Nevada Geothermal raising US$140m in debt to construct power plant

Nevada Geothermal (NGP-V, NGLPF-O) is raising US$140 million in debt to construct a geothermal power plant at Blue Mountain in northern Nevada. The plant is scheduled for start-up in December 2009.

Speaking at a Richmond Club event in Toronto, CEO Brian Fairbank says that the plant will include 3 units, each rated at 16.5 megawatts of electricity, for a total of 49.5 megawatts. Since the plant itself consumes 10.5 megawatts of power, it will have 39 megawatts available for sale. About 30 megawatts will be sold to Nevada Power Company, and Fairbank anticipates a sale price of at least US$60 per megawatt-hour. He says that the company will be entitled to US$19 per megawatt-hour in tax credits for the first ten years. (The bill awarding the tax credit is in force until the end of 2009, and it may be extended.)

Power not sold to Nevada Power Company will be available for sale to other buyers, and Fairbank says that one sector which could be interested is the mining industry in Nevada. The cost of the plant is US$76 million and it will be constructed by Ormat Nevada, which has completed similar plants elsewhere. Nevada Geothermal has already sunk four geothermal wells, with another two still to be sunk. Four injection wells, used to return the water underground, will also be sunk. A connection to the Nevada electrical grid will be built.

Fairbank says that the company has further room to grow. He believes that the Blue Mountain area itself has potential for more geothermal wells, so it could support more power generation. Other prospective sites that the company hopes to bring to production are Pumpernickel Valley, Crump Geyser in Oregon, and the Black Warrior exploration site.