Geothermal Resource Development in Nevada – 2006
Existing efforts and next steps to successful development in the Silver State
Daniel J. Fleischmann
Geothermal Energy Association (GEA)
December 2006
Photo: Mount Rose (10,776’) looms a vertical mile above the Richard Burdette Plant, Steamboat, Nevada. Taken by
Daniel Fleischmann, GEA
Table of Contents
Reviewers and Contributors .........................................................................................1
Preface ...........................................................................................................................2
Introduction...................................................................................................................3
Geothermal resource potential in Nevada ....................................................................4
Efforts towards new geothermal power production ....................................................7
Steps to further development ......................................................................................10
Research....................................................................................................................11
Regulations ...............................................................................................................15
Government incentives...............................................................................................18
Power Market policies...............................................................................................21
Distributed generation projects .................................................................................27
Direct use applications ..............................................................................................30
Web resources with more information for Nevada....................................................42
Endnotes ......................................................................................................................43
Tables
Table 1: Nevada’s Developing Projects – 12/12/2006 .....................................................7
Figures
Figure 1: State borders from the “Preliminary Geothermal Map of the Great Basin,
Western United States: 2005” ..................................................................................4
Figure 2: Nevada Geothermal Resources ........................................................................6
Figure 3: Construction of Industrial Park ......................................................................34
Reviewers and Contributors
David Blackwell (Southern Methodist University), Gordon Bloomquist (Washington State
University), Roger Bowers (Consultant), Tom Box (Calpine), Toni Boyd (Geo-Heat Center –
Oregon Institute of Technology), Peggy Brown (Great Basin Center for Geothermal Energy at the
University of Nevada-Reno), Grey Champneys (Constellation Energy, Soda Lake Geothermal
Power Plant), Andrew Chiasson (Geo-Heat Center), Jim Combs (Geo Hills Associates), Susan
Combs (Nevada Commission on Economic Development), Mark Coolbaugh – (University of
Nevada-Reno), Paul Dankowski (Nevada Department of Wildlife), Colin Duncan (Ormat
Technologies, Inc), Brian Fairbank (Nevada Geothermal Power, Inc.), Curtis Framel (U.S.
Department of Energy), Larry Garside (University of Nevada-Reno), Karl Gawell (Geothermal
Energy Association), Don Gieseke (Empire Energy LLC), Joe Greco (Caithness), Mark Harris
(Public Utilities Commission of Nevada), Roger Hill (Sandia National Laboratory), Gwen
Holdman (Chena Hot Springs), Rich Hoops (Bureau of Land Management – Nevada), Kevin
Jackson (Caithness), Roger Jacobson (Desert Research Institute), Joe Johnson (Sunrise
Sustainable Resources Group), Alyssa Kagel (Geothermal Energy Association), Bernie Karl
(Chena Hot Springs), Pete Konesky (Nevada State Office of Energy), Pat Laney (Idaho National
Laboratory), Mike Lattin (Canyon Construction Co.), Steve Lintz (Moana Swimming Pool), Jim
Lovekin (GeothermEx, Inc), John Lund (Geo-Heat Center – Oregon Institute of Technology),
Susan Lynn (Public Resource Associates), Randy Manion (Western Area Power Administration),
Roy Mink (U.S. Department of Energy), Christy Morris (Nevada Division of Minerals), Robert
Neilson (Idaho National Laboratory), Gerry Nix (National Renewable Energy Lab), Susan Petty
(Black Mountain Technology), Steve Ponder (Sierra Pacific Power), Hezy Ram (Ormat
Technologies, Inc.), Marshall Reed (U.S. Geological Survey), Joel Renner (Idaho National
Laboratory), Subir Sanyal (GeothermEx, Inc), Claude Sapp (Geothermal Rail Industrial
Development, LLC), Allan Sattler (Sandia National Laboratory), Dan Schochet (Ormat
Technologies, Inc.), Walt Snyder (Boise State), F. Mack Shelor (Consultant), Lisa Shevenell
(University of Nevada-Reno), John Snow (Amp Resources), Paul Thomsen (Ormat Technologies,
Inc.), Dennis Trexler (Nevada Geothermal Utility Co.), Charlene Wardlow (Ormat Technologies,
Inc.), Pamela Wilcox (Nevada State Lands Division), Jim Witcher (Witcher & Associates), Colin
Williams (U.S. Geological Survey), Ryan Wiser (Lawrence Berkeley National Laboratory),
Kermit Witherbee (Bureau of Land Management), Tim Young (Sierra Capital Services), Richard
Zehner (University of Nevada-Reno).
1
Preface
Every state with geothermal resources faces different challenges to utilizing those resources to
help meet its energy needs. Nevada has been particularly effective in recent years at taking steps
to increase geothermal development. The purpose of this report is to combine an analysis of
relevant literature and interviews with industry stakeholders in Nevada to determine what is being
done, and what needs to be done to better encourage this development. The interviewees
represent different perspectives, which help construct a balanced and objective understanding of
the status quo. For this report, there are interviews with over 60 leading experts in the geothermal
field in the United States, 40 of which have worked specifically with geothermal resources in
Nevada. The interviewees include geologists, developers, utilities, regulators, consultants, direct
use facility operators, clean energy advocates and university researchers.
This research was complemented by travel to Nevada to visit geothermal direct use and power
facilities and to meet with industry stakeholders. It was also aided by previous study on
geothermal development in Utah, which was completed in May of 2006, and released in June of
2006, and subsequent studies written and released from September through November of 2006 on
Arizona, Idaho, and New Mexico.
Ultimately, after taking into consideration the broad spectrum of opinions, the findings of this
report represent a general consensus (or majority viewpoint) of what these experts believe are the
overall needs to unlocking greater development in Nevada. The help received, whether
informative, critical, or “filling in a gap” of information, was indispensable to the final product.
Thank you to all who contributed time and effort to help bring this report to final publication.
2
Introduction
As one embarks across Nevada’s northern highways, lofty mountains and wide valleys stretch
across miles of undeveloped landscape. In numerous areas, tucked below the mountains, rest
underground reservoirs with super-heated fluid. Nevada has often been described as one of the
most promising states for geothermal resource development. For thousands of years, geothermal
resources have been used in Nevada and the Great Basin for cleansing, cooking, and heating.
However, it wasn’t until 1940 that the state’s first commercial geothermal operation was installed
to heat residential homes in Reno. Exploration for high-temperature resources began in the 1970s
after the first oil crisis. The exploration performed during that time period led to the development
of every existing geothermal power plant in Nevada today. The first came online in 1984 when
small binary units were constructed in Wabuska with a capacity of 1.3 megawatts (MW).
Another 13 geothermal power plants were developed over the next eight years until development
ceased after 1992. It wasn’t until 2005 before another geothermal power plant would come
online. The new plant, developed by Ormat Technologies, Inc., is called the Richard Burdette
Geothermal Facility and has a capacity of 25 MW.
Photo: Richard Burdette Geothermal Facility –
Steamboat Springs, Nevada. Photo by Daniel
Fleischmann
Nevada remains second to only California in
existing geothermal power capacity with 276.4 MW
from its 15 power plants. In 2005, these facilities
generated 1,268.7 gigawatt-hours (GWh) during the
year (with the new Richard Burdette Plant only
generating power in November and December)1.
While the Dixie Valley geothermal facility sells
power to the California utility, Southern California
Edison (SCE), the other 14 plants sell power within Nevada. Roughly 9% of retail sales in the
northern Nevada electric-grid are powered by geothermal plants2.
Nevada will not have to wait long for another geothermal power facility. As of December 12,
2006, there are 37 MW under construction and a total of 24 projects under development that
range from 637 to 751 MW (see Table 1). Additionally, there are five unconfirmed projects in
various stages of development that could add an additional 72-102 MW. Drilling permits for 61
geothermal wells were issued by the Nevada Division of Minerals in 2005 (more than double the
number of permits from 2003 and 2004) and 33 of those wells were actually drilled3.
To understand what is driving the resurgence in development, one should review several key
trends that occurred over the past ten to 15 years. For one thing, Nevada’s population nearly
doubled between 1990 and 2005. Furthermore, between 1993 and 2002, the state’s retail sales for
electric power increased by 57.8% -- which, according to the Energy Information Agency (EIA),
grew at a rate more than 2.7 times faster than the U.S. average during that time4. Nevada, which
by 1970 had a population of half-a million, now has a population of 2.5 million and growing.
In addition to geothermal power plants, there has been renewed interest in using geothermal
resources for distributed generation. This includes a geothermal-powered bio-diesel plant
expected to come online in early 2007. New geothermal direct use projects are also under
3
development including expansions to the Elko District Heating system and geothermal space
heating at a college campus outside of Reno.
Because the geothermal research and development efforts are as advanced in Nevada as anywhere
in the U.S., there are two questions that need to be examined: 1) What more can be done to
harness as much of Nevada’s geothermal resources as possible—including examining how
existing state and federal policies are affecting the industry; and 2) What activities related to
geothermal development are going on in Nevada that could be applied in other states.
This report attempts to answer these questions. It focuses on ongoing efforts and it discusses how
policymakers can address challenges to developing Nevada’s potential and get new projects
online. The main focus of the paper is on power plant production, but the development of direct
use projects is also addressed.
Because of the recent volume of new activity in Nevada, this report is a snapshot of the progress
made by December of 2006. This report is one of several examinations of obstacles and
opportunities for geothermal energy on the state level being conducted by GEA. The final report
will bring together these reports and offer cross-cutting analysis of the barriers and needs
identified in different western states.
Any opinions expressed in this report are those of the author, and do not necessarily reflect the
views of the Department of Energy, the many individuals who contributed to this report, the
Geothermal Energy Association or the members of GEA’s Board of Directors.
Geothermal resource potential in Nevada
Nevada contains the largest portion of the Great Basin (a large section of the Basin and Range
Province that runs throughout the western U.S.) The Great Basin covers the entire state (See
Figure 1), with high-temperature geothermal areas primarily concentrated in northwest and northcentral Nevada north of US Route 6 and west of Elko and Eureka5 -- an area covering roughly
2/3rd of the state: equal in size to the states of Missouri, North Dakota, and Oklahoma (See Figure
2).
Figure 1: State borders from the “Preliminary Geothermal
Map of the Great Basin, Western United States: 2005” –
Source –University of Nevada-Reno:
http://www.geothermal.org/articles/onestopshop.pdf
Researchers say that much of the deep drilling in Nevada has been for the mining of minerals,
particularly gold. While certain parts of the state have been drilled for oil and gas, Nevada is not
a major producer and developers say that this drilling has not been a primary source of
serendipitous geothermal discoveries—although the state has seen a fair share of oil and gas
drilling compared to the Pacific Northwest. Nevada produced an average of 1,000 barrels a day
of oil in 2005 (ranked 26th in the U.S.) and only had four producing natural gas wells by year-end
20046.
4
Nevada’s geothermal resources are the products of both recent magmatic activity and the deep
circulation of high heat flow in underground reservoirs. Both types of geothermal systems can be
used for power production, and both are prevalent in the state. Evidence of recent magmatic
activity is often identified at the surface by the presence of Pleistocene rhyolite domes.
According to the U.S. Department of Energy (USDOE), deep circulation of high heat flow is
caused by the Great Basin pulling apart each year, creating fractures in the earth’s crust which
allows water to circulate in the hot, primarily volcanic rock formations, especially common in
parts of northern Nevada 7.
In January of 2006, the Geothermal Taskforce of the Western Governor’s Association (WGA)
estimated that Nevada could install an additional 1,488 MW of geothermal power economically
by 2015 and estimated potential by 2025 as high as 2,895 MW from identified resource areas 8.
The WGA report complemented the April 2004 Public Interest Energy Research Program (PIER)
report on New Geothermal Site Identification and Qualification, prepared for the California
Energy Commission (CEC) by GeothermEx, Inc. 42 geothermal prospects are estimated in the
WGA report (63 total are mentioned) and 60 prospects are identified in the PIER report (although
the report did not estimate the # of MW).
While these reports assess many different geothermal resource areas in Nevada, geothermal
developers have actually leased several prospects not included in either of these reports because
some discoveries have been held in propriety. For this reason, an effort to evaluate the full
quantity of the work performed on Nevada’s (and other states) geothermal resources was funded
by USDOE and released in 2005 by Geo Hills Associates. In their final report, they cited 2,737
thermal gradient boreholes and 377 slim holes or exploration and/or commercial production wells
in Nevada -- most drilled in the 1970s and early 1980s. They cited 122 separate geothermal
prospects (including those that now have power generation projects). This is well above the 63
total in the WGA and PIER reports. According to the report, of these 122 prospects, only 39 have
been considered “identified prospects”, leaving 83 prospects that need further assessment and
exploration data9.
Researchers agree that this volume of geothermal exploration is accurate. Oil and gas exploration
companies came to Nevada in the 1970s and performed much of the initial exploration drilling for
geothermal resources. At the time, however, these companies were generally looking for big hits,
similar to The Geysers in California. Because few prospects indicated temperatures or conditions
of a similar magnitude, companies did not move ahead on many of these prospects at the time.
In 1978, the U.S. Geological Survey (USGS) released USGS Circular 790. The document
estimated the recoverable geothermal power potential from identified resource areas in Nevada at
2,559 MW, and the total recoverable identified/unidentified resource at roughly 12,800 MW.
2,559 MW is actually lower than the 2006 WGA estimate for identified resources. Researchers
suggest two major reasons for this discrepancy: (1) there were no power facilities in Nevada in
1978, and (2) constrained by engineering and technological limitations, the USGS did not
consider resource areas with temperatures below 302°F (150°C)10. Several years after the report
was released, advanced binary plants were demonstrated feasible in Idaho, and binary power
plants currently produce electricity from temperatures considerably lower, including plants in
Nevada at Empire and Wabuska. Binary technology is utilized at 10 of Nevada’s 15 power
facilities. Since 1978, subsequent estimates for Nevada’s geothermal power potential for
identified resource areas have ranged from 1,283 MW to 3,140 MW, although some of these
studies have chosen select sites while excluding sites with only limited exploration11.
5
Figure 2: Nevada Geothermal Resources – Source: Idaho National Laboratory:
http://geothermal.id.doe.gov/maps/id.pdf
Another limit to the findings of USGS Circular 790 is that the authors were only considering
resources shallower than 9,842 feet (3,000 meters). Presently, geothermal production has been
utilized at depths greater than 3,000 meters in other parts of the world, and researchers contend
that in addition to deep convective resources, conductively heated hydrothermal resources may be
available for production at deep depths throughout the state, depending on fluid, permeability,
and the economics associated with development.
A new USGS assessment of geothermal resources is planned to update resource potential
estimates from USGS Circular 790. This new assessment has been encouraged by researchers
6
throughout the geothermal energy field in part because there is a broad spectrum of opinions
about the size of the available resource and there is a need to update previous estimates using
advanced information technology and field data not available in 1978. Developers say that given
the significant development in Nevada since USGS Circular 790 was released, a new report is
needed to update all the new information and to help guide further exploration and development
planning.
Data shows that the development of Nevada’s geothermal resource base represents a real
opportunity to contribute to Nevada’s energy supply. For instance, in 2004, the University of
Nevada-Las Vegas released population forecasts which estimated Nevada would contain 3.6
million residents by 2024. This would result in an increase of nearly 60% from the energy needs
in 2004 (based on existing consumption figures) representing an additional 17,523 GWh needed
by that time. If the 2,895 MW of potential estimated by WGA is developed by that time, 140% of
that new demand could be met by geothermal energy (not factoring in a decline in energy
intensity through improvements in energy efficiency)12.
Efforts towards new geothermal power production
Completed in November of 2005, the Richard Burdette Plant, just outside of Reno at Steamboat
Springs is adjacent to four other geothermal units, the oldest of which has been operating since
1986. While many consider its construction is a milestone, both as new development and as
technological advancement, it has yet to prove that new geothermal development is economical
outside of producing well fields.
However, just a year after this new plant came online, development efforts in Nevada have begun
in locations without existing power plants. As of December 12th, 2006 four geothermal power
projects had secured a power purchase agreement (PPA) located on resource areas that had never
had a producing well field.
Of the 63 combined resource areas noted in the PIER report and the WGA Geothermal Task
Force Report, 19 sites (including those on producing well-fields and those that are “greenfields”)
have projects under development, with another five sites with proposed projects (aka
unconfirmed) (See Table 1). Not only do these projects represent megawatts, they represent jobs
and economic development; tax revenues and economic multipliers; clean air and sustainable
energy. In addition, as the industry continues to grow, both in the U.S. and worldwide, the
application of efficient next generation plants will outperform older models.
Table 1: Nevada’s Developing Projects – 12/12/2006
Phase I
Aurora, Colado, Lee Allen, New York Canyon, Patua, Salt Wells (Vulcan Power Company
leases) – 210 MW combined – Vulcan Power Company
Black Warrior – 50 MW – Nevada Geothermal Power
Fish Lake Valley – 49-118MW – ESMERELDA ENERGY COMPANY
Grass Valley (Leach Hot Springs) – 20 MW – Ormat Technologies Inc.
Hazen – 20-30 MW – GRID LLC
Pyramid Lake – 25 MW - Pyramid lake Paiute Tribe, Pyramid Lake Energy Project
7
Reese River – 20-30 MW – Cayley Geothermal Corp.
