TODAY’S STUDY: U.S. GEOTHERMAL RIGHT NOW

2013 Annual US Geothermal Power Production and Development Report

February 2013 (Geothermal Energy Association)

Key Statistics from 2013

US Industry Statistics

• Installed geothermal power capacity grew by 5% or 147.05MW in the United States since GEA’s last survey in March 2012.

• Seven geothermal projects became operational in 2012, including the first coproduction plant. Additionally, the first hybrid solar-geothermal plant went online this year, although no new geothermal capacity was added at this plant.

• There are currently 175 geothermal projects under development in the U.S.

• About 5,150-5,523 MW of known geothermal resources are under development in the U.S., of which geothermal developers are developing 2,511-2,606 MW in potential capacity additions over the next decade.

• GEA revised its last year’s estimate of total installed capacity to increase its estimate by 128 MW. Currently 3,386 MW of geothermal power are installed in the United States.

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Geothermal Resource Types and Their Definitions

In reporting a project in development to the GEA, the developer of a geothermal resource is asked to indicate which of the following definitions the project falls under:

Conventional Hydrothermal (Unproduced Resource): the development of a geothermal resource where levels of geothermal reservoir temperature and reservoir flow capacity are naturally sufficient to produce electricity and where development of the geothermal reservoir has not previously occurred to the extent that it supported the operation of geothermal power plant(s). Such a project will be labeled as “CH Unproduced” in this report.

Conventional Hydrothermal (Produced Resource): the development of a geothermal resource where levels of geothermal reservoir temperature and reservoir flow capacity are naturally sufficient to produce electricity and where development of the geothermal reservoir has previously occurred to the extent that it currently supports or has supported the operation of geothermal power plant(s). Such a project will be labeled as “CH Produced” in this report.

Conventional Hydrothermal Expansion: the expansion of an existing geothermal power plant and its associated drilled area so as to increase the level of power that the power plant produces. Such a project will be labeled as “CH Expansion” in this report.

Geothermal Energy and Hydrocarbon Co-production: the utilization of produced fluids resulting from oil and/or gas-field development for the production of geothermal power. Such a project will be labeled as “Co-production” in this report.

Geopressured Systems: the utilization of kinetic energy, hydrothermal energy, and energy produced from the associated gas resulting from geopressured gas development to produce geothermal electricity. Such projects will be labeled as “Geopressure” in this report.

Enhanced Geothermal Systems: is the development of a geothermal system where the natural flow capacity of the system is not sufficient to support adequate power production but where hydraulic fracturing of the system can allow production at a commercial level. Such a project will be labeled as “EGS” in this report.

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Tracking Projects through the Development Timeline

In addition to defining their projects according the above list of definitions, developers also indicate to GEA their projects’ current status in the project development timeline using a fourphase system. This system captures how much, and what type of, work has been performed on that particular geothermal resource up until the present time. These four phases of project development are:

Phase I: Resource Procurement and Identification

Phase II: Resource Exploration and Confirmation

Phase III: Permitting and Initial Development

Phase IV: Resource Production and Power Plant Construction

Each of the four phases of project development is comprised of three separate sections, each of which contains phase sub-criteria. The three separate sections of sub criteria are resource development, transmission development, and external development (acquiring access to land, permitting, signing PPA’s and EPC contracts, securing a portion of project financing, etc.). For a project to be considered as being in any particular phase of development a combination of subcriteria, specific to each individual project phase, must be met.

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Planned Capacity Addition (PCA) and Resource Capacity

Finally, at each phase of a project’s development a geothermal developer has the opportunity to report two project capacity estimates: a Resource Capacity estimate and a Planned Capacity Addition (PCA) estimate. At each project phase the geothermal resource capacity estimate may be thought of as the megawatt (MW) value of the total recoverable energy of the subsurface geothermal resource. It should not be confused with the PCA estimate, which is defined as the portion of a geothermal resource that “if the developer were to utilize the geothermal resource under its control to produce electricity via a geothermal power plant . . . would be the power plants estimated installed capacity.” In other words, the PCA estimate is usually the expected power plant’s estimated installed capacity. In the case of an expansion to a conventional hydrothermal geothermal plant, the PCA estimate would be the estimated capacity to be added to the plant’s current installed capacity. In each phase of development the resource and installed capacity estimates are given different titles that reflect the level of certainty of successful project completion. The different titles as they correspond to the separate phases are as follows:

Phase I: “Possible Resource Estimate” and “Possible PCA Estimate”

Phase II: “Possible Resource Estimate” and “Possible PCA Estimate”

Phase III: “Delineated Resource Estimate” and “Delineated PCA Estimate”

Phase IV: “Confirmed Resource Estimate” and “Confirmed PCA Estimate”

This section outlines how the Geothermal Reporting Terms and Definitions influence the reporting and presentation of project in development information in this report…

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The US Geothermal Industry

The development of geothermal energy resources for utility-scale electricity production in the United States began in the 1960’s. Since that time, the continual development of geothermal resources and technology has positioned the US as a leader in the global geothermal industry. The US currently has approximately 3,386 MW of installed geothermal capacity, more than any other country in the world.

