Greenearth signs $25M deal with Vic Government

THE BOURSE WHISPERER: Greenearth Energy has concluded negotiations with the Victorian State Government to execute a $25 million funding agreement for its Geelong Geothermal Power Project (GGPP).

The $25 million Victorian Government grant funding was awarded to the company in December 2009 under the government’s Energy Technology Innovation Strategy (ETIS).

The funding was awarded to assist two stages of the GGPP development, the first being $5 million towards establishing Proof of Resource, with a further $20 million awarded for Stage 2 12 Megawatt Equivalent (MWe) demonstration upon a successful Proof of Concept.

 

Source: Company announcement.

Proof of Resource will require the company to drill an initial well to a depth of approximately 4,000 metres and conduct a short term flow test to analyse the results in terms of temperature, geothermal fluid flow rate and formation permeability.

The $5 million grant funding will be applied to assist the completion of this stage.

Upon the establishment of suitable resource parameters, the company will be required to drill a second to produce a “couplet” and establish Proof of Concept and allow for an extended flow test to allow extensive analysis of the commercial viability of the resource and construction of a 12MWe geothermal demonstration plant.

The $20 million portion of the ETIS grant will be used by Greenearth to achieve the development of the 12MWe geothermal plant demonstration stage.

The separate tranches of the funding are to be paid as each set of milestones is met and are subject to a number of conditions precedent including securing the necessary project funds to complete each stage.

“The achievement of this milestone after many months of negotiations is most welcome and underpins the potential value this flagship conventional geothermal project holds for the state,” Greenearth Energy managing director Mark Miller said in the company’s announcement to the Australian Securities Exchange.

“The ongoing support from the Victorian Government highlights its dedication to promote innovative, renewable energy alternatives to the people of Victoria.

“We will now seek support from the Australian Government in the form of an application to the newly announced Emerging Renewables program for support for Stage 1 of the GGPP.

“The GGPP represents a major opportunity for collaboration between the Victorian and Commonwealth governments along with Industry partners, to bring to fruition a baseload (24/7) renewable energy alternative fulfilling the vision of a Clean Energy Future.”

Victorian Minister for Energy and Resources Michael O’Brien said the construction of the Geelong Geothermal Power Project (GGPP) could result in a 140 Megawatt geothermal power plant providing clean, renewable power for 100,000 homes.

“The Coalition Government is committed to supporting the future of renewable energy through projects like the GGPP,” O’Brien said in a government press release.

“Realisation of this geothermal resource is still some time away, but this grant will support Greenearth Energy to prove the geothermal resource and pilot a 12 Megawatt power station using hot water from about four kilometres beneath the surface.

“Our Energy Technology Innovation Strategy (ETIS) provides practical support for the development of sustainable energy in Victoria, and this year’s Budget delivered on our commitment to double the funding for ETIS to $82 million over this term.”