The tiny Utah town of Minersville is suddenly finding itself a hot topic thanks to its upcoming geothermal plant. Geothermal energy, the process of using the earth's heat to create and/or harvest steam to produce electricity, is among the most intriguing alternative energy technologies today. With fossil fuel prices high and with support from big backers such as Google, things are looking good for geothermal energy.
Raser Technologies Inc. at its initial public offering five years was a simple electric motor business with little intention of revolutionizing the alternative energy business. Somewhere along its journey over the last several years, it had a vision of creating profitable green geothermal power according to Reuters, a dream which has consumed it ever since. Now it is on the verge of fulfilling that dream. Construction is nearly finished on the company's plant in tiny Minersville, which will go online later this year providing electricity to 9,000 homes in Anaheim, California.
The company has no plans of stopping there -- it will complete construction on 7 more plants next year and expects to be turning a profit by the end of next year. Chief Executive Brent Cook announced the news in an interview at Raser's Provo, Utah, headquarters last Thursday, stating, "After these first couple of plants come online I believe we will be cash flow positive."
While geothermal requires more complex infrastructure and takes more time to deploy, it has an advantage over wind and solar in that it provides steady power around the clock.
Mr. Cook acknowledges that there were some initial difficulties when the company decided to transition into alternative energy mode in 2005. He states, "In the case of geothermal... the execution of that plan is all in our hands. The licensing side of our business requires convincing some other company to take the technology and deploy it into their marketplace, and that's a lot harder to predict."
At first the company tried to acquire geothermal startup Amp Resources; however, the deal fell through with Amp being bought instead by Italian energy company Enel SpA. In the aftermath of the failed deal, Mr. Cook took the reins and went to work acquiring land leases and capital. He found a big partner in Merrill Lynch, which signed on to finance up to 155 MW of Razer plants, including a $44M USD investment in the first plant. Razer Technologies also partnered with United Technologies Corp, which is providing the power generation units.
The key to Razer's completed approach is to build smaller geothermal plants capable of being constructed within a few months. This makes the technology more growth-competitive with solar and wind installations. Mr. Cook describes, "Geothermal usually takes much longer to be built. We've tried to go with an off-the-shelf type of plant design. It's like Legos that come together."
The plants are expandable if additional capacity is needed. The company also is unique in that it uses lower temperature water, using steam from a liquid with a lower steam point than water, thus allowing energy harvest from hot water below the 212 degrees Fahrenheit boiling point. Mr. Cook says, "That allows us to exploit sites that frankly were passed over or thought to not be useful 25 or 30 years ago. We are going back through and tying up a lot of those opportunities."
With over 200,000 acres in six Western states, Razer Technologies has plenty of room to expand. Mr. Cook is confident his plant can beat one of its main fossil fuel competitors -- natural gas. He concludes, "We're seeing a lot of utilities recognize that geothermal is much more competitive than natural gas and has zero fuel risk exposure."
The first plant will produce 10.5 MW when complete. The projected plant lifetime is 35 years.