Renewables
Green pioneer
- Details
- Category: Alberta Renewables
- Written by Jim Bentein
Calgary-based pipeline and power giant Enbridge, already heavily invested in renewable energy sources such as wind and solar, decided to invest in a geothermal energy project in the United States to “develop a learning curve” regarding geothermal energy, according to a senior company executive.
Chuck Szmurlo, vice-president of alternative and emerging technologies with Enbridge, says the company decided to take a 20 per cent interest in a geothermal plant in Oregon, being developed by Boise, Idaho–based U.S. Geothermal, to develop more expertise in the area. It eventually plans to invest in geothermal in Canada.
“We think British Columbia will come around to [developing] its geothermal power, but it may be a couple of years,” he says. “That’s why we went to the States to develop a learning curve.”
And he says Enbridge chose U.S. Geothermal as a partner because the company, which has two projects in Nevada, one in Idaho and the Neal Hot Springs project in Oregon under development, is one “we admired, and we also respected their technological expertise.”
Enbridge is investing US$23.8 million for the 20 per cent interest in the Neal Hot Springs plant, on which construction is underway. It is designed to produce 35 megawatts (MW) of power when it comes into production in mid-2012.
Construction has also started on U.S. Geothermal’s San Emidio Phase 1 project in Nevada, which will produce 11.5 MW. It plans to expand the project to produce 35 MW.
Its two other U.S.-based projects are in the planning stages. The company holds the rights to almost 70,000 acres of geothermal assets in the United States, which could accommodate six projects, as well as leases in Guatemala.
Szmurlo says Enbridge may get involved in other projects with U.S. Geothermal.
“It’s prudent for us to partner with people who have had more experience with geothermal than us,” he notes. “I think we believe in walking before you run.”
ENBRIDGE’S GROWING RENEWABLE PORTFOLIO
The company took a similar approach in developing utility-scale solar power. In October 2009, it announced it would spend $100 million to acquire an interest in a 20 MW solar project near Sarnia, Ont., from First Solar of Tempe, Ariz.
The two companies subsequently announced they would spend $300 million to expand that project to 80 MW. First Solar will operate the development under a long-term contract with Enbridge, which now wholly owns the project.
Szmurlo suggested that will serve as the model for its geothermal involvement.
Enbridge also has significant wind power assets, including four existing wind power projects in Canada, with two more under construction in Ontario. It owns the 30 MW Chin Chute wind project and the 30 MW Magrath wind project in southern Alberta. It recently announced it would spend US$500 million to buy the 252 MW Cedar Point wind project, located near Denver. That project, which will be one of the largest wind power facilities in the United States, is now under construction.
The company has green power assets worth in excess of $2 billion (including the Colorado project, which will be operated by a U.S. subsidiary), and Szmurlo says the green energy sector is poised to become the “third leg on the stool” of the energy giant’s businesses, along with its oil pipeline and gas transmission divisions.
“It’s still a skinny leg, but it will grow in importance,” he says.
Along with its solar, wind and new geothermal assets, the energy giant also has a 50 per cent interest in projects operated by Calgary-based NRGreen Power that capture waste heat from pipelines to produce power. The company has four waste-heat-powered generating units at compressor stations along Alliance Pipeline’s natural gas pipeline system in Saskatchewan, and the company is planning three similar projects in Alberta. Each of the four units produces five megawatts of power.
Szmurlo says the company is investing in green energy because it realizes, as one of the giants of the fossil fuel industry, it must take measures to balance its involvement in that sector with investments in the green energy sector.
Enbridge is also involved in two initiatives in Canada that are investigating the possibility of the long-term sequestration of CO2 in deep saline aquifers. That CO2 would be used for enhanced oil recovery.
In Alberta, it is involved in the Alberta Saline Aquifer Project, a consortium of 38 energy industry participants. In Saskatchewan, it is involved in the Saskatchewan Aquistore project, which is being managed by the Regina-based Petroleum Technology Research Centre.
GEOTHERMAL INVOLVEMENT
Daniel Kunz, president and chief executive officer of U.S. Geothermal, says the initial Enbridge investment will almost certainly lead to more involvement by the company.
“We’re talking to them about [investing in] a second project and possibly about a project in Guatemala,” he says.
He says his company has the potential to eventually produce “several hundred megawatts” of geothermal power in that Central American country, which is chronically short of electricity. The cost of power there is high because of a reliance on bunker fuel and oil as a source.
Kunz says his company has looked at developing projects in Canada, particularly in B.C., but decided not to proceed because of the remoteness of many of the good geothermal sites in the province and their distance from the power grid. The company was also concerned about how native land claims might affect any projects there.
“But some day there will be geothermal in B.C.,” he notes.
He says his company values the “access to capital” its deal with Enbridge provides.
“It has been tough times on the equity markets for small caps [small companies that trade on stock exchanges],” he explains.
Kunz says his company plans to have at least 250 MW of geothermal power in its portfolio within the next five years, which would make it one of the largest geothermal power producers in the world.
