Magma Energy purchases Geysir Green Energy’s shares in HS Orka to increase stake to 98.53%

The acquisition of HS Orka will boost Magma Energy’s geothermal power production to 186 megawatts.

Magma Energy Corporation has agreed to purchase all of Geysir Green Energy’s shares in HS Orka, the largest privately-owned energy company in Iceland, to increase its stake in the Icelandic geothermal company to 98.53 percent.

Iceland is home to one of the world’s largest and most developed geothermal industries. The country relies heavily on geothermal energy for its energy supply, meeting 23 percent of its electricity demand with the renewable energy source.

The acquisition of HS Orka will boost Magma Energy’s geothermal power production to 186 megawatts, its geothermal reserves to 193 MW and its indicated and inferred geothermal resources to 1,161 MW.

Meanwhile, HS Orka’s remaining 1.5 percent stake is held by four Icelandic municipalities.

Magma Energy’s wholly-owned subsidiary will purchase Geysir‘s interest in HS Orka for 10.56 billion Icelandic krónur (.27 million) and through a bond with a face value of 6.29 billion Icelandic krónur issued by Geysir.

The Canadian company may opt to pay .55 million of the purchase price in common shares, which are valued based on its trading price in late July. The remaining cash component can be paid in two tranches of .45 million by end of July and .50 million by end of November.

Magma Energy will secure the bond through 27.35 percent of the shares it acquired through the transaction, which is expected to close in late July.

The company plans to finance the acquisition through bridge financing, conventional debt or equity financing, or by selling a minority stake in HS Orka to other Icelandic or offshore investors.

HS Orka generates 175 MW of geothermal power from its75-MW Svartsengi plant, which opened in 1978, and its 100-MW Reykjanes plant, which began production in 2006. The company plans to expand its geothermal power production capacity to 405 MW by 2015.

HS Orka also produces 150 MW of thermal energy for district heating.

Geysir Green Energy is a private geothermal development company that also holds interest in Iceland Drilling, a geothermal drilling company, and other geothermal assets worldwide.

Magma Energy (TSX:{yootooltip mode=[cursor] title=[MXY] width=[556] display=[inline]}

{/yootooltip}) specializes in operating, developing, exploring and acquiring geothermal projects. The company has an extensive portfolio that also includes properties in Latin America and Western United States.

Geothermal

U.S. Department of Energy offers to guarantee 80 percent of loan for Faulkner 1

Faulkner 1 facility tied with the North Brawley geothermal plant in California as the biggest geothermal power plants brought online in 2009 in the United States. Photo by Nevada Geothermal Power

The United States Department of Energy has offered to guarantee 80 percent of a .5 million loan to Nevada Geothermal Power that will be spent on developing its Blue Mountain Faulkner 1 geothermal project in Northwest Nevada.

The 49.5-megawatt project in Humboldt County consists of advanced fluid collection technologies and injection systems that draw geothermal energy from rocks and fluids beneath the surface.

The lead lender to the project is insurance company John Hancock Financial Services.

The Energy Department will serve as lead guarantor through the financial institution partnership program, a Recovery Act-backed program designed to speed up loan guarantee processes for renewable energy projects that use commercial technologies.

The geothermal developer has secured a power purchase agreement with utility Nevada Energy for Faulkner 1. Nevada Energy will buy up to 49.5 MW of gross geothermal power from the power plant for 20 years.

“The John Hancock senior debt facility and the D.O.E. loan guarantee will provide low cost, long-term financing for our leading Faulkner 1 project and greatly enhance our ability to provide permanent clean energy jobs in northern Nevada,” said Brian Fairbank, chief executive of Nevada Geothermal.

Faulkner 1 facility tied with the North Brawley geothermal plant in California as the biggest geothermal power plants brought online in 2009 in the United States. North Brawley is owned by geothermal developer Ormat Technologies Inc.

According to the Geothermal Energy Association, the United States remains as the global leader in geothermal electricity production. As of May 2010, the country possessed 3,068 MW of installed geothermal capacity from 77 power plants.

The Nevada geothermal developers estimate that the area around Faulkner 1 actually has a resource potential of 100 MW. Last May, the geothermal plant achieved a record 530-MW electric power production, which is enough power for 40,000 homes.

Geothermal

New Zealand is seeing no end to its geothermal growth

New Zealand has been harnessing its vast geothermal reserves since it pioneered the development of large-scale geothermal electricity generation in the 1950’s.

New Zealand, a country which has a rich history in developing geothermal energy sources, is seeing no end to its geothermal growth, it told a global industry event recently.

