Monday 10 May 2010

Power plan unplugged $700m geothermal bid misses grants

Hobart Mercury
Saturday 1/5/2010 Page: 5

A $700 MILLION Tasmanian renewable energy project has been shelved after failing for a second time to secure Federal Government funding. KUTh Energy's planned geothermal power stations at Fingal in the North-East and in the Midlands were believed to have the potential to supply 25% of Tasmania's electricity needs. KUTh Energy managing director David McDonald said the company would refocus its attention on other geothermal projects in Vanuatu and forget about Tasmania for now.

The company missed out on the Federal Government's first round of $150 million funding grants in November and recently discovered there was no money left in the second round of $35 million, which went to five other companies. The Federal Government has handed out grants worth nearly $290 million for geothermal exploration since 2002 but Tasmania got the smallest share - just $1.8 million, or 0.6% of the total funding. Exploration suggests Tasmania sits on a huge source of geothermal or hot-rock energy.

Mr McDonald said the Fingal and Midlands projects were ready for drilling and investors were waiting to get involved. The next step was to drill the Skin-deep holes needed for a commercial trial but the $35 million needed for that process would be almost impossible to raise through private investors alone, he said. "We do not want any government to fund the entire project, this is simply a helping hand to get things rolling." Mr McDonald said.

His company finished drilling 36 pilot holes late last year in an exploration tenement that stretches from the mouth of the Tamar River to Hobart. He said drillers struck hot granite which would be perfect for generating power. The geothermal process involves heating water deep underground and using its steam to drive turbines. "We would be able to produce 280MWs a year over a 30-year period," Mr McDonald said. "That's 25% of Tasmania's energy requirement."

The funding setback comes on top of the $400 million dollar Musselroe wind farm hanging in the balance after the scrapping of the Federal Government's push for an emissions trading scheme. Tasmanian Greens energy spokesman King Booth said governments around the world owed it to the next generation to stop squabbling over old energy technologies and ensure proper investment was made in renewable projects. Liberal alternative energy spokesman Matt Groom said talk by Premier David Bartlett to make Tasmania the hub of renewable energy in the country had amounted to nothing.

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