27 Nov 2012
On paper, the potential for geothermal energy in Australia is staggering. Government data suggests that using just 1% of our hot rocks to generate power could meet Australia's energy needs for 26,000 years. But for now it seems the hot rock industry has gone cold. In August, one of Australia's largest geothermal supporters, Origin Energy wrote off its investments in GeoDynamics' Cooper Basin wells, one of Australia's only active geothermal projects. "They lost patience with geothermal", says Graeme Beardsmore from geothermal consultancy Hot Rocks. They haven't seen the returns that they anticipated ten years ago when they got involved. It's a similar story with EnergyAustralia".In March, TRUEnergy, which recently merged with EnergyAustralia, also gave up its stake in another major geothermal project, the Paralena joint venture in South Australia. Mr Beardsmore says the decisions of both companies have a flow-on effect for all investment in the industry. "Other investors with money look at the project and say 'that project hasn't returned anything in ten years, so why should we believe that we are going to get our money back any time sooner?' "It becomes a difficult business model to raise investment on and that's the case the world-over for geothermal projects. "So the industry is at a crossroads".
Off the back of this difficult investment environment, the Federal Government downgraded the geothermal sector in its Energy White Paper, released earlier this month. Just a year ago it was predicted that geothermal would provide 23% of Australia's total electricity needs by 2050. That figure has now been revised to just nine%. "That probably was always much more realistic", says Mr Beardsmore. "It's certainly not insignificant, but it's not been a good year for the geothermal industry. "But I'm still optimistic-next year's looking much rosier. "I think we should actually have the first power generated from geothermal outside Birdsville".
The geothermal plant currently supplying power to Birdsville in Queensland was the last project to be built in Australia, over 20 years ago. Now, industry talk points to the Cooper Basin as the likely home to Australia's second geothermal power plant. Despite the loss of primary investor Origin Energy, GeoDynamics is expecting to have a new, trial one-MW-plant operational about 11 km from Innamincka by mid-2013. According to Geoff Ward, managing director at GeoDynamics, that's one geothermal project that isn't short of cash.
"We closed out our remaining insurance claims from events in 2009 when we had a well incident, and recieved that payment" he said., "We've also sold two large drill rigs,.. and are well supported by the Australia Renewable Energy Agency, and Sentient and Sunsuper groups. "But we've been exploring for hot rocks in the Cooper Basin for over 11 years now. "We've just completed our sixth deep, hot well, 'Habanero 4', in September, and we're now undertaking a major simulation to test it".
GeoDynamics are also advancing plans to provide geothermal energy to large customers like the Gove alumina refinery in the Northern Territory.
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