Installed Capacity

Geothermal companies continue to increase the development of geothermal resources in the US. At the end 2012, geothermal energy accounted for roughly a third of a percent of total installed operating capacity in the United States. Additionally, Geothermal was about 1% of new renewable energy projects brought online in 2012.2 While this number may seem small on a national scale, geothermal is a significant portion of renewable electricity generation in the states of CA and NV. While the majority of geothermal installed capacity in the US is concentrated in California and Nevada, geothermal power plants are also operating or under construction in Alaska, Hawaii, Idaho, Oregon, Utah, Washington and Wyoming. A significant amount of additional geothermal capacity -- 574 - 620 MW -- could become operational by January 2016 if companies who participated in GEA’s survey bring their plants online on time.

Due to the varying resource characteristics of different geothermal reservoirs and the lack of a standardized plant design, three generalized plant categories are used to define geothermal generators in the US: dry-steam, flash, and binary. Currently, dry-steam power plants account for approximately 1585 MW (47%) of installed geothermal capacity in the US, and are all located in California. Next, flash plants count for approximately 997 MW (29%), the majority of which are also located in California. With a few exceptions, though, most of the industry growth comes from binary plants, which utilize lower temperature resources. Binary capacity reached roughly 803.57 MW, or 24% of the geothermal installed capacity. Also notably the first co-production facility in the US came online in Nevada at Florida Canyon Mine and Enel Green Power North America brought the first hybrid solar geothermal plant online at their Stillwater facility.

The US geothermal industry’s trend of sustained steady growth continued in 2012. In that year five geothermal power plants and two expansion projects to existing power plants were completed for a total of approximately 147.05 MW of newly installed capacity.

Additionally, GEA conducted a statistical revision of its information on existing plants and found that many power plants had slightly increased their installed capacity since GEA had last contacted those geothermal plant operators. Therefore, of the total 275 MW of growth since GEA’s last survey, 147 MW came from plants installed in 2012, while 128 MW is a result of revision to GEA statistics. So the true increase in geothermal capacity this year was only ≈5%. The new geothermal capacity installed in 2012 came from five different geothermal companies. EnergySource completed their John L. Featherstone Plant with a capacity of 49.9 MW, ElectraTherm brought one of the first co-production plants in the US online at Florida Canyon Mines, and Terra-Gen’s Dixie Valley expansion became operational. Additionally, Ormat Technologies brought its 18 MW Tuscarora geothermal power plant online in Elko County, Nevada and a second 30 MW plant online called McGinness Hills. U.S. Geothermal expanded electricity generation at its San Emidio resource by replaced old generating equipment at the site with a new 12.75 MW power plant and completed a 30 MW plant in Oregon. As a result, geothermal installed capacity increased in the US by approximately 147.05 MW to an overall total of 3,386 MW.

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Capacity in Development

Installed geothermal capacity increased from 3,187 MW in early 2012 to 3,386 MW in February of 2013. As the economy recovers and the recent language alteration of the PTC tax credit effects the geothermal industry, significant growth is expected in 2013 and subsequent years. From the information GEA gathered from reporting companies, up to 14 plants could become operational in 2013 and 9 new plants in 2014 and 10 more plants in 2015, by over 20 different companies and organizations making 2013, 2014, and 2015 three of the most significant boom years for geothermal in decades.

As advanced geothermal projects enter or near the construction phase of development, geothermal companies in the US are also acquiring and developing early stage geothermal resources. In 2013, the geothermal industry is developing 175 geothermal projects (including prospects). The geographic spread of geothermal projects alone is significant, with projects in various phases of project development located in 13 different states.

Of the 175 projects 15 are “unconfirmed” by their respective developer. By unconfirmed” GEA means the project developer failed to respond to GEA’s requests for information during the Jan.- Feb. data collection period. Thus, the information presented is based on public sources or the developer’s 2012 response.

The number of developing geothermal projects reported to GEA in 2013, excluding unconfirmed projects and prospects is 125. This result represents a slight decrease from 2012 at 130 projects. This decrease is partly due to companies failing to report to GEA, not necessarily because fewer projects are under development.

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Beginning with the 2012 US Geothermal Power Production and Development Report, GEA allowed for the reporting of geothermal “prospects” by developers. The reporting of a prospect may occur when a geothermal developer has acquired access to a geothermal resource which has the potential for electricity production, but which has not yet met enough project criteria for the geothermal resource to be considered a Phase I project under the Geothermal Reporting Terms and Definitions (see Section 1). While not currently considered a geothermal “project,” a geothermal prospect has the potential to become so. When including confirmed prospects, the total number increases to 160 confirmed projects and prospects.

