Plant Reboot: Raser looking to finance larger Thermo 1 turbines

In Utah, Raser Technologies, Inc. said it has entered into an agreement with the senior secured lender that provided the debt financing for the Thermo No. 1 geothermal power plant to repay a substantial portion of the debt.

Ok, so another announcement of another re-finance of the Thermo No. 1 plant is not new – we’ve reported on a series of financing changes and extensions over the last year. What is news is that embedded in the release was a statement noting the company is looking to sell assets, including Thermo No. 1, with the ultimate aim of putting in bigger turbines at the plant.

Currently, the plant’s output is just about 6MW. A year ago, we reported that the plant was buying 4 MW while producing only 5 MW. And the numbers remain too close for comfort. At that time, the plan was to boost water temperatures from 180 to 280 degrees to increase efficiency. While there has been some rise in output, the plants remains far from the expected 14 MW.

The company now says that “several unaffiliated, geothermal equipment manufacturers have indicated to Raser that, in their judgment, significant improvement in the electrical output of Thermo No. 1 is possible.” The claim is that larger, more efficient generators could bring production to between 9-11 MW, based on current geothermal flow and temperature conditions.

Nick Goodman, Raser’s CEO, put it this way: “Raser would need additional capital to install larger generating units at our Thermo No. 1 project. Therefore, instead of upgrading the units ourselves, we are considering the sale of equity interests in the Thermo No. 1 project while maintaining ownership in the remaining Thermo field – a resource that GeothermEx reports has the potential to produce an additional 150-200 megawatts of geothermal power. If we are able to sell our interests in Thermo No. 1 to a third party with the capital to upgrade the generators at the Thermo No. 1 project, we believe it will further validate the larger Thermo area, demonstrating the viability of the Thermo area resource for additional power plants.”

Thus the struggle remains to validate the field, which is a struggle for the financing that will be needed to tap the rest of the field’s potential. In the short term, a current investment can be repaid through the sale of 2 to – perhaps 7 MW above the 4 MW needed to run the plant. In the long term, proving the viability of the Thermo-area resource, or not, will have serious implications for the company as well the state of Utah.