Geothermal operators seek level playing field for renewables

The geothermal industry is advocating for a new way for utilities to calculate the cost of renewable energy.

The goal is to make geothermal energy more competitive with solar, wind and other renewable sources in power-purchase agreements with the utilities that are required to include renewable power in their portfolios but also are obligated to find the best deal for their ratepayers.

“We are going to be actively lobbying (public utility commissions) in the West to include all of the costs of all the technology,” says Paul Thomsen, director for policy and business development at Reno-based Ormat Technologies Inc. and president of the Geothermal Industry Association. “We’ll reach out to ratepayer advocates to make sure they understand there is no such thing as a free ride or free lunch. Someone is picking up cost of ancillary services.”

What Thomsen and others want to see is the secondary costs of using an intermittent power source such as wind and solar taken into account when compared to geothermal, a baseload power source capable of generating electricity round the clock.

“Variable renewables say we can build power plant at this price, but we have to back that power up with a natural gas plant,” says Thomsen. “Those integration adders have a cost that is not reflected in their power purchase price, giving them an incredible advantage.”

As the industry likes to point out, geothermal is the only renewable that must be discovered and is disadvantaged by the huge upfront costs and time required for exploration and construction. Solar and wind are often given preferential treatment, too, through use incentives or mandates.

The result is reflected in the market. Solar and wind use has grown in the double digits for the last few years and is forecasted to continue expanding, albeit more slowly, for several years to come. Growth in geothermal, on the other hand, has stalled and is expected to remain flat through at least 2014, according to U.S. Energy Information Administration.

In northern Nevada, though, geothermal rules. More than 90 percent of the renewable energy used by Sierra Pacific Power Co., NVEnergy’s northern arm, is generated by geothermal.

Still, the industry is targeting the Nevada ratepayer advocate, which resides in the Office of the Attorney General, Bureau of Consumer Protection. By 2019, NVEnergy will retire 800 megawatts of coal-fired generation and replace it with 550 megawatts of new generation, although it need not be from renewable sources. In addition, the utility must issue request for proposals for 350 megawatts of renewable power by 2016.

Dan Jacobsen, technical staff manager with the AG’s Bureau of Consumer Protection, says the office has not seen a specific proposal from the geothermal industry but is open to discussing whatever they want to put on the table.

He says each power-purchase agreement is negotiated and there are no hard and fast rules to determining pricing. But he says forecasts of the price of natural gas, which is usually the form of energy used to make up for the downtime of solar and wind, show the cost of natural gas will remain low for years.

“I do agree geothermal is more of a baseload so it has that benefit,” says Jacobsen. “It meets needs that wind and solar cannot meet. What we look at is the most economical way for the utilities to meet renewable requirements.”

Jacobsen says one provision of Senate Bill 123, the Nevada legislation passed this session that requires the state to retire its coal plants and issue an a request for proposals for renewables, may help geothermal. It requires that the PUC, which approves purchased power agreements and rates, take into account the economic benefit of any source in terms of job creation.

For its part, NVEnergy says it remains agnostic.

“All renewables have positive and negative attributes,” says Bobby J. Hollis, executive, renewable energy for the utility. “Based on the new laws adopted in 2013, we will work with our commission over the next several months to be sure that all technologies present a fair picture of those attributes to assure that the selected projects present the best renewable value for our customers.”