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Santa Fe, New Mexico May 13, 2008

Developing G eothermal Resources in New Mexico and the Western Markets. Santa Fe, New Mexico May 13, 2008. Daniel J. Fleischmann Ormat Technologies, Inc. www.ormat.com dfleischmann@ormat.com 775-356-9029 ext. 2239. Ormat: Innovative Power Plant Technology

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Santa Fe, New Mexico May 13, 2008

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  1. Developing Geothermal Resources in New Mexico and the Western Markets Santa Fe, New MexicoMay 13, 2008 Daniel J. Fleischmann Ormat Technologies, Inc. www.ormat.com dfleischmann@ormat.com 775-356-9029 ext. 2239

  2. Ormat: Innovative Power Plant Technology • Vertically-integrated company active in the design, engineering, supply, installation, support & operation of renewable & sustainable energy products and projects since 1965 • Four decades of experience developing modular power plants from 0.2 MW to 130 MW for geothermal, recovered energy generation (REG), biomass, solar, and re-powering/rehabilitation of existing plants • Supplied over 950 MW of geothermal and REG power generation in 23 countries, about half of the supplied MW are currently owned by Ormat • The only pure play geothermal and renewable energy company supplying equipment and technology to utilities and developers as well as owning and operating geothermal projects world wide

  3. 1987 57 MW Ormesa Binary Geothermal Complex, California • 1996 125 MW Upper Mahiao Combined Geo Power Plant, Philippines Ormat’s World Wide Presence Over 900 MW of Geothermal Power Plants • 1992 30 MW Puna Combined Cycle Geothermal Power Plant, Hawaii • 1992 • 1994, 1998 • 2005 • 2000, 2005, 2007 40 MW Heber Geothermal No. 2 Binary Power Plant, California 115 MW Mokai Combined Geo Complex, New Zealand 20 MW Burdette Binary Geothermal Power Plant, Nevada

  4. Pre-Packaged Equipment Supply for Self Construct Plug and Play On Site Geothermal Power Ormat supplied equipment for remote and rural applications 1989 1984 Supplying local electrical power and energy for crop drying and cold storage since 1989.19 years of operation. First commercial geothermal application in Nevada. 800 kW OEC, with power supplied to Sierra Pacific Power Co.24 years of operation. 800 kW Wabuska Geothermal Power Unit, Nevada. 300 kW Egat Geothermal Power Plant, Thailand 2001 2004 Owner installed plant using Ormat supplied equipment, documentation and technical assistance. 4 years of operation. 250 kW air-cooled geothermal CHP plant generating electrical power as well as district heating, by utilizing a low temperature geothermal resource. 7 years of operation. 1.8 MW Oserian Geothermal Power Plant in Naivasha, Kenya 250 kW Geothermal Power Unit at Rogner Hotel & Spa, Bad Blumau, Austria

  5. Presentation Purpose • This presentation will examine the power market in New Mexico and general issues related to how geothermal fits into power markets in the Western U.S. • The presentation will focus on: • New Mexico’s power market • New Mexico’s geothermal potential Based on Western Governor’s Association (WGA) Geothermal Task Force Report • New Mexico’s needs in order to facilitate geothermal development • Key issues for geothermal throughout the West • General power market trends throughout the West

  6. How Extensive is the U.S Geothermal Resource? Estimated Earth temperature at 6-km (3.7-mile) depth. Southern Methodist University (SMU) Geothermal Laboratory. Source – National Renewable Energy Lab (NREL)

  7. Status of the U.S. Geothermal Power Market Over 60 Geothermal power plants in 6 U.S. states: (AK, CA, HI, ID, NV, UT) • Geothermal electricity has been produced in 9 states: (NM, OR, TX) • At least 9 states expect to have plants in commercial operation by 2010 • Ormat owns and operates geothermal plants in 3 U.S. states, and Ormat has installed plants in 5 U.S. states that currently operate commercially • There is potential for geothermal power development in all 13 Western States

  8. Average Retail Electricity in the Western U.S. in 2006 Source: Energy Information Agency

  9. Geothermal Development Issues in New Mexico Manzano Mountains; Central New Mexico. Photograph by Hans Schenk;http://www.summitpost.org(Used by permission)

  10. New Mexico’s Energy Market Fossil Fuel production Source: Energy Information Agency • 6th in domestic crude oil production in 2006 • 13th in domestic coal production in 2006 • Produced approximately 8.5% of domestic marketed natural gas in 2006 • 40% of New Mexico’s coal and 90% of its natural gas is delivered out of state Energy Generation Source: Southwest Energy Efficiency Project (SWEEP) • 55.7% of New Mexico’s electricity generated from coal in 2006 • 35.7% of New Mexico’s electricity generated from natural gas in 2006 • The rest comes primarily from wind (496 MW installed) and hydro-electric • Net exporter of electricity Electric Utilities Source: Energy Information Agency • PNM is the largest IOU in the state, providing approximately 37% of retail sales in 2006 • Xcel Energy (SW Public Service) provides 18% in 2006 • El Paso Electric and Texas-New Mexico Power are the two other IOUs (~12% in 2006) • Tri-State Generation & Transmission serves many of the rural cooperatives Other key issues Sources: Energy Information Agency and U.S. Census Bureau • Average population growth for U.S. (population just below two million in 2007) • Average retail energy price of 7.37 cents per kWh in 2006, about 1.5 cents below U.S. average

  11. New Mexico’s Policies • Renewable Portfolio Standard • IOUs – 15% by 2015, 20% by 2020 • "Reasonable Cost Threshold" (RCT) at 2% of overall retail customer rate impact threshold • Co-ops – 10% by 2020 • Tax credits • State renewable energy production tax credit currently applies to solar, wind, and biomass • Additional tax credits apply to renewable technologies, such as solar, biomass, and wind • Reconsideration possible if geothermal projects initiate development?