Phase II
Blue Mountain – 24 MW – Phase II – Nevada Geothermal Power
Gerlach – 5-10 MW – Alternative fuel facility under consideration – Gerlach Green Energy, LLC
Pumpernickel – 20-30 MW – Nevada Geothermal Power
Phase III
Blue Mountain – 30 MW – Nevada Geothermal Power
Buffalo Valley – 30 MW – Ormat Technologies, Inc.
Fallon Naval Base (Carson Lake) – 30 MW – US NAVY geothermal program & Ormat
Technologies, Inc.
Galena 3 – 15-25 MW – Ormat Technologies, Inc.
Salt Wells – 26 MW – AMP RESOURCES
Stillwater – 26 MW – AMP RESOURCES (Plant #1)
Phase IV
Desert Peak – 15 MW – Ormat Technologies, Inc.
Galena 2 – 10 MW – Ormat Technologies, Inc.
Steamboat Hills binary – 12 MW – Ormat Technologies, Inc.
Unconfirmed
Hawthorne Army Depot – 10-15 MW
Hot Sulphur Springs (Tuscarora) – GRED III funding – 20 MW near-term in WGA report
Rye Patch 12 MW – Site has existing power plant offline. Needs new well drilling. Rye Patch
received GRED I money.
Silver Peak – 20-30 MW – Sierra Geothermal Power Corp.
Wilson Hot Springs – 10-25 MW – Sierra Geothermal Power Corp.
Total figures
Phase I: 12 projects: 394-483 MW
Phase II: 3 projects: 49-64 MW
Phase III: 6 projects: 157-167 MW
Phase IV: 3 projects: 37 MW
Unconfirmed: 5 projects: 72-102 MW
Total w/out unconfirmed – 24 projects: 637-751 MW
Total w/ unconfirmed – 29 projects: 709-853 MW
Key
• Phase I: Identifying site, secured rights to resource, initial exploration drilling
• Phase II: Drilling and confirmation being done; PPA not secured
• Phase III: Securing PPA and final permits
• Phase IV: Under Construction
Unconfirmed: Proposed projects that may or may not have secured the rights to the resource,
but some exploration has been done on the site
Source: “November 2006 Geothermal Power Production and Development Survey” 11/10/2006 –
Geothermal Energy Association (GEA): http://www.geo-energy.org/publications/reports.asp - Five
additional Phase I projects (with power service contracts) were confirmed by Vulcan Power Company on
12/12/2006
Case studies
There are several projects under development that represent successful examples of how new
development is evolving since the previous boom period. This includes well field expansion at
Steamboat Springs and initial developments at Blue Mountain.
8
Steamboat Springs
The Richard Burdette Plant at Steamboat Springs is the first geothermal power plant to be
completed in Nevada in the 21st Century. Perhaps it was completed first because of its
advantageous attributes. In addition to the benefit of existing plants producing from the well field
and an existing transmission infrastructure, the project also benefited from being located close to
Reno where the power plant could supply local load, and where a steady supply of labor could be
employed.
The plant has five production wells measuring from 4,000 to 6,000 feet (1,220 to 1,829 meters),
producing from temperatures that reach the surface at 310°F (154°C) and are injected back into
the reservoir at 180°F (82°C). The plant is far more efficient than earlier models, both for
producing power and in its mechanical design for operation. Because the units are modular, the
well field can be incrementally expanded over time. In fact, at least three more facilities are
under development in the Steamboat Springs resource, with a potential capacity of up to 47 MW.
The entire Steamboat Springs area is expected to reach a full capacity of approximately 100 MW
once all these projects are completed.
Because the Richard Burdette plant is automated (which will be the case for the other plants
under development at the site) issues can be monitored by computer from anywhere in the world.
While this is not critical in a location near Reno, it is especially helpful for power plants in
remote locations to where transportation is time-consuming and where it is difficult to employ
plant engineers who are willing to live nearby.
Blue Mountain
Blue Mountain is located north of I-80, 22 miles from Winnemucca in Humboldt County. The
geothermal resource was discovered in the early 1990s when groundwater as hot as 190°F (88°C)
was recorded in gold exploration drill holes. In 2002, Nevada Geothermal Power, Inc. drilled a
2,133-foot (650-meter) exploration core hole that recorded a temperature of 292.5ºF 144.7ºC at
2,115 feet (644.5 meters). The well was funded in part by the USDOE through the Geothermal
Resource Exploration and Definition (GRED) program, which facilitated the project to move
forward at a time when financing for a project without major previous exploration was difficult to
secure.
About 60% of the Blue Mountain resource area is located on private land, where the company
owns 100% of the surface and water rights, allowing them to utilize water-cooling for the plant.
The first wells, however, are located on federal land which required acquiring permits from the
Bureau of Land Management (BLM). The site is located 15 miles from the state electrical
transmission grid, running along I-80, although developers say that transmission access is not a
major hurdle for the property based on existing local infrastructure. A production well drilled in
the summer of 2006 measured hotter than anticipated temperature fluids of 361°F (183°C) from
depths between 2,240 feet (683 meters) and 2,815 feet (858 meters). In addition, flow tests from
geochemical analysis of geothermal brine produced from this well predict reservoir temperatures
of up to 460°F (240°C) within 1,600-4,000 feet (500-1,200 meters) of the surface. These
findings, in addition to ownership of a large land position (15 square miles) and ongoing studies
of the area over the past several years, indicate that the resource can continue to be expanded after
the first plant is completed13.
Efforts to drill new wells
Expanding resources requires new production wells and sometimes additional leases. Efforts to
expand the use of producing well fields have been attempted at several geothermal power
9
facilities in the U.S. While some these efforts have been successful, including at Steamboat
Springs in Nevada, and at Coso and the Salton Sea in California, there are others that have been
unsuccessful.
One example of an unsuccessful well is at Soda Lake, near Fallon Nevada. Soda Lake has two
power facilities located less than a half mile apart from each other. In optimal conditions, the
plants have a net-capacity of 12 MW. The first plant has been operating since 1987, and the
second has been operating since 1990. In 2002 an exploration well was drilled that recorded
temperatures of 377°F (191.7°C) at a depth less than 2,000 feet (610 meters). Unfortunately,
issues with the drilling process caused the well to collapse. Developers at Soda Lake say that they
could have prevented the well failure and suggest that the error would not be repeated if they
drilled another well. They contend that the results of the failed well proved that a sizeable
resource is available and could be recovered at the site. However, because the well cost roughly
$4 million, investors have been reluctant to finance another well.
Although failed wells like this are common in the oil and gas industry, geothermal developers
find that failed geothermal wells may be show stoppers. If a well fails to produce, no matter what
the reason, they may not have the capital resources to drill another. However, developers contend
that new drivers and incentives such as the federal production tax credit (PTC) and Nevada’s
Renewable Portfolio Standard (RPS) are helping the industry grow. As new plants are developed
and the industry grows financially, efforts to drill at producing well fields is likely to increase.
Steps to further development
From 1993 to 2004, no new geothermal power facilities were developed in Nevada. Despite the
active development from 1984 through 1992, geothermal projects were affected by changes in
federal and state laws governing utility regulation and utility renewable contracts (see
descriptions of PURPA on page 24), as well as changing economics due to increases in natural
gas supplies and an overall decline in energy prices. During this period, federal incentives
towards alternative energy expired, and funding for federal programs was reduced. However,
when the California energy crisis struck during 2000 and 2001, Nevada residents were deeply
affected when natural gas prices hit new highs. Experts say this event ended a long period of
energy price stability in the state and reaffirmed the need for Nevada policymakers to encourage
investment in domestic renewable alternatives. In fact, it was during 2001 that Nevada first
increased its existing RPS benchmarks.
Today, with new geothermal projects under construction, and well-drilling occurring elsewhere,
Nevada seems to be on the right track. For now, there is a window of opportunity to develop new
geothermal projects, and recent efforts by the federal and state government have helped this
happen. However, despite this initial progress, developers say that they actually face many of the
same barriers today that they did three decades ago for developing projects. This includes the
issues of acquiring a PPA, of acquiring rights to develop geothermal prospects, and of planning
long-term projects with uncertain extensions for federal tax credits. Most agree there is still
plenty of room for improvement from a policy, regulatory, and research perspective, and there is
a general consensus that continued effort and planning is necessary to maintain industry
momentum and to keep this window of opportunity open.
The analysis below identifies six issues of importance to geothermal development, including
research, regulations, government incentives, power market policies, distributed generation
projects, and direct use applications. For each of these issues, the analysis identifies ongoing
10
efforts, remaining barriers, and proposed policy alternatives that a general consensus believes will
continue to foster geothermal resource development for years to come.
Research
Like oil and gas, geothermal resources are buried deep beneath the surface of the earth, and
cannot be recovered without well drilling. However, exploration efforts for geothermal
resources are still considered nascent to those for oil and gas (both in breadth and in technical
experience). Exploration is a time-consuming process that generally involves significant upfront
costs with high risks and uncertainties. Most agree that the efforts of researchers and the state
and federal government can reduce these risks, especially in Nevada, which benefits from a
wealth of information compiled during prior geothermal exploration efforts.
Resource identification
One of the greatest challenges to geothermal development is the characterization of resources.
Geology is not well-defined at many locations with geothermal potential, and developers
generally do not have the time or money to use advanced resource characterization and
identification techniques. These techniques are therefore generally tested by universities and
federally-funded national labs, rather than by developers themselves. In Nevada, this type of
research is performed primarily through the University of Nevada-Reno (UNR) at the Great Basin
Center for Geothermal Energy.
The Great Basin Center was officially established in May of 2000, and has since become a
premier research institute for geothermal study in the U.S. Among its recent activities include
geophysical and geologic analysis, regional and local structural analysis, resource
characterization to understand existing geothermal systems, remote sensing (mapping rocks,
minerals, and thermal features from aircraft and satellites), using multi-gas soil gas detectors to
find concealed structures, satellite imagery, seismic velocity, short-wave and thermal infrared
imagery, geochemistry, and InSAR. Using the Global Positioning System (GPS), methods like
InSAR are used to study earth movement over time to determine if geological features are pulling
part from one another indicating preferential locations for geothermal systems14. In addition, they
have coordinated with the BLM, the USGS, geothermal developers, and other researchers on the
use of Geographic Information Systems (GIS) for assessing potential resource areas based on
geographical data15. Because many geothermal systems are blind (i.e. without apparent surface
manifestations) the applied research at the Great Basin Center can be used to identify them.
The work done at the Great Basin Center has helped to identify a queue of new resource
prospects needing more exploration and has already led to new projects that are under lease and
are expected to move ahead to exploration drilling. They currently maintain a database of more
than 200 geothermal resource areas in the state, which they have updated over the past few years
to include the latest information on well drilling, existing facilities, and geophysical and
geochemical studies. Researchers say that they would like to update and even expand this
database, but the necessary time and funding are not currently available. While their work
primarily focuses on resources in Nevada’s Great Basin, most agree their research is applicable
for exploration efforts throughout the western U.S.
Federal efforts
The federal government has played a significant role in Nevada’s geothermal development
throughout the past three decades, through funding from the USDOE. Programs in the late-1970s
and the early 1980s included cost-shared confirmation drilling and loan guarantees. Studies of
promising geothermal prospects led to new exploration wells, and new projects. During the
11
1990s, as energy prices declined, so did efforts towards exploration and development. However,
in 1999, the USDOE initiated the GRED program. There were three funding cycles over the next
five years to study geothermal resources, and cost-share geochemical and geophysical work, corehole drilling, and exploration well drilling. Developers of geothermal prospects in ten separate
resource areas in Nevada received assistance from the GRED program and six of them now have
projects under development, while projects have been proposed at two of the other locations.
In addition to GRED, USDOE has also helped fund geothermal research, exploration, and
development over the past few years through the Great Basin Center and through additional
projects, such exploration work at Pyramid Lake. Developers say that the efforts of USDOE have
mitigated many risks and uncertainties that they would be unlikely to take on themselves. Most
agree that the research funded by USDOE has been essential to the learning process and has
helped correct mistakes. For example, according to several interviewees, initial geothermal
development and exploration efforts during the 1970s and early 1980s were unsuccessful when
individuals new to geothermal were put in charge of drilling. However, these early efforts have at
least helped correct past mistakes. Continued government involvement has protected against
further mistakes by employing experienced researchers to help on new projects and by utilizing
the most advanced methods to analyze resource areas.
State efforts
On the state level, there are no specific geothermal programs funded by state dollars. While the
Public Utilities Commission of Nevada (Nevada PUC) regulates the state RPS, and incentives and
rate flexibility mechanisms are built into the system, the state has no grant or loan program for
geothermal development. The geothermal program at UNR receives some general state funding
for staff, but not for specific research projects. This leaves the industry and the federal
government to provide funding for these activities. Geothermal permitting activities at the
Nevada Commission on Mineral Resources-Division of Minerals (NDOM) are funded by fees on
oil, gas, and geothermal drilling. Geothermal programs at the State Energy Office are funded
partly from royalties from geothermal power plants and partly from the USDOE. Federal funding
for state energy offices has been reduced 25% in recent stop-gap funding bills, leaving Nevada’s
government with less ability to expand renewable energy programs at the state level.
Next steps
Because Nevada has excellent geothermal resources and the industry has a track record for
development, most agree that there are ample opportunities in Nevada for the federal government
to test new applications and make a return on its investment. For instance, there is a general
agreement that the Great Basin Center has an opportunity to become a model geothermal research
institution in the U.S. While the expansion of existing programs at colleges and universities
across the western U.S. are important, researchers say that what makes the Great Basin Center
unique is that it provides the opportunity for people from all over the world to get hands-on
experience with projects undergoing exploration and development. Many engineers who work on
geothermal projects today were trained at schools in other parts of the world, such as Iceland,
Italy, and New Zealand and industry stakeholders in the U.S. say it is time for more of them to be
trained at American institutions.
Another reason for the support of this institution is that many experienced geothermal
professionals are nearing retirement and it is crucial that these professionals share their
knowledge with the next generation. The Great Basin Center program works closely with
industry and provides an opportunity for students to work on actual projects. While there is a
general consensus that the Great Basin Center should be expanded, the reliance on federal
funding is cause for concern. In order to expand existing programs, it may require greater pursuit
12
of private endowments or other sources of funding. While industry has stepped up to provide
funds for the Great Basin Center, clean energy advocates suggest that since geothermal energy is
a clean renewable energy source, other sources of funding may be available from nongovernmental organizations that seek to promote alternative energy development.
Next steps for federal programs
Most agree that the conditions are right for new government investment in Nevada’s geothermal
resources—given rising energy prices and increased investment and policy support for alternative
energy technologies. One issue that has come up repeatedly is the importance of the USDOE
Geothermal Technologies program in funding exploration, assisting new development, and
fostering technological breakthroughs. High energy prices are fueling the demand for alternative
energy, and planned geothermal power projects currently under development could represent an
increase of over 67% in total U.S. geothermal energy capacity in the next five years alone16.
However, despite the need for greater government support when the industry is re-emerging,
funding for the program has declined significantly in recent years. In fact, the FY 2006
appropriation for the USDOE Geothermal Technologies program is 16% lower than the average
budget from 1990-1999, even without accounting for inflation17. Of more pressing concern, at
the time of this writing FY 2007 funding for the program is still uncertain, and might possibly be
zeroed out.
If the program remains, and is expanded, smaller developers say that loan guarantees, in
particular, are helpful at getting projects off the ground. According to a report done by
SENTECH, Inc. in March of 2005, the federal loan guarantee program that ran in the 1970s and
early 1980s had a corresponding subsidy rate of approximately 3.6 MW per million dollars of
expenditure. If this subsidy rate was held constant, it would translate to $1 billion spent (at that
time) leading to 3,600 MW of baseload geothermal power -- or 150% of the total installed
geothermal capacity in the U.S. today18.
Cost-shared drilling is cited as one of the most effective government programs because it helps
reduce risks. Developers say that getting the first well drilled is among their greatest challenges.
Developers say they lack the capital resources to pursue a project without confidence that the
resource can be developed economically. According to an August 2005 report by the GEA,
exploration (including geological studies, drilling, and confirmation) is typically up to 1/3rd of the
overall costs of a geothermal project. Drilling can be up to 1/4th of the overall costs, considering
the cost of a geothermal exploration well ranges from $1 million to $9 million, depending on the
depth, the type of material being used, and the current market for drilling products. According to
the report, an average well “would probably be in the range of $2-5 million”19 however, recent
spikes in demand for steel and drilling equipment have sent those costs soaring in the past year
(particularly drilling rigs given the high prices for oil and gas). In addition, strains on labor have
affected the market, especially in remote locations.
Improving drilling and extraction technologies
Researchers assert that the federal government can use Nevada’s geothermal resources as a
testing ground for technologies that can expand resource production. For example, many deep
wells drilled in Nevada have measured intermediate-to high temperatures that came up as “dry
holes”. The heat from these resources is unable to be extracted through conventional
hydrothermal wells because they lack available fluid and/or permeability. In these cases, the
USDOE has been researching alternative heat extraction methods such as Enhanced Geothermal
Systems (EGS) and Hot Dry Rock. EGS is a process where geothermal aquifers with low
permeability can be stimulated to create a conductive fracture network where the reservoir
operates like a conventional hydrothermal reservoir. It was proven feasible by a demonstration
13
project in Soultz-sous-Forêts, France. This process can serve to extend the margins of existing
geothermal systems or create entirely new ones20. Hot Dry Rock targets a heat source that lacks
both permeability and fluid, and was proven technically feasible through a demonstration project
at Fenton Hill (on the western rim of the Valles Caldera in New Mexico). These methods, while
more expensive than those used for conventional geothermal power projects, have potential for
future application in the U.S. and Nevada21.
