The full potential of geothermal energy is not being realized in certain parts of the U.S. due to a “chicken and egg game” involving the way in which the federal Bureau of Land Management (BLM) handles leases, the executive director of the Geothermal Energy Association (GEA) recently said.
On the one hand, BLM doesn’t want to roll up its sleeves and get to work on processing leases until it sees clear evidence of resource potential on a geothermal site, according to Karl Gawell, GEA’s executive director. But the significant amount of money it takes to determine the viability of a geothermal site won’t get spent without a lease in hand, he said in an interview with NGI.
“You look at these states and people say, ‘Well, where’s the geothermal resource?’ If you’re running a utility in these states and want to know, ‘OK, if we’re going to count on geothermal, where is it?,’ what you want to see is a queue of projects,” Gawell said. “You want to see that here are the things that can come on-line over the next 10 years and here’s what we can count on.”
The problem is that “no one’s going to get in that queue if they haven’t done the basic exploration on the sites,” the GEA executive director said. And “real investment dollars” won’t get spent based solely on “broad brush” geology done by state geologists or the U.S. Geological Survey.
“You need to do the site-specific exploration work, which might be $5 [million] or $10 million for an individual site, before you say, ‘OK, we know we’ve got it and here’s what we’re willing to commit to from the supply side.'” But that $5 million to $10 million is not going to get spent “on a site if you don’t have the rights to develop it,” Gawell said. “It’s just that simple.”
The “chicken and egg game” occurs when BLM says, “‘We don’t see the reason to move ahead with leasing until you can really show us that there’s something there because it takes a lot of money to clear these leases and to do the NEPA [National Environmental Policy Act] requirements and we’re just not sure it’s very smart to spend our limited resources'” on geothermal leasing, Gawell said.
The conundrum facing the geothermal energy sector is that “we’re not going to know whether anything’s there for sure with the certainty that you’ll get a power project moving forward until we spend the money on the ground doing the more detailed and intensive” exploration and characterization work, “and we’re not going to do that until we get the lease,” Gawell pointed out.
“It’s state-by-state. Some states are better than others, but in some of these areas like California, we’re just stuck in the mud because it’s [a] chicken and egg game — ‘Well, we don’t want to go through the process until you show us the resources there’ — but you can’t show them the resources there until they issue the leases.”
Gawell said that “somehow, that logjam has got to be broken.”
Currently, a little more than half of geothermal production comes from federal lands. “In the future, we expect that to grow,” Gawell noted. “In fact, we did look at the new projects coming on-line and the new projects coming on-line are close to 60% federal resource. You can see the proportion is shifting to more federal.”
Geothermal developers have said that the process for approving leases and issuing permits to drill wells and construct power plants has become “excessively bureaucratic,” according to a report issued by the U.S. Government Accountability Office (GAO) earlier this year. The report outlined some of the challenges facing the geothermal energy industry.
BLM and Forest Service officials “often have to amend or rewrite resource or forest management plans, which can add up to three years to the approval process, depending upon the complexity of the proposal and when the last plan was written,” the report said.
Issued in May, the report also said that delays in finalizing resource and forest management plans and in conducting environmental reviews had resulted in a backlog of 31 lease applications in California, with an average age of 7.4 years, and 136 lease applications in Nevada, with an average age of about two years. “Despite the high backlog in Nevada, BLM officials noted that they processed 177 lease applications from January 2001 through June 2005. In contrast, during the same period, BLM did not process any lease applications in California,” GAO said.
“We have got to figure out how to get the federal government moving on its leasing and permitting efforts,” Gawell said.
He noted that it’s been five years since then-Secretary of the Interior Gale Norton “declared renewable energy on the public lands as a priority and we still do not have a single federal lease issued in California.” That state “has a huge resource potential that is just not going to be tapped if the federal government can’t move forward.”
One of the difficulties, Gawell noted, is that the BLM “is very fragmented. Each state is sort of its own little principality, so Nevada moves forward, Idaho moves forward, but California’s stuck in the mud.”
Studies, “just within the last 10 years, that have been done on geothermal energy in California, show that there’s somewhere between 6,000 and 24,000 megawatts of additional resource” in the state, he said.
There are currently 2,400 MW of geothermal power installed in California that account for 5% of the state’s electricity generation, “but only a fraction of the state’s geothermal resource potential is being utilized,” the GEA said last month.
The Western Governors’ Association’s Geothermal Task Force recently identified an additional 7,000 MW of geothermal that could be developed in California in the immediate future.
Last month, California Gov. Arnold Schwarzenegger signed legislation to promote geothermal energy development in the state (SB 1294). And, according to GEA, there are 11 new projects under development in California that would add 750 MW of geothermal power. These new projects would increase geothermal capacity in the state by more than 30%.
Nationwide, it’s full steam ahead for the geothermal sector. In March, the association said that the results of a survey showed a major surge in the development of geothermal power projects in the U.S. At that time, the GEA said that some 45 projects were under way that could nearly double U.S. geothermal power output. The U.S. had 2,828 MW of geothermal power capacity on-line in 2005.
“There’s a lot of land under lease,” Gawell said. There are “a lot of projects that are moving forward now. We’re not going to run out of” projects in the near term, he said, meaning “in the next year or two.”
However, states are “asking for a lot more than that.” Gawell recently came back from a meeting with California Energy Commission staff and “they want to know, right now, what we’re going to do over the next seven years. And they’re saying to us, ‘If the geothermal industry doesn’t come forward and tell us what they’re going to put on-line and where within the next seven years, we’re not going to be able to tell you [that] you’re going to have wires to connect it.'” He said that the transmission “end of things drives a longer-term planning horizon.”
The GAO report lists insufficient transmission capacity as one of the challenges facing the development of geothermal resources. Since portions of the electrical grid lack adequate transmission capacity “and because geothermal resources are often in remote locations, new geothermal power plants may face costly transmission expenses,” the report said.
In the West, “many geothermal resources are located far from existing transmission lines, making the construction of additional lines economically prohibitive, according to federal, state, and industry officials,” the GAO report said.
By way of example, the report said that there are no significant transmission lines between the geothermal resources in northern Nevada and the populated area of Las Vegas in southern Nevada. “In California, there is a need for new or upgraded transmission to access renewable resources in Nevada and in the Imperial Valley of Southern California, which has significant geothermal potential.”
Even when geothermal resources are near major transmission lines or developers can fund the construction of an additional transmission line, adequate transmission capacity may still be unavailable, the GAO report went on to say. “Many existing transmission lines are operating at or near capacity and may not be able to transmit electricity without significant upgrades,” according to the report.
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