Geothermal power heats up with newfound certainty

The Age reports the new carbon tax has increased interest in geothermal power companies - Geothermal power heats up with newfound certainty.

SCIENTISTS estimate there is enough energy stored in hot rocks beneath Australias surface to meet its power demands millions of times over, but bold prognostications have not been enough for the geothermal industry.

Kevin Rudds abandonment of Labors first proposed emissions trading scheme hit the industry hard, with share prices plummeting and investors baulking. "That policy backflip has hurt the industry, no doubt," says Terry Kallis, managing director of South Australian company geothermal Petratherm. Hot rocks power remains a highly speculative industry, but things are slowly looking up for Petratherm.

Last month, it began fracturing rock four kilometres beneath the Earths surface in the North Flinders Ranges using part of a $7 million federal government drilling grant — the key step in proving a geothermal reservoir can be created deep underground and the project has a future. Mr Kallis said he believes his is the only company with an active hot rocks project.
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Yesterday Petrotherms shares leapt 16 per cent, reaching a high of 23.5¢ before closing at 19¢. It is a far cry from its high of 92¢, but is an important reflection of the role the carbon price package — and a new $10 billion clean energy finance corporation, largely paid for with carbon tax revenue — could play in developing the industry.

"It has put us back on track, which is very important," Mr Kallis says.

"Every geothermal project will take a bit longer and cost a bit more because of the policy backflips that we have had, and we all rely on the equity market, which was hit with the financial crisis. [But] having a carbon price out there starts to create an investor framework and gives the industry some certainty — something we havent had."

Changes in government policy is not the only thing that has held up geothermal investment. Projects take a long time to get off the ground and the costs are considerable with no guarantee of success.

Petratherms project involves injecting water into rocks deep beneath the ground at high pressure in an attempt to create fractures. If successful, power will ultimately be generated by steam and hot water rising from a well and running a generator at the surface.

Petratherm has no short-term need for the new funding — it hopes to access an existing $63 million demonstration stage grant later this year. But Mr Kallis says the seed funding available from the corporation could prove valuable for the industry if well run.