RENO, Nevada --- Reno just might be the greenest little city in the world.

Ormat’s Galena Power Plant at the edge of town provides the city with 100 megawatts of carbon-free electricity, or enough for 20 percent of Reno’s daytime electricity and 50 percent of its nighttime power. Put another way, you could power every home in town with the electricity from the plant.

Pumps pull 6,000 gallons of water a minute out of reservoirs 3,000 feet below the surface. The water, naturally heated by geologic forces to approximately 300 degrees Fahrenheit (150 C), boils a chemical refrigerant contained in sealed loops. The refrigerant, now a gas, cranks a turbine.

But just as important is the quality of power. Unlike solar or wind farms, Galena churns predictable, baseload power 24 hours a day that is relatively easy for the grid to accommodate. 

It doesn’t even cover much land: it looks like an ordinary substation with most of the works hidden behind low-rolling hills. Many residents don’t even know it exists. (I grew up in Reno and visit the town regularly, yet had never heard of it.) 

Only seven to eight people work at Steamboat full time, but geothermal has a 4.25-job multiplier effect on contractors, pipe suppliers and companies that sell anti-scaling compounds.

“With geothermal, you’re replacing fossil fuels with labor,” says Paul Thomsen, director of policy and business development at Ormat, which has 600 megawatts of capacity under contract with investor-owned utilities in the U.S.

The attractiveness of geothermal is tough to deny. The U.S. has 3 gigawatts' worth of geothermal plants, mostly in Nevada and California, but roughly 38 gigawatts to 40 gigawatts of known reserves that can be developed and harvested with known technologies (that is, not counting concepts like enhanced geothermal that are still under development) exist here, according to says Dan Schochet, executive vice president of Ram Power, a geothermal developer and one of the early champions of geothermal in the U.S.

That would be enough power to supply the West with 10 percent of its power, he said. Approximately 25 percent can be brought on-line over the next decade. Projects are underway or being scrutinized in Arizona, New Mexico, Alaska, Hawaii, Colorado and even Gulf states like Texas and Louisiana.

“One hundred megawatts of geothermal is like 300 megawatts of solar,” said Schochet. “On a macro level, everything is going geothermal’s way.”


The capital costs for geothermal can run from $3.5 to $6 a watt before incentives, he said, depending on transmissions, permitting and geology. But, again, that’s for baseload, constant power, not nameplate capacity.

Overseas, Ormat Magma Energy and Enel’s renewable group, among others, are or hope to develop sites in Italy, Kenya, Turkey, Guatemala, Indonesia and Peru.  Because of its geology and early support of the technology, a good portion of the industry and scientific community for geothermal is based here.

“We want to make Reno to geothermal what Texas is to oil,” said Wendy Calvin, a professor of geophysics at the University of Nevada Reno (UNR) and the director of the Great Basin Center for Geophysical Energy.

So what’s the problem? Geothermal developers are essentially mining heat and, like virtually all other mining endeavors, it’s fraught with risk and uncertainty.

In fact, geothermal arguably carries even more risk and uncertainly than mining or oil drilling. Developers, after all, are looking for hot, briny pools of water buried deep in the earth. Water isn’t as easy to detect as oil and the software tools are far more advanced for oil exploration.

“If you are off by 200 feet, you can miss it. That is the nature of these reservoirs. They are much more capricious,” said John Louie, a professor of geophysics at UNR. “There are still a number of dry holes or colder-than-expected [wells]. Drilling risk is still perceived as the highest risk element.”

Only one in ten wells turns out to hits a pool that can produce power, he added.

Temperature is a big issue, too. In Iceland, geyser water clocks in at a steaming 600 degrees, but in the U.S., many of the resources are in the 300-degrees range. Wells that turn up 120-degree water may have little, if any, practical economic value. Production levels off over time, giving some wells a practical lifetime of 15 years.  

Forget scouting for bubbling sulfur springs or geysers. Most potential sites these days do not show “surface expressions” of geothermal potential. The task requires mapping, seismological studies, and complicated fluid flow patterns and the optimal conditions can vary from region to region.

The inability to precisely determine the value of a site leads to the next big problem. Namely, money. A single well can cost $5 million to $8 million to drill and a developer may have to drill five to six wells before it can determine whether a given field can produce megawatt-hours' worth of power.  While outside investors might ultimately contribute $500 million to a large project, developers generally have to put up their own seed funds.

“You will spend as much as $20 million to $25 million. Certainly, you won’t spend less than $15 million,” said Schochet. "When you come in, you put these funds at risk.”

As a result, geothermal companies function as vertical silos, making equipment for their own projects and serving as a power provider, too. Ormat obtains 75 percent of its revenue from projects it develops and only 25 percent comes from equipment.

"We’d love to have a shift" toward equipment sales, said Thomsen.

The headaches aren’t over yet. Because geothermal plants provide baseline power, utilities generally pay only 8 cents to 10 cents per kilowatt-hour for geothermal power under power purchase agreements, or around two-thirds of the price that solar power providers get, said Thomsen. Hence, one of the signature features of geothermal power actually depresses prices.

Geothermal also gets more expensive as oil prices increase. Why? Developers have to compete for drilling rigs and equipment with Big Oil.

It’s also not an industry with tremendous clout. Only ten major developers exist in the U.S. Geothermal does not qualify for many of the drilling tax credits, like the dry well credit, showered on oil companies. Solar enjoys better credits under the federal system, too.

So why try? Like in other renewable fields, technology can come to the rescue. Enhanced geothermal techniques and deep drilling could, according to an MIT study, generate an additional 100 gigawatts at 3.9 cents a kilowatt hour, or less than other renewables.

Near-term solutions could boost power production and reduce risk, as well. Ormat is considering ideas like filling dry holes with water and capping them, effectively creating a man-made well from a literal financial hole. Adding water to existing wells to boost production has already successfully been accomplished at plants like Geysers in California.

Carbon dioxide could even be injected into wells. The heat-carrying capabilities of CO2 aren’t as good, said Thomsen, but it would have the added benefit of carbon capture. Developing nation -- particularly those on the seismically active Ring of Fire in the Pacific -- would become some of the leading beneficiaries of cheaper, more reliable geothermal exploration because they wouldn’t have to import or burn as much coal or natural gas.

Mapping and seismology also continue to improve. Thirty years ago, the fossil industry only found oil once every ten times. Thanks to better software and extensive research, it has boosted that success rate to 50 percent, says Louie.

At Faulkner 1, a geothermal project in Blue Mountain, the success rate was an unusually high 50 percent.  

“We want to find a seismic signature for hot brine. Even if we got to 20 percent, that would halve the risk,” said Louie.

(In keeping with geothermal tradition, Nevada Geothermal Power announced record power production in May 2010 from Faulkner 1 and in May 2011 admitted power production will decline faster than expected because of temperature declines.)

Others, meanwhile, have coined ways to potentially mine revenue from low-temperature reservoirs. The Peppermill Casino gets all of its hot water -- one megawatt worth of thermal energy -- from a geothermal well in its parking lot.

John Cushman, another UNR professor, has tapped lower temperature resources to grow algae in racetrack ponds in the desert, where temperatures often plunge below the optimal level of 18 degrees Celsius.

Despite the risks, the industry has a pretty good track record. Virtually every geothermal plant today is based on exploration funded by the federal government in the 1970s, noted Schochet. That money didn’t just go to publishing papers. 

“We don’t necessarily need a ‘Man on the Moon’ commitment, but we do need a long-term commitment,” said Schochet.

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