Oregon Geothermal Working Group MeetingNovember 3, 2005

Curtis FramelDOE Western Regional Office

Curtis.Framel@ee.doe.gov

Agenda9:00 AM Welcome & introductions, Carel DeWinkel, Oregon DOE

9:15 AM GPW Initiative – Status Report, Curtis Framel, USDOE

9:45 AM Highlights from the GRC Annual Meeting, Al Waibel and Alex Sifford

10:00 AM The New Energy Bill, Curtis Framel, USDOE

10:15 AM Utility Geothermal Working Group, Randy Manion, WAPA

10:30 AM Break

10:45 AM RPS Efforts in Salem, Troy Gagliano, RNP

11:45 AM PURPA Update, Carel DeWinkel, Oregon DOE

12:00 Lunch

1:30 PM Lake County Geothermal Prospects

Crump Geyser, Brian Fairbank, NGP, Inc.

Lakeview, Phil Rendahl, Geothermal Power, LLC

Christmas Valley, Vicki McConnell or Clark Niewendorp, DOGAMI

3:00 PM Newberry Volcano Project, Jim Hansen, AHZ, LLC

3:30 PM Next Steps

GeoPowering the West:The Time is Right

Goals

1. Reduce the transactional costs of geothermal power and direct use development by removal, reduction, or mitigation of institutional barriers.

2. Characterize geothermal energy as clean, safe and reliable so that it is appropriately valued in the utility sector.

“This modest investment by the Federal government has the potential to stimulate billions of dollars in investment and tens of thousands of new jobs, and in turn make Nevada the Saudi Arabia of geothermal energy.”

Senator Harry Reid, Nevada

Market Factors and Barriers Overview

• Transactional Costs

• Technical Unfamiliarity

• Power Market Expectations

• Leasing, Permitting, and Public Policies

• Environmental, Tribal, and Public Perception

GPW Approach – Short Version

A state-focused strategy – GPW builds state-level support for increased use of geothermal energy.

GPW Partners

• Idaho National Laboratory

• National Renewable Energy Laboratory

• Sandia National Laboratories

• Tribal Groups

• Geothermal Industry, Utilities, Universities . . .

• State Energy Offices (and other state agencies)

GPW Tasks

•State-based activities

•Geologic assessments

•Interagency facilitation and collaboration

•Utility sector support

•R&D technology transfer.

Geologic Assessments

• Identify and enlist geoscience experts

• Assemble geothermal resource data

• Interface with U.S. Geologic Survey on national update

Interagency Facilitation & Collaboration

• Cataloging & assessing impediments and institutional issues

• Engaging various agencies, such as the U.S. BLM, U.S. Forest Service, U.S. Dept. of Agriculture, U.S. Dept. of Defense, and the U.S. EPA

• Engaging utility organizations (e.g., WAPA, APPA)

Utility Sector Support

• Identify or target likely geothermal energy-buying utilities or other potential utility sector stakeholders

• Assess geothermal performance with utilities or stakeholders currently buying geothermal energy

• Increase awareness of the competitiveness of geothermal power with other generation technologies, especially the baseload advantage

• Create greater utility and retail customer acceptance of geothermal technologies

GPW ‘Check Up’

In 2004, GPW underwent a peer review; the following areas were noted for improved health of the initiative.

• Focus on state level collaboration, such as state working groups

• Coordinate information, communications, and outreach activities

• Address and develop partnerships with utility industry

• Encourage greater federal and state interagency coordination regarding barriers and policy.

GPW – Measures of Success?