Just because developers drill a “dry hole” does not mean that the resource is unavailable or
extraction methods like EGS or Hot Dry Rock are necessary. Often times, a resource is available,
but the drilling was not precise. As discussed above, drilling is one of the greatest challenges to
developing a geothermal project. Researchers assert that advancements in drilling technology
need to be developed and tested that can improve the rate of success in reaching productive
geothermal zones. The challenge, according to developers, is drilling within a precise vicinity of
the targeted resource, say within a quarter of a mile, to be able to reduce the risk of drilling dry
holes. Generally, the techniques used for oil and gas drilling, such as seismic surveys, are not as
effective for geothermal drilling, because geothermal resources typically form in areas of abrupt
changes in geology (such as faults) that may confuse the seismic signal. For this reason,
developers need assistance combining traditional methods such as temperature gradient drilling
with advanced methods such as remote sensing. Although researchers say that improvements in
drilling technology will be made as the industry grows, most agree that research and development
funding from the federal government is essential to help solve this dilemma.
Next steps for state programs
There is a general consensus that the state government has improved coordination with the
geothermal industry as new development has picked up over recent years. However, there is still
concern that the state could do more to reduce the reliance on federal funding for geothermal
research. While most agree the Nevada state government does not have the capability to fund a
large geothermal program, like the Geothermal Resources Development Account (GRDA) and
PIER in California, the contribution of geothermal resource development to the state energy mix
warrants additional support. In fact, the establishment of a state renewable energy office is under
consideration, funded by a tax such as a “public benefit” or “system benefit” fund, or through
another revenue stream.
Outreach
Among government programs, the least expensive is outreach. Outreach requires no drilling, no
leases, and no transmission lines. Both the state and federal government can be involved, as well
as industry. Outreach allows more people to be involved in educating the public, policymakers,
regulators, and utility companies about the viability and benefits of geothermal energy. Outreach
may include state agencies working with non-profit organizations and encouraging volunteer
grassroots efforts whose purpose is to educate the public about geothermal resource development
(and energy alternatives in general). According to clean energy advocates, there are numerous
innovative ways to approach this, including the development of internet resources, holding public
awareness events, encouraging youth projects in public schools, and encouraging youth field trips
to geothermal power and direct use facilities.
Federal outreach efforts to promote geothermal development in Nevada have been supported by
the GeoPowering the West (GPW) program. Because of the industry presence in Nevada, and the
active relationship between the USDOE, the Great Basin Center, the State Energy Office, and the
utilities, there is no official “state working group” in Nevada. However, GPW has participated in
outreach events and regulatory meetings, they have brought together investors, they have reached
out to tribal groups, and they have held an all-states GPW meeting in Reno in 2004. The Great
14
Basin Center also hosts workshops (sponsored by the USDOE Technologies Program) as part of
their outreach mission, the most recent of which took place December 4-5, 2006, to discuss the
industry’s exploration needs.
Regulations
Approximately 83% of the surface land and 83.5% of the mineral acreage in Nevada is managed
by the federal government. 67% of the surface land is managed by the BLM, and the rest is
primarily military-owned or managed by the U.S. Forest Service (USFS). Regulations play a
large part in the acquisition of geothermal resources. Indeed, they are one of the greatest
challenges to geothermal development. Many of the best geothermal prospects identified in
Nevada located on private land have been developed, especially those along the I-80 corridor.
Because of this, developing geothermal resources in Nevada has required, and will continue to
require, working with federal agencies, particularly the BLM.
Private lands in Nevada predominate near cities (like Las Vegas and Reno) or else are scattered in
small areas. State lands make up less than 1% of total state acreage, and predominate in state
wildlife refuges and in Carson City where the state capital offices reside. The State of Nevada’s
water appropriation process applies to all land in Nevada, and involves tribal lands in the process.
They require geothermal power developments to re-inject the geothermal fluid back into the
aquifer. If a plant consumes ground or surface water, such as in a water-cooling tower, they must
have water appropriations for this loss. State regulations define a “geothermal resource” as “the
natural heat of the earth and the energy associated with that natural heat, pressure and all
dissolved or entrained minerals that may be obtained from the medium used to transfer that heat,
but excluding hydrocarbons and helium.” Geothermal resources in Nevada belong to the owner of
the surface property (which is the federal government if the resource is on federal land or mineral
acreage). An industrial well used to produce power requires a drilling permit from the NDOM22.
Tribal lands
Tribal lands in Nevada make up roughly 1.7% of its total mineral and surface acreage. Of the 22
federally recognized tribes that have land in Nevada, three specific reservations are of particular
interest for geothermal development opportunities23.
First, extensive exploration has been performed and development is likely within the Pyramid
Lake Paiute Reservation located 50 miles north of Reno (See Table 1).
Second, interest in geothermal exploration has been expressed in the Walker River Paiute
Reservation; a ~530 square mile (339 thousand acre) reservation ~75-80 miles southeast of Reno,
to the north of Walker Lake24. As of yet, no development has occurred, although there has been
active discussions between developers and the tribe about geothermal development opportunities.
Third, the Fallon Reservation and Colony of the Paiute-Shoshone tribe is also an area of interest.
While smaller than the Pyramid Lake and Walker River reservations, the Fallon Reservation and
Colony abuts existing geothermal power facilities at Stillwater. The Reservation has used solar
energy, and developers say that there is potential within the reservation for geothermal
development.
Geothermal development on tribal land depends on both the project and the tribe. Those who
have worked with these tribes say that their leaders are generally open to development if it
benefits their community and does not disturb environmentally sensitive and/or culturally
important landmarks. As part of the Title V provisions in the Energy Policy Act of 2005
15
(EPAct), the USDOE has begun soliciting applications from federally-recognized tribes in order
to “conduct feasibility studies to determine the viability of economically sustainable renewable
energy installations” including geothermal. The available funding is $4 million, with an award
ceiling for individual projects at $150 thousand. Solicitations are due in February of 200725.
Federal lands
Acquiring federal lands has been a challenging prospect for developers. For one thing, once a
federal lease is issued, the developer of a geothermal project is not only subject to complying
with federal laws and regulations, but is also subject to state and local regulations. These include
the regulatory requirements necessary to obtain drilling permits, construction permits,
commercial use permits, right-of-way grants for roads, pipelines, transmission lines, and
communication sites, along with accompanying environmental reviews. Geophysical exploration
may take place without a lease, however exploration well drilling prior to obtaining a lease could
result in a substantial risk if the lease is not issued. Only two of Nevada’s 15 power plants were
constructed on federal land. However, because of their proximity to federal land, 13 of them use
federal mineral resources, or built transmission on federal land, thus requiring federal leases or
permits.
Leasing
Nevada has about two-thirds of the total federal acreage leased for geothermal development in the
U.S. For several years, the volume of federal lease applications had created a significant backlog
which stifled new development. After additional funds were appropriated to BLM to conduct the
necessary National Environmental Policy Act (NEPA) documentation, they have been able to
significantly reduce the backlog. For example during the period from 1997 through 2001, BLM
Nevada issued only 20 leases that included almost 30,000 acres, while in the five year period
from 2002 through 2006, BLM issued 278 leases that include over 455,000 acres26.
While most agree that removing this backlog will allow new projects to move forward, the
provisions of EPAct did not authorize transition rules, thereby restricting BLM from accepting
nominations for competitive leasing until new regulations are implemented to conduct
competitive leasing. There is concern by developers and researchers that this delay will impact
new exploration in promising areas on federal lands that currently do not have a lease, although
the BLM and the USFS are continuing to process lease applications that were filed prior to the
enactment of EPAct.
Environmental reviews
There is no denial by developers that environmental reviews and regulations are important to
ensure protection of secure water resources and for quality control to ensure drilling and
construction has a limited impact on the local environment. However, the primary regulatory
concern for developers is not the requirements themselves, rather the lack of adequate manpower
to process them. In addition, most agree that it is critical that adequate funding is provided to
enable these agencies to perform environmental reviews in accordance with NEPA.
Ongoing efforts
In EPAct, several actions were taken to facilitate geothermal development on federal lands. In
addition to providing funding to help BLM process backlogs, the law increases rental fees over
time to discourage speculation, and requires all future USFS and BLM resource management
plans to consider geothermal leasing and development in areas with high geothermal resource
potential. A policy change in EPAct led to a Memorandum of Understanding (MOU) between
the USFS and BLM that affects developments on both types of land, mandating that geothermal
leases be executed in a timely manner. Leasing can be extremely complicated on USFS land.
16
However, unlike California, Idaho, and the Pacific Northwest, where a number of the best
geothermal prospects are located on USFS land, most of Nevada’s promising resources on federal
land are managed by the BLM. Therefore, regulatory issues on USFS lands have not affected
geothermal development in the state.
One change that has begun to occur is new regulations on the royalty structure for power plants
that send 25% to county governments along with, and in addition to, a 50% federal royalty sent to
the state and the other 25% sent to the federal government27. Several interviewees touted this
policy because they believe it will be an effective incentive for communities to pursue geothermal
projects to benefit economic development. One example of this is in Churchill County where five
geothermal power facilities are currently operating with another two under development28. At the
time of this writing, the County, which is about 90% federal lands, has already received several
hundred thousand dollars in royalty payments from existing facilities and is planning to use the
money for its schools and roads. Developers say that while the impact on Churchill County is
beneficial, it may have even more of an impact on counties with tinier populations. For example,
a handful of power project have been proposed in Esmeralda County and Mineral County, which
have a combined population of just over 5,500 (fewer than one person per square mile)29.
What still needs to be done
Nevada has been more active than other states at processing geothermal leases and permits, and
they have accomplished a great deal over the past few years. However, most agree that to fully
absorb all of the leasing and permitting for geothermal resources in Nevada, the BLM needs
adequate funding and dedicated staff to process regulations and to ensure that developers do not
have to wait too long until the next lease sale. For instance, even with new federal regulations
requiring the BLM and USFS to process lease applications, funding for this activity is still far
behind what was appropriated to these agencies during the 1980s (even without accounting for
inflation). While funding naturally declined during the 1990s when there was less activity, most
agree that the recent surge in lease applications mirrors the conditions of the early 1980s and
justifies a similar appropriation.
There is a general agreement that if policymakers wish to expand geothermal development,
funding for federal agencies that issue geothermal leases should be a top policy priority.
Developers assert that these additional funds should prioritize projects nearing completion that
are struggling to meet the deadline to qualify for the PTC (particularly if it is extended for only
two to three years in the next legislative session).
A May 2006 report by the Government Accountability Office (GAO) discussed the challenges of
lease backlogs and delays in the federal permitting process as a principal barrier to geothermal
development. Among the issues they discussed are the challenge of processing leases when, as
some BLM officials noted for the report, “some developers have reported difficulty in
consolidating the various geothermal leases into an economically viable project that can recover
the costs of the power plant and transmission line. These developers, according to these BLM
officials, say that speculators often lease geothermal resources not for development purposes but
rather to resell the leases at a significant profit, running up the cost of the project.”30 Several
interviewees say that mitigating this issue requires a “carrot and stick” approach. For example,
most agree there is a need to encourage development, while allowing adequate time for
exploration. At the same time, owners must also be discouraged from sitting on property without
performing any geophysical or exploration work. Thus, many believe that effective program
would at the very least require meeting specific (reasonable) benchmarks for progress.
17
For environmental reviews, there is concern about how they will be handled in the future.
Currently, most projects with federal leases issued have gone through an environmental
assessment (EA). However, there is ongoing consideration to develop a Programmatic
Environmental Impact Statement (PEIS) process that would cover all BLM and USFS lands in the
Pacific Northwest and the Great Basin in order to conduct these efforts in a broader context
(similar to the effort performed for wind development, except that the wind PEIS was only
conducted for resources on BLM lands)31. Although all projects with federal leases must go
through NEPA analysis, they have not been generally required to go through an EIS. In many
cases a less expensive EA has been sufficient, and an EA can be completed in much less time.
Developers expect that the PEIS should not impact ongoing geothermal projects. Further, they
might be discouraged by a PEIS review if they believe the process will mean that leases are not
processed in a timely manner. Furthermore, developers say that oil and gas development has a
simple, standardized approach, and a lengthy NEPA review process would put geothermal at a
disadvantage compared to the oil and gas industry (although the oil and gas industry is actually
smaller in Nevada than the geothermal industry, with fewer than 10 oil and gas drilling permits
issued in the state in 2005). Regulators assert that projects already undergoing NEPA analysis
would not be affected by the new regulations, nor would projects with lease applications still
under review. Furthermore, regulators say that the PEIS effort has secure funding due to the
changes in the law that earmarks royalty funds for the BLM. This should allow BLM’s effort to
be designed to create certainty and encourage investment by effectively streamlining the process
to support new projects.
Overall, most agree that the progress made by the BLM and the cooperation with the state on
geothermal leasing and permitting has been the most successful in the country. California still
faces serious backlogs, and development in the Pacific Northwest has faced more serious
roadblocks, especially on USFS land. In Nevada, however, there is a general consensus that with
continued support from the federal and state government, many geothermal prospects on federal
land can be exploited for viable power projects—while continuing to mitigate environmental
consequences—without significant delays.
Government incentives
In 2005, according to the EIA, of the 11 western states in the continental U.S. from the Rocky
Mountains to the West Coast, retail energy prices in Nevada were second highest behind
California 32. As a result, geothermal projects are more competitive in Nevada than in other states
with geothermal resource potential. Most agree that because geothermal prices are generally
stable in the long-term, the impetus to develop these resources should be a priority for legislators.
Clean energy advocates cite the environmental benefits of geothermal resources, while regulators
note that the potential for carbon taxes or carbon trading credits will shift the economics towards
renewable projects. This has already occurred in California where a cap and trade system for
carbon emissions—the first in the country—was establish in September of 2006.
When geothermal power projects were initially developed in Nevada during the 1980s,
geothermal developers benefited from the participation of oil and gas companies who had
performed initial drilling. Most of these oil and gas companies entered the geothermal field
looking to diversify as a hedge against reliance on foreign oil markets after the oil crises of the
previous decade. These companies had large amounts of capital on hand to finance the drilling.
Environmental aspects weren’t a large incentive, nor were the utilities looking to purchase
geothermal energy. Climate change was a non-issue. At that time, the emphasis was on
economies of scale. Small power plants were not considered good investments. Only recently
18
has there been a greater emphasis on issues such as climate change and RPS mandates. Today,
while the impetus for development has changed, the oil and gas industry has only recently
engaged geothermal development opportunities, and the majority of the new projects are being
undertaken by smaller companies without nearly as much capital as the oil and gas companies.
While costs and risks limit the availability of geothermal resources in the marketplace, most agree
that government incentives can help turn viable resources into power-producing facilities—that
is, if government and university research programs can improve technology and methods of
resource identification. In the past, government incentives have bridged the gap between
development potential and actual development. Given rising energy costs, there is a general
agreement that adequate incentives could be applied today and produce a similar result.
Federal incentives
The most important incentive for geothermal developers is the PTC. In EPAct, the PTC was
extended until January 1, 2008, providing a subsidy of 1.9¢ per kilowatt-hour (kWh) on
geothermal power sales for the first 10 years of projects online by that date, and in December of
2006, the PTC was subsequently extended until January 1st, 2009. The Richard Burdette plant
that came online in 2005 is the first geothermal power plant to take advantage of the PTC and
there are at least six more power facilities expected to be built in Nevada by the time the credit
expires33. Furthermore, based on the volume of new projects under development in Nevada, it is
clear that the initial inclusion of geothermal power plants in the PTC in 2004 immediately
enabled projects to move forward with drilling and construction. However, developers say that
the majority of proposed projects in Nevada will only be cost-competitive if the PTC is extended
beyond January 1st 2009 to encompass the average 3-5 years required for development of a
geothermal project.
The option of a long-term extension of the PTC is not the only solution of the table. Some
developers who have (or are planning) a project in Nevada suggest the possibility of changing the
definition of the placed-in-service date for the PTC. For instance, the current credit says that
projects operating before January 1st, 2009 would get the PTC for 10 years, and projects built
afterwards would get nothing (if the PTC is not extended by that time). In the alternative
scenario, a plant would need only to start construction by the placed-in-service date. If they miss
the date, then the length of the credit would be reduced. This policy change would stop the
“placed-in-service cliff” that occurs when the PTC expires; making the cost of power more
predictable. This would mean, under the current PTC deadline, if a plant is under construction by
December 31st, 2008, and comes online in 2009, it gets the credit for nine years; online in 2010, it
gets credit for eight years; online in 2011, it gets the credit for seven years, etc.
