AGL will commit $10m

Adelaide Advertiser
Thursday 10/7/2008 Page: 68

POWER giant AGL Energy has thrown its weight behind South Australia's geothermal energy industry, committing to invest about $10 million next year. AGL has bought 9.99 per cent of geothermal firm Torrens Energy, which is exploring for hot rocks north of Port Augusta, near Port Wakefield, in the Barossa and the Port Adelaide area. AGL paid $2.2 million for the stake in Torrens, but has also agreed to fund the drilling of 4km deep geothermal energy wells, once Torrens had completed initial exploration, in return for a half stake in each project.

Engineered geothermal energy, still in the testing phase, involves drilling deep wells into hot rocks in the earth's crust, and circulating water between them. The energy in the hot water or steam which returns to the surface is then used to generate electricity. South Australia is the undisputed leader in the geothermal sector in Australia, with more than $700 million earmarked for investment in the sector - or 82 per cent of investment Australia-wide.

The State Government was applauded for setting up a progressive bureaucratic structure to foster investment, while the Federal Government set aside $50m of the $500m Australian Renewable Energy Fund to co-fund geothermal drilling. Torrens has had encouraging results from exploration at its Parachilna prospect area near Leigh Creek. Chief executive Chris Matthews said the benefit of Torrens' projects was that they were close to power grids. Other projects, such as GeoDynamics's Habanero project in the Cooper Basin, are very remote.

"We're combining Torrens Energy's expertise which is exploring for, identifying and then perhaps defining geothermal resources, with AGL's considerable experience in bringing resources to development and market, so this is a perfect fit," he said. Mr Matthews said it was too early to say when geothermal could be a large contributor to the nation's power supply. "We'd like to think that five to 10 years from now the geothermal sector will have a significant, large scale impact on the renewable energy mix in Australia."