* New plant opening at California's Salton Sea
* Geothermal already has 40 pct of state's renewable energy
* Wells have big capital costs but prized for baseload power
By Braden Reddall
SAN FRANCISCO, March 19 The surreal inland lake
known as the Salton Sea, which sits below sea level in a desert
east of San Diego, is mainly known as an ecological disaster
born of failed water engineering schemes and massive fertilizer
But the region is now emerging as a key location for a
venerable but unsung technology that could be crucial to
California's ambitious renewable energy plans: geothermal power.
The first new geothermal plant in the Salton Sea area in two
decades, Hudson Ranch I, fires up this month. At just under 50
megawatts, the $400 million plant built by lender-backed
start-up EnergySource is small, but there is plenty more to
CalEnergy, part of Warren Buffett's MidAmerican Energy
Holdings, is pressing ahead with a 160-megawatt project
known as Black Rock after years of delay. Ormat, an
Israeli-run company with 349 MW of capacity at eight geothermal
plants in California and Nevada, is building nearby. A crucial
power line to San Diego is set to be completed this summer.
Subir Sanyal of GeothermEx, a consultant working for the
banks behind Hudson Ranch, said the Salton Sea region had the
potential for 1,400 MW more on top of the 326 MW produced by 10
existing projects there. One megawatt is roughly equivalent to
the electricity used by 1,000 homes.
Growth will be driven by a California law, signed by
Governor Jerry Brown last year, that will require 33 percent of
all electric power to come from renewable energy sources by
2020, up from just under a fifth now. Solar and wind power may
get all the attention, but geothermal already accounts for
two-fifths of the renewable energy in the state.
The California mandate is giving new life to a technology
plagued by high upfront costs and uneven government support.
Geothermal will be especially important because unlike wind and
solar, it provides the steady "baseload" power that electric
"They want it and if you can show them a credible project,
you can move forward," said Erik Layman, a geothermal consultant
in San Luis Obispo, California. "But capital is king."
HOT AND COLD
If oil and natural gas are "cooked" underground over
millions of years, the essence of geothermal is to capture
immediately the power created by steam from water boiled in
Engineers joke that even advanced geothermal plants are at
the "cutting edge of late 19th Century technology," according to
a recent report from the Geothermal Energy Association, which
argued that this simplicity is its strength.
Finding utility-scale geothermal sources, however, is as
expensive and risky as drilling for oil. Wells cost up to $5
million apiece, getting a plant built can take seven years, and
transmission is often an issue since most geothermal resources
are found in remote areas.
To the chagrin of geothermal promoters, the technology has
not enjoyed the same degree of government support as wind or
solar. The Department of Energy (DoE) provided loan guarantees
for some projects, but critical federal tax credits expire next
year and uncertainty over whether they will be renewed makes
them all but useless for geothermal developers.
"The DoE has gone hot and cold on geothermal," said Margaret
Torn, an adjunct associate professor in energy and resources at
University of California Berkeley who also works at the nearby
Lawrence Berkeley National Laboratory, the former workplace of
DoE head Steven Chu. "Sometimes the funding is there, and
suddenly it's not."
Like all alternative energy technologies, geothermal often
struggles to compete on price with conventional fuels. The
political backlash following the collapse of DoE-backed solar
panel manufacturer Solyndra, and the sudden abundance of cheap
natural gas, have created additional headwinds for all renewable
WHERE'S BIG OIL?
The challenging economics may explain the notable lack of
U.S. geothermal investment by Chevron Corp, which is not
only California's oldest energy company, but also one that often
brags about being the world's top geothermal producer, thanks to
plants in Indonesia and the Philippines.
While acknowledging its long history with geothermal power
in California - mostly deriving from its 2005 merger with Unocal
- Chevron would only say that it sees those two countries on the
other side of the Pacific as "highly prospective and desirable
areas" to expand.
Layman, who once worked for Chevron, described Big Oil
generally as a "big zero" when it comes to U.S. geothermal,
despite the past efforts of Unocal, as well as Phillips
Petroleum and Anadarko Petroleum Corp.
"Drilling risk is their business, and they're not putting a
dime into it, as far as I can tell," Layman said.
Ironically, the world's largest producing geothermal field
sits 100 miles (160 km) north of Chevron's San Francisco Bay
area headquarters. The many plants in an area known as The
Geysers are scattered among picturesque hills near Sonoma
County's Alexander Valley - far better known for wine than
While the natural steam resource here had been running out a
few decades ago, it was replenished by a pipeline that started
bringing waste water from the nearby city of Santa Rosa in 2003.
Calpine Corp, which produces enough energy at The
Geysers to power San Francisco, recently got approval to spend
$700 million on 100 MW of capacity to add to its current 725 MW.
That's still very small in relation to California's peak
demand of more than 50,000 MW. But Karen Douglas, head of plant
siting at the California Energy Commission, said recently that
even without the renewable mandate, geothermal could be a way to
replace the carbon-free power of the state's two nuclear plants,
which she does not expect will be around in the decades to come.
"The more geothermal, the better," Douglas said at an
industry conference in San Francisco.
California will not be alone. Eight states already have
geothermal plants operating, and six more have projects under
development. Hudson Ranch, for one, will send power to Arizona.
The Western Governors Association estimates 13,000 MW of
identified geothermal resources will be developed by 2025, and
the national Energy Information Administration predicts overall
U.S. geothermal production will triple by 2035.
John Carson, chief executive of Alterra Power Corp,
a Vancouver-based company with geothermal projects in Iceland,
Chile as well as Nevada, is undeterred by the recent lack of
U.S. enthusiasm for clean energy development.
"We think that's a pendulum swing to some extent," he said.
"And that that's going to come back our way."