JULY 2009

2008 GEOTHERMAL TECHNOLOGIES

MARKET REPORT

Energy Efficiency &

Renewable Energy
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TOC

Table of Contents

 Executive Summary .............................................................................. 1

Major 2008 Highlights ................................................................................ 2

1. Introduction........................................................................................ 4

2. Investment ......................................................................................... 5

The 2008 Geothermal Technologies Program: $44M for EGS RD&D ...................................... 5

Investment in Geothermal Energy On the Rise.......................................................... 5

3. State of Power Generation & Current Activity in U.S. ....................................... 8

Geothermal Industry Participants Increase Substantially in 2008 ......................................... 8

GTP 2008 Funding Opportunity Announcement Receives 

the Largest Number of Applicants in the Program’s History .............................................. 9

U.S. Geothermal Capacity Increases by 3.8% in 2008 ................................................... 11

USGS Releases the First National Geothermal Assessment in More Than 30 Years (September 2008) ....... 13

The Geothermal Development Pipeline in 2008: 126 Projects with 3,638-5,650 MWe of Capacity ........ 14

Low-Temperature and Co-Produced Resources are Gaining Ground...................................... 16

New Binary Plant Designs Reduce Construction Lead Time ............................................. 17

DOE-Funded Projects Target EGS Deployment ......................................................... 17

4. Cost of Development, Operation and Maintenance........................................ 19

Conventional Hydrothermal Plants Typically Cost $3,000 to $4,000 per Installed KW ................... 19

Power Plant Construction Costs Decline In 2008....................................................... 20

Geothermal Development Cycle and Risk Profiles ...................................................... 20

Development of Geothermal Power: Project Cycle ..................................................... 20

Tax Equity Financing – Special Purpose Entities and the Partnership Flip ................................ 22

Availability of Geothermal Project Financing Declines in 2008.......................................... 23

Geothermal Costs Less than Other Renewables and Some Conventional Sources ......................... 24
5. National Policy, Geothermal Leasing and Permitting ..................................... 26

EESA of 2008 Extends Geothermal Tax Incentives ...................................................... 26

Renewable Portfolio Standards are Drivers for Renewable Energy Development .......................... 26

Western Renewable Energy Zone to Expedite Renewable Energy Development and Delivery .............. 27

EPAct 2005: New Procedures for Federal Geothermal Leases............................................. 27

BLM Expands Geothermal Leasing .................................................................... 27

6. Direct-Use and GHPs ............................................................................. 28

Direct-Use & GHPs: Strong Market Growth ............................................................ 28

The U.S. GHP Installed Base is World’s Largest: More than 1 Million Units ............................... 29

 U.S. GHP Market Segmentation – Evenly Divided Between Residential and Commercial Applications .... 30

Four Companies Hold 80 Percent of U.S. GHP Market .................................................. 31

Tax Credits and Incentives Set to Increase GHP Deployment............................................ 31

7. International Activities ......................................................................... 32

Worldwide Geothermal Capacity Continues to Grow................................................... 32

International Direct-Use Geothermal is Widespread .................................................... 32

8. Employment and Economic Benefits of Geothermal Power.............................. 34

Geothermal Industry – More than 25,000 Employed Nationwide ....................................... 34

Gross Revenue from Geothermal Royalties Increased 14% between FY 2006-2008 ........................ 34

9. Looking Ahead – 2009 and Beyond ........................................................... 35

Conclusion .......................................................................................... 35

References ............................................................................................. 39

Primary Authors:

Jonathan Cross

New West Technologies, LLC

Jeremiah Freeman

New West Technologies, LLC

Acknowledgements

This report was made possible by the U.S. Department of Energy (DOE) Geothermal Technologies 

Program (GTP). The authors thank Jørn Aabakken, Alison Wise, Rachel Gelman (National Renewable 

Energy Laboratory) and Alexandra Pressman (Sentech) for technical input; and Lauren Boyd, Nicole 

Reed, Mike Murphy (DOE GTP) and Agatha Wein (New West Technologies) for comments on drafts 

throughout the process. The authors also thank Christina Van Vleck for graphic design. Of course, any 

remaining errors or omissions are the fault of the authors.
2008 Geothermal Technologies Market Report | July 2009 1

Executive Summary

Geothermal energy has been exploited for power generation since at least 1904.1 However, 

the last few years have witnessed a conspicuous revival in interest in geothermal technologies 

both old and new. In fact, 2008 was a watershed year for the industry. The U.S. Department of 

Energy (DOE) revived its Geothermal Technologies Program (GTP) with new funding that made 

possible substantial new investments in geothermal research, development and technology 

demonstration. The U.S. Department of the Interior’s (DOI) Bureau of Land Management (BLM) 

also significantly increased the amount of Federal land available for geothermal exploration and 

development and worked to streamline the complex permitting and leasing process. Installed 

geothermal capacities in the United States and abroad continued to increase as well. 

Despite the positive advances for geothermal in recent years, strains from the global economic 

downturn that started late in 2008 are beginning to have an effect on financing in the industry. 

Geothermal power developers rely heavily on the equity markets and financing based on the 

monetization of production tax credits (PTCs), and these sources of capital are no longer 

readily accessible. Geothermal development also has a steep, front-loaded risk profile that 

makes projects very difficult to finance; exploratory drilling is an extremely expensive step 

early in the development process that carries the greatest risk. 

Geothermal markets are also being affected by the downturn of the Icelandic economy. A 

particularly poignant example is the nationalization of Glitnir Bank, now Íslandsbanki, 

which was adept at providing geothermal developers with funding necessary to support risky 

exploration and drilling activities until they were able to secure financing from traditional 

sources. When it was nationalized by the Icelandic government in September of 2008, Glitnir 

largely disappeared from the pool of potential geothermal financing sources. Unfortunately, 

they were not the only financier of geothermal development to fall victim to the economic 

downturn. Only half of the 14 large financial companies that funded renewable energy projects 

over the past few years are still active today.2

In contrast to the economic arena, the policy environment in 2008 was favorable to continued 

geothermal power development. In the United States, the Emergency Economic Stabilization 

Act (EESA) of 2008, signed by President Bush on October 3, 2008, extended PTCs for geothermal 

energy production until January 1, 2011. The legislation also reinstituted a 30% individual tax 

credit for qualifying geothermal heat pumps (GHPs), capped at $2,000.3 Additionally, state 

renewable portfolio standards (RPS) remained an effective driver for investments in a variety 

of renewable energy technologies, including geothermal.

At the non-electricity generating end of the geothermal technology spectrum, the market 

for GHPs continued to experience rapid growth despite the downturn in financial and real 

estate sectors.

SUM
2 2008 Geothermal Technologies Market Report | July 2009

The Air-Conditioning, Heating and Refrigeration Institute (AHRI) reported 2008 shipments 

of more than 71,000 units, indicating continued strong demand. The heat pump market still 

faces significant barriers, however, including: high installation and capital costs; a pervasive 

lack of consumer awareness; and insufficient market delivery infrastructure. In order for heat 

pumps to reach their full market potential, these barriers must be addressed through effective 

market conditioning strategies. 

Low-temperature geothermal direct use applications typically include spas, district space 

heating, aquaculture, agricultural drying, and snow melting.* Though these applications 

remain only a small portion of total geothermal resource use in the United States, it is still 

noteworthy that their installed base has doubled in the past 15 years.4 Direct-use geothermal 

energy is widely used internationally, including in Iceland, China and Japan. In Japan, 

geothermal power developers are competing with spa, hotel, and bath projects to access the 

direct-use energy resources.

Geothermal co-production with oil and gas is another exciting and likely possibility for the 

near future. These developments, along with the enormous potential of enhanced geothermal 

systems (EGS) projects, will transform geothermal energy in the United States from a western 

state-focused energy source into a ubiquitous source of baseload power.

In conclusion, this is a particularly exciting time for the geothermal energy industry. Even in the 

face of a troubled economic climate, it seems likely that the next few years will see a marked increase 

in the use geothermal energy to meet the nation’s growing electricity demand requirements. 

Major 2008 Highlights 

• 110 additional MW of geothermal power came online in the United States. 

(100 MW from binary plants and 10 MW from steam plants). 

• The GTP made 21 awards totaling $43.1 million over four years.5

• Google.org, Google’s philanthrophic arm, gave over $10 million in grants to two 

gethermal companies and one research university to support their work on EGS. 

Google’s name-brand support thrust geothermal into the public spotlight and 

improved its standing as a viable alternative energy source, alongside wind and solar.6

• BLM leased 301,588 acres of land for geothermal power development, a substantial 

addition to the 244,000 acres leased for this purpose since July of 2007.7

• The United States signed the International Partnership for Geothermal Technology 

(IPGT) with Iceland and Australia. The IPGT will lead to joint technology development 

projects with partner countries, reducing the cost of advanced geothermal technology 

development for each country and increasing the available expertise for specific projects.†

• The economy-wide credit crunch dried up equity markets, making it extremely 

difficult for geothermal developers to locate financing for their projects.

• Glitnir Bank collapsed, taking with it an important source of geothermal financing. 

• Price drops in the market for PTCs decreased their efficacy. 

