Report - Geothermal Electricity Plant Operation in the U.S. (wxtx)
As a producer of a renewable energy source, the geothermal power industry has lagged behind wind and solar power. According to IBISWorld industry analyst Josh McBee, “even though geothermal exhibits a higher availability rate, the viability of this energy being produced on a commercial scale is limited by geography, as deposits of high-temperature subsurface water are required to produce geothermal electricity.”
As such, the geothermal power industry is concentrated in the Western US region, where major companies like Calpine and Ormat have their operations. The region is led by California, where more than 80.0% of all US geothermal electricity is generated. Report......
Despite the geographic limitations of geothermal development, several positive trends have contributed to strong growth during the past five years. First and foremost, unprecedented fiscal stimulus on the part of the US government's American Recovery and Reinvestment Act created funding initiatives for companies seeking research and development opportunities in geothermal production. In turn, this funding has expanded the ability of industry firms to generate geothermal electricity from previously unavailable sources, which has expanded the geographic reach of development projects. At the same time, the US Bureau of Land Management and the US Forest Service agreed to open up 245.0 million acres of public lands to geothermal development, which makes it easier for firms in the geothermal power industry to secure leases for exploratory and construction activities. Last, the growing push for clean energy with regard to environmental protection has made geothermal energy, which is considered a renewable resource, a rising star among its solar- and wind-powered peers. “As renewable portfolio standards in several states mandate a certain ratio of overall energy production to come from renewable sources, industry operators are poised to benefit,” says McBee.
Given these favorable operating conditions, IBISWorld estimates industry revenue has increased at an annualized rate of 17.1% during the five years to 2012. Data gathered by the Geothermal Energy Association indicate that the number of projects in the later stages of development will continue to create significant annual gains in overall geothermal capacity through 2012, thereby increasing industry revenue 9.0% to an estimated total of $2.4 billion. Favorable legislation enacted during the past five years and likely continuations of environmentally and industry-friendly state and federal mandates are forecast to increase revenue through 2017. In addition, with technological advancement at the forefront of plant operators’ expansion strategies, industry consolidation, and consequently concentration, will likely increase over the next five years as companies seek to pull their resources to produce geothermal energy on a broader scale.
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