Australian firm to power California with geothermal energy

Controlled Thermal Resources (CTR) has secured a lease for a 250MW geothermal power project within a dedicated area in Southern California. The board of the Imperial Irrigation District (IID), the state’s third largest public power provider, has approved an agreement that will see CTR lease about 1.9k acres of district-owned land in the Salton Sea. The exact terms of the contract depend on the achievement of specific developments; CTR expects to start drilling by Q4 2016 and complete the project by 2020. The IID noted that the total capacity of the geothermal plant could be expanded to 375MW in future phases.

Falling costs

Mr Colwell said he was confident falling costs will enable the company to kickstart geothermal development in the Salton Sea, which lies between Palm Springs and the US border with Mexico, after a hiatus.

The Salton Sea is one of the richest geothermal resources in the world, and Berkshire Hathaway's MidAmerican Energy Holdings part owns several geothermal generators that were built from the 1980s.

But only one new plant has come on stream since 2000 and the sea has become highly saline, leading to huge numbers of fish dying. Local authorities hope royalties from new power projects will help pay for rehabilitation.

The most recent project, Hudson Ranch, cost $US400 million for a 50 megawatt capacity four years ago or $US8 million a megawatt.

The generator alone cost $US25 million. Salton Sea projects to date have all been 50 megawatt or less because a larger project would require California Energy Commission planning approvals rather than just local government approvals.

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Now, because of falling costs and the larger scale of project, Controlled Thermal should be able to buy two 125 megawatt generators for $US45 million, a reduction of about two-thirds.

As well, the price of titanium for the turbines - necessary because of the briny water - has fallen by nearly half. And the turbine blades being built nowadays are longer and more efficient.

Early stages

As a result, Mr Colwell estimates Controlled Thermal Resources will be able to generate power at about half the cost of Hudson Ranch.

"There's equipment laying around everywhere from the oil and gas industry," Mr Colbeck said. "I think the timing more so than anything and the advances in technology (is working in our favour)."

The project is at an early stage. The company has only raised $US1.9 million and is seeking another $US6-$7 million from Australian investors to fund drilling, seismic testing and other preparatory work, including an offer document being prepared by KPMG Toronto.

Mr Colwell estimates this will take up to 18 months. The company is also in "advanced discussions" with utilities about a power purchase deal. It will seek to raise the larger sums of money needed for construction - which should begin towards the end of 2017 - in the US. It hopes eventually to expand the plant to 375 megawatts.

He said he decided to venture into new fields because property development in Australia had become unattractive with tight margins and high risks on greenfield projects. Excel developed the $20 million Edge commercial building at Kawana, 100 kilometres north of Brisbane, and Insight developed the 40,000 square metre Insight Logistics Park at Yatala, south of Brisbane just off the M1 Motorway.