Dive Brief:
- A California public utility recently approved a 1,900-acre lease for an Australian company to develop a 250 MW geothermal plant in one of the state’s most geothermal-rich areas, the Salton Sea, the Desert Sun reports, giving hope to environmental advocates who see development as a key source for funding for restoration.
- The project, developed by Controlled Thermal Resources, says it will help move the state to meeting the new 50% renewables-by-2050 mandate by bringing down costs through economies of scale and delivering price-competitiveness baseload generation necessary to balance the intermittancy of renewables.
- Only one geothermal plant has gone online in the Salton Sea area since 2000, stymied by the high costs of geothermal exploration and production, but the project has a few more hurdles, such as securing a buyer for its electrical output and garnering approval by the California Energy Commission.
Dive Insight:
California's Salton Sea area is reknown for its rich geothermal resources, but high upfront costs to build a plant has deterred developers from investing too much money into developing the area.
The board of the public utility Imperial Irrigation District, while agreeing to sign the lease to Controlled Thermal Resources, sounded a note of caution to the developers about securing buyers for their electrical output, calling the lease the "step in a long journey," the news outlet reports.
"I would be happy to see anybody down there trying to build geothermal. But to get a bid that’s attractive enough that utilities will buy it, and to be able to turn around and get a banker to help — those are the critical variables," Kevin Kelley, general manager of IID told the news outlet.
The Salton Sea area already hosts 11 small geothermal plants and should therefore allow for lower exploration and production costs. The developer will pay IID about $40,000 per year for the next three years, about $200,000 per year after construction begins and royalties on its electrical output.
A study from IID said geothermal development could generate $2 billion to help restore the Salton Sea, California's largest lake. Declines in agricultural runoff have resulted in the lake slowly drying up, leading to mass fish die-offs and the release of toxic lakebed dust into the air.
Geothermal development in the Salton Sea is estimated to have 1.05 GW to 1.81 GW of generation capacity by 2030, according to a recent study from the National Renewable Energy Laboratory (NREL). generating between $98 million and $210 million in that time period.
Solar could add an additional 1.3 GW to 1.8 GW of electricity generation. Algal biomass and mineral recovery of lithium from Salton Sea geothermal brines could add additional revenue streams, leading to $5.6 million to $77.8 million of revenue annually, NREL concluded.
