Photo Attribution: Unknown.

For those of you who routinely visit, don’t worry, we’re not going to devolve into a “humor” site. But perhaps as often as once a quarter, when we see something particularly funny and related to renewable energy, we’ll post it. Today happens to be that day. With all the new turbines being erected, might we see an concurrent increase in Quixotes?

We’ll provide some real analysis in a post later today. In the meantime, have a slight renewable chuckle and please share with your colleagues if you enjoy this. Better yet, have your colleagues subscribe, it’s free. And if you liked this entry, please Stumble It!

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The chart below was taken from the Update on World Geothermal Development issued by the GEA today.



Yesterday the Geothermal Energy Association released the following press release:

For Immediate Release For Information Contact:
April 30, 2007 Karl Gawell 202-454-5264

New Report Shows Geothermal Growth Accelerating Worldwide

Washington DC — The US Geothermal Energy Association (GEA) today released a report assessing the progress in worldwide geothermal development since 2005. The report, titled, Update on World Geothermal Development, concludes, geothermal development is accelerating.

According to the assessment, the number of countries producing power from geothermal resources could increase 120%, from 21 countries in 2000 to as many as 46 countries in 2010. Total geothermal capacity online could increase over 55%, from 8661 MW in 2000 to 13,500 MW or more in 2010. The report states, ìThe trends in both the number of new countries developing geothermal energy and the total of new megawatts of power capacity under development reverse slowdowns in international markets seen in the late 1990s, and approximate trends seen in the more robust 1980s.î

Reports examining the international status of geothermal development were published by the GEA and the International Geothermal Association (IGA) in 2005. While additional detailed reports are expected to be prepared for the next World Geothermal Congress (WGC), this interim report examines the progress in international geothermal power development since 2005, GEA explains. The new Interim Report notes projects under development, major political and/or policy initiative related to development, and plans announced by either governments or in-country parties.

The report notes that ìin numerous casesÖthe success of development in a country is linked to government policies and initiatives. The extent of future geothermal project development depends more upon adequate funding and sustained policy support than
geologic factors.

The report is available on-line at: https://www.geo-energy.org/publications/reports.asp, or you can email: research@geo-energy.org and request a copy.

Highlights of the report:

• The World Bank is expected to approve funding for the ARGeo project in November –a Risk Mitigation Fund of $17.75M USD. This fund is key to the development of potentially thousands of megawatts of new geothermal power in Kenya, Ethiopia, Djibouti, Uganda, Tanzania and Rwanda.

• Australia is aggressively pursuing Hot Dry Rock (HDR) geothermal technology with currently five different projects underway.

• Germany is looking at over 100 sites of geothermal potential, and is looking to have as much as 200 MW online in several years.

• Iceland has doubled its geothermal power capacity since 2005 to meet growing industrial and commercial demand, particularly businesses looking for green energy and stable prices.

• Indonesiaís aggressive geothermal program is regaining steam, and with several new developments now underway is expected to achieve 2000 MW of capacity online by 2010.

• The United States continues to be the world leader in online capacity of geothermal energy and the generation of electric power from geothermal energy. A new wave of geothermal development is underway, propelled by Congress enacting in 2005 a new federal tax incentives (the production tax credit) for geothermal energy. US geothermal power capacity is expected to nearly double in the next few years.

• Armenia, Canada, Chile, Djibouti, Dominica, Greece, Honduras, Hungary, India, Iran, Korea, Nevis, Rwanda, Slovakia, Solomon Islands, St. Lucia, Switzerland, Taiwan, Tanzania, Uganda, Vietnam, and Yemen are all countries now looking at geothermal development that could be producing geothermal power for the first time in the coming years.

Countries Generating Geothermal Power in 2000 (21)

Australia, China, Costa Rica, El Salvador, Ethiopia, France (Guadeloupe), Guatemala, Iceland, Indonesia, Italy, Japan, Kenya, Mexico, New Zealand, Nicaragua, Philippines, Portugal (Azores), Russia, Thailand, Turkey, United States

Countries Adding Power Generation by 2005 (3 for a total of 24)

Austria, Germany, Papua New Guinea

Potential New Countries by 2010 — Based Upon 2007 Interim Survey (22 for potential total of 46)

Armenia, Canada, Chile, Djibouti, Dominica, Greece, Honduras, Hungary, India, Iran, Korea, Nevis, Rwanda, Slovakia, Solomon Islands, St. Lucia, Switzerland, Taiwan, Tanzania, Uganda, Vietnam, Yemen

This is encouraging to see that geothermal resources are being developed globally, though we wish we’d see more momentum on this renewable in the US. With the lack of funding on the R&D side, it’s unlikely large-scale HDR projects will be undertaken in the US anytime in the near future limiting projects to hydrothermal systems in the foreseeable future.