Investments in geothermal development, such as research, exploration and infrastructure, are expected to soar as New Zealand pushes to source 90 percent of its electricity from renewable sources by 2025.

At present, geothermal is the second most-used renewable energy source in the country, providing around 14 percent of its electricity. Hydropower is still number one.

But New Zealand’s climb from No. 8 to being No.5 in the ranking of the fastest geothermal power builders in the world is another testament to a promising future.

“We have seen a steep upward growth for geothermal power generation domestically, proving the commercial viability of this clean energy resource to fuel our industries and homes,” said Spence McClintock, president of the New Zealand Geothermal Association, which aims to promote geothermal use in New Zealand.

The association, supported by the New Zealand government, is currently attending the World Geothermal Congress 2010 in Bali, Indonesia which opened on April 26 and ends this Friday. It is promoting its geothermal capabilities before the event, the world’s largest geothermal industry gathering.

In 2015, New Zealand itself will become the event’s host jointly with Australia, said Alan Koziarski, New Zealand Trade and Enterprise’s regional director for the Asian region.

New Zealand has been harnessing its vast geothermal reserves since it pioneered the development of large-scale geothermal electricity generation in the 1950’s.

New Zealand built and funded the first Indonesian geothermal power station, Kamojang 1, which opened in 1982, while providing technical support.

New Zealand also provided training for many of Indonesia’s and the Philippines’s leading national engineers and scientists, and continues to offer broad geothermal postgraduate training, making it one of the remaining countries that do so for the last 30 years.

Overseas projects

Mr. Koziarski expects their presentation at the conference to deepen New Zealand’s partnerships with other leading geothermal markets in the Asia-Pacific, such as Australia, Indonesia and the Philippines.

New Zealand’s companies are also active players in Papua New Guinea and other countries in the Western Pacific, Asia and South America, particularly in Chile. It also has presence in East African countries.

“The geothermal industry is the place to be, with a lot of development over the last few years and much more to come in the near term,” said Mr. McClintock, citing geothermal’s independence from weather and its ability to deliver the most competitive unit rates of any energy option for heat and electricity generation.

Some of the participants in the geothermal conference are Maskel Productions Ltd., Allied Industrial Engineering, Robt Stone and Parsons Brinkcerhoff Power. Others include PT AECOM Indonesia, Sinclair Knight Merz and Tiger Energy.

Geothermal energy is responsible for approximately 0.4 percent of the world’s global power generation. The International Geothermal Association expects global installed geothermal capacity at around 11 gigawatts currently, after it went beyond 10 GW in 2008.

Geothermal

Sacramento Municipal Utility District purchases 132 MW from Patua’s geothermal power plant in Nevada

Nevada (above) is the country’s second largest producer of geothermal energy in the United States, with 16 geothermal plants. The state will be the home of Patua Project’s first geothermal plant.

The Sacramento Municipal Utility District expands its renewable energy portfolio after it agreed to purchase up to 132 megawatts of power from Patua Project L.L.C.’s first geothermal power plant.

Under the 21-year contract, the utility will also receive energy, environmental and carbon-neutral benefits from the project.

Located near Fernley, Nevada, Patua’s geothermal plant will initially provide 500 gigawatt-hours of energy annually, which will be increased eventually to 1,000 GWh per year.

Patua, a subsidiary of Vulcan Power Company, began the three-phase construction of the plant with the drilling in February. The company will construct a 60-MW power plant in January 2011.

The plant will produce electricity around the clock for the utility beginning the first quarter of 2012 until 2033.

The new power purchase agreement with Patua is part of the Sacramento utility’s efforts to meet its target of sourcing 33 percent of its energy from renewable sources by 2020. The utility generated 19 percent of its power supply from renewable sources in 2009, and plans to increase it to 20 percent this year.

“The additional base load power supply avoids the challenge of integrating an intermittent source of renewable energy, such as wind and solar,” said John DiStasio, chief executive and general manager of the utility.

Geothermal energy is harvested by drilling naturally occurring hot water reservoirs to produce geothermal fluids, which can replace fossil fuels burned to generate electricity. Geothermal reservoirs can be replenished by injecting the produced geothermal fluids back into the reservoir.

The utility is the third company to sign a power purchase agreement with the Patua geothermal project. Patua has previously signed 20-year agreements with the Nevada Power Company and Southern California Edison.

Vulcan Power Company is a private geothermal developer that owns a comprehensive geothermal portfolio composed of geothermal leases and applications covering over 170,000 acres in Nevada, California, Oregon and Arizona.

In 2008, the United States generated a total of 14.86 million kilowatt-hours of geothermal power, which contributed 0.4 percent of the nation’s electricity generation.

