US Department of Energy offers loan guarantees to geothermal projects

The DOE recently offered loan guarantees for geothermal power projects located in northwestern Nevada and southeastern Oregon, drawing on funds from the American Reinvestment and Recovery Act. Geothermal power plants generally draw on underground reservoirs of hot water or steam, using that energy to drive a turbine, which spins a generator to produce power. For the Nevada plant, DOE has announced a conditional commitment to provide a partial guarantee for a US$ 98.5 million loan to the Nevada Geothermal Power Company (NGP). The company is the developer of Faulkner 1, a 49.5 MW geothermal power project at NGP's Blue Mountain site in northwestern Nevada. DOE is acting as loan guarantor for up to 80% of the US$ 98.5 million loan to NGP for the Blue Mountain project.

Investment in alternative energy has received a real boost as part of the Recovery Act, with clean energy goals being the main driver behind the industry. Beyond this though, North America is making a real effort to become energy self-sufficient. Renewable energies have not just been exploited for commercial power generation though, even the US military is getting in on the action with the US Air Force testing Hornet F18 fighters to run on biofuel, in an attempt to break their reliance on imported fuel. "I am glad to see economic recovery funding being used to put Nevadans to work on a project that will help us achieve energy independence," US Senator Harry Reid said. "Northern Nevada is the Saudi Arabia of geothermal energy."

NGP's Blue Mountain project is the first to access a DOE loan guarantee through the Financial Institution Partnership Program (FIPP), a programme supported by the Recovery Act. In a FIPP financing, long-term lenders apply on behalf of the project sponsors or developers and are required to hold at least 20% of the credit exposure to the project. FIPP was designed to expedite the loan guarantee process for renewable energy generation projects that use commercial technologies, while expanding the capacity for financing US renewable energy projects.

Oregon

For the Oregon plant, DOE has announced an offer of a US$ 102.2 million conditional commitment for a loan guarantee to US Geothermal, Inc. to construct a 22 MW power plant. The project could be the first commercial geothermal power plant in the state, and the electricity generated will be sold to Idaho Power. The project will use an improved technology to extract energy from the geothermal hot water more efficiently. In typical ‘binary-cycle’ geothermal power projects, geothermal hot water is used to vapourise a secondary ("binary") fluid that is then directed through a turbine to generate electricity, after which it is condensed and reused, forming a closed cycle. US Geothermal's supercritical binary geothermal cycle is designed to be more efficient than other systems in extracting heat from the geothermal hot water, thereby increasing the output of the power plant. The technology could help extract more energy from existing sites, while sites that previously would not have been considered for geothermal projects could now be feasible to develop.

The race to be the world leader in alternative technologies is becoming increasingly competitive, with China leading the way in terms of investment. With these projects the US is no doubt hoping to get one step ahead in the Geothermal power industry. "With U.S. Geothermal, Inc., Oregon will be home to another renewable energy company that is not only producing green power to meet current and future energy demands but it is also an innovator within the geothermal industry," said Governor Kulongoski. "We welcome Geothermal, Inc. to Malheur County as a part of eastern Oregon's growing renewable energy economy."

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