Friday, 6 November

I have expressed a number of times in this blog how optimistic I am about the prospects of geothermal energy and, as a logical follow-up, the financial prospects for the manufacturers supplying the geothermal electricity sector. You do not need to gaze into a crystal ball to conclude that, if the geothermal energy will provide 6000 MWe in Australia by 2030 as most people believe it would, then someone will have to manufacture and sell power plant equipment to produce these 6000 megawatts. At a cost of $2m per MW, this would be worth $12 billions in today's prices. Multiply it across the globe and you have a multi-trillion-dollar industry that will have to spring up from almost nothing in the next 20-30 years. And this would be just the starting point because we do not expect the geothermal sector to stop at that level. As a consequenct, the geothermal plant equipment and supply sector could have an annual turnover of tens of billions of dollars a year in twenty years time and just starting to grow. The astute financial analysts already note this. One harbinger of this buoyant future for the geothermal supply industries is the apparently unstoppable rise of the Ormat Technologies. This US subsidiary of Ormat, the Ormat Technologies Inc published its financial report for the third quarter of 2009 yesterday. The company reports that the equipment sales boosted the its revenue and profits. Ormat Technologies posted $119.8 million revenue for the third quarter, 20.2% more than the $99.7 million for the corresponding quarter of 2008. The product segment revenue rose 65.5% to $51.1 million for the third quarter from $30.9 million for the corresponding quarter, thanks to equipment procurement contracts for the construction of three large binary geothermal projects in Nevada, New Zealand, and Costa Rica.

As a digression, my first job after my PhD was a post-doctoral fellowship with the Solar Energy research Centre of the University of Queensland in early 1980's. At that time, I had the chance to work with a 15-kWe Organic Rankine Cycle engine supplied by Ormat Industries. Unfortunately, I have not retained a photo of it but we were exploring its use for solar thermal power conversion and I remember it having quite poor off-design and part-load efficiencies. Ormat obviously has come a long way since then. At that time Ormat was a company just coming out of in Israel, where it had been in operation since 1965 since the founding of the husband-and-wife company Ormat Turbines by Lucien and Dita Bronicki in that year to commercialise the Organic Rankine Cycle technology for power generation from low- to medium-temperature heat. In the 1980’s Ormat built and operated one of the world's first power stations to produce electricity from solar energy; the plant was located just north of the Dead Sea in Israel and was using a salt-saturated pond (the so-called solar pond) to collect and store the solar energy. I remember us too in Brisbane working in that area duplicating the work as well as trying various different cover options on the pond to increase the pond temperatures and hence the conversion efficiencies.

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