* Some authorities include GHPs in the direct-use category but they are treated separately in this paper.

† The International Partnership for Geothermal Technology (www.internationalgeothermal.org)
2008 Geothermal Technologies Market Report | July 2009 3

• Investments in geothermal continued to increase.

• Small, low-temperature power generation units began to account for a significant 

portion of the overall geothermal market, a trend expected to continue for at least 

the next several years.

• Modular low-temperature electricity generation units gained popularity. These units 

have the potential to become a major contributor to the national geothermal energy 

portfolio over the next few years.
4 2008 Geothermal Technologies Market Report | July 2009

Introduction

While geothermal energy technology has been in development in the United States for over 

100 years*, national interest in geothermal recently gained momentum as the result of new 

analysis that suggests massive electricity producing potential. The geothermal industry has 

also seen unprecedented investment growth following the transition to a new administration 

and its response to the economic climate through the American Recovery and Reinvestment 

Act of 2009 (the Recovery Act). While it tends to have a lower profile among the nation’s 

renewable energy resources, geothermal is currently in the midst of a renaissance. In such a 

rapidly changing market, this report bears particular significance.

Geothermal energy technologies can be broken into four major categories: conventional 

hydrothermal, low-temperature, EGS, and direct use, including geothermal heat pumps 

(GHPs). The first three categories generate electricity, while the fourth is used primarily for 

heating and cooling and hot water production. This report will consider electricity generation 

technologies separately from direct use technologies due to differences in technology maturity 

and market characteristics.

This report describes market-wide trends for the geothermal industry throughout 2008 and the 

beginning of 2009. It begins with an overview of the GTP’s involvement with the geothermal 

industry and recent investment trends for electric generation technologies. The report next 

describes the current state of geothermal power generation and activity within the United 

States, costs associated with development, financing trends, an analysis of the levelized cost of 

energy (LCOE), and a look at the current policy environment. The report also highlights trends 

regarding direct use of geothermal energy, including GHPs.†

 The final sections of the report 

focus on international perspectives, employment and economic benefits from geothermal 

energy development, and potential incentives in pending national legislation.

* While geothermal energy has been in use for over 100 years within the United States, its use for electrical production dates back to 1922. The 

first large-scale geothermal power plant began operation in 1960. See http://www1.eere.energy.gov/geothermal/history.html.

† GHPs are also commonly referred to as ground source heat pumps.

1.
2008 Geothermal Technologies Market Report | July 2009 5

Investment

The 2008 Geothermal Technologies Program: $44M for EGS RD&D 

Combined with rising energy prices and climate change concerns, significant renewed interest 

in geothermal energy came in 2007 with the release of Massachusetts Institute of Technology 

(MIT) report, “The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems 

(EGS) on the United States in the 21st Century.” This report presented exciting new research 

that has already had a profound effect on overall energy investment in the United States, 

suggesting that given appropriate funding, 100,000 MWe of geothermal could be developed 

through EGS technologies within 50 years. After the release of the MIT report, Congress 

directed the GTP to refocus its program onto the development and eventual deployment of 

EGS technology due to its potential as a nationwide energy resource. The GTP received an 

infusion of funding during the 2008 Fiscal Year of approximately $20 million (see Table 1). 

Table 1. GTP Budget Request FY 2007-2009

Funding ($ in thousands)

FY 2007 

Approp.

FY 2008 

Request

FY 2008 

Approp.

FY 2009 

Request

FY 2009 

Approp.

Enhanced 

Geothermal Systems 2,000 0 19,818 30,000 44,000

Oil and Gas Well 

Co-Production and 

Resource Assessment

3,000 0 0 0 0

TOTAL 5,000 0 19,818 30,000 44,000

Source: DOE, “EERE Fiscal-Year 2009: Budget-in-Brief”

Investments in Geothermal Energy On the Rise

Though 2008 presented enormous economic challenges, private investments in geothermal 

energy actually increased over prior years. Public market investment, project acquisitions, 

and venture capital (VC)/private equity (PE) have shown a marked increase from 2005-2008 

(Figure 1), with U.S. projects receiving the majority of worldwide investment in geothermal 

development in 2007 (Figure 2).

2.
6 2008 Geothermal Technologies Market Report | July 2009

In 2007 and 2008, as the number of geothermal industry players grew, so did total investments 

in the sector. Many of these new developers are relatively small companies with few assets that 

are particularly vulnerable as the result of shrinking equity markets. Adding to the challenge, 

geothermal projects are notoriously difficult to finance because of large up-front capital costs, 

high risk, and long lead-time (see Financing section for more detail).8 

Íslandsbanki, formerly known as Glitnir, has played an integral part in geothermal project 

financing, particularly during the early, high-risk stages of development. The nationalization 

of the Icelandic bank in 2008 ended its involvement in the U.S. geothermal industry. This 

blow to the industry did not result in a major setback because the crash of credit markets in 

this time period resulted in a lack of funding across all sectors.9

Figure 1. Trends in U.S. Geothermal Investments (2005-2008)

Source: New Energy Finance, January, 2009

Figure 2. U.S. and International Geothermal Investments

Source: New Energy Finance, January, 2009
2008 Geothermal Technologies Market Report | July 2009 7

The highest-profile geothermal investment of 2008 came from Google. The tech giant’s 

philanthropic arm, Google.org, provided $10 million in grants to two companies, AltaRock 

Energy and Potter Drilling, and a geothermal research institution at Southern Methodist 

University (SMU) (see Table 2). Specifically, AltaRock Energy was awarded $6 million to support 

the advancement of EGS, and Potter Drilling received $4 million to develop its breakthrough 

drilling technology, hydrothermal spallation; a prototype is expected sometime in 2009. 

Lastly, the Geothermal Laboratory at SMU received nearly $500,000 to improve geothermal 

resource assessment techniques and update the Geothermal Map of North America. Although 

Google’s investment was one of many made in geothermal research over the course of the 

year, it is especially significant for the publicity that it generated. 

Table 2: Google.org Funding for Geothermal Research

Awardees Funding 

AltaRock Energy $6,000,000 

Potter Drilling $4,000,000 

SMU Geothermal Lab $489,521 

Source: Google.org, 2008 
8 2008 Geothermal Technologies Market Report | July 2009

State of Power Generation 

& Current Activity in the U.S.

Geothermal Industry Participants Increase Substantially in 2008 

In October 2008, 79 companies participated in the tradeshow at the Geothermal Resource 

Council (GRC) and Geothermal Energy Association (GEA) annual meeting in Reno, Nevada, 

compared to 51 in 2007.10 While some vertically integrated firms perform all stages of 

development, others specialize in one or two specific stages such as drilling or engineering 

and construction. For an overview of all the commercial players in the geothermal industry, 

it is useful to classify them according to their stage of development. 

Figure 3. Companies in the Geothermal Value Chain (not comprehensive) *

STAGE OF DEVELOPMENT

R&D  Exploration  Drilling  Confirmation  Engineering  Construction  O&M 

Ormat (US)*

PNOC-EDC (PH)

Chevron (US)

Enel (IT)

Calpine (US)

PT Pertamina (ID)

Reykjavik Energy (IS)

Boart Longyear (US) Sumitomo (JP)*

Halliburton (US)* Shaw Group (US)

Govt./Univ. Labs (All) Iceland Drilling Co. (IS) Mannvit (IS) MHI (JP)*

Baker Drilling (US)* Power Eng (US) GE (US)*

Parker Drilling (US) Siemens (DE)*

ThermaSource (US) Enex (IS)*

GeothermEx (US) Fuji (JP)*

UTC Power (US)*

Toshiba (JP)*

Source: New Energy Finance, 2008

*The U.S. Department of Energy does not endorse any company listed in this report.

3.

Americas (North, Central and South)

Europe, the Middle East and Africa

Asian and Oceanic Countries
2008 Geothermal Technologies Market Report | July 2009 9

The information shown in Figure 3 comes from industry surveys by New Energy Finance 

and includes several of the most prominent commercial hydrothermal and EGS geothermal 

developers, but is not an exhaustive list. Five of these companies are vertically integrated, and 

represent the leaders of the industry: Ormat (U.S.), PNOC-EDC (Philippines), Chevron (U.S.), 

Enel (Italy), and Calpine (U.S.). Two firms perform all stages except research and development 

(R&D): PT Pertamina (India) and Reykjavik Energy (Iceland). Six companies in the United States 

are dedicated to drilling and confirmation: Baker Drilling, Parker Drilling, ThermaSource, and 

Geothermex; along with Boart Longyear, and Halliburton who also perform exploration.

GTP 2008 Funding Opportunity Announcement Receives 

the Largest Number of Applicants in the Program’s History

In October of 2008, DOE awarded $43.1 to 21 applicants over four years for research, 

development and demonstration (RD&D) associated with EGS.* This is the greatest number of 

award recipients and of first-time recipients, 13 of the 21, in the history of the program (See 

Table 3). Specifically, for the 2008 fiscal year, $8.7 million was awarded to fund 17 component 

technologies research and development projects, while roughly $11.1 million was provided 

for the four demonstrative projects. 

