U.S. Geothermal (TSX: GTH) (NYSE MKT: HTM) said Dec. 15 that it has acquired from Goldman Sachs the majority of its cash flow interest in and ownership of the Raft River geothermal project in Idaho.
U.S. Geothermal will receive 95% of the cash flow from the project on a going forward basis, along with all increased cash flow from any project improvements. The purchase price was $5.1 million for the 95% interest, with an option to purchase the balance of Goldman’s interest for fair market value at the end of 2017.
“This agreement with Goldman Sachs is a strong positive for our company,” said Dennis Gilles, CEO of U.S. Geothermal. “It unlocks the ability to consider capital upgrades that should increase output from the facility and potentially reach its design capacity of 13 megawatts. It strengthens our commitment to becoming the North American leader in geothermal energy.”
The Raft River Geothermal Power Plant is located in Southeast Idaho and has a designed capacity of 13 MW (net). The project is currently operating at approximately 9.4 MW. Power from the facility is sold under a firm-price, 25-year contract with Idaho Power that allows for the full 13 MW output. Reservoir modeling indicates that the geothermal reservoir can support the full 13-MW contract level, U.S. Geothermal said. Plans are under consideration to drill for additional production to increase plant output to its full contract limit.
“We are also encouraged by the increasing focus on climate change and renewable energy,” said Mr Gilles. “Geothermal is 24/7 baseload power and has significant advantages over wind and solar. We are seeing legislators paying closer attention to reducing emissions and expect a ready market for our pipeline of development projects as we bring them on stream.”
U.S. Geothermal is currently operating geothermal power projects at: Neal Hot Springs, Oregon; San Emidio, Nevada; and Raft River, Idaho. That comes to total power generation of about 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.