global geothermal news: october, page-10

The bank is teaming up with India's LNJ Bhilwara Group to explore the country's untapped potential. Reykjavik, Iceland-based Glitnir Bank is continuing to spread the word about geothermal, announcing a joint venture today for exploration in India.

Glitnir is partnering with Noida, India's LNJ Bhilwara Group, a diversified business with operations in power generation.

The Icelandic bank will hold a 40 percent stake in the geothermal venture, with Bhilwara holding 60 percent. The venture is being set up with initial capital of $10 million for its exploration phase.

India is new to the renewable energy market and has yet to establish any geothermal power, but Glitnir sees the chance for a hot market in the region.

"There is a technology curve, and we believe in the next five years the technology curve will get more mature, wherein the potential will only increase," Bala Kamallakharan, executive director of strategic growth at Glitnir, told the Cleantech Group.

New developments in geothermal could allow for the power to be tapped at lower temperatures than were previously possible, and advances in exploration could expand the areas where geothermal drilling takes place.

With geothermal power, boreholes are drilled into deep underground reservoirs containing hot rocks saturated with water or steam. The hot water and steam is be piped up to a power plant, where they are used to drive turbines to create electricity.

The hot water can also be used directly for space heating.

Kamallakharan said a typical geothermal plant costs about $3 million to $5 million per megawatt, and with plans for 30 to 50 megawatt facilities, he said the bank expects the pricetag to be around $250 million for an initial plant.

Last year, Glitnir announced that it planned to push the use of the technology forward with a $1 billion investment in geothermal in the U.S. (see Glitnir pouring cash into geothermal).

In a report released at the time Glitnir predicted a more than six-fold increase in the annual sales of electricity from geothermal sources in the U.S., rising to $11 billion in 2025, up from $1.8 billion.

San Jose, Calif.-based Calpine (NYSE: CPN-WI) has a lock on the bulk of the current geothermal power in the States, operating 19 geothermal plants, totaling 725 MW, in the Geysers region of Northern California. Calpine exited bankruptcy protection last week (see Calpine emerges from Chapter 11).

Although the U.S. is the world leader in geothermal, with an installed capacity of 2,800 MW, India has some distinct advantages.

"It's much more attractive in India," said Kamallakharan. "The economics are much higher."

He said the price of energy, which is subsidized by the government, is much higher in India.

"There are incentives for solar and wind and for small hydros," he said. "We believe we will be able to avail some of those benefits for geothermal as well."

India has planned $475 billion in energy investments over the next five years, with $120 billion to $130 billion targeted for tax credits, but it could be a hard sell for steam power in the country.

"The Indian government is kind of skeptical, because there's been a lot of people who have talked about geothermal, but they've never done anything."

Glitnir is bringing plenty of expertise to India. In Iceland, 90 percent of all homes are heated with geothermal power.

And the bank has spread its wings beyond Iceland and the U.S. In 2006, Glitnir opened an office in Shanghai, helping to set up geothermal district heating in China. The company said it believes similar projects can be developed in India.

Kamallakharan said they know the locations where there is potential, but they need to do some more analysis. He expects the first plant to take a few years to get up and running.

"We expect maybe a six to eight year cycle is probably not a bad one for India," he said.