Funding “critical” for geothermal industry

“Funding is critical and funding sources for geothermal developers need to come from a combination of areas including the equity markets, joint venture participation and government grants,” said Kallis.
“In simple terms, in order to confidently enter a proof of concept for an engineered geothermal systems project, a total of at least $30 million in funding is required.”
He expects that activity in the geothermal sector will accelerate considerably during 2010 on the back of renewed interest in renewable energy, the geothermal sector specifically and an improving economic situation in Australia and overseas.
“A very supportive regulatory environment will be in place for the geothermal industry including areas that govern licencing and permits, the renewable energy target and the Carbon Pollution Reduction Scheme,” said Kallis.
He believes that changes to the rules that apply to the National Electricity Market (NEM) will occur and at an industry level an increased level of transparency will be seen through both the current Geothermal Code reporting on resources and reserves and the further development of standardised economic assessments of project potential.
“Beyond 2010 the potential for geothermal is quite clear,” said Kallis, “it is enormous and not unlike coal seam gas, I believe geothermal energy power generation will have a major impact on the Australian energy market, in particular the NEM.”
“In addition, I envisage significant industry consolidation with new and larger players entering and significant progress on technological issues being made over the next decade.”
To date, the Federal Government has announced $153 million in funding under its Renewable Energy Demonstration Program grant - to Geodynamics ($90 million) and Petratherm ($63 million). This is in addition to the $50 million for the Geothermal Drilling Program (GDP).
In regard to the view in 2010, Kallis referred to it as a “watershed year” for the industry where activity will be accelerated across the board - exploration drilling, proof of concept work, pilot projects and the commencement of demonstration projects.
“There will be at least seven projects with GDP monies and the only factor limiting their progress will be the availability of drilling rigs – and I expect more rigs to enter the market.
“There will be success and failures and indeed everything in between. This is the nature of exploration and it is not unusual to be a feature of an emerging industry. The risks can be significant but the rewards I believe are very high.”
Petratherm plans to complete its HEWI model proof of concept in 2010 and commence work on its Renewable Energy Demonstration project.
There will be many others planning to drill deep wells in 2010 including but not limited to Greenearth Energy, Torrens Energy, Greenrock Energy, Hot Rock Ltd to name a few.
“I expect the New Year to see new players enter the market coming from the resources, utility and other sectors. A number of parties have already entered the market such as Origin, Beach Petroleum, TRUenergy, AGL…
“I also see the year showing the beginnings of consolidation in the industry. I believe that consolidation will be driven primarily by funding needs, but also by the need for skills and indeed critical mass of the geothermal development companies.”
In his role as chairman of the Australian Geothermal Energy Association, Terry Kallis also annnounced that Australia had won the rights to host the 2015 World Geothermal Congress in Melbourne.
“The 2015 Congress will attract the world’s foremost authorities on geothermal energy...and will enable Australia and New Zealand to showcase its geothermal expertise and ideas to an international audience.”
First held in Italy in 1995, the World Geothermal Congress is convened by the International Geothermal Association every five years.

Renewable Energy Demonstration Program – four innovative projects receive $235 million
The Minister for Resources and Energy, Martin Ferguson recently awarded $235 million to four commercial-scale renewable energy projects from the Renewable Energy Demonstration Program (REDP). This funding - combined with money from successful applicants - will deliver approximately $810 million in renewable energy investment in Australia. It will deliver almost 80 MW of new renewable generation from wave technology, geothermal sources, and an integrated mini-grid project involving wind, solar, biodiesel and storage technologies.
The four successful lead companies are MNGI Pty Ltd (Petratherm), Geodynamics Pty Ltd, Victorian Wave Partners Pty Ltd and the Hydro-Electric Corporation (Hydro Tasmania).
“The REDP will support the commercialisation of renewable energy and help accelerate the deployment of new renewable energy technologies for power generation in Australia,” said Ferguson.
The two geothermal projects proposed by Petratherm and Geodynamics in South Australia deploy different technologies in two different geological settings. Both will significantly add to the body of knowledge supporting Australia’s geothermal energy sector.