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A New Power Boom Starts in California

By Matt Badiali, editor, S&A Resource Report
Thursday, June 14, 2007

The first thing you notice about the power plants is the silence.
I'm looking at the Geysers, located about 70 miles north of San Francisco, just outside of Sonoma, California. It is the largest developed geothermal field in the world. It's also an example of what's possible in power generation.
Standing on the western ridge, looking out across the deep green valley, you see another ridge about two miles away. The ridge is spiderwebbed with big, white pipes.
Wells drilled to 11,000 feet below the surface cut across steam-filled cracks in the rocks. The steam comes up the wells, through the pipes, and over to the generation plant. The steam turns a big turbine, which generates electricity.
The Geysers Field currently produces around 1,000 megawatts, but that capacity is expanding.
To put that in perspective, the Tennessee Valley Authority's Kingston Fossil Fuel plant produces 1,140 megawatts, or enough energy for 700,000 homes. The plant consumes 14,000 tons of coal per day to generate that much energy.
The power plant at the Geysers also strikes a pretty small footprint. It's nearly invisible compared to its power plant peers. Take the monstrous Four Corners coal mine/power plant I visited in Fruitland, New Mexico, for example. You could see its silhouette for miles around. The coal mine was a giant hole in the ground, and the noise of the operation was deafening.
Located in a 30-square-mile area in the Mayacamas Mountains on the border of Sonoma and Lake Counties, the Geysers are the crown jewel of Calpine, the largest producer of geothermal energy in North America. The power generated at the Geysers supplies 60% of the power needs from the Golden Gate Bridge north to the Oregon border.
California is an ideal place for developing geothermal power. The state currently gets 6% of its power (2,492 megawatts) from geothermal sources, and another 15 projects are underway. California's Renewables Portfolio Standard (RPS) requires that 20% of the state's electricity come from renewable sources by 2010.
Another bill is before the California State government that would increase the RPS to 35% by 2015. I see the bulk of it coming from geothermal plants like the Geysers... it's the best source of renewable energy – if it is available.
Reliability of Renewable Energy Sources
In the past, geothermal energy was expensive to produce. However, the economics have improved due to better drilling techniques, field management experience, and more efficient turbines. Because of tax incentives, producing geothermal power can be a hugely profitable enterprise.
My trip to the Geysers was part of an invitation only seminar hosted by a geothermal company. The other attendees were high net worth individual investors and bank analysts. The attendees came as far as Iceland and the Philippines to participate. Interest here is building...
For now, most investments in geothermal are companies working with new technologies. We're still in the early stages of the game, so it's difficult to invest in right now.
However, as the world invests billions into non-polluting sources of energy, this area will experience a huge boom in the coming decade. We'd be wise to follow it.
Good investing,
Matt Badiali

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