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Wed Sep 5, 2007 6:01 PM BST140


NEW YORK (Reuters) - Glitnir Bank (GLB.IC: Quote, Profile , Research) of Iceland is planning to invest $1 billion in U.S. geothermal energy projects over the next five years in an effort to grab a "big slice" of the nascent alternative energy sector, a bank official said on Wednesday.

"The challenges are numerous, but the potential is huge," Arni Magnusson, managing director of sustainable energy for Glitnir, told a press conference to announce the opening of the bank's New York office.

Magnusson said Glitnir already had financed three geothermal energy deals in the United States this year and was planning one or two more before January, adding up to a total investment of between $70 million and $100 million.

"In the next five years (investment in geothermal) is estimated at $10 billion in the U.S. and, if we can get 10 percent of that, that would be good," Magnusson said. He said Glitnir wanted a "big slice" of the U.S. geothermal market.

Glitnir is ranked as one of the leading capital markets players in the Nordic region and specializes in financial services for the seafood, sustainable energy and offshore service vessel industries.

The bank expects a potential six-fold increase in the annual sales of electricity from geothermal sources in the United States to about $11 billion from less than $2 billion now, the bank said in a press release.

Potentially, geothermal energy could fill up to 20 percent of California's, 60 percent of Nevada's and 30 percent of Hawaii's electricity needs, Glitnir said.

Glitnir said the investments required to service current geothermal projects in the United States is nearly $10 billion, while the total investments required to develop the resources available through 2025 were estimated at nearly $40 billion.