The number of confirmed geothermal projects recorded in this report account for approximately 5,150-5,523 MW of geothermal resources in development and 2,511-2,606 MW planned capacity additions spread among 13 states in the Western US. However, these numbers exclude projects where the total resource capacity or the potential capacity additions (PCA) are unknown and are therefore lower than ‘real’ estimates. Some developers may only report the PCA or resource numbers to GEA. Additionally, projects in early stages of development do not always have estimates for PCA or resource available.

Note that while a project’s resource capacity value provides an estimate of the amount of recoverable electricity (MW) from an underground reservoir, a project’s potential capacity additions (PCA) estimate is the portion of that geothermal resource which a developer plans to develop for electricity production via a geothermal power plant (see Section 1 explaining the Geothermal Reporting Terms and Definitions used in this report). Currently, geothermal companies are developing 2,511-2,606 MW of potential capacity additions in the US. Of this total, 774 – 799 MW are advanced-stage (Phase 3 – 4) geothermal projects. These numbers in the Table 2 include all 15 unconfirmed projects.

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While the majority of advanced-stage projects are currently located in Nevada and California, utility-scale projects are also nearing completion and production in Oregon, Utah, Idaho, and Alaska…

As the geographical reach of the geothermal industry expands, developers are increasingly exploring for and developing conventional hydrothermal geothermal resources in areas where little or no previous development has taken place. Of the 175 projects surveyed (including unconfirmed), 148 (approximately 84%) are developing conventional hydrothermal resources in “unproduced” areas (CH Unproduced) where the geothermal resource has not been developed to support electricity generation via a power plant. Additionally, 17 or 10% are developing conventional hydrothermal projects in “produced” (CH Produced) areas, and four or 2% of projects are expansions to existing conventional hydrothermal power plants (CH Expansion). The remaining projects are three geothermal and hydrocarbon coproduction (Co-production) and three enhanced geothermal systems (EGS) projects.

The exploration for and development of new resources, as well as the application of new technologies, has the potential to expand the geographic extent of the industry. Projects featuring the development of conventional hydrothermal resources as well as EGS pilot projects are increasing in the Western US. At the same time, the potential to generate geothermal electricity from low-temperature fluids co-produced with from oil and gas production is being explored through demonstration scale projects in states along the Gulf of Mexico and in North Dakota. A number of successful co-production test projects concluded this year...

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Emerging Technology

Significant Developments in EGS and Co-Production

In 2006, MIT published a study that found that EGS technology could create 100 gigawatts (GW) of electricity by 2050.13 One example of a developing EGS project is Davenport Newberry Holdings LLC’s Newberry Geothermal Project in Bend, Oregon. This past year they have significantly progressed on their EGS demonstration funded by $26 million from Google, Kleiner Perkins, Khosla Ventures and Vulcan Capital, as well as funds from the US Department of Energy (DOE). If successful, EGS technology development could make significant progress toward cutting geothermal costs and eliminate significant risks in geothermal development. For example, EGS will allow developers to create multiple stimulated geothermal areas from a single well.

The Newberry project is still in the testing and research phase. However, Altarock has stimulated multiple geothermal zones at the site, it still needs to run injection tests and test the heat exchange areas in addition to drilling a production well in the stimulated zones. After this testing phase, AltaRock Energy intends to build a demonstration power plant, and eventually a utility-scale power plant on-site.

Other groundbreaking milestones in co-production were reached this year as the first coproduction generator became operational at ElectraTherm’s Florida Canyon Mine and other important research projects at University of North Dakota (UND) progressed.

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ElectraTherm’s project at Florida Canyon Mine turns waste heat to power by using co-produced fluids. Low temperature geothermal brine produced in the mining, oil and gas industries is considered a nuisance. However, ElectraTherm’s technology, known as the ‘Green Machine’, uses a cleanable heat exchanger to generate a power output of 75kW. This standardized unit is easy to transport, install, and can produce fuel-free, emission-free power.

UND is in the early stages of research demonstrating the technical and economic feasibility of generating electricity from non-conventional low temperature (150° to 300°F) geothermal resources using binary ORC technology. This research will demonstrate that the technology can be replicated within a wider range of physical parameters including geothermal fluid temperatures, flow rates, and the price of electricity sales. The success of this research will be a significant milestone for co-production and could further prove the technologies economic feasibility and expand the utilization of co-production across the US.

Department of Energy Grant Recipients

The DOE Geothermal Technologies Office (GTO) works to advance the broader deployment of geothermal energy in the United States. The DOE reports in their 2012 Annual Update that through research, development and portfolio of over 200 projects under development in the fiscal year 2012, DOE investments yielded approximately 25 MW of additional nameplate capacity and identified an additional 57 MW of new resources…

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