Hoping to tap into California's growing appetite for renewable power, Calpine Corp. today will unveil an ambitious expansion of its geothermal operations, considered one of the state's most promising clean-energy sources.
The overhaul of the Geysers geothermal project, expected to cost $75 million in its first year, is evidence of the strong demand for cleaner energy in California. It is spurred by legislation aimed at reducing greenhouse gas emissions, which is pushing utilities to ramp up their use of energy from water, wind and sun.
Under goals set by the California Public Utilities Commission, Pacific Gas & Electric Co., Southern California Edison, San Diego Gas & Electric Co. and others must get 20% of their electricity from renewable sources by 2010.
In recent months, Edison signed the largest wind energy contract by a U.S. utility and agreed to a new, 10-year contract with Calpine for 225 megawatts of geothermal power from the Geysers. Calpine, one of the nation's largest wholesale power sellers, also has a new, long-term contract to provide geothermal power to PG&E, California's largest electric utility.
"The Geysers has not seen a huge infusion of capital into it for many years ... but the market indicators are there to support investment and upgrades of the facilities," Dennis Gilles, Calpine's top geothermal executive, said in an interview last week. "You either have to have alternative-energy types being priced higher -- like the cost of natural gas -- or have a high demand for renewables. And we have both occurring right now."
The Geysers expansion represents a departure for the San Jose-based power producer, which has been selling power plants and other assets since it fell into bankruptcy protection in late 2005. And it comes at a time when it is strapped for cash.
"I'm very excited and really proud of Calpine ... and I'm really encouraged that they're taking the lead in such a critical area," Public Utilities Commissioner Timothy A. Simon said Wednesday. "They're a very vital part of the energy economy."
Bernadette Del Chiaro, clean-energy advocate at advocacy group Environment California, said she applauded Calpine's plans to draw more power from the Geysers, which naturally produces steam from hot rock formations deep underground.
"Geothermal is a terrific, clean, renewable resource that should be expanded," she said. "It's a no-brainer to tap into the immense energy that we have just under the earth. And it's 24-7, it's not intermittent, so it's a crucial piece to have in the mix."