Again, from Renewable Energy Access: (these folks are on a roll today…)

A report prepared by the Massachusetts Institute of Technology (MIT) considers the immense potential from Enhanced Geothermal Systems (EGS), sometimes referred to as Engineered Geothermal Systems. The MIT report, called “The Future of Geothermal Energy – Impact of Enhanced Geothermal Systems (EGS) on the United States in the 21st Century,” was released in January 2007…

…As you probably know, geothermal power plants have been producing electricity for many years. Conventional geothermal power plants make use of underground steam or hot water and are known as “hydrothermal” systems. In order for hydrothermal systems to work, they must have: (1) high enough temperatures; (2) water or steam saturation of the field; and (3) good permeability. Rocks are permeable due to minute fractures and pore spaces between mineral grains.

With EGS technology, heat is extracted by fracturing rocks underground to make the subsurface more permeable. After the fracturing process, water is added to the system through injection wells. Injected water is heated by contact with the rock and returns to the surface through production wells, as in naturally occurring hydrothermal systems. With an EGS system, the three critical factors listed above (temperature, water, and permeability), are not essential. Even if the water isn’t present or the rock structure isn’t sufficiently permeable, the systems can be “engineered” by manually fracturing the rocks and adding water…

…So how can the U.S. become a leader in EGS development? First, the White House should reinstate funding for the Department of Energy’s Geothermal Technologies program, which has been zeroed out for the second year in a row.

Second, the program should be funded at the level needed to advance geothermal technology development. According to the MIT study, a modest investment in EGS over fifteen years — $800 million to $1 billion — would be sufficient to develop EGS potential. That’s roughly what the Bush Administration proposes to spend on fusion energy research in just two years, or less than one-half of the expected cost of one next generation nuclear power plant, as estimated by another MIT study…

Read more…

After seeing the cooperation other governments are providing in the renewable energy space, it would be a good idea for the US to step up to the plate around this and other opportunities.

The first large-scale wave farm, set to be built 10 miles off the coast of Cornwall in South West England, is now one step closer to becoming a reality with approval of GBP 21.5 million [US$42.9 million] in funding. The investment means Wave Hub could be operational as early as summer 2008, subject to final UK Government and EU approval….

…”This is public sector investment at its best — taking the long view, taking risks the private sector can’t take, and making significant investment in the technology we need to tackle climate change. Wave Hub will help make the UK the location of choice for companies developing wave energy, and should see British and overseas businesses making long term investments in Cornwall,” said Matthew Spencer, chief executive of Regen SW, the renewable energy agency for South West England.

Read more…

One of the interesting things in this project is the partnership between the regional development authority (RDA) and private industry. The companies involved are: Ocean Power Technologies Limited, Fred Olsen Limited and WestWave, a consortium of E.On and Ocean Prospect Limited, using the Pelamis technology of Ocean Power Delivery Ltd.

It’s a truly international effort with each company bringing a specialty to the table and the government agency providing the funding and helping the permitting process along. It will be interesting to watch this project as it progresses to see the practicality of such large offshore ocean power farms.

There is news today that Ormat is expected to post a Q1 loss in its earnings report due May 9. Analysts expected to see revenue of $67M and net income of $0.23 per share, but the company indicated that a net loss of $5.5 – $6.5M should be expected instead due to lower revenue on a delayed project and higher than expected maintenance costs at three plants. The company does assert that it will be profitable for 2007 as a whole. As the market is not yet open, the effects of this announcement have not been observed. But, we predict that Ormat will fall to the $35/share range on the logic discussed in an earlier post on this subject valuing the company.

This was a miss Ormat can ill-afford. Q1 of last year, Ormat announced revenue of $60.3M and net income of $0.25 per share. Is this a one-time blip, or is the debt and operations load too heavy? Only time will tell. Expect the valuation to drop toward 18x vs. the rich 40x multiple seen over the past 12 months.

Disclosure: Our principals hold no position in Ormat.