Existing facilities such as Soda Lake 2 (pictured) just north
of Fallon, factor into RPS requirements. Both Soda Lake 1
and 2 sell power to Sierra Pacific Power customers. Photo by
Daniel Fleischmann
Renewable Portfolio Standard (RPS)
Most agree the RPS is a critical policy for geothermal
development in Nevada. While not technically an
incentive, developers say it helps create a market for
geothermal power by explicitly encouraging utilities to
sign PPAs for geothermal power plants. The Nevada PUC manages the RPS and requires the
investor-owned utilities (IOUs) to supply a “minimum percentage of the total electricity they sell
[from] renewable-energy resources”34. The RPS was initially passed in 1997 by the state
19
legislature, and in 2001 was revised to require minimum renewable portfolios to increase by 2%
every 2 years, culminating in 15% by 2013. In 2005, the standard was revised again to 20% by
2015, increasing 3% every two years. Nevada’s potential for geothermal development will likely
enable it to be the largest source of these increases, although the RPS requires that 5% of the
portfolio to come from either solar power plants or residential solar energy.
Hydroelectric power is only included among the eligible renewable power technologies if the
hydro facility is less than 30 MW. All of the renewable power generated must serve Nevada
customers. Although the power is not required to be built in Nevada, developers say that the
majority of new renewable load will be generated in-state35. It is uncertain how much additional
generation of renewable power will be required to reach 20% by 2015. With the population
expected to swell by nearly 60% by 2024 (as noted above) a 30% increase in energy demand by
2015 would require 7,460 GWh from renewables to be generated into Nevada by its IOUs.
However, even if half of what the WGA Geothermal Taskforce report identified as economical by
that time (1,488 MW) is added to existing capacity, geothermal energy would generate over
100% of the required generation36. While 5% of the RPS is required to be met by solar power,
utilities are allowed to meet up to ¼ of their RPS requirements (or 5% of their total requirements
by 2015) through demand-side management (i.e. energy conservation or energy efficiency).
Based on the GEA Survey of new projects under development, if 5% of the RPS was met by solar
power and 5% through demand-side management, geothermal power plants could meet the other
10% even if geothermal projects currently in Phases II through IV stages of development (see
Table I) were developed by 201537.
There is a general consensus that the RPS is working well in its existing form. However, because
RPS requirements increase incrementally, time will tell just how effective the policy becomes.
Despite early praise, several interviewees still raise issues with some of the ways in which the
RPS is structured. For example, the penalties for non-compliance have not yet been clarified or
tested. In addition, while the RPS is based on generation and not capacity, some are critical that
the RPS places no specific priority on peak load generation to ensure that renewables are
producing power when needed. Some of the cause for this concern results from the recent
experience in California where its capacity reached all-time records exceeding 50,000 MW
during a summer heat wave in 2006, which tested the limits of the electric grid and demonstrated
the need for peak load sources to be able to perform in such conditions. Ultimately, most agree
that as long as there is continued coordination between the state government, utilities, developers,
and the Nevada PUC to meet the RPS benchmarks, these concerns can be resolved.
State incentives
Beyond the RPS, there is a general consensus that the Nevada legislature has not provided
significant enough incentives to lower the cost of geothermal projects. The most significant tax
incentive for renewable energy projects in Nevada is a property tax exemption which exempts
“any value added by a qualified renewable energy system from the assessed value of any
residential, commercial or industrial building for property tax purposes” including a geothermal
power plant38.
Another, smaller, incentive is a Renewable Energy Producers Property Tax Abatement. The
incentive, as written, allows “new or expanded businesses in Nevada” to apply to the Nevada
Commission on Economic Development (NCED) to qualify for “a 10-year, 50% property tax
abatement for real and personal property used to generate electricity from renewable energy
resources or for a facility for the production of an energy storage device.” The facility must have
a minimum capacity of 10 kW, and geothermal power plants are eligible. To qualify, a project
must meet certain other requirements. For example, projects must provide a minimum number of
20
jobs: 15 for rural counties and 75 for urban communities, including the Las Vegas-Henderson
area and the Carson-City-Reno-Sparks area. The property tax abatement is only part of the
NCED’s tax abatement program that also includes “green” buildings. Clean energy advocates
assert that a limitation of this program is that the tax abatements only target revenue to county
governments. Therefore, the state does not face the tax burden for this policy. Since it was
initiated in 1997, three projects have been granted the abatement and only two have taken
advantage (both solar projects)39.
According to clean energy advocates, one reason the incentives provided by the state of Nevada
are relatively modest is because of the political disposition toward low taxation on the state level.
Because of its low sales tax and the fact that there is no state income tax, there is a limit on the
sources of revenue to offset any proposed tax incentives. Several interviewees doing business in
the state suggest that the lack of incentives compared with California, Oregon, and Washington
State, lead investors to want to develop renewable projects in those states rather than Nevada.
Developers assert that the PTC and the implementation of regulations affecting development on
federal lands remain their most important issues. However, because geothermal plays a primary
role in meeting the state RPS, developers agree that the state should do what it can to ensure that
state incentives for development are strengthened. State action could include a state tax credit, a
subsidy, or a loan guarantee to reduce a developer’s risk. Most agree that whatever incentives
may be passed, more is needed on the state level to avoid any setbacks that could hinder the
ability of utilities to meet the goals set by the RPS. The more immediately the incentives are
passed, the more helpful they will be.
Advocacy
Due to the size and the presence of the geothermal industry in Nevada, the state government and
the geothermal industry have been engaged at the policy level. The RPS has been a big driver for
the geothermal industry. The BLM has worked with the NDOM on removing lease backlogs and
more projects have begun to move forward.
Independent organizations such as the Sunrise Sustainable Resources Group and Western
Resource Advocates have promoted geothermal resource development in the state and have
testified in front of the state legislature, particularly regarding the RPS. Geothermal developers in
the state have also worked with the legislature and clean energy advocates on energy policy
issues. Developers have worked closely on the local level with county governments on tax issues
and amending land use plans to accommodate geothermal resource development. However, with
possible cuts to the USDOE Geothermal Technologies program and with the PTC only assured
through 2008, clean energy advocates stress that advocacy efforts at the state level have become
more critical than ever.
Power Market policies
The Great Basin is a wide open landscape, sparsely populated, and particularly remote. While
Nevada’s power market has been able to incorporate coal plants and geothermal plants in remote
locations to serve its energy needs, the state still imports over half of its energy from other states.
That includes the Hoover Dam generation plant on the Arizona/Nevada border, although Nevada
customers only receive 235 MW of generation capacity from that facility. Nevada receives a
large supply of imported natural gas from Canada and the Rocky Mountain states, which are used
to power in-state facilities40.
21
Due to its rising population and energy demand, Nevada utilities have had to continually increase
their generation capacity. There is considerable pressure to meet load growth through new coal
plants. Coal is already the primary source of fuel for power plants in Nevada, followed by natural
gas and hydroelectric power. Considering near-term costs, utilities say that coal remains a
preferred base-load alternative. However, maintaining adequate coal supply is difficult because
all of Nevada’s coal is imported from out-of-state. In addition, there is concern over the use of
water required for the cooling towers of new coal plants. Coal plants typically use far more water
per equivalent generation than a geothermal power plant that utilizes water-cooling. Geothermal
plants often utilize air-cooling. Although this practice may reduce efficiency it avoids water uses
restrictions in some areas. Some geothermal developers have considered hybrid systems that use
water-cooling in the summer and air-cooling in colder months. Air-cooling, or a hybrid system, is
often not a viable option for coal plants, especially for large facilities, due to associated economic
and technical limitations.
Altogether, geothermal has become an attractive alternative to utilities, particularly because it is a
baseload renewable energy source. Nevada’s utilities have established working relationships with
geothermal developers to incorporate geothermal projects into their Integrated Resource Plan
(IRP). While both developers and utilities stress the importance of federal tax credits like the
PTC, they agree that whether or not tax credits are extended, other efforts must continue to
sustain the momentum for geothermal development.
Transmission
There is a general consensus that transmission access remains a barrier to geothermal
development in Nevada. While transmission is an issue for any energy source, it is particularly a
problem for geothermal projects. Unlike oil, coal, and natural gas, geothermal energy cannot be
shipped. Geothermal power plants must be built at the location where the resource exists, and the
power transmitted to populations within the region. Because utilities are not required to cover the
transmission costs for projects that they do not own, these costs fall onto the developer, which can
be prohibitive for the development of geothermal resources in remote locations.
Transmission planning is critical to the long-term success of the geothermal industry. For one
thing, transmission lines are expensive. Utilities indicate that a 10 MW geothermal prospect close
to transmission lines stands a better chance of development than a remote 30 MW prospect.
Building transmission from remote sites requires coordination. Some lines are nearly maxed out
or require upgrades to add new power. In cases where a geothermal prospect is remote, utilities
say that multiple sites in the same area present less of a challenge. Building transmission and
performing upgrades for each new project (one at a time) is contrary to effective strategic
planning. An example of good planning can be seen in California, where new wind projects in
Tehachapi are being built in a coordinated fashion, so as to make sure individual projects do not
interfere with one another. Such planning also ensures that the costs of transmission are spread
out over a longer time period by developing a larger transmission project. Several interviewees
suggest that a similar methodology might work for locations in Nevada, including areas on the
California border near the Fish Lake valley, areas near Winnemucca, and areas in Nevada’s
northwest corner.
While transmission planning is part of process for submitting an IRP, several interviewees assert
that the Nevada PUC could play a larger role in these matters. Furthermore, they say that the
BLM must be actively involved in transmission projects; particularly for geothermal projects.
Connecting a remote geothermal project, even one on private land, will almost certainly require
transmission lines be built on federal land. This requires NEPA compliance; which further delays
the date of completion.
22
Another issue for transmission in Nevada is the separation between the northern and southern
parts of the state. The bulk of the population in the south is in Clark County, which includes
Henderson and Las Vegas. The bulk of the population in the north is Reno-Carson City-Sparks,
with several small towns along the I-80 corridor stretching across the state, including
Winnemucca, Battle Mountain, Elko/Spring Creek, and West Wendover 41.
Residents of southern Nevada, including the Las Vegas-Henderson area are primarily served by
Nevada Power Company. Residents of northern Nevada, including the Reno-Carson City-Sparks
area are primarily served by Sierra Pacific Power. Nevada Power Company and Sierra Pacific
Power are the only two IOUs in the state. They merged in several phases starting in the late1990s and are now jointly held by the Sierra Pacific Resources (SPR) as their parent company. A
north-south intertie connecting the two utility grids has been proposed and is planned for
completion by 2010 at the earliest. The line would be 500 kV and connect Las Vegas to Ely, 245
miles to the north where a large-scale next generation coal-fired facility is proposed that will sell
power onto the high-voltage line. The completion of this line would avoid wheeling rates or a
FERC transmission tariff (although this has not yet been defined or established).
Most agree that geothermal power development cannot grow without transmission. For Nevada
to increase geothermal production by the 637-751 MW currently under development would
require less planning than the 1,488 MW estimated to be economical by 2015, or additional
power production afterwards. However, while excess geothermal power generated in Nevada
could be used to serve California customers, most agree this would require coordinated
transmission planning and substantial upgrades. Effort towards this goal are being pursued by the
WGA through its Clean and Diversified Energy Advisory Committee (CDEAC), including
transmission studies for areas with renewable potential, and the proposal for a Frontier Line from
Wyoming to California, capable of delivering up to 12,000 MW of new renewable and
conventional energy once construction is completed42. Part of the impetus for CDEAC is
California’s unyielding population growth and the viability of renewable resources in the
Intermountain West. Given the fact that geothermal, solar, and wind power do not require excess
water consumption, its development in this part of the country is more viable.
To simplify transmission planning, one solution that has had a great deal of consideration is the
establishment of Regional Transmission Organizations (RTOs). Geothermal developers note that
because a project is localized, in most cases they do not have the option of negotiating with
utilities other than the one with the closest utility lines. Thus, proponents say that if RTOs are
expanded throughout the western U.S., they might possibly reduce transmission tariffs to postage
stamp transmission rates for electric generation traveling across utility wheels. Such a system
might be structured to avoid rate pancaking across multiple owners, and enable a more
transparent market conducive to broader, long-term planning needs for entire regions. RTOs may
encourage coordination on transmission projects cost-shared by multiple partners to serve a larger
volume of customers and disperse the costs and risks.
An RTO based on this model was first proposed in 2000, later called the Grid West RTO. Grid
West defined its purpose as “creating a new, independent, non-profit corporation that plans and
manages certain operational and commercial functions of the regional transmission grid.” The
RTO would have covered the Pacific Northwest and parts of the Intermountain West (including
Washington, Oregon, Idaho, Nevada, Utah and parts of Montana, Wyoming and California) and
would have had the authority to raise transmission rates and build infrastructure. While some say
this was a revolutionary concept and there was considerable interest when originally proposed, as
the project moved ahead there were concerns over bureaucracy and complexity, and after several
23
years of negotiating between major utilities in the Pacific Northwest, the Grid West RTO was
scrapped43. Currently both Nevada utilities belong to WestConnect. While WestConnect is not
an RTO, it is a regional collaboration composed of 12 utilities in six states in the “Desert
Southwest” and facilities coordination on transmission projects in the region through discussion
on utility practices, with a purpose to “achieve as much consistency as possible in the Western
Interconnection.”44
Investor-owned utilities (IOUs)
The two largest utilities in Nevada are IOU’s. In 2004, Nevada Power Company served roughly
61% of Nevada customers and Sierra Pacific Power served roughly 27% of Nevada customers45.
Both utilities are subject to the RPS, and both can utilize the PTC. While the two companies are
now joined by a merger under a single holding company, each prepares a separate IRP and a
separate Request for Proposal (RFP).
Most agree that Nevada’s RPS has been a primary driver for Nevada utilities to sign contracts for
geothermal power plants. Although utilities assert that the PTC has made these projects more
attractive, several contracts have been signed for projects to be completed beyond the current
expiration date for the PTC. Developers assert that this is due to the fact that the price of power
is high enough in Nevada to enable some geothermal power plants to be cost-effective even
without the PTC.
Ultimately, however, the PTC, like the RPS, is a recent phenomenon to geothermal development,
and the impacts of these policies cannot be fully measured at this time. Most agree that the PTC
is not too different from investment tax credits available in the 1980s, and that the RPS is not too
different than the Public Utility Regulatory Policies Act of 1978 (PURPA). PURPA was created
to facilitate a market for small renewable energy projects by obligating regulated utilities to
purchase the power, at rates equal to the utility’s avoided cost (i.e., “the incremental cost to an
electric utility of electrical energy or capacity or both which, but for the purchase from the
qualifying facility, such utility would generate itself or purchase from another source”)46. The
implementation of PURPA regulations varies from state to state and still plays a role in the
consideration of smaller renewable qualifying facilities
Integrated Resource Plans (IRPs)
The Nevada PUC requires regulated utilities to prepare IRPs to forecast supply and demand. The
regulatory body specifies options for meeting load growth while also considering cost reliability,
long-term risks, and environmental impacts. Based on the near-term costs of geothermal power
plants and the risk-averse nature of utilities, most agree that the IRP is helpful to geothermal
development. The IRP serves as a road map for utilities to plan for future load growth
responsibly. Regulators say that geothermal projects have an advantage in the IRP process
because of its low risk of fuel-price volatility and its environmental benefits, including low
emissions of greenhouse gases. Although the power generated by geothermal power plants is not
necessarily the lowest cost energy source, utilities recognize that its costs have been relatively
stable.
In Nevada, the IRP plays a more critical role for renewables due to the existence of the RPS. For
Nevada Power Company and Sierra Pacific Power IRPs, the Nevada PUC requires a specific
action plan be submitted every three years to cover 20 years from the date of submittal. Although
their IRPs are submitted separately, each one addresses issues common to both utilities. For
example, Nevada Power Company and Sierra Pacific Power plan to spend $2 billion from 20072015 to comply with the RPS, but that figure will be a combination of spending between them.
The bulk of new renewable projects will be constructed in northern Nevada. The only project in
24
southern Nevada identified in the IRP that is larger than 1 MW is a 64 MW solar power facility
near Boulder City expected to be online in 2007. The majority of the projects in northern Nevada
are geothermal projects (counting existing projects and projects under development that have
negotiated contracts). Until the north-south intertie connects the utility grids, renewable power
generated by Sierra Pacific Power in excess of its RPS requirements will be sold as renewable
energy credits (RECs) to Nevada Power Company.
Requests for Proposal (RFPs)47
Nevada Power Company and Sierra Pacific Power each release a RFP for renewable energy
projects on an annual basis or until renewable requirements are filled to meet the RPS. Each
utility holds separate bids for renewable power projects and demand side management. As of
December 2006, all geothermal power plants in Nevada, except for Dixie Valley, were selling
electricity to Sierra Pacific Power. A specific quantity of geothermal power (in MW) is not
specified in the RFP, although the total power produced from any individual project must add up
to a minimum of 1 MW. In addition, the Sierra Pacific Power RFP requires the developer to:
•
•
•
•
Provide summary of all collected geothermal data for the proposed generating facility
site;
Characterize the geothermal resource quality, quantity and projected production levels;
Provide a graph or table that illustrates the annual and monthly projection of geothermal
resources; and
Describe any other existing geothermal facilities in the resource area and characterize
their production and their anticipated impact, if any, on the Generating Facility.
There is no specification in either RFP for the price per kWh, which is negotiated between the
developer and the utility. Utilities say they consider multiple cost factors, including location from
load centers, and the impact on “the existing transmission system”. Although preferred
geothermal projects selected are the “lowest cost possible” according to the RFPs.
One way in which utilities procure geothermal projects is through their green power programs.
