We won’t get the power, but utility will get credit

By Stephanie Tavares, Las Vegas Sun

Friday, Sept. 12, 2008 | 2 a.m.

Southern Nevada’s electric company is building a geothermal plant in Northern Nevada even though none of the plant’s power will come to the Las Vegas Valley any time soon.

Though they are both subsidiaries of Sierra Pacific Resources, Nevada Power in the south and Sierra Pacific Power in the north are not connected by transmission lines. There is no way to move electricity from the new geothermal plant to Las Vegas.

So why is Southern Nevada’s electric company investing in a plant in Humboldt County, about 25 miles west of Winnemucca? Each utility must generate at least 20 percent of its electricity from renewable sources by 2015. This geothermal energy will count toward Nevada Power’s quota. Until a transmission line links the state’s northern and southern electric grids, the north will buy the geothermal power and the south will reap the renewable energy credit.

Nevada Power has plans to build just such a line, but that project is tied up with the postponed Ely Energy Center, a controversial coal-fired power plant planned for eastern Nevada.

And private electric generator Ellis Energy recently applied for Bureau of Land Management permits to build a similar transmission line along the same corridor, but Nevada Power has said it will not contract with the company to connect its grids.

The developer of the new plant, Nevada Geothermal Power, has signed a 20-year power purchase agreement with Nevada Power. The state’s two major electric companies also have contracts for seven other geothermal projects in various stages of construction and development, which will eventually produce 288 megawatts of power, enough for more than 200,000 homes.

Already, about 200 megawatts of electricity is generated by 17 geothermal plants in Northern Nevada.

Geothermal energy — heat naturally produced underground — is plentiful in Nevada, and generating electricity from it is less expensive than many other types of renewables. That has made it a major component of Sierra Pacific Resources’ renewable energy strategy.

“The geothermal business is really taking off in Nevada, as well it should,” said Tom Fair, Sierra Pacific Resources’ renewable energy executive. “It’s a fundamentally sound industry with a good resource base — in fact, an excellent resource base — in Nevada. That’s why we’re a hotbed of activity in that sector — no pun intended.”

It will take time to develop all the resources because the state’s many geothermal hot spots are sparsely situated across Northern Nevada, Fair said. Geothermal projects here also require more exploratory drilling than in some other states, he said.

Geothermal plants in Nevada also tend to be comparatively small — generating 20 to 40 megawatts per installation.

The upshot is that it is much easier to incorporate several small projects into the grid than one large one, Fair said.

“They’re not a burden on our grid,” Fair said. “So we’ve been able to accommodate these plants so far without expanding the grid. Moving forward, we plan to grow the grid so we can exploit this energy and bring (more of) it to market.”

The new plant near Winnemucca is to be constructed by Ormat, a large Nevada-based geothermal developer, for Canadian company Nevada Geothermal Power. It is expected to start producing almost 50 megawatts by the end of 2009. The groundbreaking is slated for this month.

Nevada Geothermal Power announced last week it had acquired a $180 million loan for construction of the plant — Blue Mountain Phase 1, dubbed Faulkner 1. The money will fund the first phase of construction, remaining well field development, transmission line construction and other development costs.

A version of this story appeared in In Business Las Vegas, a sister publication of the Las Vegas Sun.

Sun reporter Phoebe Sweet contributed to this story.