  12. New Mexico Geothermal Resource MapSource: Idaho National Laboratory

  13. New Mexico’s Geothermal Resource • WGA estimate of 80 MW economical potential (by 2015) • New Mexico has geothermal potential within the Basin and Range province and the Rio Grande Rift • Many of these resources are “blind” • Most significant resource is located in northern New Mexico at Valles Caldera (not included in WGA estimate) • Much of the geothermal exploration that took place was during the 1970s and early 1980s before binary technology was commercially available • Figure from “Geothermal Energy in New Mexico” GHC Bulletin, December 2002; author Jim Witcher:http://geoheat.oit.edu/bulletin/bull23-4/art2.pdf

  14. The New Mexico Transmission SystemSource: PNM Resources presentation to the New Mexico Renewable Energy Transmission Authority (RETA) – 11-15- 2007Web-link: http://www.emnrd.state.nm.us/main/RETA2.htm Shiprock San Juan Walsenburg WECC Path 48 Four Corners Springer Ojo Taos Gladstone PNM “Remote” Resources Four Corners – 192MW San Juan – 765MW Palo Verde – 398MW Tri-State – 50MW* Bravo Dome Los Alamos Norton Yah - tah - ey Las Vegas McKinley Santa Fe Ambrosia Algodones FPLE – 200MW* PEGS Guadalupe B - A HVDC tie Springerville Moriarty West Mesa Blackwater Sandia Belen SPS – 200MW* Willard Bernardo SPP PNM “Load-side” Resources Reeves – 157MW Delta – 140MW * Afton – 141MW +95 Las Vegas – 20MW Socorro Alamogordo Elephant Butte HVDC tie Greenlee Hidalgo Amrad Artesia Picacho Arroyo Dona Ana Luna Afton Deming 345 kV Caliente Newman 230 kV Diablo 115 kV Rio Grande

  15. New Mexico’s Needs (based on what has worked in other States) – Page 1 • Transmission • Examine transmission-related challenges to developing resource targets in remote areas • Lease sales • June 2007 BLM geothermal lease sales in Idaho and Utah generated over $9 million combined – 25% went to County governments • University efforts • Possible return of New Mexico State’s Geothermal Program and Business Incubator program? • Educate new generation of students in geothermal technology • Resource characterization • University of Nevada efforts to apply exploration techniques to geothermal have led to new resource discoveries in Nevada • These efforts could be applied in New Mexico to survey broader regions for potential new targets, particularly in “blind” resource areas

  16. New Mexico’s Needs (based on what has worked in other States) – Page 2 • Utilize US DOE support for Industry Coupled Drilling – similar to GRED • Geothermal Resource Exploration and Development (GRED) program initiated by USDOE in 1999 • GRED provided funding support and technical assistance for exploration and development efforts at 22 sites in 7 states (Alaska, Arizona, California, Idaho, Nevada, New Mexico, and Utah) • Budget of $12.5 million from 1999 through 2005 • Resulted in 2 completed power plants • Expansion of U.S. geothermal facilities from 4 states to 6 states • 12 projects under development • Leasing and permitting • Critical to identify relevant state and federal agencies involved with leasing and permitting of geothermal projects. • Interagency coordination will be imperative to enable projects to move forward • Follow the example of Nevada and its efforts to streamline the leasing and permitting process • Outreach to the public • Critical to bring relevant civic and environmental groups into the discussion of how to design projects that reduce impact on the local environment • Critical to educate the public on the environmental benefits of geothermal power, and the environmental impacts they offset

  17. Key Issues Throughout the West • Federal policies • State policies • Resource characterization • Leasing and permitting • Streamlining • PEIS progress • Federal lease sales • Transmission planning • to incorporate more renewable power into the grid

  18. Other Applications that may Expand Geothermal to Other Markets • Co-production from oil wells and geopressured gas wells • California, Gulf Coast, Rocky Mountains, Northern Great Plains • Engineered Geothermal Systems (EGS) • Expand existing geothermal fields. • Hot rocks and deep geothermal resources across the U.S. • Off-Grid applications* • Aluminum Smelting • Alternative fuels • Hydrogen Production • Industrial drying • Local power use • Desalinization *Generally applicable in hydrothermally active areas

  19. Looking Ahead to the Future

  20. Three “P’s” and an “R” Renewable energy markets are being driven by: • Population • Power Prices • Pollution • Reliance on Energy Imports All 4 of these affect California. Hawaii and Nevada are particularly reliant on energy imports. What about New Mexico? - Let’s discuss

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