Nevada Power Company and Sierra Pacific Power run a joint green power program that allows
customers to make a minimum monthly contribution of $3.00 added to their energy bill. For the
past several years, they have run the program through the Desert Research Institute (DRI), a
nonprofit research campus of the Nevada System of Higher Education (NSHE)48. The money
collected from the green power program funds renewable energy and energy efficiency projects
that help meet the RPS. To promote the program the utilities have run print ads, held events, and
provided pamphlets to its customers, among other efforts. However, despite these activities, the
number of participating customers is only a small percentage of their total customer base. Clean
energy advocates assert that to complement the utilities’ efforts, the state government should
expand its role in the outreach effort to encourage customer participation. To do this, clean
energy advocates suggest that they establish a state-wide awareness campaign promoting the
program and preparing presentations or videos that provide information about actual projects
these programs help finance. Such activities would give customers an objective understanding of
how their contribution makes a difference.
Rate flexibility
Beyond green power programs, other policies and programs can be implemented by the state can
to encourage utilities to procure geothermal projects. While an IRP attempts to guide sensible
planning, and a RPS attempts to set a minimum standard for development, utilities are still
discouraged by the risk incurred by purchasing geothermal power from outside developers. For
25
instance, when an IOU purchases any power from a plant owned by an outside party, the power
purchased becomes imputed debt for the utility. This may be shaky with shareholders because it
can affect bond ratings. During the California energy crisis several utilities went into bankruptcy.
When price shocks first occurred, state laws restricted rate increases, and rates remained
artificially low, at the forecasted price of power. After this debacle spread to other western states,
including Nevada, the Nevada PUC gave utilities more flexibility to raise rates. Furthermore,
when considering increased RPS requirements in 2005, the Nevada PUC recognized that utilities
should be able to raise rates when necessary to protect themselves from financial difficulties that
may arise from attempts to comply with the RPS.
Also in 2005, the Nevada PUC authorized the creation of the Temporary Renewable Energy
Development (TRED) Program. While the TRED program is intended to aid developer financing
for small companies without strong bond ratings, the program also gives IOUs the flexibility to
recover the costs of purchasing these projects and providing “prompt payment to renewable
energy providers in order to encourage completion of renewable energy projects.” To do this, the
TRED program established:
(1) A TRED Charge allowing investor-owned utilities to collect revenue from electricity
customers to pay for renewable energy separate from other wholesale power purchased
by the electric utilities; and
(2) An independent TRED Trust to receive the proceeds from the TRED Charge and
remit payment to renewable energy projects that deliver renewable energy to purchasing
electric utilities49.
Utility investment in geothermal
Because utilities in Nevada have experience with geothermal power, some might ask why they do
not take a larger investment role in geothermal projects themselves. For instance, utilities may
avoid certain problems by investing in plants through shared equity ownership or by building the
plants themselves. The most recent IRP suggests that the utilities examine both equity
contributions and self-build alternatives for power plant development, and they are currently
examining these financial structures. However, most agree about the inherent risk and
uncertainty faced by utilities who use those alternatives. For instance, geothermal energy
resources cannot be directly brought to market like oil, gas, or coal. As an added constraint,
utilities are not experienced with the process of geothermal leasing, exploration, and drilling.
Municipal power, rural cooperatives, and individual producers
While customers in Nevada are primarily served by IOUs, municipal utilities and rural
cooperatives pick up the additional residential load. Nevada’s largest municipal utility and its 2nd
largest rural cooperative are located in the southern part of the state, where geothermal power is
less of an alternative. The largest rural cooperative in the state, however, is located in
northeastern Nevada where they may be some potential development opportunities. This utility,
called the Wells Rural Electric Cooperative, serves small communities and several small mining
operations and has a system peak of 104 MW50.
Some of the smaller municipal utilities and rural cooperatives in the state receive power from the
Bonneville Power Administration (BPA), and have done so for many years. However, after
drought has reduced hydro supplies to the region and higher energy costs in California have
affected BPA’s load growth, rate increases have affected their customers all over the Pacific
Northwest, including northern Nevada. Higher rates have not only initiated changes in how BPA
26
may serve its customers in the future, it has also raised awareness of the potential to use local
renewable resources to serve rising load growth in Nevada’s small communities.
Currently, the prospects for using small-scale geothermal power units depend, in part, on the
outcome of ongoing regional dialogue between BPA and its customers. This dialogue will
determine how the BPA load will be allocated, and whether or not utilities will be able to serve
their additional load using indigenous resources, like geothermal. Such development may be
enhanced by the availability of federal Clean Renewable Energy Bonds (CREB) that encourages
development of renewable resources by assisting municipal utilities and rural cooperatives in
purchasing RECs.
Besides municipal utilities and rural cooperatives, several other individual producers exist in the
state. When utilities in Nevada were deregulated in the 1990s, large utility customers were
allowed to separate from their utility contracts. Several casinos cancelled their contracts and
purchased power on the wholesale market and Nevada’s two largest gold mining operations broke
from their contracts to build their own plants. Barrick Gold built an 80 MW natural gas plant to
serve their power needs and Newmont Gold is building a 180 MW coal plant to serve their
additional load. Geothermal power still serves some power needs for the mining industry through
Sierra Pacific Power’s utility grid.
Distributed generation projects
While most agree the geothermal resource base in Nevada is substantial, an individual resource
area might only be able to produce a small amount of power. Because geothermal power plants
use a localized resource, this raises the opportunity for distributed generation projects. According
to the USDOE, distributed generation units are “small, modular electricity generators sited close
to customer loads.” Proponents of these technologies agree with the assessment by USDOE that
the advantages of geothermal-powered distributed units are their ability to avoid “transmission
and distribution power losses” because the system can be “located inside or immediately adjacent
to” the facility receiving the power 51. The low emissions of geothermal power systems make them
more ideal for this type of setting. The plant may be connected to the utility grid, or may be
completely off-grid, providing power directly to a facility. In this case, the developer is not
required to procure a PPA or go through a lengthy utility regulatory process. Furthermore, while
small power units might cost more per kWh than a utility would be willing to pay, they might still
be lower than the retail power cost the utility would charge.
Proponents of distributed generation projects assert these projects may be preferable for
geothermal resource areas capable of providing only small amounts of power. Geothermal
aquifers with temperatures at or slightly above 212°F (100°C) are especially suited for distributed
generation projects. While these resources may be sufficient for power production, they
generally cannot produce large amounts of power. In addition, the revenue produced by such
plants do not create substantial profits or rates of return, particularly if the areas are remote and
require substantial investment in new transmission infrastructure.
Alternative fuels
In the early 1980s, an entrepreneur had an idea when he drilled wells that hit temperatures of
225°F (107°C) from a shallow reservoir at 351 feet (107 meters) in the Wabuska Hot Springs area
70 miles south of Reno. With an oil crisis still looming, he got to work on the first geothermalpowered alternative fuel plant. Using grain as a feedstock, the plant produced gasohol for several
years until oil prices plummeted and existing federal tax credits expired. A geothermal power
facility, adjacent to the site, is still in operation52.
27
Today, the concept of starting new alternative fuel plants using geothermal resources has
resurfaced. The Wabuska gasohol plant is being revived by another developer to produce biodiesel. The plant is expected to be fully operational by early 2007; capable of producing 5
million gallons of bio-diesel per year, using the geothermal resource for both its power and
thermal energy needs. Various locally-grown oil-seed
crops will be used to produce the fuel, while other types
of feedstock are being studied, including algae ponds
being grown on-site. The developer is working with the
state government to brainstorm agricultural opportunities
to grow various types of feedstock in-state that could be
used for alternative fuel53.
The grain silo, methanol recovery towers, and the tank
farm at the bio-diesel facility under construction. Photo
by Claude Sapp, Infinifuel Biodiesel. Used by permission
An even larger alternative fuel facility is under development at Gerlach, located 100 miles north
of Reno. Drilling recently began for a geothermal well to both power and heat a planned ethanol
plant. In 2005, $250,000 in federal money was earmarked to support the facility, entitled the
“Gerlach Green Energy Project”, which developers say may create up to 250 jobs in the local
area54.
Alternative fuel production is also being considered at other geothermal resource areas in Nevada,
including at the Pyramid Lake Paiute Reservation, and several areas with existing power
facilities. Alternative fuels plants are notoriously energy intensive to develop. For example,
according to ongoing research at Iowa State University, since the ethanol boom in the state, early
estimates show that Iowa's annual production of more than one billion gallons of ethanol accounts
for about 16% of the state's demand for natural gas (although many ethanol producers in the U.S.
have been locating plants near coal-fired power facilities as well)55.
Because geothermal power facilities can provide both power and cascaded heat for alternative
fuel production, the geothermal resource affects all aspects of production, including refining and
drying. Proponents say that a geothermal ethanol or bio-fuel plant can provide far more
employment and revenues than a geothermal power plant of equivalent size. Many potential
geothermal resource areas in Nevada are located nearby major highways and rail lines (especially
along the I-80 corridor) that can move feedstock from other parts of the country and transport
alternative fuels to emerging markets in California.
Other uses
The use of geothermal resources to provide both power and cascaded heat is relevant not only to
alternative fuels, but can also be used for other projects such as greenhouses, aquaculture, mining
operations, and industrial applications. Two industrial facilities have operated in Nevada in
recent years using geothermal heat and power for vegetable dehydration. One is still operating at
Brady’s Hot Springs owned by ConAgra Foods, Inc., while the other, at Empire, is currently
inactive.
When in operation, the vegetable dehydration plant at Empire received its power and heat from an
adjacent geothermal power facility. At Brady’s Hot Springs, an existing vegetable dehydration
facility produces onion and garlic for half of the year, while processing celery and carrots during
other seasons. The facility produces over 50 million lbs of onions annually. There are separate
28
owners of the geothermal power plant and the vegetable dehydration plant at Brady’s Hot
Springs. Up until a few years ago the vegetable dehydration facility was receiving heat from its
own wells, but now receives both heat and power from the power plant56.
According to researchers, if technically feasible, industrial facilities like these can be applied to
other sites with existing power plants, thereby utilizing the resources for additional business
opportunities and increasing revenues. Distributed generation may also be applicable for sites
with existing direct use facilities if sufficient temperatures are present for small power
production. There are also resource areas without any existing facilities being considered to
locate these applications. For example, a project in which a geothermal power plant would sell
heat to a local lithium mining operation is under consideration at Silver Peak, southeast of
Tonopah in Esmeralda County.
Application of advanced ORC technology at Chena Hot Springs, Alaska
A promising technology is currently being utilized in Alaska at the Chena Hot Springs Resort
where an Organic Rankine Cycle (ORC) power plant is generating electricity from a geothermal
aquifer with a temperature of 162.5°F (72.5°C). This plant, called a PureCycle® plant, is
powered similar to existing binary power plants; however, because the geothermal water at Chena
Hot Springs never reaches the boiling point of water, a refrigerant, called R-134a, is used which
has a much lower boiling point than water. The water is pumped at 480 gallons per minute (gpm)
and passes through a heat exchanger where it transfers heat energy to the refrigerant. When the
refrigerant boils, it vaporizes and is then routed to a turbine to generate power. The system runs
in a closed loop, and most of the water is injected back into the reservoir with the rest of the fluid
being used for space heating. Cooling water is siphoned from a shallow well close to a nearby
creek using the natural gradient, or fall, of the property. A second plant will be installed at the
resort using air-cooling57.
Developers of the technology say that this process is feasible in Nevada. However based on its
ambient temperatures, units installed in the state would likely require a temperature at or above
200°F (93°C) to operate at the same capacity as units operating in Alaska. Even so, these
temperatures have been identified in numerous locations in Nevada through shallow geothermal
aquifers and hot springs. But because these temperatures have not been adequate for power
production with conventional applications, many of these resources have been overlooked as a
source of power. However, since these units may require little additional infrastructure to install,
they can produce power at a cost competitive with retail energy prices. In fact, orders for
PureCycle® units have already been made for sites in Nevada, although the exact locations have
not yet been specified at the time of this writing.
Proponents of this technology say that small units like these can be used for greenhouses,
aquaculture, and any other business or industry that can use small-scale power production. Most
of the units would be under 1 MW in size, however, the developers assert that due to the cost per
installed kW, multiple units could be employed at one location cost-effectively.
Challenges and policy solutions
Whether geothermal power units are used for alternative fuels, industrial applications, or
commercial agricultural facilities, most agree that the challenge to moving these projects forward
is whether there will be a market for them. In order to profitably produce small power units,
developers need to install them in enough resource areas and find enough willing buyers to enable
mass-production. One challenge is whether these units will need to be custom made for each
individual site, or whether they can operate (with only small adjustments) anywhere a suitable
resource exists.
29
Nevertheless, most agree that the range of possibilities for these technologies have not yet been
explored. Several interviewees suggest geothermal resources could be used for hydrogen
production. Others suggest combining geothermal heat with concentrated solar power (CSP) or
biomass refining. In some areas, geothermal facilities can be used to recover minerals such as
zinc, lithium, manganese, cesium, rubidium and even precious metals such as gold, silver and
platinum. This process has been successful at several locations in the world, although most agree
that it can be a risky investment, as developers in the U.S. have lost money pursuing it. For this
reason, most agree that some government funding for demonstration projects is necessary if this
process is to occur more frequently in the U.S.58 In fact, demonstration projects are considered
important for multiple applications for geothermal technology. For example, the USDOE
contributed roughly $1.25 million to the installation of the first geothermal unit at Chena Hot
Springs, which was recently selected as Project of the Year for 2006 in the renewable/sustainable
energy category by Power Engineering magazine59.
Some express concern that these types of projects may not qualify for federal incentive programs.
Geothermal power projects that are not used for on-grid electricity do not receive credits like the
PTC or CREB, and it is uncertain which, if any, other types of federal tax credits they may be
eligible to receive. A new facility would not be covered by the RPS, unless it is included in the
demand-side management plan for IOUs and powers an existing facility rather than a new
business or industrial facility. For alternative fuels, those working on these projects suggest that
alternative fuel credits could be weighted to give an advantage to alternative fuel plants using
renewable energy in the production process, and geothermal-powered alternative fuel plants could
receive technical support or funding from the USDOE Ethanol program.
Direct use applications
Photo: Moana Swimming Pool, Reno. Photo by Daniel
Fleischmann
Currently in Nevada, low-to intermediate temperature
geothermal resources are being used for direct
applications including agricultural drying, recreation,
and district and space heating,
In interviews with researchers and geologists, there is a
consensus that while direct uses of geothermal resources
have been well-developed in certain parts of the state,
the overall resource base remains vastly under-utilized. Developers contend that many
opportunities exist given changing economics and researchers assert that new exploration efforts
may reveal extensive geothermal systems available for near-term utilization in Nevada’s growing
suburban areas. The three sections below discuss ongoing efforts, and what still needs to be done
to encourage more development of geothermal direct use facilities in Nevada.
Regulations60
Nevada’s regulatory definition of a “geothermal resource” does not place a temperature limit, nor
provide separate definitions for different temperatures. Rather a “geothermal resource” is defined
by how it is used. In 2003, Washington State University (WSU) professor Gordon Bloomquist
summarized the direct use regulations in Nevada. In the report he noted that most geothermal
direct use applications fall under the designation of a “commercial well” which covers
applications such as greenhouses, aquaculture, space heating, irrigation, swimming pools, and
30
spas. Most power facilities fall under the designation of an “industrial well”, while residential
geothermal space heating projects often fall under the designation of a “domestic well”, although
that only includes space heating on a single parcel of land. The lead regulatory agency for
commercial geothermal wells is the NDOM. According to Professor Bloomquist, Nevada’s
regulations are “somewhat unique among western states” in that “they have developed a
regulatory path for direct use geothermal applications.”
Water
When considering geothermal direct use projects in Nevada, one of the main concerns for
regulators (both state and federal) is protecting scarce water resources. Water is critical for
irrigation and the survival of agricultural industries. Although geothermal resources are not
defined as “water” resources, any direct use project that consumes water is subject to regulation
to ensure water conservation and water quality. The Department of Conservation and Natural
Resources – Division of Water Resources (NDWR) is the lead state agency that regulates the
appropriation and distribution of water. Similar to other western states, water rights in Nevada are
like property rights in that they are granted through the principal known as the Doctrine of Prior
Appropriation. This means “those who first made beneficial use of water are entitled to continued
use in preference to those who came later.” Water rights must also meet the definition of
beneficial use. In Nevada beneficial uses includes “irrigation, lawn and garden, stock-watering,
manufacturing, mining, hydropower, municipal use, agricultural spraying, recreation, fish and
wildlife, among others.”
Geothermal direct use projects that have “minimal consumptive water use” as defined by the state
regulations are not subject to the water appropriation process. These projects include those that
“return or re-inject the geothermal water into the same aquifer or reservoir” or a close-looped
system where the thermal energy is transferred from the water in the well bore to a closed-looping
piping system where there is no extraction of water from the well61.
Geothermal direct use applications are generally required to re-inject fluid or to utilize a closedloop system. According to Professor Bloomquist, these methods must be utilized unless NDOM
“approves an alternative method of disposal”. While there are projects in Nevada where water is
irrigated or disposed back to the ground or in surface water, this is only allowed for areas where
the owner of the resource already has consumptive rights. The Nevada Department of
Conservation and Natural Resources-Bureau of Water Pollution Control (BWPC) is responsible
for administering surface disposal of wastewater, including geothermal fluids. Re-injection is
costly, and may deter new projects due to the added cost. However, most existing direct use
facilities in Nevada are non-consumptive, either using the resource for a spa or pool, or for
facilities that pipe hot water from the underground aquifer through re-injection or a close-looped
system.
