In today’s issue, we’ll bring you up to speed on why geothermal is the way of the future and Raser is at the forefront of a revolution in the energy industry.. Let’s start by taking a look at geothermal energy and what gives it an advantage over fossil fuels and other competing renewable energy sources:
What is geothermal energy?
Geo (earth) thermal (heat)
Simply put, geothermal energy is heat from within the earth that can be harnessed through modern technology to generate electricity. This is usually accomplished by drilling wells into underground hot water reservoirs, which in turn produces hot steam that can be used to power turbines that produce electricity.
Geothermal Energy Benefits:
1. Unlimited Source of Base Load Power: Forget waiting for the sun to shine or the wind to blow, geothermal plants produce power 24/7 and run regardless of weather conditions or issues politicians who can often disrupt production at fuel-dependent facilities.
2. Emissions-Free, Clean Energy: Carbon Dioxide: Emissions (CO2) from US power plants posted their biggest annual jump in nearly a decade, from 2006 to 2007 (EIP). While plants that burn fossil fuels emit toxic gases, geothermal power plants have a relatively small environmental footprint and produce a final product of water vapor. Furthermore, by using electricity from current geothermal plants, 22 million tons of CO2 and 110,000 tons of particulate matter do not enter the atmosphere each year.
3. Geothermal energy requires minimal resources: Solar and wind farms require a significant amount of land to generate enough energy to power a city. By contrast, geothermal plants occupy a fraction of the space and currently operate in environments as fragile as farm fields and tropical rainforests. Geothermal plants also have capacity factors of 85% to 95%, better than a typical coal plant and far in excess of the output of typical solar or wind power operations.
4. Less reliance on foreign oil: The US consumed nearly 21 million barrels of oil per day in 2007, and the average American now uses about 15 times more energy per person than the average developing nation. Our appetite for oil has grown so much that the US is forecast to spend $440 billion on foreign oil in 2008.
As tensions rise in the Middle East and Central America, President-elect Obama is expected to order soon that US utilities get 10% of their electricity from renewable sources by 2012. Fortunately, geothermal energy can help us to get out of this debacle. Recent studies by the National Renewable Energy Laboratory and MIT suggest that geothermal energy harnessed from currently identified reserves may account for as much as 10% of total US energy production.
5. Significant Government Renewable Energy Mandates/Tax Incentives: These regulatory trends are making renewable energy production cheaper and driving increased demand for geothermal, solar, and wind power. Currently, almost 30 states have established some type of renewable energy standard or have plans to do so in the near future.
Additionally, under the Emergency Economic Stabilization Act of 2008, companies like Raser that are engaged in geothermal power generation are eligible for a tax credit of 1.9 cents per kilowatt-hour (KWh) for the first ten years of a renewable energy facility. operation. Before generating power at its plants, Raser is eligible to receive tax breaks on the percentage of what it costs to build facilities and distribute to financial partners in a strategy that helps offset construction loans and attract equity investment.
The epitome of innovation
In the geothermal sector, Raser has stood out from the competition for its innovation and perseverance.
One of the biggest barriers to geothermal production is the time and capital required to bring the plants to production and this is where RZ excels. Raser recently built its Thermo 1 geothermal plant in just 12 months, representing the fastest development and construction of a commercial-grade power plant to date. Utilizing modular technology licensed through its partnership with UTC Power, a United Technologies Corp. (NYSE: UTX) company, RZ has been able to exceed the industry average of 3 to 5 years. The modular approach eliminates the need for custom engineering, which significantly lengthens the construction of competing geothermal plants and, in turn, the capital required to create plants.
Alignment with world leaders ensures quality
The company has built relationships with world-class partners in an effort to optimize every key facet of its business. Merrill Lynch ($600M in committed capital) has agreed to finance the first 155MW of geothermal power production from Raser, the technology is available through United Technologies, Cummins & Barnard, Inc. is responsible for plant engineering and Layne Christensen Company handle the drilling.
With 8 geothermal projects currently in development representing at least 80-85 megawatts (MW) of geothermal power and a portfolio of “heat farms” currently spanning five states and over 250,000 acres, Raser is ready to deliver its first dose of geothermal power to the city of Anaheim, CA on 12/15.
In doing so, the company will transition from development to commercial and begin tapping into its recoverable resources, which management believes are sufficient to facilitate development plans for the next decade. In addition, the power needed to fulfill the Anaheim contract will come from the company’s Thermo 1 power plant in Utah.
Digging smarter, not deeper
In addition to helping Raser build commercial plants at record rates, the collaboration with UTC provides the company with another major competitive advantage. UTC’s proprietary PureCycle binary geothermal systems generate electrical power from low-temperature water (as low as 165f), while competitors are forced to spend significant capital identifying hot water resources (212f or higher) and they then dig deep into the ground to exploit them.
This also uniquely positions Raser to target the estimated 120,000 megawatts of untapped low-temperature geothermal opportunities in the US (USGS survey), while competitors have a much smaller pool to prospect.
Raser doesn’t swing over the fences like the competitors
UTC’s technology represents a revolutionary innovation in the geothermal space and essentially allows Raser to explore a virtually infinite amount of resources while competitors are forced to search for high-temperature geothermal reserves present in a very limited number of geographic regions.
Raser CEO Brent Cook equates the strategy provided by UTC’s PureCycle technology to America’s greatest pastime, baseball. He was recently quoted as saying, “You can win a lot more games by consistently hitting a lot of singles and doubles instead of trying to hit a home run every time. Our main focus is a game-winning strategy of consistently and reliably hitting singles and doubles.” “. with the abundant sites of lower temperature”.
net net
Raser Technologies is making all the right moves to establish itself as a leader in the geothermal space.
With its first geothermal power plant scheduled to be fully operational in the very near future and three power purchase agreements in hand for an estimated 32MW of electrical power, the next few weeks could be eventful for RZ.