Table 3: GTP FOA Awardees: October 2008

Component Technologies R&D

Awardees Location Project Description Funding

• Baker-Hughes, Inc. Houston, Texas Develop an ultrasonic 

borehole televiewer

$3,139,364

• Colorado School of Mines

• Boise State University

• Flint, LLC

• Mt. Princeton Geothermal, LLC

Golden, Colorado Geophysical characterization 

of geothermal systems using 

joint inversion of electrical 

and seismic data

$867,564

• Composite Technology

• Wood Group ESP

• New England Wire Technology

Lafayette, Colorado Develop high temperature 

motor windings for electric 

submersible pumps

$987,739

• Foulger Consulting

• Geosystem with WesternGeco

• US Navy

• Magma Energy US Corporation

• Lawrence Berkeley National Laboratory

Menlo Park, California Develop tools and methods 

suited to monitoring EGSinduced micro-earthquakes

$561,729

• GE Global Research

• Auburn University

• GE Energy

Niskayuna, New York Develop high temperature 

electronics platform and 

temperature sensor 

$1,599,934 

• Hattenbrug, Dilley, and Linnell, LLC

• University of Utah

Anchorage, Alaska Use of Fluid Inclusion 

Stratigraphy (FIS) chemical 

signature to identify open 

fracture systems

$313,858

* DOE’s commitment of $43.1 million is subject to annual appropriations.
10 2008 Geothermal Technologies Market Report | July 2009

• Hi-Q Geophysical Inc.

• Ormat Technologies Inc.

• Lawrence Berkeley National Laboratory

Ponca City, Oklahoma Develop surface and borehole 

seismic methodologies

$817,757

• MIT

• Chevron

• Los Alamos National Laboratory

Cambridge, 

Massachusetts

Develop geomechanical 

model of reservoir fluid flow

$508,633

• MIT

• New England Research

Cambridge, 

Massachusetts

Combine geophysical 

methods with a rock 

physics model for fracture 

characterization

$1,019,769

• Perma Works and Frequency 

Management International

• ElectroChemical Systems Inc

• Draka Cableteq

• Pacific Systems Inc

• Tiger Wireline Inc

• Viking Engineering

• Kuster Company

• Electronic Workmanship Standards, Inc.

• Eclipse NanoMed

• Honeywell SSEC

Albuquerque, 

New Mexico

Develop high-temperature 

well monitoring tools 

$2,200,000

• Schlumberger Sugar Land, Texas Extend temperature 

operating range of electric 

submersible pumps

$1,245,751

• Schlumberger Sugar Land, Texas Develop downhole 

monitoring system for electric 

submersible pumps

$1,253,959

• Stanford University Stanford, California Develop wellbore tools 

and reservoir engineering 

approaches

$967,541

• Texas A&M University

• Sandia National Laboratory

• University of Mississippi

College Station, Texas Develop improved 

seismicity-based reservoir 

characterization technology 

techniques

$820,198

• Texas A&M University

• Sandia National Laboratory

• University of Mississippi 

College Station, Texas Develop three-dimensional 

numerical model to predict 

reservoir stimulation

$690,953

• University of Utah Salt Lake City, Utah Demonstrate absorbing 

tracers and develop 

fluorimeter to measure

tracer concentration

$1,091,039

• University of Utah Salt Lake City, Utah Investigate fracture stability $978,180

Component Technologies R&D Total $19,063,968
2008 Geothermal Technologies Market Report | July 2009 11

Systems Demonstration

Awardees Location Project Description Funding

• AltaRock Energy Inc

• Northern California Power Agency 

• University of Utah 

• Texas A&M University 

• SAIC

• Temple University

Seattle, Washington Demonstrate innovative 

stimulation process to create 

EGS reservoir by drilling 

below permeable zone and 

stimulating low permeability 

zone

$6,014,351 

• Geysers Power Co. LLC 

• Lawrence Berkeley National Laboratory

Middletown, California Demonstrate deepening 

of wells into hightemperature zones

$5,697,700 

• Ormat Nevada, Inc

• Lawrence Berkeley National Laboratory

• University of Utah

• Pinnacle Technologies

• GeoMechanics International 

• University of Nevada – Reno

• TerraTex/Schlumberger

Reno, Nevada Demonstrate ability to 

stimulate multiple wells 

at Brady Field, Nevada

$3,374,430

• University of Utah 

• APEX Petroleum Engineering Services

• HiPoint Reservoir Imaging 

• Chevron

Salt Lake City, Utah Demonstrate monitored 

hydraulic stimulation of 

existing injection well at 

Raft River Idaho

$8,928,999 

System Demonstrations Total $24,015,480

Total Department of Energy Funding $43,079,448

Source: DOE EE/RE

These RD&D projects target GTP’s goal of reaching EGS technology readiness by 2015. Though 

successful EGS development will provide long-term nationwide benefits, near-term gains in 

geothermal expansion will likely come from conventional high-temperature hydrothermal, 

co-produced fluids, and low-temperature resources once considered uneconomical for 

commercial electricity generation.

U.S. Geothermal Capacity Increases by 3.8% in 2008 

In 2008, an estimated 110 MWe of nameplate capacity was installed within the United States, 

bringing the cumulative total to 3,040 MWe (see Table 4). Of this total, 100 MWe was sourced 

from binary plants and 10 from steam plants. 
12 2008 Geothermal Technologies Market Report | July 2009

Table 4. New Geothermal Power Plants Online in 2008

Start Year State Power Plant Nameplate Capacity (MWe)

2008 Idaho Raft River 15.8

2008 Nevada Galena 20.0

2008 New Mexico Lightning Dock 0.24

2008 Utah Hatch 14.0

2008 Wyoming NPR3 0.25

2008 California Herber South 10.0

2008 California North Brawley 50.0

TOTAL 110.29

Source: New Energy Finance, 2009.

Electricity generated from geothermal sources reached 15 billion kWh in 2008, representing 

approximately 0.36% of the total U.S. electrical production and 12.13% of electricity generated 

from renewable resources, excluding hydropower (see Figure 4).11

Though growth has been modest, the United 

States remained the leader in installed 

geothermal capacity in 2007 (see Figure 

5).12 Because the majority of electricity 

production is currently from hydrothermal 

sources, geothermal power generation in 

2008 remained limited to western states 

that contain these resources (see Figure 6). 

As more low-temperature and co-produced 

resources are exploited, geothermal energy 

is expected to expand eastward (see Figure 

7). Additionally, temperatures viable for EGS 

production are available throughout the U.S. 

at a depth of 10 km (see Figure 8)*, which is 

reachable with current drilling technology.

* Geothermal electricity production can come from resources as low as 74°C (165°F).

Figure 5. Top Ten Countries with 

Geothermal Power Generation (2007)

Figure 6. Installed U.S. Geothermal 

Capacity in 2008 

Figure 4. U.S. electricity generation by type

Source: EIA, “Electric Power Monthly” (March 2009)

Source (left): Bertani, R. “World 

Geothermal Generation in 

2007” (September 2007)

Source (right): GEA, “U.S. 

Geothermal Power Production 

and Development” (March 2009)
2008 Geothermal Technologies Market Report | July 2009 13

Figure 7. Short-Term Geothermal Energy Potential

Source: DOE, National Renewable Energy Laboratory

Figure 8. Subsurface Temperatures at 10km Depth - EGS Potential 

Source: Tester, J., et al. 2006. “The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems 

(EGS) on the United States in the 21 Century”

USGS Releases the First National Geothermal Assessment in 

More than 30 Years (September 2008)

With funding support from Congress and the DOE, the United States Geological Survey 

(USGS) released an assessment of domestic geothermal electricity production potential in 

September of 2008.13 This assessment focused on electric generation potential in 13 western 
14 2008 Geothermal Technologies Market Report | July 2009

Figure 9. Distribution of Identified, 

Undiscovered, and EGS Resources

Source: Department of the Interior’s BLM, 

“Assessment of Moderate- and High-Temperature 

Geothermal Resources of the United States” 2008

states* and estimated 39,090 MWe of potential from 

conventional hydrothermal reservoirs. This figure 

includes 9,057 MWe from discovered sources, and 

a mean estimated power production potential from 

‘undiscovered’ geothermal resources of 30,033 MWe.†

These figures suggest that only 23% of sources capable 

of producing geothermal electricity with today’s 

technology have been discovered in the United States. 

The undiscovered source estimates are based on analysis 

of the local geology and the calculated potential of 

current discovered sources in the states examined. The 

assessment also predicts an additional 517,800 MWe 

of generation could come from implementing EGS 

technologies in high temperature, low permeability 

rock formations (see Figure 9).

The Geothermal Development Pipeline in 2008: 

126 Projects with 3,638-5,650 MWe of Capacity 

In August of 2008, the GEA reported that the 103 projects 

in development ranged from 2,805 MWe to 3,979 MWe 

in capacity.14 By March 2009, the number of projects in 

development had increased to 126 and an additional 

752-1,670 MWe of geothermal generating capacity had 

been added to the pipeline (see Figure 10).‡ According to 

the GEA, in addition to the eight current western states 

producing geothermal power, projects exist at various 

stages in five additional states: Arizona, Colorado, 

Oregon, Washington and Florida (see Figure 11).