Federal lands
Because most of Nevada is rural and sparsely populated, the opportunities for geothermal direct
use are primarily a concern for towns and communities. However, when reviewing maps of
Nevada, it is evident that every city and town in the state is encircled by federal land62. Like with
geothermal power projects, direct use projects on federal lands are subject to both state and
federal regulations. According to developers, they have avoided geothermal direct use projects
using federal resources due to the added costs of federal royalty payments. For years, these
royalty payments were a disincentive to development at promising locations throughout the state,
as well as throughout the western U.S. Royalty calculations were based on equivalent power
usage and in some cases would run higher than an electrical power plant would pay for the
equivalent amount of energy use.
31
In Nevada, only two geothermal direct use facilities have been subject to these federal
regulations. The only active project is at Brady’s Hot Springs, where the actual facility is on
private land, but uses federal resources and has paid royalties to the federal government. The
inactive facility is located at the Round Mountain Gold Mine (about 60 miles northeast of
Tonopah). When in operation, the mine piped geothermal fluid from shallow wells to transfer
heat to cyanide heap leach solutions designed to extract additional gold and silver from piles of
ore. This process, called heap leaching, is generally not feasible in cold weather, however when
using geothermal heating, the process can continue year-round. Despite the Round Mountain
Mine’s success in using geothermal resources for this process, the operation is no longer active.
According to John Lund of the Geo-Heat Center, the reason it went idle is because of “low prices
for gold and silver” and “high operating costs” no longer justified paying the “federal royalty
charge for the use of the geothermal energy produced from wells on [BLM] land” which
amounted to 10% of “the equivalent avoided competing fuel cost” at the time63.
In addressing geothermal development issues, EPAct authorized changes to the royalty system.
Once the new policy is fully implemented, it is understood that the royalty rates for geothermal
direct use projects on both BLM and USFS land will be changed to a small fee. This means that
operations on federal lands will face fewer additional costs for development than before. Most
agree that with fossil fuel prices rising, along with the price of gold, this policy change may
enable mining operations to reconsider geothermal heating facilities for heap leaching in addition
to opening up federal resources for other types of geothermal direct use projects.
Establishing markets
While developers in Nevada have been relatively successful at establishing an industry for
geothermal power, this success has not been replicated for geothermal direct use applications.
There is a general consensus that federal and state energy policy can do more to encourage
geothermal direct use endeavors in Nevada. When traveling throughout the Southwest, it is clear
geothermal resources can be put to innovative use to spur economic development, particularly in
struggling rural and agricultural areas.
Geothermal direct use systems replace thermal uses otherwise produced through electricity or
boilers using conventional fuels. In a March 2006 geothermal working group meeting in Utah,
geothermal expert Jim Witcher noted the that in order for businesses to be successful using
geothermal direct use applications, there needs to be a market to sell the product, a sound
business plan, and an expert to manage the product (whether it be aquaculture, greenhouses,
dairies, or other geothermal heat uses). According to the presentation, this includes the need for a
good transportation route and year around product availability64. Because Nevada has promising
resources nearby major highways and rail lines, some say it is possible to build hotels, milk and
cheese processing facilities, greenhouses, or aquaculture facilities on these locations. Other
potential users include bio-fuels refining, mineral processing, and garlic, onion, or other
agricultural processing facilities. These technologies can provide jobs and tax revenues for
communities without requiring additional water use to operate.
According to direct use facility operators, the challenge to creating a market for these projects is
that there is no coherent geothermal direct use industry that provides geothermal systems readily
available to businesses in the state. In addition, there is no major government program
specifically geared towards finding opportunities for geothermal direct use applications. Because
direct use applications are generally a small part of any business (such as a greenhouse, dairy, or
aquaculture facility) there are limits on time and money to dedicate to developing the geothermal
resource. For instance, in his May 2006 presentation at the “Using the Earth’s Energy: Arizona
32
Geothermal Direct Use Conference” in Tempe, Arizona, Leo Ray of the Fish Breeders of Idaho,
Inc. (who uses geothermal heating facilities for raising catfish, tilapia, sturgeon, and alligators)
noted that the major barrier to these projects is that anyone interested in pursuing them has had to
do all the work themselves65. According to Leo Ray, this is a task that most businessmen are
unable to undertake without mastery of both their business and geothermal resource development
-- a rare combination of skills.
Another challenge, noted by Professor Bloomquist in his presentation at the March 2006, Utah
Geothermal Working Group meeting, is that costs and revenues, in particular the cost to prove a
geothermal resource, play a large part in the decision to pursue a direct use project66. The costs of
drilling, even for shallow wells, has risen over the past few years and this has increased the risk of
taking on these projects without first being assured that the costs will not rise significantly over
the course of construction.
Space heating
One of the most practical applications for geothermal direct use is for space heating and district
heating systems. Because geothermal space heating is a renewable alternative to a home furnace,
and in some cases domestic hot water, it has been exploited in many locations throughout the
western U.S. The best example of this in Nevada is in the Moana geothermal area in southwest
Reno where several hundred homes use geothermal wells for residential space heating67.
A lone injection well sits above the city of Reno,
where 110 homes use the Nevada Geothermal Utility
Co. district heating system. Photo by Daniel
Fleischmann
Approximately 250 geothermal wells have been
drilled within this area, which covers about three
square miles. Many of these wells serve single
residences, along with several businesses and a
church. Most use a close-looped system with a
down-hole heat exchanger. While the first of
these systems were installed in the 1940s and 50s,
the vast majority were installed in the early 1980s to take advantage of existing tax credits at the
time. None have been installed since the early 1990s. However, new installations are expected
over the next few years as recent increases in heating costs have driven new demand.
The largest concentrated use of this resource is a district heating system operated by the Nevada
Geothermal Utility Co. that heats 110 homes in the Warren estates and the Manzanita estates.
The photo above shows the injection wells in the hills, with large buildings making up downtown
Reno just visible in the background. Temperatures in these hills reach 200°F (93°C) at depths less
than 1,000 feet (305 meters). Operators say the system could expand, although this would require
a new heat exchanger. Customers of this system pay a rate at 75% the cost of natural gas.
Because of its northern latitude and its high elevation, the Reno-Carson City-Sparks area is
considered an ideal location for these systems. All three are at elevations above 4,400 feet above
sea level and the average low temperature is below freezing from November through March68.
Altogether, over half-a-million people live in these cities (and their metropolitan areas) and
researchers assert that plenty more of these residents could benefit from geothermal space
heating.
33
Geothermal space heating projects are generally best suited for new construction, developers say.
Retrofitting homes or businesses can be expensive, and facilities that are retrofitted generally
require longer payback periods to recoup installation costs. Another cost that varies from project
to project is the drilling of new wells—most applicable for locations experiencing new
development without existing infrastructure. However, researchers say that the study of
geothermal resources in many key potential areas has been inadequate, thereby limiting
opportunities.
New projects
While the development of geothermal direct use projects in Nevada has been limited since the
1980s, there is evidence that interest is picking up in a number of communities throughout
northern Nevada. As of December of 2006, several new projects are under development or have
received funding to study the feasibility of a geothermal application.
Elko69
The most recent project to take advantage of geothermal heating is in Elko, where an industrial
park is currently under construction that will use geothermal heating (see Figure 3). Elko and
nearby Spring Creek are the largest center of population in Nevada outside of the Reno-Carson
City-Sparks area, or the Las Vegas-Henderson metro area 70. The Elko Heat Company is
expanding an existing district heating system to accommodate the buildings. The first building
went online in October of 2006, with five more buildings expected to be constructed once the
project is completed.
Figure 3: Construction of Industrial Park
Early Construction
First Building
Completed
34
Installing Geothermal
Piping
Photo 1 by Daniel Fleischmann, GEA
Photos 2 and 3 by Mike Lattin, Canyon Construction
Used by permission
There are currently two existing district heating systems in Elko. One serves the Elko County
School District, as well as the city hall and the Elko Convention center. The Elko Heat Company
operates the second, larger system. This system has been operating since 1982, when a federal
grant assisted in the financing of its construction. The system currently heats 18 buildings,
including a hotel/casino, a large laundromat, the post office, a courthouse, and several other large
buildings downtown. When the system was built, many of these buildings already existed and
were retrofitted with geothermal heating.
The Elko Heat Company system uses a geothermal resource from an 865-foot (263.7-meter)
production well discharging fluid at 425 gpm at 177°F (80°C). The water quality is good, and is
used for domestic hot water heating as well as space heating. The well is artesian, and most of
the water is disposed in evaporation and percolation ponds, while some is used for irrigation
during the summer months. Although the system does not inject the water back into the
geothermal aquifer, the resource has not degraded since its initial development, nor has the
temperature declined. Researchers suggest this is evidence that the heat capacity of the aquifer is
not yet near its limit.
According to the operators, the challenge to expanding the use of the aquifer is the size of the
customer base. Given that the district heating is a rate-driven system, new users must be added to
justify new construction of piping and installation. The system is run by Canyon Construction
Company and the Elko Heat Company is only a small part of its overall business.
The industrial park is ideally suited for development because it sits along existing pipelines,
requires no retrofitting, and is large enough to disperse the costs of installation. In addition, the
winter climate in Elko (5,067 feet above sea level) is more severe than in the Reno-Carson CitySparks area. The average overnight low is below freezing from October through April71. New
users at the industrial park may save as much as 2/3rds on their annual heating bill and the
operators say that the success of this project may lead to more customers as new development
occurs in the community.
Redfield campus – Steamboat
A “Renewable Energy Center” is under development at the Redfield Campus in south Reno near
the Steamboat geothermal area. The Redfield Campus is a collaborative effort between Ormat
Technologies Inc., UNR and the Truckee Meadows Community College. The Redfield Campus
opened its first building in 2000, and now has two buildings on campus. Neither building uses
geothermal heating, however, there are plans to heat the buildings with geothermal fluid from the
nearby power facilities at Steamboat Springs; which will also provide 100% of the power for the
35
campus. When completed, the campus will have six buildings and will house, among other
programs, the “Renewable Energy Center” where students will be able to study geothermal
energy, as well as other forms of renewable energy72.
Fernley73
Fernley is a growing community of just over 8,500 situated along I-80, 30 miles east of Reno in
Lyon County. Many of its residents commute to Reno or Sparks. As new businesses move into
the community to serve the growing population, geothermal developers are working with a
landowner to use their property for a geothermal industrial park that would heat new buildings
using geothermal wells. A feasibility study is being performed by the Geo-Heat Center at the
Oregon Institute of Technology (OIT) in cooperation with a private developer. The Lyon County
government has also cooperated on development and land-use planning. In addition to these
efforts, wells have been drilled 12 miles to the south in Hazen where consideration for both
geothermal direct use applications and power development has been proposed.
Hawthorne74
Hawthorne is located in 120 miles southeast of Carson City and 70 miles south of Fallon in
Mineral County. While Hawthorne’s population is just over 3,300, it is home to the Hawthorne
Army Depot, the largest ammunition storage facility in the nation (which has large heating loads
although the staff residing there is only a couple hundred). The community itself has considered
using geothermal space heating since the early 1980s after a well drilled a couple miles outside of
town measured temperatures of 210°F (99°C) at a depth of 1,000 feet (305 meters) with fluid
discharge sufficient for a geothermal district heating system. The county owns the well, but does
not have the money to build piping to extract the heat to serve the community. The Army Depot
itself is considering a geothermal power project, which would require drilling a deeper well
further outside of town.
Photo – Mount Grant rises nearly 7,000
feet above the town of Hawthorne, located
~10 miles to the east of the mountain.
Photo taken by Dean Molen –
Summitpost.org:
http://www.summitpost.org/images/origin
al/79469.JPG – Used by permission.
Within the community, the Geo-Heat
Center has been given a small grant to
study the economic feasibility of using
the resource for space heating at Mount
Grant General Hospital. According to their initial findings, building a pipeline to the resource is
presently considered too expensive and drilling a well on the hospital property may not recover a
sufficient resource. A ground-source heat pump system has been considered instead, although
direct use heating is still a possibility. The whole community could potentially utilize the hot
well outside the town, but the payback period for building the piping and retrofitting all the
buildings is not considered economical. It is conceivable that a larger federal grant could be used
to lower the cost, and could enable the entire community to use the resource.
Inactive projects75
Outside of Elko and Reno many geothermal direct use facilities in Nevada have become inactive.
For example, while several aquaculture facilities used to operate in Nevada, none were in
operation as of December of 2006. Lobster, crayfish, prawns, catfish, and tropical fish have all
36
been raised in Nevada using geothermal resources, along with greenhouses and mining operations
that no longer operate. To understand why many of these facilities are inactive, Nevada’s
demographics must be considered. Outside of Las Vegas and Reno, the population of Nevada
remains quite small. Less than 10% of Nevada’s population resides outside of these metropolitan
areas. Remove the population-base within the general surroundings of Elko and Pahrump in Nye
County, and that number is about 5%.
Many of Nevada’s small communities have seen their populations rise and fall, in part, because
many were founded as small mining communities. In fact, Nevada is known for its many “ghost
towns” which were often mining communities that existed in the 19th and early 20th century and
were then abandoned. Several geothermal spas were built in these communities during the late19th century.
Florida Canyon (about 40 miles southwest of Winnemucca near I-80) was a gold and silver
mining operation that used geothermal fluids for heap leaching. Unlike Round Mountain Mine, it
was not on federal land. It went out of business in 2005 due to concern over dwindling reserves,
and the parent company deciding it could better invest elsewhere76. A nearby mine is still
operational, closer to Lovelock and I-80, but is not using geothermal heating.
Several geothermal direct use facilities that shut down are located far from civilization. In fact,
the currently inactive vegetable dehydration facility at Empire (discussed earlier) is located over
100 miles from Reno and was affected by its distance from the market. Several other inactive
areas were far from the market including a spa at Ash Springs -- 102 miles from Las Vegas, a
process heat facility for a magnesite mill in Gabbs -- 140 miles from Reno, and an aquaculture
facility in Duckwater -- 268 miles from Las Vegas, 313 miles from Salt Lake City, Utah, and 374
miles from Reno.
Duckwater is an interesting case. From 1982 through the early 1990s, over 300,000 lbs of catfish
filets were produced annually at the Duckworth Indian Reservation near Currant. Currant and the
Duckwater Indian Reservation have a combined population of less than 500 people. No
community with over 10,000 residents is within 150 miles. Despite this distance, the business
managed to stay profitable for eight years until the manager, and technical expert, died in a plane
crash. After the accident, the facility went out of business. One has to wonder if the facility had
been closer to the marketplace, whether another owner might have stepped in. Most agree that
remoteness will magnify any setback, because it is difficult to stay competitive when you are
located so far away from the marketplace.
Perhaps the most bizarre case of distance affecting a geothermal direct use facility took place
south of Mina at Sodaville Springs. Mina is an old mining town in Mineral County, with a
remaining population of under 300, 30 miles southeast of Hawthorne, over 165 miles southeast of
Reno, and over 280 miles from Las Vegas.
Starting in the late 1980s, property around Sodaville Springs was leased in preparation for an
aquaculture business. Part of the customer base was derived from tourists traveling from Las
Vegas to Reno on U.S. Highway 95. In 1995, the operation began after permits were secured
from the state government. However, as the business continued on into the next decade,
argument arose over a stipulation in the permit from the Nevada Department of Wildlife
(NDOW). Situated in a series of warm fish ponds, the owner was selling imported Australian
crayfish, considered an exotic species to Nevada that could potentially harm local endangered
habitat if they escaped or, as the NDOW puts it, were “released from captivity”. The permit
stipulated that the crayfish could not be sold alive to tourists driving along the highway.
37
However, the owners’ concern was that if he sold dead crayfish they would not remain fresh as
tourists drove several hours to Las Vegas or Reno. As a result, the owner continued to sell the
crayfish alive, until the business was featured in a Las-Vegas Review article discussing the
operation and providing photos. With the owner visibly defying the permit, the business was
raided by the NDOW in July of 2002 and shut down, with the remaining crayfish killed77.
When discussing this case with several interviewees, most agree this situation not only
demonstrates the problem of “distance”, it also demonstrates the lack of coordination between the
government, counties, communities, and business owners. While the state government was not
necessarily at any fault in this case, it is clear that it is in the best interest of these entities to work
together to best use the resource and to avoid these situations in the future so that the focus
becomes economic development and the indigenous production of goods.
Most agree that, with a few exceptions, failed geothermal direct use facilities in Nevada have not
resulted from problems with the geothermal resource itself. While distance is not the only cause
of the failure of these projects to stay in operation, it appears to be a catalyst to problems down
the road. These problems include labor shortages and distribution costs. Because distribution
costs increase as gas prices increase, gains related to the energy savings of the geothermal system
tend to be offset.
Agricultural industries
Nevada is not traditionally considered an agricultural state. Las Vegas is a prime, international
tourist destination and critical to the state economy. Nevada is also the nation’s leading producer
of gold and silver. Its miles of open landscape and unique geology have allowed speculators to
profit from mining for over 150 years. Nevada took in just under $447 million in 2002 from
agricultural products and livestock (primarily cattle) -- a small percentage of the total economy.
