Nevada climate favorable for frnewable energy production

Ormat of Nevada, the Sparks-based subsidiary of Ormat Technologies, broke ground on its Galena Geothermal Project at Steamboat last week.

It was the first expansion since 1991.

Between then and 2001, Ormat built 30 to 40 overseas projects, producing 500 megawatts of electricity, says Daniel Schochet, vice president.

It built nothing here.

For more than a decade, deregulation, advances in technology, reductions in the price of natural gas, and a Nevada law requiring utilities to purchase the least expensive power combined to price electric power at

about 3 cents per kilowatt hour.

"Renewables could not compete at that price," says Schochet.

The state had no regulations requiring a percentage of renewables in the power mix.

There was no exploration for geothermal resources because customers told companies such as Ormat they'd look at renewable energy sources only when they became price competitive with traditional generation.

The scene changed in 2000 due to the California energy crunch.After deregulation, the price of natural gas started to go up.

"It became apparent that the era of cheap natural gas was over," says Schochet.

"Renewables could be efficient."

And because upfront development is the major cost in a geothermal project, energy prices for renewables are fixed for 20 years, unlike gas prices which can rise without notice.

"Nevada wisely recognized this was coming," Schochet says."That was the spur to starting in Nevada again."

The new facility joins three existing plants off Mount Rose Highway at Highway 395.More employees may be added to staff it, says Schochet, although operations can be managed from a central control area.

Ormat employs about 600 worldwide, about a third of them in the United States.

Ormat will serve as the general contractor for the project.Manufacturing is done in Israel, but the company buys 50 percent of parts in the United States; they are shipped overseas for assembly, then shipped back here.

Ormat will build another project in Churchill County: Desert Peak II, scheduled for completion later this year.

The permitting process is under way, and output is expected to be about the same as at the Galena plant, says Schochet.

Financing comes from a combination of bank loans, bonds and shareholders' equity.

A 15-year bond totaling $190 million was issued last year by Lehman Brothers.

Ormat, a New York Stock Exchange company, raised $100 million through a stock offering last November.

The Galena Geothermal Plant pumps 18,000 gallons of hot water per minute in a closed loop system from wells that average 1,200 feet, says Darin Daters, facility manager.

Water from 350 feet below the surface measures 305 degrees.About 100 degrees of heat is removed before the water is re-injected into the ground to be reheated at 2,400 feet.

Hydrologists measure a water temperature decline of about half a degree per year.

Sierra Pacific Power Co., a subsidiary of Sierra Pacific Resources, has contracted to buy the power generated by the plant.

"The cost of geothermal power is now competitive with conventional fossil-fuel generation," says utility spokeswoman Faye Andersen.

Nevada regulations require 15 percent of energy sold by utilities in the state to come from renewable resources by 2013.

Currently Sierra Pacific generates 10 percent from renewables, with 85 to 90 percent of that coming from geothermal sources and the remainder from hydro.

It aims to achieve another 2 percent toward that goal every third year, Andersen says.

Sierra Pacific has signed agreements to purchase an additional 50 megawatts of geothermal energy from Ormat operating units due to come on line over the next 18 months, said Roberto Denis, senior vice president at Sierra Pacific Power and its sister company, Nevada Power.

"Currently we purchase 95 megawatts of electricity from geothermal producers from Steamboat to Wabuska to Beowawe.

That's enough power to serve almost 100,000 typical homes.

In 2004 we purchased 690,000 megawatt hours of electricity generated from geothermal resources," said Denis."Renewable energy sources reduced atmospheric emissions last year by more than 600,000 tons of carbon dioxide and over 850 tons of sulfur dioxide."

The additional 20 megawatts of electricity Sierra Pacific has under contract from the Galena project is expected to produce another 170,000 megawatt hours of electricity, an increase of 25 percent over current geothermal production, said Denis.

Public lands are important to the Nevada energy portfolio, said Del Fortner, a spokesman for the Bureau of Land Management."Nevada is a lightning rod for geothermal with 67 percent of all geothermal licenses in the nation on BLM land," Fortner said during groundbreaking for the Galena plant last week.

Nine power plants producing 170 megawatts are operating on federal geothermal resources, says Richard Hoops, geothermal program coordinator at the State office of the Bureau of Land Management.

Two-thirds of the power is sold to Southern California Edison; the remainder to Sierra Pacific Power.

Federal royalties collected on geothermal production from public lands run about $2 million a year; the state gets half of that, says Hoops.

The royalties formula is based on a combination of factors and calculations that yields about 3 percent of gross power sales receipts in royalties.