Figure 10. The Geothermal Project Pipeline (2008-2009)

Source: Geothermal Energy Association, “U.S. Geothermal Power Production 

and Development” (August 2008 and March 2009).

* The 13 states assessed were; Alaska, Arizona, California, Colorado, Hawaii, Idaho, 

Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

† Figure may be as high as 73,286 MWe at a 5% probability.

‡ It is important to note that while the overall number of development projects 

increased, this change in number also accounts for projects that have been 

completed and removed from the total.

(B) UNDISCOVERED

(C) ENHANCED

(A) identified
2008 Geothermal Technologies Market Report | July 2009 15

Figure 11. States with Geothermal Projects under Development 

Source: Geothermal Energy Association, “U.S. Geothermal Power Production and Development” (August 2008 and March 2009).

Of the 126 projects in development, ten are currently in the final stages and will add roughly 

329-457 MWe of capacity.15 As the number of projects under development continues to grow 

and see completion, the overall installed capacity is expected to bounce back from its 2000 

decline (see Figure 12). The decline resulted from a reduction in output from the U.S.’s largest 

production site, The Geysers Geothermal Field in California. A number of plants were closed 

due to overproduction of geothermal resources. As the result of recovery measures, some of 

these plants are now beginning to reopen.*

Figure 12: Installed Capacity and Generation, 1960-2007

Source: Energy Information Administration (EIA), “Annual Energy Review 2007,” June 2008. 

* For example, the Bottle Rock Geothermal Power Plant in Cobb, California began operation in 1985, with a 55 MWe capacity. However, the 

steam field (resource) only allowed for 15 MWe of production. As a result, the operation of the Bottle Rock Power plant was suspended in 1990. 

Seventeen years later, in 2007, the plant was re-opened and began delivering power to the grid.

0 

2,000,000 

4,000,000 

6,000,000 

8,000,000 

10,000,000 

12,000,000 

14,000,000 

16,000,000 

18,000,000 

0 

500,000 

1,000,000 

1,500,000 

2,000,000 

2,500,000 

3,000,000 

3,500,000 

1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 

Generation (MWh) 

Capacity (kW) 

Year 

Capacity (kW) 

Generation (MWh) 
16 2008 Geothermal Technologies Market Report | July 2009

Low–Temperature and Co-Produced Resources are Gaining Ground

While the majority of geothermal power production comes from conventional hydrothermal 

sources, the geothermal industry is starting to tap the enormous potential represented by 

co-produced, geo-pressured and low-temperature resources. In September 2008 at the Naval 

Petroleum Reserve No. 3 (NPR3), Ormat Technologies and the Rocky Mountain Oilfield 

Testing Center (RMOTC) achieved the first successful generation of electricity from geothermal 

technologies integrated with existing oil infrastructure. The Ormat power generating unit known 

as the Ormat Energy Converter (OEC) has been producing 150-250 gross kilowatts of power since 

its inception (see Figure 13). An average 

of 40 billion barrels of heated water is 

co-produced annually from oil and gas 

wells within the United States; these 

co-produced fluids have an estimated 

generation potential of 3,000 to 14,000 

MWe, depending on their temperature.16

At the Jay Oilfield in Florida another coproduced project is under development, 

utilizing a UTC Power/Pratt & Whitney 

binary generation unit.

Binary units have expanded the 

resource base for geothermal power by 

allowing for the exploitation of lower 

temperature geothermal fluids.*

 Until 

recently, only temperatures over 93oC 

(200oF) were deemed commercially 

viable for successful electric generation 

from geothermal resources. In 2006 at 

Chena Hot Springs in Alaska, successful 

power generation occurred at a temperature of 74oC (165oF).†

Nameplate capacity for binary plants ranges from 200-280 kW to more than 100 MW. 

The major manufacturers of binary cycle units in use in the United States are UTC Power/

Pratt & Whitney, which sold approximately 100 of its PureCycle units in 2008, and Ormat 

Technologies, which sold around 12 of its OEC units in 2008. Other companies that produce 

binary cycle generators include:

• Barber-Nichols (Organic Rankine Cycle/ORC)

• Mafia-Trench (ORC)

• Turboden (ORC)

• Enex (ORC)

• GE 

* In a binary cycle, the heat from a geothermal fluid is transferred to another fluid that vaporizes at a lower temperature and higher pressure 

than water. The vapor from this second fluid then drives a turbine generator.

† The Chena Hot Springs resort facility used a UTC Power/Pratt & Whitney PureCycle system. The lowest temperature previously used for 

commercial energy conversion was 208°F.

Figure 13. Ormat’s OEC Producing Power From 

Co-Produced fluids in Wyoming

Source: Office of Fossil Energy, “2009 Winter News: Rocky 

Mountain Oilfield Testing Center

• Siemens (Kalina Cycle)

• Exorka (Kalina Cycle)

• Gulf Coast Geothermal 

(“Green Machine”) (ORC)

• Deluge Inc. 

• Linear Power Ltd.
2008 Geothermal Technologies Market Report | July 2009 17

New Binary Plant Designs Reduce Construction Lead Time

Recently introduced binary-cycle plant designs have allowed power developers to substantially 

reduce plant construction lead times. One notable example is Raser Technology’s Hatch Power 

Plant in Utah*, completed during November 2008. The plant consists of 50 UTC Power/Pratt 

& Whitney PureCycle binary units capable of producing at least 10 MW of net electricity (see 

Figure 14). The entire project was built 

and put online in less than one year, 

with construction completed in just six 

months rather than the typical three 

year timeframe. 

The project is remarkable not only 

because of the rapid construction, 

but also because of the flexibility of 

its modular approach. Employing 

small, off-the-shelf UTC Power/Pratt & 

Whitney units, a plant can be scaled to 

the local geothermal resource, energy 

demand and available financing. Raser 

has subsequently confirmed that the 

geothermal resource at Hatch may have 

the potential to generate more than 200 

MW. The company plans to add ten 

more units in 2009. 

DOE-Funded Projects Target EGS Deployment 

The USGS Assessment of Geothermal Resources revealed that the majority of future power 

generation potential lies with EGS (see Figure 15). However, the technology necessary to 

exploit EGS resources is not yet commercial-ready. The GTP refocused its long-term technology 

development goals to address this state of 

affairs. The Program selected four field 

demonstration projects in 2008 focused 

on EGS reservoir creation, development, 

management and successful power 

production. These projects are located on 

the fringes of pre-existing conventional 

geothermal fields with active power 

generating capabilities in order to share 

infrastructure. Two field projects are located 

at the Geysers in northern California, run 

by AltaRock Energy and Calpine. A third 

project is located at Brady’s Hot Springs, 

Nevada, and the fourth is at Raft River, 

Utah.17

* The Hatch Power Plant was formerly known as Thermo.

Figure 14. Raser’s Hatch Power Plant in Beaver Creek, Utah

Source: Raser Technologies

Figure 15. Future Geothermal Potential 

by Resource Category

Source: USGS, “Assessment of Moderate- and High-Temperature 

Geothermal Resources of the United States”
18 2008 Geothermal Technologies Market Report | July 2009

The four field projects link steam production lines to current power plant facilities on site; no 

new facilities are under construction. AltaRock will utilize Northern California Power Agency 

(NCPA) power plants, and Geysers Power Company will utilize their own power plants. The 

University of Utah will use preexisting plants at the Raft River geothermal field operated by 

U.S. Geothermal, and Ormat will use their existing power facilities at Brady’s Hot Springs.18

In addition to AltaRock Energy, Geysers Power Company (Calpine), University of Utah, and 

Ormat Technologies, other major entities involved in EGS development in the United States 

are U.S. Geothermal, Inc., APEX Petroleum, Engineering Services, and HiPoint Reservoir 

Imaging.19 
2008 Geothermal Technologies Market Report | July 2009 19

Cost of Development, 

Operation and Maintenance

Conventional Hydrothermal Plants Typically Cost 

$3,000 to $4,000 per Installed KW20

The development of geothermal energy requires the consideration and evaluation of a number 

of factors, such as site (geography), geology, reservoir size, geothermal temperature, and 

plant type. In 2008, New Energy Finance published a breakdown of estimated costs for each 

developmental stage (see Figure 16). The majority of the overall cost is typically attributed to 

construction of the power plant, due to the high cost of raw materials including steel. The 

second highest cost intensive processes are the exploratory and production drilling stages, 

which together comprise 42.1% of the total cost. 

Figure 16. Estimated Developmental Costs for a Typical 50 MWe Geothermal Power Plant

Source: Taylor, M. New Energy Finance, 2009

Though geothermal power production is very capital-intensive with high first-cost and risk, 

it boasts fairly low operating costs and a high capacity factor*, making it one of the most 

economical baseload power generation options available. As previously noted, a number of 

factors contribute to the cost of developing a geothermal power plant. The power conversion 

technology (plant type) in use also has an effect on cost. Low-temperature reservoirs typically 

use binary power plants, while moderate- to high-temperature reservoirs employ dry steam or 

flash steam plants, based on whether the production wells produce primarily steam or water, 

respectively. Recent cost comparisons between flash, dry steam and binary plants do not 

demonstrate a clear winner.21

* Capacity factor measures the amount of real time a facility is utilized to generate power.

