Market Wire, July, 2010
U.S. Geothermal Inc. (TSX: GTH)(NYSE Amex: HTM), a renewable energy company focused on the development, production and sale of electricity from geothermal energy, announced today that it has entered into an agreement for the engineering procurement and construction of a new 8.6 net megawatt (“MW”) modular binary cycle power plant at its San Emidio project.
TAS Energy Inc. of Houston, Texas through a FORTUNE 500 engineering, procurement and construction company (“EPC Contractor”) will manufacture the plant. The agreement calls for the EPC Contractor to provide a non-recourse project loan for the $30 million construction capital together with an Engineering, Procurement and Construction services contract for Phase 1 of the San Emidio project in northern Nevada. The construction loan is expected to be repaid with long term financing from available sources such as the Section 1705 loan guarantee program from the U.S. Department of Energy (“DOE”) which we expect to apply for in the near future. Under the terms of the agreement, the parties have established an exclusivity period during which final terms and conditions of certain definitive agreements will be negotiated.
“This is a fully financed, turnkey engineering, procurement and construction arrangement,” said Daniel Kunz, President and CEO of U.S. Geothermal Inc. “We are excited to get construction started this year, which will insure that our 35 net MW San Emidio development project qualifies for the special 30% Investment Tax Credit cash grant.”
The project will construct a new water-cooled binary cycle power plant with an estimated output of 8.6 net MW of renewable baseload electricity. No well drilling is required for Phase 1 since production and injection wells are currently in use by the existing San Emidio power plant which will be replaced with the new plant. The anticipated Phase 1 commercial operations date is 4th quarter of 2011.
The $200 million San Emidio project is a planned two-phase development. The $30 million Phase 1 is planned at 8.6 MWs net and the $170 million Phase 2 is planned at 26.4 MWs net. Phase 2 is expected to be completed in late 2013, subject to satisfactory completion of new well drilling, a transmission upgrade and obtaining the required permits. Phase 2 reservoir resource expansion efforts are already underway using funding assistance from a $3.77 million DOE Innovative Exploration Grant awarded to U.S. Geothermal in 2009. Approximately 3 MWs of the Phase 1′s output is sold through 2017 under the terms of an existing power purchase agreement (“PPA”) with Sierra Pacific, a subsidiary of NV Energy. U.S
construction loans