Geothermal Industry Is Told to Promote the Sizzle or Fizzle

California’s emerging geothermal energy industry must keep pace with a rapidly changing competitive environment if it hopes to escape the economic devastation that ruined windmill manufacturers earlier in the century, according to Larry Kellerman, president of Citizens Power & Light Corp, a subsidiary of Boston-based Citizens Energy Corp.

Windmills, even those situated in the most breezy locations, eventually were replaced by more cost-efficient devices, Kellerman told members of the Geothermal Resource Council, an industry trade association that on Monday began a weeklong meeting in San Diego.

Kellerman cautioned geothermal companies, which tap superheated brine pools beneath the Earth’s surface to drive electrical generating plants, to revamp business plans that were crafted during an era when government programs helped to make the relatively young industry competitive with proven technologies.

Must Be Competitive

But the next generation of geothermal projects must become competitive without federal and state assistance, Kellerman said. “It’s going to be real tough to get any energy company or utility company to approve a contract that is above the market” price for electricity, Kellerman said.

Kellerman suggested that the geothermal industry could benefit from the wave of change that is redefining the utility industry. “The utility industry itself doesn’t look the way it did a few years ago, and we’re in the middle of redefining what a geothermal developer is,” Kellerman said.

San Diego Gas & Electric Vice President Gary Cotton told geothermal companies that utilities will not buy relatively expensive geothermal electricity because a glut of cheaper electricity is being generated by traditional sources.

SDG&E;, for example, continues to buy geothermal power from Mexico under a long-term, low-priced contract. But SDG&E; has abandoned its plan to eventually sign contracts for more than 400 megawatts of geothermal power from producers in the United States. That 400-megawatt total equals the output of a small coal-fired electrical generating plant.

Geothermal producers can snare contracts by becoming more adept at marketing the highly desirable aspects of their environmentally safe and highly reliable electrical generating plants, Cotton said.

‘Excitement and Sizzle’

Geothermal companies must market “the excitement and sizzle” that will create interest in geothermal generating plants, Cotton said. That marketing effort is needed even in Southern California, which is home to some of the world’s best geothermal reserves, Cotton said.

Conference Chairman Robert Tucker said geothermal electrical generating plants are capable of competing economically with the next generation of coal- and natural gas-fired electrical generating plants.

“We can compete on a level playing field,” Tucker said during a Monday press conference. “Geothermal is not dead. We’re just in a lull.”

That lull will be broken in coming years as developers open a string of geothermal plants in the nearby Imperial Valley to the east of San Diego County. Some of those plants, which are valued at about $1 billion, were prompted in part by federal and state regulations that made geothermal more attractive to developers and utilities.