Will LA Geothermal Purchase Add Steam to the US Market?

In what could be a boost to U.S. geothermal energy development, Los Angeles has signed a $94-million long-term contract with Reno, Nev.-based energy developer Ormat Technologies Inc. to buy 150 MW from its portfolio of northern Nevada geothermal projects.

The Southern California Public Power Authority will buy the power, reselling the output to the Los Angeles Dept. of Water and Power. The portfolio covers nine plants, including several not yet built. The power contract supports Ormat’s long-term plans to grow its geothermal business in the U.S., says CEO Isaac Angel. Such contracts are critical to the development of projects, the Geothermal Energy Association said in its 2016 power-production report. The U.S. market has about 1,250 MW of geothermal power under development, but about 500 MW are stalled, waiting for power purchase agreements (PPA), the report says. With power contracts, the projects could be brought on line in 17 to 33 months.

The Los Angeles PPA has a fixed price of $75.50 per megawatt hour for 26 years. For the city, geothermal power adds base-load capacity, unlike intermittent renewable sources. “I promised Angelenos we would kick L.A.’s dependence on coal, and projects like this are exactly how we’ll do it,” Mayor Eric Garcetti (D) said when the agreement was signed. It comes just weeks after Japanese financial services firm ORIX Corp. bought a 22% stake in Ormat for $626 million.

Ormat will have exclusive rights to develop, own, operate and provide equipment for ORIX geothermal energy projects in markets outside of Japan, as well as co-invest in ORIX geothermal projects there. The collaboration will accelerate Ormat’s strategic growth plans in the global renewable-energy market, said Chairman Gillon Beck. The global market is strong, with new, larger-scale developments taking place in Southeast Asia and Africa, says the U.S. Dept. of Energy.

Controlled Thermal Resources, an Australian firm, is developing the largest geothermal project in the U.S., a 450-MW plant in California’s Salton Sea.

Mary B. Powers has reported on engineering and construction issues in the global energy and environmental sectors for more than 30 years from Washington, D.C. and Birmingham, Ala. She formerly wrote for the Platt's group of energy sector publications under McGraw Hill and S&P Global that included Inside Energy and Megawatt Daily, and was state editor for the Lexington, Ky., Herald Leader. Mary has a master’s degree in journalism from The American University.

Post a comment to this article

Coinciding with the release of the new 2024 Top 400 Contractors list, this annual webinar dives into the results of the Top 400 survey. We'll bring together a panel of executives from the largest contracting firms to discuss the industry’s pressing issues, from workforce challenges to data security.