fit in perfectly with our existing operations” said Dennis Gilles, CEO of U.S. Geothermal. “We paid $1.5 million, which is approximately 5% of the equipment’s original cost, a saving of roughly $28 million. This equipment gives us the ability to expand our megawatt output at our existing portfolio of advanced stage development projects at significantly lower cost, and in much shorter construction timeframes.”
The three equipment packages, which represent about 70% of the components needed for the complete plants, will meet the major and long lead equipment requirements for the company’s proposed Crescent Valley I power plant (25 MW) and San Emidio II power plant (10 MW). The company plans to grow its portfolio by developing an additional 95 MW over the next three years, through a combination of expanding existing operations and constructing new projects.
U.S. Geothermal is currently operating geothermal power projects at: Neal Hot Springs, Oregon; San Emidio, Nevada; and Raft River, Idaho, for a total power generation of approximately 45 MW. The company is also developing projects at: the Geysers, California; a second phase project at San Emidio, Nevada; the El Ceibillo project located near Guatemala City, Guatemala; and at Crescent Valley, Nevada. U.S. Geothermal’s growth strategy is to reach 200 MW of generation by 2020 through a combination of internal development and strategic acquisitions.