The RET(Renewable Energy Target) bill passed ten days ago commits Australia to producing 20% of its electricity from renewable sources by 2020. Inclusion of Waste Coal Mine Gas utilisation as an eligible renewable technology has been criticised but this is probably an unfair criticism because it is not easy to capture waste coal mine gas and without an extra motivation the companies would find it easier to let it go - and as we all know methane is 23 times more potent as CO2 as a greenhouse gas. A more relevant criticism for the RET bill is its failure to distinguis between intermittent and baseload electricity generation. The marginal cost of adding intermittent sources to the grid is lower for for lower penetration ratios because you do not need to worry about issues like storage and reliability. In other words, if the fraction of wind-generated electricity in the AEMO (used to be known as NEMMCO) grid is say 2%, it is said to be a better commercial proposotion to add more wind power plants instead of other renewables.
Obviously, there is a limit to wind penetration of the grid. Since wind is an intermittent source, thousands of megawatts turning on and off unpredictably makes it very difficult to maintain the voltage and the frequency in the grid. Such network stability issues start limiting the introduction of more wind only when the wind penetration into the grid is around 20%. This is based on the European experience. 20% is magically the number for the RET bill. Therefore, some commentators have argued that this bill wil be a godsend for the overseas wind turbines manufacturers such as Vestas and Suzlon, which have nearly saturated their home markets and have agressively been marketing in other countries, including Australia. These commentators argue that the attention given to wind will support these manufacturers and will do nothing to help Australia to exceed the 20%-renewable target in the future because there is no way wind can provide more than 20% of the Australian grid without very expensive electricity storage facilities and also redundant investment. I am not as pessimistic. While I agree that the RET bill has failed by not marking some of the 20% as "baseload only", I do not think this will be a major setback because even with the RET incentives I do not think there is enough wind in locations close to the grid to fulfil the RET target.
Geodynamics issued an ASX release last week on the results of their investigation into the Habanero-3 well blow-out on 24 April 2009. The press release the results of a technical investigation which has found that the cracking of the blow-out was caused by cracking of the casing material and this cracking was caused by hydrogen embrittlement of the high-strength casing steel and the thermal fatigue between flowing and shut-in conditions. Hydrogen embrittlement occurred due to dissolved gases, principally carbon dioxide as well as hydrogen sulphide in the reservoir fluid. These findings have implications for future well design, material selection and operating procedures and the company is investigating these implications. These follow-up investigations are expected to take at least eight weeks and may also affect the the commissioning date for the 1MW Pilot Plant.
The morning news said that the renewable energy target legislation passed the parliament although I do not know the details yet. It looks like it did not include the amendment to reserve 5% of the 20% target for emerging baseload renewable power such as geothermal energy. There is a significant risk that, with generous government subsidies, wind and household solar industries will consume much of the target. Susan Jeanes, head of the Australia Geothermal Energy Association, had said geothermal, wave and baseload solar technologies would be set back years if part of the target was not reserved.
Petratherm reported on 14 August that the Paralana 2 drilling slowed down while drilling the large diameter (17 1/2") hole through the harder rocks in the upper geological sequence but the rate of penetration has picked up now and it is currently drilling the 12 1/4" section in the Erudina shale formation at double the rates as in the previous weeks. The well was down to 1427 meters as per the last report by Beach petroleum published on 12 August. The Paralana 2 well drilling campaign was originally expected to take between 2-3 months. The drilling campaign is now scheduled to take 3-4 months. The delays in the Paralana project affect the Panax penola project, which is scheduled as the next task for the Weatherford Drilling International Rig #828 being used in Paralana. Panax expects the Penola project to progress faster once the rig becomes available and starts drilling.
Reuters reports that Magma Energy is acquiring another 32% of the HS Orka. HS Orka is Iceland's largest privately owned energy company. Magma, cased up by a $100m IPO in June, bought 11% of HS Orka a month ago. 32% of HS Orka is worth $74m according to the Reuters article. This new acquisition will increase the Magma stake in HS Orka to 43%.
In another news item from North America, US Geothermal was able to raise C$11m in a private placement through Canadian stock market. The company operates the 11-MW Raft River geothermal power plant in Idaho, San Emidio in Nevada and is developing the Neal Hot Springs in Eastern Oregon.
A 10 MW geothermal plant near Buena Vista could provide 85 percent of power needs in the Upper Arkansas Valley. Most of the geothermal electricity generation in US is in California. If realised, this will be the first plant in Colorado. Colorado School of Mines is advising the Sangre de Cristo Electric on the right place to drill. Six injection and four production wells are considered to power a binary plant which will be air-cooled.
Petratherm announced last week that it has signed a cooperative agreement with the Spanish governments (central and Madrid regional) to develop a 8-MW district heating project for Madrid. The Spanish federal government, through its Institute of Renewable Energy and Energy Efficiency (IDAE), will contribute a sum of €87,000 (approximately AUD $150,000) toward the feasibility assessment work, which is planned for completion by the end of 2009.
The Australian Financial Review reports that Granite Power is looking into getting listed on the Australian stockmarket with an IPO(Initial Public Offering) valued at up to $50m. The company has several leaases including Narracun near Melbourne and Nagoorin near Gladstone.
