Polaris Geothermal recently reported full results for the year 2007. A detailed press release about the earnings is available here. The high points: The company got a full year of production from the Phase I of its plant in San Jacinto-Tizate, Nicaragua at around 7MWe of average output, the drilling program continued to grow Phase I to its planned 34MW target, and the full 72MW of production appears to be on track for the 2010 timeframe.

The low lights involved a question about the validity of the concession from the Nicaraguan government which was resolved and accelerating losses, the net loss rate for the company increased nearly $2M to $6.7M on the year. Shareholder concerns about Polaris have to revolve around project finance where additional dilution and access to debt financing will present distinct challenges going forward.


Rather than making this a straight financial story, one of the things that struck us about this release was the transparency of the operational aspect of the SJC plant. We applaud Polaris for disclosing this information and believe since it is there, at least at this plant on this project, we can see some of the real cost and benefit of geothermal plant operations.

In 2007 the SJC plant produced 64,778 MWh of power accounting for $3.9M in power sales and $0.7M in carbon credit sales for a grand total of $4.6M of revenue for the project. Plant operations expenses totaled $2.2M yielding a gross margin of $2.4M for the project at an average output of 7.37MW per month. Hidden in these numbers are outages of over a week in June which cost the company approximately 1,000 MWh of sales.

We can reverse engineer that the company is being compensated $10.80 per MWh for carbon credits and $60.20 per MWh for power sales against operations cost of $34 per MWh. As the project grows to 34MW and finally tops out at its planned 72MW, these numbers should improve as the plant operations costs won’t scale in a linear fashion relative to output due to economies of scale (after all, the operations infrastructure is in place now, operations cost will increase but the slope should be pretty flat.)

NCPA, an operator at the Geysers, sees operations costs of about $19 per MWh at 132MW of output. It seems reasonable to believe that Polaris could achieve that level of efficiency over time, but even if the SJC project split the difference and only improved to $26.50/MWh, there would still be interesting impacts on the bottom line.

If nothing changes except capacity and output, at a 34MW and present availability and capacity factor, the company would bring in $13.2M in power sales and $2.4M in carbon credits balanced against $7.5M in plant operations producing a pre-tax, pre-corporate expense run rate net of $8.1M. If the company was able to hit the $26.50/MWh operational improvement, that would result in a $1.7M increase to $9.8M.

At 72MW and current operational levels and assumptions, the project is a real money machine producing $28M in power sales and $5M in carbon credits against operational expense of $15.8M. With numbers this attractive, why isn’t everyone building geothermal plants? The answer lies in the development expense. Effectively, the lifetime cost of production is incurred upfront and then amortized over the lifetime of the project. Therein lies the rub, the development cost per MW of output is in the $3.2M range presently meaning to reach 72MW Polaris will likely have spent $230M developing the plant.

It’s always nice to see real numbers, thank you for disclosing Polaris and we wish you well as you build your SJC project out to scale.

Last night, the Ohio State men’s basketball team won the NIT (National Invitational Tournament) with a win over the University of Massachusetts. I have to admit, March madness hasn’t been the same without watching the Buckeyes this year, but the NIT Title is a nice consolation prize and it’s always great to end the season on a winning note.

As the late Einstein might quip, “it’s all relative.”

I suppose the standard answer would be 186,282 miles per hour. But it turns out that’s only true in a vacuum under pristine conditions. Would it surprise you to know that light has actually been stopped? How about that it’s been clocked at 38mph?

A research team at Harvard clocked light shining through sodium at -272 C at a mere 38mph. That same team managed to “freeze” light in 2006 by shining it through a Bose-Einstein condensate of the element rubidium. By contrast, shining a light through a diamond slows it to around 80,000mph.

It makes sense, but I have to say, until I read it recently in The Book of General Ignorance, it wouldn’t have occurred to me to even think about the relative speed of light traveling through different substances. If we’re ever going to get that light speed jump, I guess people ought to be doing this kind of research. After all, it would really suck traveling through space at 38mph!

US Geothermal, developer and operator of the Raft River project in Idaho, announced their intent to acquire the assets of Empire Geothermal consisting of a 4.8MW (nameplate) binary plant and over 28,000 acres of land for $16.6M. The transaction details are complex, the press release goes into detail about how the deal is structured and the timing of the transaction.

The plant has been in operation since 1987 and consists of 4, 1.2MW binary units and a cooling tower arrangement. The average output of the plant has been in the 3MW range for sometime with the plant producing approximately 35,000 MWh gross and selling ~25,000 MWh in 2006. The difference in the gross and net loads are accounted for in the operation of the binary plant (pumping of fluids primarily for cooling and reinjection.)

The land in question consists of the San Emidio Desert (22k acres plus the plant) and Granite Creek near Gerlach, Nevada. USG estimates they can boost the output of the Empire plant to 10MW with the new technology available since 1987 and potentially develop up to a 40 MW plant across the other prospects.

Honestly, I couldn’t wait to post some new content to push that photo of Bush down the page from my lame April Fools prank. When I wrote the thing, I threw up a little – let’s face it, Bush’s legacy is secure and it’s not good. Setting that aside for the moment, here is the best April Fools prank I saw on the net yesterday (thanks for the tip Connie.)

Super Pii Pii Brothers for Nintendo Wii


Buy your version of Super Pii Pii Brothers at ThinkGeek.

And the worst came from Jonathan Schwartz over at Sun regarding Sun’s new stance on Open Source. It had potential, but simply didn’t make it. Here’s an excerpt:

We want you to give it all back. You couldn’t possibly believe we’d let you keep it, did you?

We specifically request that all free software originally distributed by Sun Microsystems, related to software or microprocessors, including but not limited to source files, binaries, derivatives, extensions, applications, patents, patent applications, copyrights, ideas, thoughts, and derivative thoughts, along with any and all mirrors thereof, be returned immediately.

Well, that’s enough April fooling, back to work.