Geothermal explorer sets Penola dig date

Adelaide Advertiser
Wednesday 25/3/2009 Page: 60

ENERGY explorer Panax Geothermal expects to produce clean, base-load electricity from its future Penola power plant for $63 a MW hour - equal to a gas-fired plant. Federal Government incentives for renewable energy production would reduce costs to about $13/MWh once it scaled up power production from 2015, managing director Bertus de Graaf said yesterday.

"These projected costs are highly competitive with other renewable forms of power generation such as wind or solar thermal, and are on par with gas-fired power generation but without the carbon dioxide emissions and associated penalties," he said.

Credit Suisse research estimates wind and solar projects cost $107/MWh. Gas-fired power generation is $62/MWh, while black coal power production costs are $55/MWh. Dr de Graaf was confident the company would gain a $7 million Federal Government geothermal drilling program grant towards costs to drill its first production well in October.

The well would access steam heated by hot rocks from a reservoir 3.5km underground, to power a 4.5MW demonstration plant - expected to be connected to the national electricity grid by 2011. The company's target is for three production wells to increase power production to 13.5MW from 2013 and 10 wells for a 45MW plant, costing $63/MWh, by 2015.

Dr de Graaf said the Penola tenement had Australia's largest measured resource of geothermal energy and had the advantage of being closer to the national grid than rival Cooper Basin explorer GeoDynamics - the company he formerly headed. "Our measured resource has been determined to be 11,000 petajoules, which in theory is sufficient for 1100MW - almost half of Adelaide's daily consumption," he said.

Panax had been in informal talks with power providers about purchasing future electricity but the company "had the luxury" of waiting for an optimum deal, Dr de Graaf said. "We have the luxury of waiting a bit. We're not desperate to do a deal for the sake of staying alive," he said.

Mineral Resources Development Minister Paul Holloway said Panax had potential to make a meaningful contribution to clean, base-load power supply. Panax shares closed 17% higher - up 1.6c to 11c.