Green Green:  Financing News for the U.S. Geothermal Industry


Volume 4, Number 5
31 October 2003


HOT NEWS

USTDA Funds Geothermal Feasibility Study in Honduras

What International Investors Look For When Investing In Developing Countries


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In Short

Upcoming Events

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USTDA Funds Geothermal Feasibility Study in Honduras

The U.S. Trade and Development Agency (USTDA), through its Evergreen Fund for Technical Assistance at the Inter-American Development Bank (IDB), is providing US $150,000 to fund a feasibility study of the Platanares geothermal field in Honduras. In addition to USTDA funding, Oakland, CA-based Transpacific Geothermal Corporation will contribute US $50,000 to the study.

Honduras has an estimated 990 MWe of geothermal power potential; the Platanares field has an estimated potential of up to 110 MWe (Geothermal Resources in Latin America & the Caribbean, Battocletti, 1999).

The feasibility study will examine the environmental and social aspects of the Platanares Geothermal project, in accordance with IDB and World Bank guidelines; include market and economic analyses to justify the need for, and confirm the competitiveness of, the project; and outline its benefits to the Honduran energy system. The study will also contain technical and engineering preliminary designs, and include the economic, market, environmental, social, and financial analyses investors and banks require.

With a population of approximately 6.6 million, Honduras is the second largest country in Central America. Electricity demand is growing 5-7% per year. The recovering manufacturing industry, growth in non-traditional agriculture, and a blossoming tourism industry will continue to bolster demand for electricity in the future. Honduras's current total energy demand is about 700 MWe; total installed capacity is approximately 900 MWe. Much of production capacity, however, is old, inefficient, and dependent upon unpredictable rainfall (hydroelectric) and volatile fuel prices.

USTDA has established trust fund accounts, known as "Evergreen Funds," at several Multilateral Development Banks (MDBs) to help U.S. consultants and firms conduct full-scale feasibility studies for upcoming MDB bank projects. Evergreen Funds position U.S. firms in infrastructure projects in middle income and developing countries that have potential for U.S. exports.

Project Information:
TDA No: 03-50031B
TDA Grant: US $150,000
Estimated Project Cost: US $70 million
Estimated U.S. Exports: US $60 million
Estimated Completion Date: 31 October 2004

IDB Contact:
Ginya A. Truitt-Nakata
Task Manager, Inter-American Development Bank
Tel: (202) 623-2003
Fax: (202) 623-3171
Email: ginyat@iadb.org

Transpacific Geothermal Corporation:
Dr. Tsvi Meidav
Tel: (510) 763-7812
Fax: (510) 763-2504
Email: tgcorp@earthlink.net

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What International Investors Look For When Investing In Developing Countries

Energy sector investors are guardedly interested in developing countries but are not likely to enter developing countries unless revenues are adequate according to "What International Investors Look For When Investing In Developing Countries: Results from a Survey of International Investors in the Power Sector" (Paper No. 6, May 2003), written by Ranjit Lamech and Kazim Saeed of the World Bank.

Electricity demand in developing countries is projected to grow by about 4% a year over the next 20 years, requiring significant foreign investment. The World Bank paper summarizes the 2002 survey of international equity investors in developing country power sectors. The survey was conducted as foreign investment fell steeply, after growing rapidly in the early 1990s.

The report found that investors seek reform-minded governments which can ensure:

  • The rule of law,
  • Respect for the rights of owners, and
  • A judicial and regulatory process free of arbitrary government interference.

In assessing country conditions, investors gave priority to:

  • A legal framework which defined investors' rights and obligations,
  • Payment discipline and enforcement, and
  • A guarantee from the government or a multilateral agency.

In identifying the most important factors in the success or failure of investments, investors gave top ranking to:

  • The retail tariff level and collection discipline,
  • Fair adjudication of tariff adjustments and disputes,
  • Operational control and management freedom, and
  • Regulatory commitment sustained through a long-term contract.
Click to obtain a copy of the World Bank report

The survey was sent to 67 firms that made equity investments in the power sectors of developing countries. Of the 67, 48 submitted valid responses. Most respondents are utility affiliates from North America and Western Europe which have invested in generation. Generally, investors perceived their experiences in East Asia and Pacific and Latin America and the Caribbean as positive, and experiences in South Asia as negative.

Click here or on the report cover, to obtain the report in PDF format.