Developmental

Stage

Cost ($ per 

kW installed)

Exploration 14

Permitting 50

Steam Gathering 250

Exploratory Drilling 169

Production Drilling 1,367

Plant & Construction 1,700

Transmission 100

Total 3,650

4.
20 2008 Geothermal Technologies Market Report | July 2009

Power Plant Construction Costs Decline In 2008

After years of steady increases in plant construction costs, 2008 saw a 5% decline, according 

to Cambridge Energy Research Associates (CERA) (see Figure 17). Additional cost reductions of 

approximately 7%-10% are expected for 2009 due to the declining worldwide economy and 

sharp cost reductions for raw materials, including steel and copper. Steel prices fell nearly 30% 

in the fourth quarter of 2008, a backlash from steep increases in the beginning of the year. 

Availability of equipment such as drilling rigs, labor, engineering and management services, 

has also improved due to delays and cancellations of other new plant construction projects. 

While some power purchase agreements were renegotiated to reflect higher overhead prices in 

2008, some utilities may postpone negotiations and wait for costs to decrease.22

Figure 17. IHS/CERA Power Capital Costs Index (PCCI) 

Source: Cambridge Energy Research Associates

Geothermal Development Cycle and Risk Profiles

Sizable up-front capital requirements, pervasive resource and development uncertainty, and 

long project lead times lead to risk-related mark-up over other renewable and traditional energy 

alternatives. These factors, combined with current economic conditions, mean private firms 

seeking to develop geothermal projects may face greater difficulties in obtaining the requisite 

capital for exploration and development. Industry analysts suggest that although financing 

is still available, the terms will be less attractive to investors and developers.23 Nevertheless, 

equity investors see real opportunity in the sector.

Development of Geothermal Power: Project Cycle

The primary stages of the geothermal development cycle are exploration, resource 

confirmation, drilling and reservoir development, plant construction and power production. 

Each of these steps carries with it different varieties and levels of risk. As Figure 18 shows, the 

risks associated with each stage call for different types of equity investors, who will expect a 

reward commensurate with the level of risk they assume. 
2008 Geothermal Technologies Market Report | July 2009 21

Figure 18. The Geothermal Development Cycle

Source: Geothermal Investment: An Equity Provider’s Perspective, Geothermal Investors’ Forum, October 2007 

Though geothermal projects vary widely in terms of technical elements, location, and 

economic and political environments, financial models employed are relatively consistent. 

The greatest risk is associated with the initial stages of development, prior to the verification 

of the geothermal resource (see Figure 19). Activities such as the drilling of exploratory wells 

may prove unsuccessful even if geological data are favorable. Additionally, cost and risk 

increase proportionately with drilling depth. As the project moves toward the production 

phase, this risk begins to decline and financing options are more readily available. 

Figure 19. Risk and Financing for Each Phase of Project Development

Source: Geothermal Energy Association, 

Update on U.S. Geothermal Power 

Production and Development, 

January 16, 2008.

Resource

Identification

Developers

IPPs (Development Pipeline)

Resources Speculators

Financial Players

Large IPPs 

with ability to 

monetize PTCs

Private Equity

Strategic Partners

Private Equity

Public Markets

Financial Partners

Development Equity Drilling Equity Project Equity Tax Equity

Resource

Evaluation

Test Well

Drilling

Production

Well Drilling

Plant

Construction

Plant

Operation
22 2008 Geothermal Technologies Market Report | July 2009

In the exploration stage, prior to the validation of the geothermal resource, equity financing 

predominates, usually in the form of seed or venture capital. The project developer may also 

fund a portion out of its own budget. Debt financing, i.e., bank loans, typically enters the 

investment cycle following the successful demonstration of the geothermal resource, when 

the risk is greatly diminished. Though the costs associated with exploration and resource 

confirmation only account for approximately 10% of overall project costs, the risk associated 

with these activities is still too high for traditional debt lenders. Power developers have 

identified strategies to address the risk inherent at each development stage (see Table 5).

Table 5. Geothermal Project Risk Mitigation Strategies

Project Risk Mitigation Strategy

Exploration Stage

Lack of heat or fluid for heat extraction. A 25% success rate. 

Make maximum use of surface technologies, 

Go-No Go exploration steps

Resource Capacity Risk

70% drilling success risk

Drill and test deep wells, develop a rigorous 

resource model.

Regulatory Risk

Minimal with the proper planning

Utilize an experienced permitting consultant, 

begin the process early

Drilling Risks

Risk of drilling a dry well, approximately 70% success risk

Prepare geological model and drill with blow 

out protectors and control of well insurance. 

Create a “risk fund” that can mitigate investor 

drilling risk during the exploration, confirmation 

project stages.

Plant Construction Risk

There is minimal risk if the previous items 

are completed appropriately. 

Use a credible supplier/contractor, get turnkey 

fixed price/date certain contract, use fieldproven technology supplier, get start-up 

performance guarantee.

Financing Risk

Financing issues for independent developers include: 

exploration financing (investor may want returns equal to 

multiples of investment), require an investment-grade power 

purchaser, construction financing (interest rates may be up 

to 10% or more, construction lender requires “take out” 

guarantee at commissioning), term financing usually based 

on 30% equity/70% debt, IRR in the high teens, interest 7% 

or more for 15 years. 

Execute financeable take or pay PPA with utility, 

execute binding commitment with lender

Source: Getting Geothermal Electricity Projects Online, Presentation by Daniel J. Fleischmann, ORMAT Nevada, Inc., July 23, 2007.

Tax Equity Financing - Special Purpose Entities and the Partnership Flip

The third major source of capital available to the geothermal project developer is tax equity 

financing, monetized through the creation of a special purpose vehicle (SPV)* and what is 

commonly known as a partnership flip. Federal tax subsidies amount to a large share of 

development financing for a variety of types of renewable energy plants, including solar, wind 

and geothermal. Geothermal projects qualify for the Federal PTC under Section 45 of the 

Internal Revenue Code (IRC), a 2.1 cent per kWh credit claimed on the electricity generated 

* SPE/SPVs are legal entities created to accomplish specific objectives, in this case financing of a specific asset, the geothermal plant.
2008 Geothermal Technologies Market Report | July 2009 23

by the geothermal plant for up to 10 years. The geothermal developer may also depreciate the 

geothermal property over five years, allowed under the Modified Accelerated Cost-Recovery 

System (MACRS). In addition, intangible drilling costs can be deducted immediately, either 

amortized over the five-year period or folded into basis in the geothermal wells and reservoirs, 

and depletion can be claimed on the investment in the reservoir.24 In sum, a substantial portion 

of the cost of developing the geothermal project can be covered by these tax benefits. 

To claim the credits under Section 45 of the IRC, the taxpayer must be the owner and 

operator of the renewable energy property, but most developers cannot directly utilize these 

tax subsidies to build their projects. The trick is to monetize them or convert them into 

capital through a partnership flip. Under this arrangement, the geothermal developer brings 

in an outside entity, typically a large, institutional investor that can take advantage of the 

available tax credits, forming a special purpose entity or vehicle. The developer enters into 

a disproportionate allocation partnership with this investor, an arrangement made for tax 

purposes wherein the party attempting to monetize the tax credits is allocated the majority 

share of project income and loss. The tax-oriented investor is allocated 99% of the geothermal 

plant’s economic returns, i.e., income and tax credits, until they reach a target yield--an aftertax return on investment previously agreed upon by both parties. This is typically designed 

to occur towards the end of the 10-year tax credit period, once the project is completed and 

in operation, providing a revenue stream. On this flip date the investor’s percentage interest 

is reduced to 5% and the developer has the option to buy the remaining interest. That is, the 

project flips back to the developer.25

The total tax equity generated against the project at the outset of such a partnership 

arrangement is essentially the present value of cash income, PTCs, depreciation-related tax 

savings, depletion interest and investor-paid intangible drilling cost deductions and taxes. 

The amount of tax equity depends upon the overall capital cost of the project, the quantity of 

electricity generated, negotiated prices under the power purchase agreement with the end user, 

and the tax equity yield. For every 50 basis point increases in yield, the portion of plant cost 

covered by the tax credits is reduced by approximately 10%. That is, with each hike in yield 

the equity investor is providing less value in return for the tax credits. At some point, it may be 

beneficial for the project developer to retain the tax benefits for its own future use.26 To qualify 

for the production tax credits, geothermal projects must be placed into service by December 

2010, though plants that come online after this date are still eligible for a 10% investment tax 

credit (ITC). The developer may utilize tax equity financing at the initiation of the project or, 

if it has access to sufficient debt financing during the plant construction phase, it may opt to 

sell the tax-oriented investor an interest in the project after it has started operating. 

