Nevada Geothermal Power borrowing US$145M for generating plant

Nevada Geothermal Power (NGP-V, NGLPF-O) is planning to borrow US$145 million from a banking syndicate led by Morgan Stanley (MS-N) and Glitnir Capital to build a geothermal power plant at Blue Mountain in northern Nevada.

The banks are currently busy with documentation and due diligence for the loan, which the company expects to close shortly. The proposed loan is in the form of senior secured credit facilities.

Speaking at a Richmond Club event in Toronto, CEO Brian Fairbank said that the plant will include three units, each rated at 16.5 megawatts, for a total of 49.5 megawatts. The plant itself will consume 10.5 megawatts of power, leaving 39 megawatts for sale. About 30 megawatts will be sold to Nevada Power Co., and Fairbank anticipates a price of at least US$60 per megawatt-hour. The company may be entitled to US$19 per megawatt-hour in tax credits for the first 10 years of operation. That tax credit option expires at the end of 2009, but may be extended.

Fairbank says that one sector that could be interested in buying surplus power produced by Nevada Geothermal is the state’s mining industry. The plant will cost US$76 million and it will be built by Ormat Nevada, which has completed similar plants elsewhere. Nevada Geothermal has already sunk four geothermal wells, of which one has yet to be tested. It is planning to sink two more wells. Four injection wells, used to return the water underground, will also be sunk. Startup is scheduled for December 2009 and the plant will be connected to the Nevada electrical grid.

Fairbank says the company has further room to grow. He believes that the Blue Mountain area itself may have potential for more geothermal wells. Other prospective geothermal sites that the company hopes to develop include Pumpernickel Valley, Crump Geyser in Oregon, and the Black Warrior exploration site.