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In Short

  • According to the International Energy Agency's (IEA) "Renewables Information 2003," geothermal energy contributes 0.5% of the world's total primary energy supply (TPES), or 3.2% of all renewables, after solid biomass and hydropower. The contribution of solar, wind, and tide to energy supply is marginal, representing less than 0.1% of world TPES, or 0.5% of total renewable supply. Global generation from renewables grew by 1.9% per year. In 2001, 18.1% of global electricity was produced by renewables, down from 19.3% in 1990. The publication is the second annual release on the use of renewables among members of the Organisation for Economic Cooperation and Development (OECD), and is designed to address the need for reliable statistics on renewables.
  • The IEA's Renewable Energy Policies and Measures in IEA Countries website offers a detailed Policy Database of more than 120 legislative acts that support the development and market uptake of renewable energy sources in IEA member countries. Visitors can search the database by country, type of policy, and type of renewable energy technology. The interactive service complements the policy analysis work carried out by the IEA on renewable energy markets.
  • The GREENTIE website is an international directory of suppliers whose energy efficiency and renewable energy technologies, including geothermal, reduce greenhouse gas emissions. The GREENTIE Directory contains over 2,500 suppliers including 169 for Geothermal Technology, and can be searched through the GREENTIE Project Broker. GREENTIE also provides information on funding on their Finance: Introduction to Project Appraisal & Financing webpage. GREENTIE was created in 1995 in response to Agenda 21 and the United Nations Framework Convention on Climate Change as a tool to help countries fulfil their commitments to the Convention by providing information on technology options.

Australia

  • Minotaur Resources Ltd. is beginning a project to locate areas of hot dry rocks in South Australia. The company is interested in the latest concepts of power generation from such environments, particularly technical information on minimum water temperatures, water injection, and power outputs that may be achieved. It is currently seeking grant money for drill testing selected targets and would welcome any contacts and possible areas of future collaboration. For more information, contact Tony Belperio, Chief Geologist at Tel: (+61-8) 8366-6000, or email at tbelperio@minotaurexploration.com.au.
  • To date, Geodynamics Limited has raised US $14 million (Aus $20.5 million) for Stage One of its Hot Dry Rock Geothermal Energy project. It is currently conducting "hydraulic stimulation" of the Habanero-1 well, injecting high-pressure water into the well to fracture the rock and form an underground reservoir. In August, Origin Energy purchased a 19% stake in the company for US $3.4 million (Aus $5 million) joining Woodside Petroleum with a 20% stake. Origin has the right to buy 50% of the electricity produced by the project.

Central America

  • USTDA approved an expanded Definitional Mission to help the Governments of El Salvador and Costa Rica structure an energy policy to prepare the countries for the increasing energy demand anticipated by the economic and trade development that will result from enactment of the Central American Free Trade Agreement (CAFTA) currently being negotiated by the U.S. Trade Representative. Computer Frontiers, Inc. was selected to perform the Definitional Mission. The final report is expected to be available by late October.

Europe

  • According to a report issued on 2 October by the World Wide Fund For Nature (WWF), entitled "Progress Report on the implementation of the European renewables directive," with current policies the European Union (EU) will not achieve its target under the Kyoto Protocol of producing 22% of electricity generation from renewable sources by 2010. Instead, the 15 member countries will fall short with 15-17%. The report attributes the projected gap to lack of progress in the largest European countries, including Italy, the United Kingdom, and France. It finds that barriers related to grid access and administrative procedures are becoming the most critical issues for the future development of renewable projects in Europe.

Indonesia

  • Mitsubishi Heavy Industries Ltd. (MHI) has received orders for turbines for geothermal power plants in Iceland and New Zealand with a total value of US $20 million (Y2.2 billion), the Nihon Keizai Shimbun reported on 18 October. Reykjavik Energy ordered a 30-MWe geothermal plant to be located east of Reykjavik at Nesjavellir. MHI will produce the turbines; Mitsubishi Electric Corp. will produce the generator. Completion is slated for October 2005. In New Zealand, MHI received an order for a 20-MWe turbine from ORMAT International, Inc. for delivery by June 2005. MHI expects that about 20 such geothermal plants will be ordered outside Japan over the next four or five years.

New Zealand

  • Contact Energy Ltd. announced on 9 October that it will spend US $23.8 million (NZ $40 million) to add 14.4 MWe of capacity to the Wairakei geothermal power station. The plant currently has an installed capacity of 153 MWe. "The binary plant will increase the efficiency of the Wairakei geothermal plant by nearly 10% and generate an additional 120 gigawatt hours per year—enough to run about 15,000 homes," said Contact Energy's chief executive, Steve Barrett. The upgrade will be funded from corporate debt facilities, and is expected to be completed by June 2005. Work is scheduled to begin in early 2004. For more information: Contact Energy 9 October 2003 press release.