Availability of Geothermal Project Financing Declines in 2008

The current global economic crisis impacts the ability to obtain tax equity for such partnership 

flip scenarios, which require the resources of large institutional investors, such as Morgan 

Stanley, GE Financial Services, and the now-bankrupt Lehman Brothers. This sector has 

contracted rapidly over the last six months. According to industry analysts, just half of the 14 

large financial companies that funded renewable energy projects over the past two years are 

still active in this market, resulting in a $2-3 billion tax equity shortfall at the close of 2008. Tax 

equity yields are 150-170 basis points higher than just one year ago.27 A representative of GE 

Financial Services was recently quoted as saying that the firm simply did not have the resources 

to take on any new tax-monetization investments in renewable energy projects.28 Finally, the 

increased borrowing costs and tax equity yields may even require developers to renegotiate 

power purchase agreements with their utility customers.29
24 2008 Geothermal Technologies Market Report | July 2009

As fewer financiers are active in the markets, there are limited financing options available for 

geothermal companies, more stringent financing terms and added deal-making complexity.30

Development capital that is still available will tend to gravitate to renewable energy projects 

that demonstrate the greatest potential for project returns for a given level of risk.31 Resource 

uncertainty, high up-front capital cost and attendant risk associated with geothermal energy 

production could potentially handicap new projects currently in the pipeline for the sector. 

Developers may be required to drill additional boreholes to secure up to 50% of capacity rather 

than the 30-35% that was previously sufficient, increasing up-front costs as much as $20 

million.32 Debt providers generally require that 25% of the resource capacity is proven and a 

long-term PPA in place prior to lending.33 There are numerous reports of geothermal projects on 

hold for want of financing in early 2009.34 

Geothermal companies that have advanced to the later project stages, with available cash and 

liquidity, are surer bets for investors because they have greater flexibility to develop their projects. 

They might be able to rely on the strength of their balance sheets to finance projects outright or 

use them to obtain better deals from investment partners. Ormat, despite a significant decline in 

its stock from a 2008 high of $53.54 to $38.18 (quoted May 27, 2009), remains in this category 

of developers. On the other hand, small or inexperienced developers, with limited project 

portfolios or projects in the early exploration or drilling stages, will be severely impacted. For 

example, Sierra Geothermal Power (SGP), currently active with five exploration-stage projects 

in Nevada, has run low on available working capital and such a weak hand to show to investors 

hinders its ability to attract new capital.35

Geothermal Costs Less Than Other Renewables and Some Conventional Sources

Geothermal power production boasts fairly low operating costs and high capacity factor, 

making it one of the most attractive baseload generation options available among renewables. 

On a levelized cost of energy (LCOE) basis*, which provides an apples-to-apples comparison of 

generation options, geothermal is very competitive with other renewable and conventional 

technologies. Most recently, the financial advisory and asset management firm, Lazard, 

calculated LCOE for various alternative and conventional electric generating technologies. 

With tax incentives included, it estimated geothermal LCOE between $0.042 and $0.069 

per kWh depending on technology employed (See Figures 20). An earlier 2005 study 

conducted by the California Energy Commission estimated geothermal LCOE between $0.04 

and $0.09 per kWh with PTCs added (See Table 6). Despite the high upfront cost and risk, 

geothermal installation costs are lower than nuclear, solar, small hydro, and selected biomass 

technologies.36

Table 6: LCOE for Various Geothermal Generation Technologies ($/kWh)

Technology Without PTC With PTC

Dry steam $0.0781 $0.0691

Dual flash steam $0.0563 to $0.0979 $0.0473 to $0.0889

Binary $0.049 to $0.1021 $0.040 to $0.0931

Source: California Energy Commission, “Geothermal Strategic Value Analysis, June 2005. 

* LCOE includes a more complete set of cost variables, including fixed and variable costs, financing and fuel costs. It is defined as a constant annual 

costs that equivalent on a present-value basis to the annual costs, which may be variable. It may include capital and financing costs, insurance 

costs, ad valorem/property tax costs, fixed and variable operations and maintenance costs, corporate taxes, and costs of fuel. (Comparative Costs 

of California Central Station Electricity Generation Technologies, California Energy Commission Report CEC-200-2007-011 SF, December 2007)
2008 Geothermal Technologies Market Report | July 2009 25

The costs to develop a given geothermal plant can vary tremendously depending on resource 

characteristics, the conversion technology utilized by the plant, and other factors, such as raw 

materials, drilling, and financing costs. It should also be noted that PTCs play a major role in 

making geothermal more competitive (see Figure 21). Without Federal tax incentives, costs can 

soar to between $0.078 and $0.116 per kWh, highlighting the importance of these incentives 

(see Table 8 and Figure 21).37 In 2008, the PTC for geothermal was $0.021 per kWh.38 

Figure 20. Levelized Cost of Energy per MWh of various power technologies Alternative Energy

Solar PV - Crystalline $128 $154

Fuel Cell $115 $125

Solar PV - Thin Film $96 $124

Solar Thermal $90 $145

Biomass Direct $50 $94

Landfill Gas $50 $81

Wind $44 $91

Geothermal $42 $69

Biomass Cofiring $37

Energy Efficiency $50

Conventional

Gas Peaking $221 $334

IGCC $104 $134

Nuclear $98 $126

Coal $74 $135

Gas Combined Cycle $73 $100

Levelized Cost ($/MWh) $0 $50 $100 $150 $200 $250 $300

Source: Lazard, June 2008

Figure 21: Levelized Cost of Renewable Technologies With and Without Tax Incentives Alternative Energy

Solar PV - Crystalline $128 $154 

 $339

Fuel Cell $115 $125

 $151 $161

Solar PV - Thin Film $96 $124

 $244 $318

Solar Thermal $90 $145

$220 $349

Biomass Direct $50 $94

 $75 $150 

Wind $44 $91

 $89 $150 

Geothermal $42 $69

 $82 $116

Levelized Cost ($/MWh) $0 $50 $100 $150 $200 $250 $300 $350

Source: Lazard, June 2008

$405

Base Case

No Tax Incentives
26 2008 Geothermal Technologies Market Report | July 2009

National Policy, 

Geothermal Leasing and Permitting

EESA of 2008 Extends Geothermal Tax Incentives

On October 3, 2008, President Bush signed the EESA of 2008 (H.R. 1424), which included 

the Energy Improvement and Extension Act of 2008. The bill extended PTCs for electricity 

produced by geothermal facilities (as well as other renewable energy sources) by two years, 

bringing the sunsets of these credits to the end of 2010. This brought a renewed sense of 

certainty to the investment market, as these tax credits were set to expire at the end of 2008. 

This act also created a 30% tax credit for GHPs, with a cap of $2,000.39

Renewable Portfolio Standards Drive Renewable Energy Development

Renewable Portfolio Standards (RPSs) are widely considered to be an essential driver for 

development of geothermal and other renewable energy technologies. Currently, RPSs exist 

only at the state level in the United States. The diverse set of authoring entities has resulted 

in a disparate set of policies governing geothermal technologies. Many of the state RPSs target 

small-scale or residential geothermal projects, but do not provide adequate incentives for 

large-scale exploration or plant development. As of May 2009, 32 states and Washington, D.C. 

have implemented RPS guidelines that are either mandatory or goal-oriented (see Figure 22). 

A national RPS is currently under consideration in Congress (see “Looking Ahead” section for 

more detail).

Figure 22. States with Renewable Portfolio Goals and Policies

Source: Database of State Incentives for Renewable Energy (DSIRE), May 2009.

5.

WA: 15% by 2020

OR: 25% by 2025 (Large Util.)

5-10% by 2025 (Small Util.)

CA: 20% by 2010

NV: 20% by 2015

UT: 20% by 2025

CO: 20% by 2020 (IOUs)

10% by 2020 

(Co-ops & Lg Munis)

AZ: 15% by 2025

NM: 20% by 2020 (IOUs)

10% by 2020 (Co-ops)

TX: 5,880 MW by 2015

HI: 20% by 2020

ME: 30% by 2000

New RE: 10% by 2017

NH: 23.8% by 2025

VT: (1) RE meets any increase 

 in retail sales by 2012

(2) 20% RE & CHP by 2017

MA: 15% by 2020

+ 1% annual increase 

(Class I Renewables)

RI: 16% by 2020

CT: 23% by 2020

NY: 24% by 2013

NJ: 22.5% by 2021

PA: 18% by 2020

DE: 20% by 2019

MD: 20% by 2022

DC: 20% by 2020

VA: 15% by 2025

NC: 12.5% by 2021 (IOUs)

10% by 2018 (Co-ops & Munis)

MT: 15% by 2015

HI: 20% by 2020

MN: 25% by 2025

IA: 105MW

WI: Varies by Util. 

10% by 2015 goal

IL: 25% by 2025

MI: 10%+1,100 MW by 2015

OH: 25% by 2025

MO: 15% by 2021

ND: 10% by 2015

SD: 10% by 2015
2008 Geothermal Technologies Market Report | July 2009 27

Western Renewable Energy Zone to Expedite Renewable 

Energy Development and Delivery

The Western Renewable Energy Zone (WREZ), an initiative launched in May 2008 by the 

Western Governors’ Association and DOE, seeks to identify the most cost-effective and 

environmentally sustainable areas within the western United States to develop renewable 

energy resources and facilitate their delivery to major load centers. The project promotes 

stakeholder collaboration and information exchange between state and Federal governments 

and non-governmental organizations with a regional approach to energy development. 

Eleven states, two Canadian provinces, and areas in Mexico that are part of the Western 

Interconnection are currently participating in the project.