California is the largest producer of geothermal electricity, with 34 geothermal power plants producing approximately 90 percent of the country’s geothermal capacity. It is followed by Nevada, with 16 geothermal power plants.

Meanwhile, Hawaii, Idaho, Montana and Utah each have one geothermal plant.

Geothermal

Ascent Solar Technologies, Inc.

Global geothermal energy use increased significantly over last five years, according to Geothermal Energy Association

Seventy countries currently have geothermal projects under consideration, representing a 52 increase from the last international report compiled by the Geothermal Energy Association in 2007.

Global geothermal energy use and development has increased significantly over the last five years, with over 10,000 megawatts of installed capacity providing power to over 52 million people, according to a report by the Geothermal Energy Association.

Entitled Geothermal Energy: International Market Update, the report states that 24 countries increased their geothermal capacity by 20 percent since the release of a report by International Geothermal Association in 2005.

Seventy countries currently have geothermal projects under consideration, representing a 52 increase from the last international report compiled by the Geothermal Energy Association in 2007.

The association cited Europe and Africa as the regions with the most projects under development. Twenty-four European countries were listed to have geothermal projects under development, compared with the 10 countries in 2007. For instance, Turkey intends to bring 550 MW of geothermal power online by 2013.

Meanwhile, there are 11 African countries producing geothermal energy compared to only six identified by the association three years ago. Kenya, for example, plans to produce 490 MW of geothermal power by 2012 and as much as 4,000 MW over the next 20 years.

While the United States remains the world leader in geothermal electricity production, with about 3,086 MW of installed capacity from 77 power plants, countries from the Pacific Ring of Fire are catching up in the geothermal market.

The Philippines, in Southeast Asia, is still the second highest geothermal power producer with 1,904 MW, which makes up nearly 18 percent of the country’s electricity generation. On the other hand, neighboring Indonesia has set a goal of 9,500 MW of geothermal capacity, an 800 percent increase from its current installed capacity.

The report emphasizes that regional institutions play key roles in global geothermal development by financing projects as well as enhancing regional cooperation within the renewable energy sector. In France, Germany, Latvia, Britain and other European countries, government policies such as feed-in tariffs make highly risky and expensive projects more feasible.

However, although the study sees that the geothermal market is expanding to encompass most of the countries worldwide, this colossal growth only represents a small fraction of the geothermal potential that the world can use, said Karl Gawell, executive director of the association.

He noted that majority of countries do not fully use their geothermal resources. In 1999, the association identified 39 nations that could source 100 percent of their electricity needs from geothermal energy, but only nine of these countries actually have geothermal projects online.

“It’s as if we discovered a huge deposit of oil underneath our feet, enough to put gas in our cars forever, and didn’t use it; except this is a totally clean, renewable and constant energy source,” Mr. Gawell said.

Geothermal

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Global geothermal capacity will surge beyond 18.4 gigawatts by 2015, study says

Geothermal energy, which has a global potential of 70 GW, is practically accessible anytime unlike solar and wind which have variability issues.

Global geothermal capacity will surge beyond 18.4 gigawatts by 2015 as concerns rise over conventional energy sources and new technologies emerge allowing the resource to be tapped at lesser cost, Earthtimes.org reported.

Global Industry Analysts said the growth of the geothermal industry is heavily dependent on new technologies. Currently, increasing drilling costs for conventional geothermal systems are affecting the economic viability of the resource.

But new technologies, such as several innovative direct-use technologies for air conditioning, will help address installation issues and related costs, the study said.

In another respect, diminishing traditional energy sources and their role in climate change will work for geothermal’s benefit. The analyst cited geothermal energy’s strong potential for mitigating climate change since it is virtually greenhouse gas emission-free.

Geothermal energy, which has a global potential of 70 GW, is also practically accessible anytime unlike solar and wind which have variability issues.

The United States and Asia Pacific countries are leading in harnessing geothermal resources, which they mainly use for electricity production and heating. The United States, the Philippines, Mexico, Indonesia and Italy account for over 75 percent of the world’s geothermal electricity.

That is explained by their location in hot regions or areas along the tectonic plates, such as the Pacific Ring of Fire, which have the highest geothermal potential.

The market analyst’s study shows that Indonesia has the highest geothermal energy potential of 25 GW to 30 GW, as the United States and Latin America trail closely behind. The Oceania regions and the Horn of Africa northeast of the African continent also possess huge potential.

Global Industry Analysts is based in San Jose, California and produces exclusive studies through over 800 employees worldwide.

Geothermal