Papua New Guinea

  • According to an article by Joseph Onglo Espi, geothermal power generation should be examined as an alternative method of generating electricity in Papua New Guinea (PNG), especially in the New Guinea Islands region where geothermal features are evident. Studies should be undertaken to decide whether or not construction of geothermal plants is economically viable, following the example of the plant built on Lihir Island. PNG Power, as sole power provider, should include geothermal plants in their future plans and policies (Source: "Alternative method of generating power" by Joseph Onglo Espi, The National Online).
  • Earlier this year Lihir Management Company installed a 6-MWe geothermal power station which is expected to save the company about $2 million a year. In addition, Lihir's board has approved the installation of a 30-MWe geothermal power plant, due to be commissioned early in 2005.

Philippines

  • The planned initial public offering (IPO) of PNOC Energy Development Corporation (PNOC-EDC) is likely to be delayed until after the May 2004 national elections, PNOC-EDC chairman and president Sergio Apostol said on 8 October. He added that the PNOC-EDC privatization committee has yet to submit its recommendation on whether or not to go ahead with the IPO. PNOC-EDC announced earlier this year plans to sell a 10% stake to small investors, roughly valued at US $183 million (P 10 billion). The Energy Department recently granted the request of PNOC-EDC to extend its service contract to develop geothermal energy sources for another 25 years as the company prepares for the IPO (Source: "PNOC unit IPO may be delayed until after 2004 polls," INQ7money.net, 8 October 2003).

Russia

  • Unified Energy System (RAO UES) of Russia may convert debt under the European Bank for Reconstruction and Development (EBRD) loan into the assets of the Mutnovsky Geothermal Power Plant, according to UES CEO, Anatoly Chubais. The second unit of the Mutnovsky Geothermal Power Plant went online last October with a capacity of 25 MWe. The unit was financed by RAO UES, a US $99.9-million EBRD loan, and private investors. RAO UES invested US $16.7 million (506 million rubles) in the plant in 2002 (Source: "Mutnovsk Geothermal Power Plant," Gateway to Russia, 6 October 2003).

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Upcoming Events

2003
November
December

2004
July
November
December
3 November NEW
Geothermal Energy Association (GEA) Annual Members Meeting
Sacramento, CA
Contact: Karl Gawell, Executive Director, GEA, Tel: (202) 454-5261 or email at Karl@geo-energy.org

3-5 November
Website: Eighth National Green Power Marketing Conference
Chicago, IL

3-7 November
Website: Implementation of NEPA on Federal Lands and Facilities
Duke University
Durham, NC

4-6 November
Website: Renewable Energy 2003: Modern Situation, Problems, and Trends
St. Petersburg, Russia

7 November NEW
Website: Inter-American Development Bank (IDB) Business Seminar on Modernization of the State
Washington, D.C.
This event will concentrate on IDB support for public sector reform projects in Latin America and the Caribbean. IDB specialists will describe a variety of operations being financed by the Bank in the region in sectors such as judicial reform, fiscal reform, decentralization, redefinition of the role of state institutions, regulatory and civil service reform, and strengthening the role of civil society and citizen security. Dr. Luis Thais, Minister of Decentralization in Peru, will be the luncheon keynote speaker.

12 November NEW
Geothermal 101 Webcast
Contact: Liz Battocletti, Bob Lawrence & Associates, Inc. at Tel: (703) 836-3654, or email at lbatto@att.net

12 November NEW
Washington State Geothermal Working Group Kickoff
Seattle, WA

12-13 November
Website: Fachkongress Geothermischer Strom-Start in eine neue Energiezukunft
Neustadt-Glewe, Germany

12-14 November
Website: 25th New Zealand Geothermal Workshop:
Managing New Zealand's Geothermal Resources
Auckland, New Zealand

17-18 November
Website: 5th Annual Financing U.S. Power Projects
TBD

17-19 November
Website: 16th NREL Industry Growth Forum:
Financing the Path to Clean Energy and a Hydrogen Future
Austin, TX

17-20 November
Website: International Trade & Pre-Export Finance
Miami, FL

17-20 November NEW
Website: Partners in Stewardship Conference
Los Angeles, CA

17-21 November
Website: Export & International Project Finance in the Energy Sectors:
Oil, Gas and Power
New York, NY

