Geothermal Power Markets

The California Energy Commission staff report on statewide electricity demand forecast peak consumption ranging from a low of 60,640 megawatts (MW) to a high of 61,528 megawatts for 2008, compared with 56,435 MW consumed in 2004. This was forecast to increase to a low of 66,656 and a high of 69,473 MW by 2016.

California ’s Energy Action Plan II placed increasing emphasis on electrical generation from renewable resources such as geothermal, wind and solar. In 2004, 10.2% of California’s electric energy generation came from renewable resources and 4.8% of that came from geothermal power plants. In 2007, California’s installed geothermal capacity of 2,555MW exceeded that of every country in the world. The most prolific location producer is The Geysers Geothermal Field in Northern California, with a current capacity of 900 MW.

The growing market for renewable power is driven by California’s legislated Renewables Portfolio Standard Program (RPS) that requires a retail seller of electricity to purchase at least 20% of that electricity from renewable energy resources by the year 2010. Those who fail to meet those targets are penalized for non-compliance is 5 cents per kWh, up to $25 million per year.

The California Public Utilities Commission (CPUC) and the California Energy Commission is actively considering increasing the RPS percentage to 33% by 2020. They feel a 33% target would further California’s efforts to address climate change and lead the nation in clean energy policy. Since current RPS statute prevents the CPUC from requiring California’s investor-owned electric utilities (IOUs) to procure more than 20% of their electricity from renewable sources, legislation is needed to codify 33% renewables. Further progress toward realizing this legislation was made on November 17, 2008 when Governor Schwarzenegger signed Executive Order S-14-08 directing all state agencies to work toward a 33% RPS by 2020.

California needs to add 20,000 to 30,000 gigawatt hours (GWh) of new renewable electricity to meet the 2010 target and likely will need to add an additional 40,000-50,000 GWh to meet a goal of 33% by 2020.

Western GeoPower ’s Unit 1 project at The Geysers and The South Brawley Project are well positioned to benefit from this combination of increasing electrical demand in the huge California market, legislated requirements for renewable power production, and prime location in producing geothermal fields.