“Between January and May 2005, there were 483 MW of power purchase agreements signed.” Karl Gawell, GEA, July 29, 2005

“If you look at what has happened in the geothermal industry in terms of projects that are under development since the project [GPW] started five years ago, we probably have 500 to 700 million dollars of projects in the hopper. I think again that we are at the level of awareness that what GPW has done is an element in making it work. So go back to those who say "What are we getting?" We're getting ½ billion dollars or more in new projects that are in the hopper that wouldn't have been there had it not been for this multi-pronged effort to get geothermal development going.  GPW is the educational and outreach element that tied everything together. I think you can make that claim and industry would back it up, certainly I would.” - Dan Schochet, ORMAT, June 8, 2004

GPW - We Learn From Each Other

GPW seeks ways to interact with stakeholders and participants – like the states – to enhance awareness of geothermal potential and development opportunities.

Sharing experiences, solutions, and lessons-learned with each other is a key benefit of GPW.

Oregon Geothermal Working Group MeetingNovember 3, 2005

Curtis FramelDOE Western Regional Office

Curtis.Framel@ee.doe.gov

The New Energy Bill

What Does it Mean for Geothermal Development

President Bush signed the energy bill on August 8th. Credit: Eric Draper, White House

President Bush, upon signing the 2005 Energy Bill, said:

“The bill offers new incentives to promote clean, renewable geothermal energy. When you hear us talking about less dependence on foreign sources of energy, one of the ways to become less dependent is to enhance the use of renewable sources of energy.”

“The geothermal provisions are a dramatic improvement in the law. They will encourage the rapid expansion of geothermal energy use in the West.”

Karl Gawell, exec. director,Geothermal Energy Association

“Vitally needed provisions in the Energy Policy Act of 2005 will breath new life into U.S geothermal industry development.”

Ted Clutter, exec. director, Geothermal Resources Council

What Does it Mean for Geothermal

Production Tax Credit‘Section 45”

A 1.9 cents/kWh credit is in place, and developers may claim this credit for ten years instead of only five years, as was the case until the new energy legislation went into effect. The generation facility must be “placed in service” by December 31, 2007.

Utility Cooperatives

This provision allows cooperatives to pass any portion of the production tax credit to their members, thus sharing financial incentives with investors.

Clean Renewable Energy Bonds

This provision creates a new Clean Renewable Energy Bond (CREB) to provide cooperatives, other not-for-profit electric companies, and Indian Tribal governments incentives for building new geothermal and other qualified energy projects.

Royalties

Old law – 50/50 split between federal and state governments.

New law – States get 50%, federal and local governments get 25% each.

“For a small county like Churchill, it’s a big deal.” Commissioner Norman Frey, Churchill County (Nevada)

The new 25% split could mean about $1.5 million for Churchill County, which could go toward the library or senior center, according to Commissioner Frey.

LeasingOld law – BLM often failed to process lease applications or hold lease sales. Most leases sold non-competitively.

New law – There will be regular lease sales at least every two years in states with geothermal resources, and all leases will be subject to competitive bidding.

Direct Use GeothermalUsed by ranchers, communities and others for purposes

other than electricity production.

• Uses a simpler procedure for leasing on federal lands and establishing a fee schedule instead of royalty payments.

• State and local governments are now allowed to use geothermal resources for public purposes at a nominal charge.

Direct Use Geothermal

• There are 18 geothermal district-heating systems operating in the western United States.

• Over 270 cities in the western U.S. are close enough to geothermal reservoirs to use district heating.

Federal Purchase Requirement

The President, acting through the Secretary of Energy, shall seek to ensure that, to the extent economically feasible and technically practicable, the federal governments' electricity consumption shall be from renewable energy by the following amounts:

Not less than 3% in fiscal years 2007 through 2009.

Not less than 5% in fiscal years 2010 through 2012.

Not less than 7.5% in fiscal years 2013 hence forward.

BenefitsClean power and job creation

A recent estimate produced for the Western Governors’ Association’s geothermal task force indicates a near-term potential to expand power production to 8,300 MW in eleven western states – presently at ~2800 MW in just four states.

According to the Geothermal Energy Association, “this would result in the creation of over 100,000 new power plant, manufacturing, and construction jobs.”

State of Oregon

• Adding this energy resource to the growing opportunities associated with indigenous resources for environmental and economic development in Oregon; power and direct use.