Even though the federal stimulus package includes substantial funding for geothermal projects, no one expects an immediate upsurge in development of the industry in Northern Nevada.
Credit markets remain frozen, and the geothermal industry relies heavily on borrowed money to explore for promising sites and build generating plants. In the longer term, however, the federal stimulus package is almost certain to encourage development of the geothermal industry.
The measure includes tax credits for the sale of energy produced from geothermal and other renewable sources. It potentially puts billions of dollars nationwide into creation of transmission lines to link remote geothermal plants with big cities that consume electricity. And the stimulus package earmarks $400 million for applied research and development of geothermal technology.
That $400 million represents an 80-fold increase in federal spending on geothermal research, notes Jason Geddes, the environmental services manager for the City of Reno and a longtime advocate of green energy development in the state.
Over the long haul, Geddes says, the applied research into geothermal is likely to make the technology an increasingly attractive alternative to traditional power plants that run on fossil fuels.
The immediate impact of the money will be felt at universities with interests in geothermal projects as well as companies willing to undertake applied research programs, says Paul Thomsen, public policy manager for Ormat Nevada Inc., a geothermal developer.
But the industry's immediate challenge is breaking loose funds from the frozen credit markets, says Mark Harris, a resource planning engineer with the Public Utilities Commission of Nevada.
Geothermal developers, Harris says, typically need a lot of cash upfront. Drilling exploratory holes to find hot water below the earth's surface can run $1 million or more. Leases of geothermal rights consume more cash. Equipment manufacturers typically want a cash deposit when they take an order for geothermal plants.
The federal stimulus package, Harris says, does little to get credit moving to the industry quickly. On the other hand, he says, steps to improve the long-term viability of the geothermal industry may mean that lenders will finance new projects on better terms.
Thomsen says financing of new geothermal projects may be eased by a provision in the stimulus package that allows developers to take a 30 percent tax credit on their investment in geothermal facilities once the plants are in operation.
"That is going to help some people over the hurdle of financing in these difficult times," says Thomsen. A Utah company that's active in Northern Nevada's geothermal industry has a plan to tap into the stimulus funds more quickly.
Provo-based Raser Technologies is talking with Utah cities " and soon will expand its focus to cities and counties in Nevada as well " about putting some of the stimulus money received by local governments into geothermal projects.
David West, a Raser vice president, says the company has geothermal plans ready for quick development in joint ventures with local governments that receive federal help with "shovel-ready" projects.
Salt Lake City, for instance, hopes to receive $70 million in federal money to help finance a geothermal plant in partnership with Raser. Ralph Becker, the mayor of Salt Lake City, has said the partnership would help jump-start the region's economy while providing low-cost green energy for its residents.
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