The leading agricultural product in Nevada is alfalfa, with potatoes a distant second78.
Nevada’s arid desert climate and its high elevation are not conducive to the rich farmland found
in the Great Plains or the Midwest. However, several interviewees assert that geothermal
resources create opportunities for agricultural applications not available in those regions. As
noted above, agriculture can be used to produce feedstock, such as oil-seed and algae, which
could be used for alternative fuels. Oil-seed requires less water than corn or other agricultural
products that can be used for ethanol.
In addition to alternative fuels, geothermal direct use applications can be used in agricultural
areas for greenhouses, aquaculture, dairy processing, and alfalfa. In fact, geothermal heating has
been considered to facilitate alfalfa production in Eureka County. Such facilities may be more
economical with new federal royalty regulations. Researchers say that other challenges exist for
using geothermal resources for alfalfa or other crops, including limited available water allocation.
In addition many agricultural operations may require new irrigation well drilling, which can be
expensive. Because many of these operations are in the middle of long valleys as opposed to
mountain fronts (where higher temperatures are typically found) well drilling in these areas
typically encounters cooler temperatures.
However, despite this limitation numerous interviewees stress the importance of investment in
agricultural extension programs operated by land-grant universities (UNR has this role in
Nevada). These programs can employ staff familiar with geothermal resource development and
can be a resource for farmers and ranchers. While there is currently little access to money for
these programs, proponents suggest they should be initiated by small businesses, since large
companies will not invest in direct use unless they can see a large profit or mass production.
38
Researchers say that if funding is made available through larger institutions such as the Western
Regional Aquaculture Consortium, the USDOE, or the U.S. Department of Agriculture (USDA),
there may be more potential for development. The USDA is offering grants for renewable energy
projects in agricultural areas that could include geothermal direct use projects.
Incentives
As noted above, incentives were critical to direct use development in the 1980s. Clean energy
advocates and developers in Nevada believe that strengthening current incentives (both on the
state and federal level) could induce a resurgence in development similar to that of the 1980s. As
mentioned earlier, businesses and investors interested in alternative energy are more apt to do
business in California where rebates and tax incentives for renewable and energy-efficient
business projects are more substantial. While it is unlikely that such sweeping programs will be
undertaken in Nevada in the near future, most agree that increased rebates and tax incentives may
encourage more investors to take advantage of Nevada’s geothermal resources in a variety of
ways.
Currently, an existing Renewable Energy Systems Property Tax Exemption covers geothermal
power and residential space heating (such as the ones operating in Reno) but not commercial
projects (such as greenhouses or aquaculture facilities). However, a tax abatement for “green”
buildings was added in June of 2005 that would cover commercial geothermal direct use projects.
This abatement, referred to as the “Property Tax Abatement for Green Buildings” includes
provisions for “partial abatement of property taxes for property that has a building or structure
that meets or exceeds the United States Green Building Council's LEED Silver rating system.”
The exemption has a limit of 10 years and a maximum allowance of 50% abatement on total
property taxes79. However, similar to the Renewable Energy Producers Property Tax Abatement
(described earlier), it only affects revenue that goes to county governments, rather than putting
the tax burden on the state.
Several interviewees suggest replacing this abatement program with minimum standards for
energy efficiency for all commercial or residential buildings, along with accompanying incentives
or fees for non-compliance. Because land developers do not pay the energy bill once they sell a
property, they may avoid installations that would increase bottom-line costs. Therefore,
proponents of these policies suggest that minimum standards might correct this market failure,
while at the same time encourage the development of geothermal direct use heating systems.
Most agree that the most significant incentive for geothermal direct use projects is the RPS.
Similar to Arizona, Nevada’s RPS allows utilities to obtain demand-side management credits for
financing residential geothermal direct use projects. However, presently the way in which
utilities will approach these projects remains unclear. Clean energy advocates call on the Nevada
PUC to clarify this and to take a more active role in delineating opportunities for utilities to
finance direct use projects that they could claim for RPS credits.
As discussed above, financial incentives alone are not sufficient to spur new development. A
market must exist, along with adequate means for distribution. Most agree that a successful
sustainable business benefits more than the business owner, but the community at large which
collects the tax revenues and supplies the labor force. Because of its rural nature, Nevada is
limited in its development of commercial geothermal direct use projects, such as growing roses in
a greenhouse in the middle of the desert. However, several interviewees suggest that in addition
to incorporating geothermal development in agricultural extension programs, the state
government might participate in feasibility studies; develop educational programs for farmers,
39
teachers and other related groups, and provide government loans to help foster opportunities and
encourage investment.
One federal policy several interviewees suggest is a thermal (Btu) utilization incentive. Also, in
July of 2006, legislation was introduced by Senator Harry Reid entitled the “Renewable Schools
Energy Act of 2006” to allow public school districts to receive zero-interest loans for the
purchase of renewable energy systems. It would affect Nevada school districts, and geothermal
heating systems would be eligible for the loans80. While it did not make it out of committee in
the prior legislative session, the bill will likely be reintroduced in 2007.
Managing and obtaining information
It is clear that Nevada has been studied for its geothermal potential for many years. Direct use
facilities have been developed, with many still active. However, two changes have occurred in
the past few years that most agree will stimulate new study and lead to new geothermal direct use
developments.
The first is new federal regulations regarding direct use facilities. New opportunities may exist
for projects that are on federal land throughout the state, especially those areas close to Nevada’s
larger communities, including Elko and the Reno-Carson City-Sparks area.
The second and more compelling change is the rise in heating costs. Businesses and residents in
Elko and Reno are already enjoying savings from existing geothermal systems. However, as
these communities expand and new homes and businesses are constructed, communities should
consider opportunities available to utilize geothermal systems instead of fossil fuels. Because
home heating costs have only begun to rise appreciably over the past few years, investment in
alternative heating technologies has not yet become a priority for home-owners. However, as the
population grows, particularly in Carson City, Fallon, Reno, and Sparks, researchers assert that
the potential for geothermal heating must be examined in these areas. While not all locations in
these communities are conducive to development, promising wells have been drilled in various
areas within city limits that warrant more exploration and study. Several interviewees note that a
few individual homes in Carson City have installed geothermal heating systems; however experts
are unsure whether information about these homes is documented.
While most agree it is more challenging to install geothermal direct use systems in small isolated
communities where there is little funding for new infrastructure, their opportunities will also
expand as the economics of these projects improve. Many communities considered geothermal
projects in the 1970s and early 1980s that were not economical at the time, but may be costeffective today. While there are geothermal direct use projects in Nevada that are no longer
active, data shows that most of the facilities using geothermal for space heating remain active,
including those in Caliente, Elko, Gerlach, Reno, and Steamboat81. In fact, besides Elko and
Reno, Caliente has the most significant geothermal direct use development in the state. Caliente
is a small town 150 miles northeast of Las Vegas near the Utah border with a population just over
1,100. A motel and a trailer park use geothermal heating from resources as high as 175°F, and
the resource has served other uses in the past.
In addition to communities and schools, researchers say that geothermal direct use applications
should be considered for prisons, large residential lots, and new office buildings not yet under
construction. One interviewee notes that the Lovelock Prison, with nearly 1,500 inmates, is
located near a geothermal resource, but has not taken advantage of it. Prisons require high
heating loads, and the benefits of geothermal space heating have recently been demonstrated at
the Utah State Prison (with roughly 4,300 inmates) located 20 miles south of Salt Lake City82
40
where a recently installed geothermal heating system has saved them an estimated $344,000 in
energy costs in FY 2006.
Most agree that it takes more than a geothermal resource to successfully develop a direct use
project. First, you need public awareness of geothermal as an energy alternative. The prospect of
developing geothermal direct use applications is lost when not considered in the first place. Most
agree that a lack of awareness about how to utilize the resource prevents the public from
clamoring for more development. Researchers say that despite its usage, the public is still more
aware of wind and solar resources; in part because wind turbines and solar panels are more
recognizable than geothermal applications. Second, you need competence and experience. There
is a general consensus that in order to bring more of these types of projects into the mainstream,
state and federal agencies should be reaching out to those who have successfully developed these
projects before—including businesses, companies, consultants, and contractors—and encouraging
them to share their knowledge. Experienced entities could be encouraged to report on geothermal
direct use projects in industry trade magazines, such as greenhouse and aquaculture industry
publications that provide visibility about geothermal technology to a broader audience.
Another issue is information on past and existing geothermal direct use projects. The last
comprehensive update on existing installations in Nevada was completed in 199683. Since this
update was released, subsequent publications have noted new facilities and facilities that are now
inactive. The Great Basin Center has updated its list of geothermal resource sites over the past
few years; noting which projects remain in service, and which have closed down. In some cases
an explanation is provided, while in other cases, no reason is given.
There is a general agreement that another reconnaissance effort should be performed that will
determine which projects are still active, and what new projects have been developed in the past
decade. Researchers at the Great Basin Center say that they do not have adequate funding or staff
to update this data thoroughly, although additional funding could be used to enable students to do
this work at low cost. Such an update may include traveling to the locations themselves, and/or
checking with regulators and local chambers of commerce to get updated information. There is a
desire by educational institutions throughout the western U.S. to learn from past projects as they
embark on new ones.
41
Web resources with more information for Nevada
Bloomquist, Gordon: “A Regulatory Guide to Geothermal Direct Use Development: Nevada”.
Washington State University Extension Energy Program, 2003:
http://www.energy.wsu.edu/documents/renewables/nevada.pdf
Bureau of Land Management (BLM) – Nevada Geothermal Program:
http://www.nv.blm.gov/minerals/geothermal/index.htm
Geo-Heat Center at the Oregon Institute of Technology (OIT) – The Nevada Geothermal Industry
– 1996 – (History):
http://geoheat.oit.edu/bulletin/bull17-2/art17.htm
Geopowering the West (GPW) – Nevada state profile:
http://www.eere.energy.gov/geothermal/gpw/profile_nevada.html
Geothermal Atlas and info on Nevada:
http://www.energyatlas.org/PDFs/atlas_state_NV.pdf
Geothermal Energy Association: Existing Projects, Developing Projects, Resource Information
and other information: http://www.geo-energy.org/
GeothermEx, Inc. New Geothermal Site Identification and Qualification. For the California
Energy Commission (CEC) Public Interest Energy Research Program (PIER). April 2004:
http://www.energy.ca.gov/reports/500-04-051.PDF
Great Basin Center for Geothermal Energy – University of Nevada-Reno (UNR):
http://www.unr.edu/geothermal/
Site Descriptions:
http://www.nbmg.unr.edu/geothermal/listsites.php
Nevada Geothermal Resources Map:
http://www.nbmg.unr.edu/geothermal/gtmap.pdf
Nevada Commission on Mineral Resources, Division of Minerals – Oil, Gas, & Geothermal
Forms and Publications:
http://minerals.state.nv.us/forms/forms_ogg.htm
Nevada State Office of Energy: Geothermal Resources:
http://energy.state.nv.us/renewable/geothermal.htm
Western Governors Association (WGA) Geothermal Taskforce Report (January 2006):
http://www.westgov.org/wga/initiatives/cdeac/Geothermal-full.pdf
Developers
Amp Resources: http://www.ampresources.com/
Caithness: http://www.caithnessenergy.com/
Geothermal Rail Industrial Development, LLC (GRID): http://www.gridusa.biz/
Nevada Geothermal Power, Inc: http://www.nevadageothermal.com/
Ormat Technologies, Inc: http://www.ormat.com/
Sierra Geothermal Power Corporation: http://www.inovisionsolutions.com/s/Home.asp
Vulcan Power Company: http://www.vulcanpower.com/
42
Endnotes
1
Nevada Commission on Mineral Resources, Division of Minerals (NDOM) – Nevada Geothermal Update
– April 2006: http://minerals.state.nv.us/forms/ogg/ogg_NGU/NVGeothermalUpdate2006.04.pdf (page 3)
2
Source of 9% - U.S. Department of Energy – http://www.eere.energy.gov/geothermal/gpw/pdfs/29214.pdf
This number is still accurate in the fall of 2006. The source did not take into account the Richard Burdette
Plant, but increased consumption figures has kept the number at roughly 9%.
3
Sources:
Projects under development – “November 2006 Geothermal Power Production and Development Survey”
11/10/2006 – Geothermal Energy Association (GEA): http://www.geo-energy.org/publications/reports.asp
Source of 61 drilling permits – Statement of Mr. Donald L. Soderberg, Chairman, Public Utilities
Commission of Nevada, before the Subcommittee on Energy and Mineral Resources U.S. House of
Representatives April 29, 2006:
http://resourcescommittee.house.gov/archives/109/testimony/2006/donaldsoderberg.htm
4
Sources:
Negative Population Growth – State Population Facts - Nevada: http://www.npg.org/states/nv.htm
U.S. Census: http://quickfacts.census.gov/qfd/states/32000.html
Energy Information Agency (EIA): http://www.eia.doe.gov/cneaf/electricity/epa/epat7p2.html &
http://www.eia.doe.gov/cneaf/electricity/st_profiles/nevada.pdf
5
The geothermal areas stretch as far south as the Railroad Valley and Silver Peak, making up about 2/3rds
of the state, which is roughly 70,000 square miles.
6
The production from these wells was only enough to power Nevada’s electric energy needs for 15 minutes.
Source of natural gas and oil statistics – Energy Information Agency (EIA):
http://tonto.eia.doe.gov/oog/info/state/nv.html (2005) &
http://www.eia.doe.gov/pub/oil_gas/natural_gas/data_publications/natural_gas_annual/current/pdf/table_05
4.pdf (2004)
7
Source – U.S. Department of Energy (USDOE), Geothermal Today – Geothermal Energy Program
Highlights (2001): Pg. 8
8
Sources:
GeothermEx, Inc. New Geothermal Site Identification and Qualification. Prepared For the
California Energy Commission (CEC) Public Interest Energy Research Program (PIER). April 2004:
http://www.energy.ca.gov/reports/500-04-051.PDF & Western Governors Association (WGA) Geothermal
Taskforce Report (January 2006): http://www.westgov.org/wga/initiatives/cdeac/Geothermal-full.pdf
(pages 62-64)
9
Source: Combs, Jim. “Historical Exploration and Drilling Data from Geothermal Prospects and Power
Generation Projects in the Western United States.” Geo Hills Associates, Reno NV. GRC Transactions,
Vol. 30, 2006: Pgs. 387-392
10
Source of 2559 MW: http://www.geoenergy.org/information/resources/Western%20States%20Geothermal%20Power%20Potential%20Data.xls
Source of 12,800 MW: These numbers are based on discussions with researchers at USGS and reviewing
data in USGS Circular 790 (1978): http://www.geo-energy.org/aboutGE/potentialUse.asp. Table 8 on page
33 of USGS Circular 790 breaks down the identified and undiscovered accessible geothermal resource by
geologic province (shown on the map on page 32). The identified/undiscovered ratio in the northwestern
Basin and Range Province (which covers a small part of northeastern California and southern Oregon and
nearly all of northern Nevada) is 280/1400 or 5:1. This would be the ratio to use to give a rough estimate
of the undiscovered resource in Nevada. In USGS Circular 790, the estimated total identified electrical
energy potential from geothermal resources in Nevada is 2559 MW (Table 5, pages 51 to 55). Using the
same assumptions as were used in USGS Circular 790 and the ratio of 5:1, you get the estimated
undiscovered electrical energy of 10,236 MW, which adds to a total of 12,795 MW or roughly 12,800. The
southern part of Nevada is still considered part of the Basin and Range province, and although it is
expected to have less potential than the northwestern section, the ratio is still 5:1, and is part of the 12,800
MW estimate.
11
Source of 1,283 MW and 3,140 MW: Geothermal Energy Association: http://www.geoenergy.org/information/resources/Western%20States%20Geothermal%20Power%20Potential%20Data.xls
43
& Supply of Geothermal Power from Hydrothermal Sources: A Study of the Cost of Power in 20 and 40
Years, (Petty S., Livesay B., Long W. & Geyer J., 1992) http://www.prod.sandia.gov/cgibin/techlib/access-control.pl/1992/927302.pdf
12
While the 2,895 is predicted by 2025, we roughly estimate 2,895 by 2024 for this calculation.
Sources:
Energy Information Agency (EIA) (2004): http://www.eia.doe.gov/cneaf/electricity/st_profiles/nevada.pdf
University of Nevada Las Vegas, Center for Democratic Culture – Economic Trends and Forecasts for
Nevada: http://www.unlv.edu/centers/cdclv/healthnv/economy.html
13
Sources:
Nevada Geothermal Power, Inc. – Blue Mountain: http://www.nevadageothermal.com/s/BlueMountain.asp
Nevada Geothermal Power, Inc. – News – 9/11/2006 & 10/18/2006:
http://www.nevadageothermal.com/s/News.asp
Nevada Bureau of Mines and Geology, University of Nevada-Reno (UNR) – Blue Mountain:
http://www.nbmg.unr.edu/geothermal/site.php?sid=Blue%20Mountain
14
For more information see the U.S. Geological Survey (USGS) – “What is InSAR?”:
http://quake.usgs.gov/research/deformation/modeling/InSAR/whatisInSAR.html
15
For more information see the Great Basin Center for Geothermal Energy – “Geothermal GIS”:
http://www.unr.edu/Geothermal/geothermal_gis2.htm
16
The reason I refer to these resources as “being considered over the next five years” is based on the 3-5
years it takes to develop a project once the project is underway (i.e. further exploration, drilling, etc.). The
67% estimate is based on the “November 2006 Geothermal Power Production and Development Survey”
11/10/2006 – Geothermal Energy Association (GEA): http://www.geo-energy.org/publications/reports.asp
17
These are calculations based on the annual appropriations for the USDOE Geothermal Technologies
Program from 1990 to 1999. The average appropriation during the 1990s was $27.75 million as compared
to $23.299 million for FY 2006. When considering inflation (real dollars), the 2006 appropriations are
more than 16% lower than the average appropriations from 1990 through 1999. Source of budget: USDOE.
