Sunday, Sept. 16, 2007 | 1:28 a.m.
The modern-day wildcatters came first, sinking drills into the hills above town, looking not for oil but for hot water.
Small, almost inconspicuous buildings followed the drilling rigs. They house turbines that hum almost without notice as they use the Earth's heat to make electricity.
And today, a string of plants connected by a pipe made hot to the touch by scalding water stretches from the top of the hill down to a valley on the outskirts of town. Owned by geothermal power developer Ormat Nevada, the plants draw hot water from underground reservoirs to create enough electricity for a city of more than 200,000 people.
This fledgling power system goes unnoticed by tourists who drive past it to ski at Lake Tahoe, but developers of these emissions-free plants say they are the future of green energy in Nevada.
Technology to harness the Earth's heat to make power has been used here since the 1980s. But now, geothermal companies - spurred by federal tax credits, the requirement that Nevada utilities buy and promote renewable energy and recent auctions of federal land for exploration - are working on a new generation of plants that could power nearly 1 million homes.
Nevada has been called "the Saudi Arabia of geothermal power," with 1,500 megawatts of development possible in the near term, according to a Western Governors Association study. And that may just be the low-hanging fruit: geothermal sources so close to the surface - sometimes with hot water bubbling up - they were easy to spot.
People who know the industry say it's on the cusp of becoming a mainstream energy source because it's capable of providing electricity 24 hours a day with minimal environmental effects.
Already in Nevada, 7 percent of the electricity produced is from geothermal energy. About a dozen companies are exploring Nevada for hot water, with more in the wings.
Ormat's geothermal power plants draw 300-degree, mineral-rich brine from aquifers beneath the hills. The brine transfers its heat to pentane fluid, which turns to vapor that is used to turn a turbine to generate electricity.
The brine, by then cooled to about 100 degrees, is injected back in the aquifer to be reheated.
Ormat and seven competing developers recently bid $11.7 million for the rights to geothermal resources scattered across 123,000 acres of federal land in western and central Nevada. Next is exploration , a labor- and capital-intensive process of sinking test drills that is so expensive it accounts for a quarter of the cost of geothermal energy production. Each test well can cost as much as $5 million, and only half yield any hot water.
"It's one step above water witching," said Karl Gawell, director of the Geothermal Energy Association.
Although 1,000 megawatts of geothermal energy are under development in Nevada, "we might have five times as much that we can't find," he said. "The key to that is better and smarter technology."
But the Energy Department has cut back on geothermal research and development programs such as those at UNR's Great Basin Center for Geothermal Energy. Sen. Harry Reid, D-Nev . , and others are fighting to keep funding for the center, which is training skilled geothermal workers, and other geothermal research and development programs for next year.
Working in the industry's favor are a requirement that Nevada utility Sierra Pacific Resources - parent company of Nevada Power Co. - buy 20 percent of its power from renewable resources by 2015, the potential renewal of a federal production tax credit for renewables developers, an influx of capital from as near as Canada and as far as Iceland , and comprehensive energy legislation being considered by Congress.
Tom Fair, a renewable energy executive at Sierra Pacific Resources, said the company will get 470 megawatts of power from geothermal projects, 300 megawatts more than in 2005. Nine projects are already in advanced development or producing power.
Maybe the best perk from tapping geothermal energy: Once the power plants are in place, they operate on free fuel. Still, geothermal power, like other renewable energy, isn't quite cost-competitive with traditional power-generation methods such as gas or coal. But experts say the high price of natural gas and an increasing need for clean, carbon-free energy will increase geothermal energy's value.
The recent lease auction by the Bureau of Land Management was spurred by a 2005 revision of energy law that allowed the industry to ask that specific parcels be put up for bid.
But the same agency that leased the 43 Nevada parcels is also the major obstacle facing geothermal developers.
Although it takes oil and gas drilling companies four to six weeks to get the BLM's permission for exploratory drilling on federal land, those same permits can take three months to a year for geothermal drilling because the staff assigned to geothermal energy is overwhelmed by the industry's growth. And granting permits for a power plant after a site is found can take another year.
For small geothermal developers - whose size is dwarfed by even the smallest oil and gas prospectors - the delays can be crippling, costing them utility contracts and financing.
There might be some relief in sight.
The same federal law that allowed geothermal companies to nominate specific parcels for auction also adjusted how that lease money is distributed.
Of the $20 million paid by developers for leases on parcels in Nevada and California in August, 25 percent will go to the BLM to hire more employees and improve the permit process.
Another 25 percent will go to the counties where the parcels are located and 50percent will go to the states.
Geothermal companies that leased land in August say they're braced for delays when they file requests for permission to drill on that land.
After geothermal energy companies find hot water and dot the landscape with their little power plants, they still have to get the electricity onto the power grid.
Fair said because geothermal projects average about 30 megawatts, they are too small to pay for large transmission lines.
Instead , they'll connect to the Northern Nevada electric grid, which will be tied to Southern Nevada for the first time around 2010 by a 250-mile transmission line that will connect a proposed coal-fired power plant near Ely with Las Vegas.
But sometimes hot water isn't far from the power lines.
In Reno, 56,000 homes are just down the hill from Ormat's geothermal power plants.