EPAct 2005: New Procedures for Federal Geothermal Leases

BLM manages over 700 million acres of subsurface mineral estate and through 480 leases 

has made just 700,000 acres available for geothermal development, highlighting the vast 

potential for development of domestic geothermal energy.40/41 The Energy Policy Act (EPAct) 

of 2005 addressed the growing backlog of lease applications by fostering greater cooperation 

among the Federal agencies involved in the leasing process. The BLM and the Forest Service 

signed a memorandum of understanding (MOU) in 2006 that lead to the completion of 

the Programmatic Environmental Impact Statement (PEIS), which amends federal resource 

management plans and land use plans. Site-specific analysis of leasing nominations, permit 

applications, and operations plans can refer back to the PEIS, reducing the processing time for 

leasing and permitting.

BLM Expands Geothermal Leasing 

On December 17, 2008, BLM released its Record of Decision for Geothermal PEIS signed by 

the Department of the Interior’s Assistant Secretary for Land and Minerals Management. This 

decision (1) allocates BLM lands as open to be considered for geothermal leasing or closed for 

geothermal leasing, and identifies those National Forest System lands that are legally open or 

closed to leasing; (2) develops a reasonably foreseeable development scenario that indicates 

a potential for 12,210 megawatts of electrical generating capacity from 244 power plants by 

2025, plus additional direct uses of geothermal resources; and (3) adopts stipulations, best 

management practices, and procedures for geothermal leasing and development.

BLM held a competitive auction of lease parcels on August 5, 2008 in Reno, Nevada, offering 

35 parcels encompassing a total of 105,211 acres. The lease sale brought in a record $28.2 

million in bids for geothermal energy development. A second lease sale was held in December 

2008 offering 61 parcels totaling 196,377 acres in the states of Utah, Oregon, and Idaho. 

Cumulatively the two sales totaled 301,588 acres and generated more than $34.5 million 

in revenue.
28 2008 Geothermal Technologies Market Report | July 2009

Direct-Use and GHPs

Direct-Use & GHPs: Strong Market Growth in 2008 

Direct-use applications typically include aquaculture, greenhouses, industrial and agricultural 

processes, pools and spas, and space and district heating. Direct use of geothermal energy 

consumed 0.0094 quadrillion BTUs (quads) in 2007 (see Figure 23).* In 2008, the installed 

capacity for direct uses, excluding heat pumps, was estimated to be 704 MWt with an annual 

consumption of 10,332 TJ/yr (2,869 GWh/yr) using an overall escalation of 4%.† All non-heat 

pump direct uses had a calculated capacity factor of 46 percent, identical to past-calculated 

values.42 While a projection has been made for 2008, direct-use estimates are difficult to 

determine because there are a wide array of uses, locations are geographically diverse, and 

temperature and flow-rates are unknown.43

Figure 23. Geothermal direct use of energy (1990-2007)

Source: Lund, J., Oregon Institute of Technology, Geo-Heat Center, March 2008.

* In February 2009 the EIA released its annual, Geothermal Heat Pump Manufacturing Activities. The data within the report were only 

applicable for the 2007. 2008 data were estimated given annual escalation factors used by John Lund, OIT Geo-Heat Center.

† The annual escalation factor of 4% = average percent increase since 1990.

Year Direct Use Utilization 

(Quadrillion BtU

1990 0.0048

1991 0.0050

1992 0.0051

1993 0.0053

1994 0.0056

1995 0.0058

1996 0.0059

1997 0.0061

1998 0/0063

1999 0.0079

2000 0.0084

2001 0.0090

2002 0.0090

2003 0.0086

2004 0.0086

2005 0.0088

2006 0.0091

2007 0.0094

6.
2008 Geothermal Technologies Market Report | July 2009 29

The U.S. GHP Installed Base is World’s Largest - More than 1 Million Units*

Installed GHP capacity in the United States in 2007 was equivalent to 10,839 MWt with 

a capacity factor of 10 percent. The thermal energy consumed totaled 33,445 TJ/yr (9,287 

GWh/yr), roughly 0.0317 quads (see Figure 24). In 2008, the geothermal heat pump capacity 

was estimated to be 12,031 MWt with an annual consumption of 37,124 TJ/yr (10,309 GWh/

yr). This estimate was produced using Lund’s annual escalation factor for geothermal heat 

pumps, which was 11 percent for 2008.44

Figure 24. GHP Primary Energy Consumption

Source: EIA, “Geothermal Heat Pump Manufacturing Activities 2007” (Released February 2009)

Based on the latest Energy Information Administration (EIA) Form EIA-902, “Annual Geothermal Heat Pump Manufacturers Survey”, GHP manufacturers shipped 86,396 GHPs in 2007, 

a 36% increase over the 2006 total of 63,682. The total rated capacity of GHPs shipped in 

2007 was 291,300 tons, which represents almost a 19% increase over the 245,603 tons 

shipped in 2006 (see Figure 25). AHRI reported 2008 shipments of more than 71,000 units, 

indicating continued strong demand despite worsening economic conditions (see Table 7).

Table 7. Geothermal Heat Pump Shipments (1999-2008)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008^

41,679 35,581 N/A 37,139 36,439 43,806 47,830 63,682 86,396 71,000

Source: EIA, AHRI, 2009.

WaterFurnace, the Canadian GHP company and a market leader in the United States and 

Canada, witnessed a doubling of sales between 2003 and 2007, with a 26% year-over-year 

sales increase from 2007 through 3Q 2008.45

* In 2007, it was estimated that the number of heat pumps installed totaled over 800,000. One geothermal heat pump has an assumed average 

size of 12 kW. Therefore, the assumed 12,031 MWt installed for 2008 allows for an estimate of 1,002,583 heat pumps installed.

^ Advance data from the AHRI.
30 2008 Geothermal Technologies Market Report | July 2009

Figure 25. Capacity of GHP Shipments by Model Type (2009)*

U.S. GHP Market Segmentation – 

Evenly Divided Between Residential and Commercial Applications

GHPs can be used in a wide variety of applications, including residential, commercial, 

institutional and multifamily buildings. Currently, GHP shipments are fairly evenly divided 

between residential and commercial building applications (see Figure 26). According to 

ClimateMater, GHPs were installed in 1 out of every 38 new U.S. homes in 2008. This represents 

a 2.6% market share for the segment.46 The retrofit market for schools has grown substantially 

in recent years; there are currently more than 600 schools with GHP systems.

As shown in Figure 27, GHPs have a presence in all census regions, although the market 

has historically been dominated by the Midwestern and southern states, which are home 

to the major GHP manufacturers and have more personnel trained in GHP installation and 

maintenance than other regions.

* ARI 320 refers to ARI rated water source heat pumps, ARI 325 to ARI rated ground water source heat pumps (open loop), 

and ARI 330 to ARI ground source heat pumps (closed loop).

Figure 26. Geothermal heat pump domestic 

shipments by sector, 2007

Source: EIA, “Geothermal Heat Pump Manufacturing 

Activities 2007” (Released February 2009)

Figure 27. GSHP Shipments by Census 

Region in Tons (2007)

Source: EIA, “Geothermal Heat Pump Manufacturing 

Activities 2007” (Released February 2009)

Source: EIA, “Geothermal Heat Pump 

Manufacturing Activities 2007” 

(Released February 2009)
2008 Geothermal Technologies Market Report | July 2009 31

Four Companies Hold 80 Percent of the U.S. GHP Market 

Although 40 firms respond to the EIA’s GHP survey,”47 just four companies account for 

over 80% of annual sales.48 The top four manufacturers are ClimateMaster (a unit of LSB 

Industries), Florida Heat Pump (a unit of Bosch), WaterFurnace International, Inc., and Trane 

(a business unit of Ingersoll Rand.) An additional 10-15 firms account for the remainder of 

the U.S. market. Some serve the entire nation while others cater to specific market niches. In 

addition, certain GHPs are rebranded and resold under different names. Major firms within 

this group include McQuay International (a unit of Daikin), Mammoth and several regional 

manufacturers. Carrier markets water-source heat pump and GHP systems designed by other 

manufacturers under their own label.49

Tax Credits and Incentives Set to Increase GHP Deployment

The GHP market still faces significant barriers, however, including: high installation and capital 

costs; a pervasive lack of consumer awareness; and insufficient market delivery infrastructure. 

In order for heat pumps to reach their full market potential, these barriers must be addressed 

through effective market conditioning strategies.50

First and foremost, GHP systems are generally more expensive than conventional heating and 

cooling systems due to the costs associated with installation of the ground connection. The 

remaining components, the “balance of system,” cost roughly the same as the equipment 

that comprise common air-source heat pumps. Average installed costs for 2008 are roughly 

$5,000–$6,000/ton* for the residential market and $6,000 to $10,000/ton for commercial 

applications.51 Though GHPs have higher initial capital costs their operation and maintenance 

costs tend to be lower than some conventional alternatives. 

To encourage continued adoption of GHPs in the residential market, EESA of 2008 renewed 

the EPAct 2005 tax credit for GHPs that had been allowed to lapse. The credit covers 30 

percent of the GHP project cost, not to exceed $2,000. The recent Recovery Act of 2009 

greatly enhanced the scope of the tax credit by removing the $2,000 cap (see Looking 

Ahead section). 