18-19 November
Website: Sustainable Energy Asia
Energy Efficiency Asia
Singapore

20 November
Website: Latin American Power Sector: Taking The Next Steps
New York, NY

26-28 November
Energy Solution WORLD 2003
Held in conjunction with JETRO Environment Japan 2003
Chiba, Japan
Contact: Aaron Held at aaron.held@mail.doc.gov, or Kenji Kobayashi at kkobayashi@usaexports-jp.com
Commercial Specialists, U.S. Embassy, Tokyo

7-11 December
Website: Fourth International Conference on Fluid and Thermal Energy Conversion
Bali, Indonesia

8-10 December
Website: 14th Annual National Energy Services Conference and Exposition
New Orleans, LA

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26-28 January 2004
Website: 29th Stanford Workshop on Geothermal Reservoir Engineering
Stanford University, CA

29-30 January
Website: 4th Annual Caribbean Energy
Miami, FL

10-12 February
Website: Second International Symposium on the Dynamics of Fluids in Fractured Rock
Berkeley, CA

16-19 February
Website: Australian Society of Exploration Geophysicists Conference and Exhibition:
"Growth Through Innovation"
Adelaide, Australia
Growth of reserves, corporate growth, professional growth—all are underpinned by innovation. From von Wrede’s use of variation in the magnetic field to discover ores in the early 1900s to the development of modern day high-resolution aeromagnetic surveys; from seismic refraction profiles over Gulf Coast salt domes in the 1920s to today's time lapse 3-D seismic surveys over offshore fields—innovation in exploration geophysics delivers growth.

1-3 March
Website: POWER-GEN Renewable Energy
Las Vegas, NV

10-11 March
25th Annual PNOC-EDC Geothermal Conference
Manila, Philippines
Contact: Dotto Los Banos, PNOC-EDC, Tel: (632) 893-6001, Fax: (632) 840-1580 or 840-1575, or email: geothermalcon@energy.com.ph.

18-19 March NEW
Website: Third European Conference on Green Power Marketing
Lausanne, Switzerland

30 March-1 April
Website: Electric Power 2004
Baltimore, MD

7-9 April
2004 Asia Renewable Energy Conference & Exhibition (REAsia 2004)
Beijing, China
Contact: Grace Fair International Limited, Tel: (+86-10) 643-90338, Fax: (+86-10) 643-90339.

18-21 April
Website: American Association of Petroleum Geologists (AAPG) Annual Meeting
Poster session: "New Advances in Geothermal Energy"
Dallas, TX

30-31 May
Website: 2nd World Renewable Energy Forum: Policies and Strategies
Bonn, Germany

1-4 June NEW
Website: International Conference for Renewable Energies
Bonn, Germany

7-11 June
Website: Export & International Project Finance in the Energy Sectors:
Oil, Gas and Power
New York, NY

20-28 August
Website: 32nd International Geological Congress
Florence, Italy

26 August-1 September NEW
Website: Geothermal Resources Council (GRC) 2004 Annual Meeting
Palm Springs, CA

28 August-3 September
Website: World Renewable Energy Congress VIII
Denver, CO
The World Renewable Energy Congress is the world's premiere conference on renewable energy. Held every two years, the Congress provides an international forum that attracts more than 800 delegates from over 100 countries. Abstracts due 30 November 2003.

5-9 September
Website: 19th World Energy Congress
Sydney, Australia

24-27 October
Website: 2004 AAPG International Conference and Exhibition
Cancun, Mexico
Abstracts due 11 November 2003.

2005
24-29 April 2005
Website: World Geothermal Congress 2005
Antalya, Turkey
Abstracts due: December 2003
Draft papers due: May 2004
Final papers due: November 2004

To have your event listed, contact the Editor.

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Green Green is produced by
Bob Lawrence & Associates, Inc.
Liz Battocletti, Editor

345 South Patrick Street
Alexandria, Virginia 22314 USA
Phone: 703 836 3654 / Fax: 703 836 6086
http://www.bl-a.com/

Copyright © 2000-2003 Bob Lawrence & Associates, Inc. All Rights Reserved


THE FINE PRINT

Green Green is produced for the Idaho National Engineering & Environmental Laboratory (INEEL) under Purchase Order No. K99-181018, and the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Geothermal Technologies Program.

This information was prepared as an account of work sponsored by an agency of the U.S. Government. Neither the U.S. Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the U.S. Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the U.S. Government or any agency thereof.