Locals score with U.S. power plays

Geothermal, wind and solar projects and expertise developed by B.C. companies securing contracts in green-energy-hungry California

Krisendra Bisetty

Kenneth MacLeod’s Canadian detractors thought he was full of hot air – until the would-be energy kingpin pulled off a coup that makes his company, along with several others in B.C., a critical player in power-starved, green-focused California.

After leading one of the first foreign mining companies into the heart of Africa and spending two decades in the resource world, the Vancouver businessman has finally struck the motherlode. This one’s worth $520 million over the next 20 years.

MacLeod’s Western GeoPower Corp. last week snared a power purchase agreement with Northern California Power Agency (NCPA) that will enable the Vancouver-based renewable energy developer to supply electricity to the agency’s vast service area of 17 cities and districts – by tapping into the world’s largest geothermal fields.

During a break from a board meeting in Nevada last Wednesday, MacLeod said the deal was important for his company because, starting in 2010’s first quarter, it will be Western GeoPower’s first operational plant.

“If the U.S. government extends the production tax credit, which is highly likely, then we stand to gain even more revenue, because that’s worth about $5 million a year for us for 10 years. So it could add to the bottom line quite substantially.”

The deal with the power agency calls for Western to supply approximately 265,000 megawatt hours a year of clean, renewable electricity from its proposed $120 million, 35-megawatt-equivalent geothermal power plant 120 kilometres north of San Francisco.

“What’s really motivating us behind this contract is California has passed legislation that requires us to reduce greenhouse gas emissions to 1990 levels by 2020,” Ken Speer, the NCPA’s assistant general manager for generation services, said in an interview. “So a lot of the rules and regulations are being written as to how we’ll do that, but we’re procuring as much non-carbon generation as we can right now because it’s a pretty significant reduction that the electric sector is going to have to take in California.”

The deal expands the agency’s geothermal production at its four power plants near Western GeoPower’s site. Over the life of the contract it’s expected to result in a significant decrease in CO2 emissions when compared with energy generated from even the cleanest natural gas-fired plant.

Speer said the agreement would increase by approximately 30% the amount of geothermal power used by the agency and its customers.

Citing U.S. Department of Energy data, Craig Aspinall, Western GeoPower’s public policy manager, said California’s energy consumption is projected to grow to 5,478 billion kilowatt hours in 2030 from 3,821 billion kilowatt hours in 2005.

California’s updated energy plan calls for more electrical generation from renewable resources such as geothermal, wind and solar.

Several B.C. companies, including Day4Energy Inc. (TSX:DFE) and Xantrex Technology Inc. (TSX:XTX), have already made inroads supplying the California market with solar products, while Western Wind Energy Corp. (TSX-V:WND) has 503 wind turbines spinning in the state.

But MacLeod said that during the state’s 2006 power crisis, California’s online wind capacity during a crucial six-week period was just over 2% of total wind capacity.

“When they needed their wind the most, it wasn’t available to them,” he said. “So that’s why the utilities are clamouring for geothermal energy, and that’s why they have no hesitation in paying close to $100 a megawatt hour.”

California is the largest U.S. geothermal producer with 2,492 megawatts. Aspinall said that represents about 5% of the state’s electrical power generation.

Western GeoPower is also advancing a $400 million 100-megawatt geothermal project north of Vancouver.

But Aspinall said that one is flying below the radar of many investors: “If you’re a Canadian investor and don’t pay too much attention to what’s happening internationally and somebody said, ‘we’ve got a geothermal project in Canada,’ the first question is, ‘What the hell is geothermal?’”

Commercially viable geothermal resources for power generation are found in countries where underground water comes close enough to molten rock to be heated to temperatures needed for power generation.

Most countries on the Pacific Ocean’s “Ring of Fire” have developed electric power generation from these sources. The U.S. is the largest producer.

kbisetty@telus.net