Debating how the US geothermal industry can best take advantage of California’s superb renewable energy rules, and working for extending the geothermal federal tax credit, were the two hot topics at the fourth annual Geothermal Energy Association Finance Forum in San Francisco, California recently.
“While analysts projected continued growth for the industry in the US and worldwide, the industry still struggles with the overall poor economy and federal and state policies that don’t match industry development needs,” said GEA Executive Director Karl Gawell.
Much of the talk at the forum centered about imbalanced government policy in the US at the state and federal levels. One problem was that California’s transmission processes and utility attainment does not match the long lead times for geothermal projects, despite the state requiring a large amount of new renewable energy production in the future. At the federal level, there are clear concerns about the Renewable Electricity Production Tax Credit for geothermal projects, set to expire in December, 2013.
Despite these challenges, California Energy Commissioner Karen Douglas emphasized at the forum the need for moving geothermal energy forward as part of the state’s energy strategy. “As we move toward our long-term goals, we can’t think about renewable energy as all being the same, because a system that has a balanced mix of geothermal, biomass, solar thermal, PV and wind will function very differently and will be able to fill the needs we see in our infrastructure in a much different way than a system that’s covered by intermittent resources alone. We need to think about how we meet the needs of our electricity that allows us to deliver reliable electricity and this is where geothermal power is our bread and butter,” she said at the conference.
California requires itself to have at least one-third of its energy coming from renewable sources by 2020. Additionally, the state’s climate law will need further renewable energy use by 2030.
In addressing the challenges being faced in California, Gawell said the Geothermal Energy Association plans to work with Governor Jerry Brown’s office, along with the California Energy Commission, to make sure policies will boost California’s geothermal industry, where they already have 34 projects with over 1,400 megawatts (MW) of power capacity. Gawell also suggested creating a California geothermal task force, similar to the one in Hawaii, to look at how to improve the sector and make further recommendations. Hawaii’s geothermal task force suggested the state go with 100% geothermal energy use.
While there were some excellent recommendations on what California could do to boost their state policies, Gawell said, at the federal level, the renewable electricity production tax credit should be extended to 2016 to make sure many of the projects get off the ground (so to speak), while advancing the industry at the federal level.
“While our technologies are not literally at their tax incentive cliff – they have until December 21, 2013 to put new projects into production — for all practical purposes the production tax incentive is having declining effect. A utility-scale project starting today would find it nearly impossible to be completed by the end of 2013. To spur continued growth in geothermal, and build on the success of the Energy Policy Act of 2005, we would urge Congress to extending tax credits through at least 2016 for geothermal,” said Gawell.
The finance forum also addressed other various subjects, including: feed-in tariffs, insurance schemes, and praising SNC Lavalin for its completion of 60,000 MW worth of geothermal projects worldwide. “The involvement of leading global companies, like SNC Lavalin, in the geothermal industry is a positive sign for its future outlook,” Gawell said.
Photo Credit: Conserve Energy Future
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