18
Source of “3.6 MW per million dollars of expenditure”: SENTECH, Inc. (3/28/2005) “An analysis of
Federal Loan Guarantees for Geothermal Energy Development” (page 1).
19
Source: Geothermal Energy Association (GEA) – August 2005: http://www.geoenergy.org/publications/reports/Factors%20Affecting%20Cost%20of%20Geothermal%20Power%20Devel
opment%20-%20August%202005.pdf (page 18)
20
For more information see the USDOE – “Enhanced Geothermal Systems”:
http://www.eere.energy.gov/geothermal/pdfs/egs.pdf
21
Source – Brown, Don & Duchane, Dave. “Hot Dry Rock (HDR) Geothermal Energy Research and
Development at Fenton Hill, New Mexico.” GHC Bulletin, Geo-heat Center, Oregon Institute of
Technology (OIT), December 2002: http://geoheat.oit.edu/bulletin/bull23-4/art4.pdf
22
For more information see: Bloomquist, Gordon: “A Regulatory Guide to Geothermal Direct Use
Development: Nevada”. Washington State University Extension Energy Program, 2003:
http://www.energy.wsu.edu/documents/renewables/nevada.pdf
23
Total federal surface and mineral acreage in Nevada: Bureau of Land Management (BLM) (2002):
Mineral and Surface Acres Administered by the Bureau of Land Management:
http://www.blm.gov/natacq/pls02/pls1-3_02.pdf
22 federally recognized tribes that have land – USDOE, Energy Efficiency and Renewable Energy (EERE)
– Geothermal Energy Resources on Tribal Lands in Nevada:
http://www.eere.energy.gov/tribalenergy/guide/nevada.html
Map of Nevada tribal reservations – Environmental Protection Agency (EPA) – Native American Tribal
Lands and Reservations – Nevada: http://www.epa.gov/region09/air/maps/nv_tribe.html
24
For more information on the Walker River Indian Reservation see Wikipedia:
http://en.wikipedia.org/wiki/Walker_River_Indian_Reservation
25
Sources:
Geothermal-biz.com: http://www.geothermal-biz.com/solicitations.htm
& U.S. Department of Energy (USDOE) – Feasibility of Renewable Energy Project on Tribal Lands:
https://ecenter.doe.gov/iips/faopor.nsf/UNID/746C66B1BDB9A8DA852571F60061A3F8?OpenDocument
44
26
Source of numbers: Personal Communication, BLM Geothermal Program:
http://www.blm.gov/nhp/300/wo310/geothermal/geothermalhome.html
NEPA: The Federal Land Policy and Management Act of 1976 and the National Environmental Policy Act
(NEPA) of 1969, required that land use planning and NEPA analysis be conducted prior to leasing. A
NEPA analysis, whether a Classification Exemption (CEX), determination of NEPA adequacy, EA, or EIS,
must be conducted prior to approval of any development activities. BLM and the USFS work jointly on
leasing and operations activities. The USFS and other surface management agencies must give consent to
BLM prior to leasing.
27
For more information on new regulations see the U.S. Department of Interior:
http://www.doi.gov/iepa/2005_results.pdf (Section 222-224)
28
There are actually three power facilities currently under development; however an existing geothermal
project at Stillwater is being decommissioned to build a larger power plant on the site
29
Source – U.S. Census: http://quickfacts.census.gov/qfd/maps/nevada_map.html
30
Source: Government Accountability Office (GAO) – “Increased Geothermal Development Will Depend
on Overcoming Many Challenges”. May 2006 Report to the Ranking Minority Member, Committee on
Energy and Natural Resources, U.S. Senate: http://www.gao.gov/new.items/d06629.pdf (pages 22-23)
31
For more information see U.S. Bureau of Land Management (BLM) – Wind Energy Development Final
Programmatic EIS: http://windeis.anl.gov/eis/index.cfm
32
Energy Information Agency (EIA) – Average Retail Price of Electricity by State, 2005:
http://www.eia.doe.gov/cneaf/electricity/epa/fig7p4.html
33
This includes all projects in Phase III and IV from Table I, except for Blue Mountain, Buffalo Valley, and
Carson Lake, which are expected to be online in 2009 at the earliest.
34
Source – Database of State Incentives for Renewable Energy (DSIRE):
http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=NV01R&state=NV&CurrentPag
eID=1&RE=1&EE=1
35
Source – Database of State Incentives for Renewable Energy (DSIRE) – Energy Portfolio Standard:
http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=NV01R&state=NV&CurrentPag
eID=1&RE=1&EE=1
36
In this calculation we assume a positive correlation between population growth and energy demand.
Because the RPS only affects IOUs, the number used is based on 2004 retail sales. That number is
multiplied by the percentage increase for the whole state from 2004 to 2005. In 2004, retail sales were
31,312 GWh, and retail sales by IOUs were 27,642 GWh. Retail sales in Nevada increased by 3.8% in
2005 to 32,501 GWh. Therefore, for 2005, we estimate the retail sales for IOUs at 28,692 GWh. A 30%
increase by 2015 would push that up to 37,300 GWh. That would require 7,460 GWh from renewables. If
1,000 MW of total geothermal energy could be installed by 2015 [an approximate number that adds
existing capacity (minus 22 MW being decommissioned to build new plants) to 50% of WGA’s near-term
economical estimate of 1,488 MW operating at 90% efficiency, that would be 7,884 GWh (assuming it was
sold to Nevada customers).
Sources – Energy Information Agency (EIA):
2004 Nevada State Profile: http://www.eia.doe.gov/cneaf/electricity/st_profiles/nevada.pdf
2005 Nevada retail sales: http://www.eia.doe.gov/cneaf/electricity/epa/fig7p2.html
37
This calculation assumes a 30% increase in demand along with new capacity combined with existing
capacity. This leaves out the estimates for additional biomass or wind, which will assuredly meet some of
the 10% by that time.
38
For more information see the Database of State Incentives for Renewable Energy (DSIRE) – Renewable
Energy Systems Property Tax Exemption:
http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=NV02F&state=NV&CurrentPag
eID=1&RE=1&EE=1
39
Data on the number of projects, the number of jobs, and the sales tax abatement is based on discussion
with the Nevada Commission on Economic Development (NCED). For more information see the
Database of State Incentives for Renewable Energy (DSIRE) – Renewable Energy Producers Property Tax
Abatement:
http://www.dsireusa.org/library/includes/map2.cfm?CurrentPageID=1&State=NV&RE=1&EE=1
According to NCED, geothermal power plants are eligible for the abatement, although DSIRE does not
indicate that on their website.
45
40
For more information see the 2005 Status of Energy in Nevada – Nevada State Office of Energy:
http://energy.state.nv.us/2005%20Report/2005%20Report.htm
41
These are the largest communities along the I-80 corridor, far removed from the Reno-Carson CitySparks area (all at least 100 miles away). West Wendover is on the Utah border, with a population of just
under 5,000. Source: http://www.elook.org/city/states/nevada.html
42
Source – Interwest Energy Alliance – Renewable Energy Highlights of 2005 (12/30/2005):
http://www.interwestenergy.org/2005_highlights.htm
43
For more information on the Grid West RTO, see Citizens’ Utility Board of Oregon (August 2006):
http://oregoncub.org/archives/2006/08/transmission_10_1.php
44
Sources:
These six states in the “Desert Southwest” with utilities involved in WestConnect include Arizona,
California, Colorado, Nevada, New Mexico, and Texas. For more information see WestConnect:
http://www.westconnect.com/ & “Nevada Power Joins WestConnect” – Nevada Power Company,
1/17/2006: http://www.nevadapower.com/news/releases/ShowPR.cfm?pr_id=4684
45
Source – Energy Information Agency (EIA) – 2004:
http://www.eia.doe.gov/cneaf/electricity/st_profiles/nevada.pdf
46
“Avoided costs” – Electronic Code of Federal Regulations (e-CFR) – Title 18: Conservation of Power
and Water Resources: http://ecfr.gpoaccess.gov/
47
RFP sources:
Nevada Power RFP: http://www.nevadapower.com/company/RFPs/renewable/
Sierra Pacific Power RFP: http://www.sierrapacific.com/company/RFPs/renewable/images/NPSPRFP_2006_Final.pdf
48
For more information see:
Desert Research Institute: http://www.dri.edu/Aboutdri/ & Sierra Pacific Resources – “Green Power”:
http://www.sierrapacific.com/comenv/env/greenpower/
49
Source – Database of State Incentives for Renewable Energy (DSIRE):
http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=NV01R&state=NV&CurrentPag
eID=1&RE=1&EE=1
50
Well Rural Electric Cooperative: http://wrec.coop/info/index.php
For more information on municipal utilities and rural cooperatives in Nevada see the Energy Information
Agency (EIA) – 2004: http://www.eia.doe.gov/cneaf/electricity/st_profiles/nevada.pdf
51
Source – U.S. Department of Energy (USDOE) Distributed Energy Program:
http://www.eere.energy.gov/de/power_generation.html
52
Nevada Bureau of Mines and Geology – “Wabuska Hot Springs”:
http://www.nbmg.unr.edu/geothermal/site.php?sid=Wabuska%20Hot%20Springs
53
Sources for more information:
Infinifuel Biodiesel: http://www.infinifuel.com/ & Dallas Kachan, “A biodiesel hotbed in Nevada”. Inside
Greentech, 11/13/2006: http://www.insidegreentech.com/node/318/print & Dave Nilles, “Nevada biodiesel
project to harness geothermal energy”. Biodiesel Magazine, October 2006:
http://www.biodieselmagazine.com/article.jsp?article_id=1207
54
Source – “Reid Wins Funding For Research and Development of Renewable Energy”. 12/02/2005:
http://democrats.senate.gov/newsroom/record.cfm?id=249465&
55
Source: “Researchers Helping Take Natural Gas Out Of Ethanol Production” – Iowa State University:
http://www.pollutiononline.com/content/news/article.asp?docid={FD009FED-93C2-4CCB-81F5CD67463C2F19}&VNETCOOKIE=NO (9/27/2006)
56
For more information see: Lund, John, “Examples of Industrial Uses of Geothermal Energy in the United
States.” GRC TRANSACTIONS, V. 30, September 2006: Pgs 216-217.
57
Source – Chena Hot Springs: http://www.yourownpower.com/Power/
58
For more information see: Bloomquist, Gordon, “Economic Benefits of Mineral Extraction from
Geothermal Brines.” GRC TRANSACTIONS, V. 30, September 2006: Pgs 579-582.
59
Source – UTC Power: http://www.utcpower.com/fs/com/bin/fs_com_Page/0,5672,0193,00.html
60
References to Professor Bloomquist as well as attributed quotations in this section refer to Bloomquist,
Gordon: “A Regulatory Guide to Geothermal Direct Use Development: Nevada”. Washington State
University Extension Energy Program, 2003:
http://www.energy.wsu.edu/documents/renewables/nevada.pdf
46
61
Source – IDWR Energy Division:
http://www.idwr.idaho.gov/energy/alternative_fuels/geothermal/detailed_history.htm (Domestic Heating)
62
For a map of land ownership in Nevada see the Idaho National Laboratory – “Nevada Geothermal
Resources”: http://geothermal.inel.gov/maps/nv.pdf
63
Sources:
Lund, John, “Examples of Industrial Uses of Geothermal Energy in the United States.” GRC
TRANSACTIONS, V. 30, September 2006: Pgs 214-215 & Nevada Bureau of Mines and Geology –
Round Mountain Mine http://www.nbmg.unr.edu/geothermal/site.php?sid=Round%20Mountain%20Mine
64
Source, Jim Witcher (March 2006):
http://geology.utah.gov/emp/geothermal/ugwg/workshop0306/ppt/Witcher0306_1.ppt
65
Sources:
Ray, Leo. “Geothermal: Our Most Underutilized Natural Resource”. Presentation given on 5/18/2006 at
the Using the Earth’s Energy: Arizona Geothermal Direct Use Conference in Tempe, Arizona &
Geo-Heat Center at the Oregon Institute of Technology (OIT) – GHC Bulletin, March 2004:
http://geoheat.oit.edu/bulletin/bull25-1/art6.pdf
66
Source, Gordon Bloomquist (March 2006):
http://geology.utah.gov/emp/geothermal/ugwg/workshop0306/ppt/Bloomquist0306_3.ppt
67
Source – Flynn, Thomas. “Moana Geothermal Area Reno, Nevada: 2001 Update”.
GHC Bulletin, September 2001: http://geoheat.oit.edu/bulletin/bull22-3/art1.pdf
68
Weather Statistics:
Carson City: http://www.weather.com/weather/wxclimatology/monthly/graph/USNV0014?from=search
Reno: http://www.weather.com/weather/wxclimatology/monthly/graph/USNV0076?from=search
Sparks: http://www.weather.com/weather/wxclimatology/monthly/graph/USNV0086?from=search
69
History of Elko Heat Company system: Lattin, Mike. “Elko, Nevada, District Heating System”.
GHC Quarterly Bulletin – 1997: http://geoheat.oit.edu/bulletin/bull18-3/art43.htm
70
Elko-Spring Creek has a combined population of just over 27,000, exceeding Pahrump at just less than
25,000, located 60 miles west of Las Vegas in Nye County. Source – eLook.org:
http://www.elook.org/city/states/nevada.html (2000 population statistics)
71
Elko weather: http://www.weather.com/weather/wxclimatology/monthly/graph/USNV0024?from=search
72
For more information on this project see the Great Basin Center for Geothermal Energy: UNR Renewable
Energy Center (UNR-REC): http://www.unr.edu/Geothermal/UNRREC.htm
73
Sources:
Geothermal Rail Industrial Development, LLC: www.gridusa.biz
“Summary of 2006 Task Order Agreement (TOA) Awards” – Geothermal-biz.com, 8/9/2006:
http://www.geothermal-biz.com/Docs/2006%20TOA.pdf
74
Nevada Bureau of Mines and Geology – “Hawthorne”:
http://www.nbmg.unr.edu/geothermal/site.php?sid=Hawthorne
75
Sources for this section:
Great Basin Center for Geothermal Energy – Status of Nevada Geothermal Resource Development – Spring
2002: http://www.unr.edu/Geothermal/pdffiles/Garside020711.pdf (Table 2, page 8 of 10) & Nevada
Bureau of Mines and Geology – Site Descriptions: http://www.nbmg.unr.edu/geothermal/listsites.php
76
“Florida Canyon ceases mining operations” by Beth Clifton. Lovelock Review-Miner, 4/14/2005:
http://nevadarancher.com/rminer/rm2005/rmapr14d.htm
77
This description is based on an article by the Las Vegas Review Journal as well as conversation and
confirmation on the details with representatives familiar with the case from the Nevada Department of
Wildlife (NDOW).
Sources:
“The little fish were 'threatened’... and the bureaucrats killed them all” (editorial) – Las Vegas Review
Journal 7/27/2003: http://www.reviewjournal.com/lvrj_home/2003/Jul-27-Sun2003/opinion/21794609.html
Mina population: http://www.nsbdc.org/what/data_statistics/demographer/pubs/pop_increase/
Nevada Bureau of Mines and Geology – “Sodaville Springs”:
http://www.nbmg.unr.edu/geothermal/site.php?sid=Sodaville%20Springs
78
Sources:
47
U.S. Department of Agriculture (USDA) – Nevada State Agricultural Overview – 2005:
http://www.nass.usda.gov/Statistics_by_State/Ag_Overview/AgOverview_NV.pdf & Wikipedia – Nevada;
Economy: http://en.wikipedia.org/wiki/Nevada
79
For more information see the Database of State Incentives for Renewable Energy (DSIRE) – Property
Tax Abatement for Green Buildings:
http://www.dsireusa.org/library/includes/map2.cfm?CurrentPageID=1&State=NV&RE=1&EE=1
80
Senator Harry Reid: http://reid.senate.gov/newsroom/record.cfm?id=259579&&year=2006&
Govtrack.us: http://www.govtrack.us/congress/bill.xpd?bill=s109-3719
81
For information on inactive projects see: Great Basin Center for Geothermal Energy – Status of Nevada
Geothermal Resource Development – Spring 2002:
http://www.unr.edu/Geothermal/pdffiles/Garside020711.pdf (Table 2, page 8 of 10)
82
Sources:
Lovelock Correctional Center: http://www.doc.nv.gov/lcc/Professional%20staff.html
Utah State Prison: http://www.cr.ex.state.ut.us/corrections/facilities/usp.html
83
This refers to research performed by the Geo-Heat Center at the Oregon Institute of Technology (OIT):
http://geoheat.oit.edu/state/nv/all.htm
48