Greenearth Energy last week announced that their HSA project near Geelong is estimated to have an inferred resource of 17 EJ. The Inferred Resource estimate covers an area of approximately 100 square kilometres (km2). The target reservoir has an estimated volume of 55 cubic kilometres (km3). The temperature is expected to be within 181-215 oC at 4100 m. The estimates were generated by Sinclair Knight Merz (SKM).
At between $75-$120 per MWe, the cost of geothermal electricity is about double the coal-fired electricity at the moment. However, during the official opening of the Petratherm Paralana project Friday week ago, Martin Ferguson, the Commonwealth Minister for resources and Energy, acknowledged its potential to be price competitive with coal as the coal price continues rise and with the inevitable carbon price.
The Global Financial Crisis does not seem to be affecting the renewable energy technoilogy companies. Ormat reported that its second quarter revenue surged 24.9% to $100.2m, compared to $80.2m in the same 2008 period. Based on those results, the CEO of Ormat, Dita Bronicki, says that Ormat is estimating 2009 revenue at between $382m and $400m. Revenue in 2008 was $344.8m.
Beach Petroleum reports good progress on the Paralana-2 geothermal exploration well, which reached a depth of 1116 metres asa of 6 am, 5 August. Casing has been installed to section TD. The current operation is installing blowout preventers prior to drilling ahead.
I will be in the USA next week for meetings associated with the DOE's Geothermal Stimulus Program funding. Although I should be able to access my e-mail regularly, I probably will not have time to blog. I will come back to this page on Monday, 17 August.
Stephen Robertson , Queensland Minister for Natural Resources, Mines and Energy announced yesterday an additional 16,000 sq km of land for geothermal exploration. This additional land is offered in 29 areas located west of Cairns and Townsville in North Queensland and around Gayndah in the south-east of the state. The Minister also released a consultation paper on the proposed draft legislation for geothermal energy production. Submissions on the draft bill can be made until Friday 4 September 2009. Copies of the consultation paper and draft Bill are available at www.dme.qld.gov.au. The Bill will replace the "Geothermal Exploration Act 2004 ". Those of you who have raised issues with the 2004 Act (and there have been a number of them) need to make sure they make their submissions by 4 September.
Greenearth Energy announced this morning that it has submitted a GDP application for $7M to drill a proof-of-concept couplet comprising two deep geothermal wells into a hot sedimentary aquifer (HSA) near Geelong, 11 km NW of the Anglesea brown coal fired power station.
Green Rock Energy also lodged a GDP application to undertake a proof of concept drilling project consisting of one production and one injection well in at UWA’s Crawley Campus. The two wells will tap into a small part of the Inferred Geothermal Energy Resource of 30,000 PJ of stored heat estimated to be within Green Rock Permit.
A Jakarta Post article suggests that the Indonesian Government may not achieve its geothermal electricity target unless it addresses problems associated with poor resource data, opaque tender processes and inadequate provisions in Power Purchase Agreements (PPA), which have made investors shy away from developing geothermal power plants in Indonesia. The article is referring to the second stage of Indonesia's 10,000 megawatt (MW) electricity program, which aims to generate 4,000 MW of electricity from geothermal-fired power plants by the year 2014. The first stage of the program was finalized earlier this year, using mostly coal and natural gas. Indonesia's geothermal potential is recorded at 26,000 MW, exceeding the country's current total installed capacity of about 25,000 MW. but so far, it has only managed to develop 1,000 MW.
Coso Geothermal reported that it now has the permission of the US Department of Interior to construct an 14-km pipeline to bring rechargeing water to its reservoir. Coso Geothermal is owned by Terra-Gen Power, a wholly-owned subsidiary of ArcLight Capital Partners. The Coso facility has been operating since 1987 in Inyo County, California, at a capacity of 270 MWe in four plants. I could not find how much water wil be transported and where it will be coming from.
Panax announced yesterday that it has received the first $2.45m as the two Milestone Payments from its GDP grant for the Salamander-1 well to be drilled in its Penola project. Similarly, Petratherm also received its $2.45m relating to the Paralana project.
Graeme Beardsmore released the 34th issue of the HDRPL Geothermal Newsletter, a monthly newsletter and a must-read for anyone interested in the Australian geothermal scene.
The Remote Area Planning and Development Board (RAPDB) thinks there are big economic and environmental benefits to geothermal energy. The RAPDB is a group representing outback Queensland councils such as Longreach, Diamantina and Barcoo. The ABC News reports RAPDB spokesman David Arnold saying that while governments are supportive of the sector, more help is needed to develop resources in the region: "We're sitting on major resources here and that's known ... it's been found ... there are industries out there wanting to develop but there just doesn't seem to be that real push by state and federal governments to really help hot, dry geothermal rock development in our region - as I said it seems to be a bit of a mixed message."
Panax Geothermal is expecting to start its first production well in the Penola project, Salamander 1, in late September or early October. Panax received a A$7m grant from the Commonweath Grothermal Drilling Programme (GDP) in April. Salamander-1 will go to about 4000 m to access a HSA resource at 160 oC. As far as I know, the copany has not made a firm announcement about its power plant choice, but their latest Quarterly report includes a picture of the UTC PureCycle module, which is capable of operating on brine temperatures up to 163 oC. To develop its second geothermal project in the country, Tirrawarra in the Cooper Basin in Southern Australia, Panax is currently preparing a submission for a A$7 million grant from a second round of the government’s GDP. The company has also ap[plied to the World Bank for two projects in Kyrgyz Republic and Tajikistan.