There are a variety of additional incentives available from Federal and state governments 

and utilities to encourage greater adoption of GHPs among residential, institutional and 

commercial consumers. Thirty-four states currently offer GHP incentives, generally in the 

form of rebates, loan programs, tax exemptions (property, sales and use), renewable and green 

building requirements for public buildings, stricter building codes that require specified energy 

efficiency requirements, public benefits funds created through utility surcharges, and green 

building incentives, such as expedited permitting.52 Other possible incentive options include 

design assistance programs, innovative loop leasing and financing strategies, low interest 

loans, consumer rebates, GHP utility rate tariffs, contractor training programs, to nurture the 

delivery infrastructure, and public support by Federal and state agencies, including program 

marketing and funding for demonstration and showcase facilities.53

* One ton is equivalent to 12,000 BTU/hr.
32 2008 Geothermal Technologies Market Report | July 2009

International Activities 

Worldwide Geothermal Capacity Continues to Grow

The United States remained the leader in installed geothermal capacity in 2008, followed 

in order by the Philippines, Indonesia, Mexico and Italy (see Table 8). While international 

figures are not yet known for 2008, New Energy Finance estimates 335 MWe of capacity has 

been added outside the United States (see Table 9). Some important international geothermal 

developers include; Geodynamics (Australia), Petratherm (Australia), Green Rock Energy 

(Australia), Chevron Geothermal & Power (USA), and Enel Green Power (Italy).

Table 8. Installed geothermal capacity of the 

top ten countries in 2007

Country Installed Capacity 

(MWe)

USA 2,687

Philippines 1,970

Indonesia 992

Mexico 953

Italy 811

Japan 535

New Zealand 472

Iceland 421

El Salvador 204

Costa Rica 163

Source: Bertani, R. “World Geothermal Generation in 2007” 

(September 2007)

International Direct-Use Geothermal is Widespread 

Direct-use geothermal is widely utilized abroad. Iceland and Turkey both employ a tremendous 

amount of geothermal energy to serve their heating and cooling requirements (see Table 10). 

Iceland satisfies 89% of its heating and cooling needs with geothermal, whereas Turkey has 

increased its installed base of district heating systems from 820 MWt to 1,495 MWt, almost 50% 

in just 5 years. Japan has over 2,000 hot spring resorts, 5,000 public bath houses, and 15,000 

hotels with natural hot springs. Switzerland makes extensive use of its geothermal resources as 

well, with more than 30,000 GHPs, and uses drain water from tunnels to heat homes and melt 

roadway ice and snow.54

* This is a 2007 figure. Current U.S. installed capacity is 3,040 MWe as of March 2009 (GEA).

Country 2008 Increases in 

Capacity (MWe)

France 1.5

Germany 6.9

Iceland 90.0

Indonesia 60.0

Kenya 35.0

New Zealand 121.6

Philippines 20.0

TOTAL 335.0

Table 9. Total 2008 MWe increases 

by country

Source: New Energy Finance, 2008

7.
2008 Geothermal Technologies Market Report | July 2009 33

Table 10. Top direct-use countries

Country GWh/yr MWt Main Applications

China 12,605 3,687 Bathing

Sweden 12,000 4,200 GHP

USA 8,678 7,817 GHP

Turkey 6,900 1,495 District Heating

Iceland 6,806 1,844 District Heating

Japan 2,862 822 Bathing

Hungary 2,206 694 Spas/Greenhouse

Italy 2,098 607 Spas/Space heating

New Zealand 1,969 30 Industrial Uses

Source: Lund, John (2007). Characteristics, Development and Utilization of Geothermal Resources. Geo-Heat Center, 

Oregon Institute of Technology, GHC Bulletin, p.6.

International installed GHP capacity has experienced strong growth in recent years. Annual 

growth rates exceed 10% over the last 10 years. Most of this activity occurred in the North 

American and European markets.55 The European GHP market is expected to experience 

continued strong growth due to a variety of energy efficiency and climate protection goals 

and policies by the European Union (EU) countries and stakeholder organizations.56 These 

include the EU Proposal for a Directive of the European Parliament and of the Council on the 

Promotion of Renewable Energy57; the Ground Reach Initiative, a collaborative effort to utilize 

GHPs to meet Kyoto Treaty climate targets58; and the European Geothermal Energy Council’s 

recent strategy document.59

As noted earlier, direct-use applications are quite diverse and include everything from 

agricultural to resorts and spas. Table 11 below contains a complete breakdown of direct-use 

categories.*

Table 11. Direct use application breakdown by installed capacity and annual energy use

Application Installed Capacity Energy Use

Geothermal Heat Pumps 56.5% 33.2%

Bathing/swimming/spas 17.7% 28.8%

Space heating (with district heating) 14.9% 20.2%

Greenhouse heating 4.8% 7.5%

Aquaculture 2.2% 4.2%

Industrial 1.8% 4.2%

Agricultural drying 0.6% 0.8%

Cooling and snow melting 1.2% 0.7%

Other 0.3% 0.4%

Source: Lund, John (2007). Characteristics, Development and Utilization of Geothermal Resources. Geo-Heat Center, 

Oregon Institute of Technology, GHC Bulletin, p.6.

* Dr. John Lund includes GHPs with other direct use geothermal applications.
34 2008 Geothermal Technologies Market Report | July 2009

Employment and Economic 

Benefits of Geothermal Power

Geothermal Industry – More than 25,000 Employed Nationwide 

Several studies have examined the employment and economic benefits of geothermal energy 

development. Perhaps the most obvious positive byproduct is the creation of high-paying, 

long-term jobs. Calpine has reported that the construction of a typical 50 MW geothermal plant 

involves 160 people and 33 months of labor.60 In 2008, the GEA estimates that the geothermal 

industry roughly accounted for 9,000 jobs in operating, construction and manufacturing and 

an additional 16,000 supporting positions.

These figures do not incorporate the manufacturing and installation jobs generated separately 

by the GHP industry. According to the EIA, direct employment in the geothermal heat 

pump manufacturer industry alone accounted for 1,219 person-years in 2007.61 GHPs are 

a labor-intensive technology to manufacture and install. Based on estimates generated by 

WaterFurnace, each GHP requires 24 hours of manufacturing labor and 32 hours of installation 

labor, and a permanent job is created for every 18 installations.62 GHPs require a wide range of 

experience, with up to 30 individuals involved with each installation. 

Gross Revenue from Geothermal Royalties 

Increased 14% between FY 2006 and FY 2008

In addition to job creation, tax revenues from geothermal development can have a substantial 

impact on local economic growth. EPAct of 2005 increased these benefits such that the Federal, 

state and county governments will now receive 25%, 50% and 25% of geothermal revenues, 

respectively, from Federal leases. According to a report by the GEA, in 2008 geothermal 

facilities produced $9.1 million in tax revenue for 31 counties in six states—an increase of 

$4.3 million from the 2007 amount These counties tend to be sparsely populated rural areas 

where the revenue increases have noticeable positive effects; the counties overwhelmingly 

used the revenues to support public services, and infrastructure. In 2007 and 2008, six states 

received a total of $27 million in geothermal tax revenues63, while the Federal government 

received $13.5 million.

8.
2008 Geothermal Technologies Market Report | July 2009 35

Looking Ahead – 2009 and Beyond

Conclusion

In 2008, the United States geothermal energy industry experienced a rebirth. New research 

showing a dramatic increase in potential of geothermal as a major energy source, along with a 

volatile energy environment and climate change concerns, sparked renewed investment from 

government and industry. Projects currently underway may result in new breakthroughs in 

technology and cost efficiency for the industry, and it is poised for additional growth in 2009 

despite challenging economic conditions.

At the time of publication, U.S. energy policy is rapidly evolving with significant new 

incentives for renewable energy development. The Recovery Act, signed by President Barack 

Obama on February 13, 2009, includes over $42 billion for energy programs and more 

than $21 billion in energy tax incentives, primarily for energy efficiency and renewable 

energy. The GTP received $400 million, a substantial portion of DOE’s Recovery Act funds 

devoted to efficient and renewable energy technologies. GTP will now have more capacity 

to implement the major provisions of the 2007 Energy Independence and Security Act. The 

GTP will distribute the Recovery Act funding to partners in industry and academia through 

competitive awards broadly focused on EGS development, geothermal component R&D, 

low-temperature geothermal resources, innovative exploration techniques and geothermal 

heat pumps. Industry cost share will further increase investment, multiplying benefits to 

technology development. 

The Recovery Act also includes enhanced tax provisions that provide assistance to geothermal 

power developers. The law extends the Renewable Energy PTCs for geothermal facilities 

put in place before January 1, 2013, which had been allowed to lapse, slowing industry 

investment. It also provides the opportunity for geothermal developers to take advantage 

of the ITC in lieu of the PTC when desirable, and allows the Department of the Treasury 

to offer grants in lieu of the tax credits. These revisions provide additional flexibility for 

geothermal developers. The grants are likely to be a more effective means of financing 

renewable energy projects since current economic conditions have largely eliminated tax 

equity financing as an option for developers. 

GHPs also are likely to receive a big boost from the Recovery Act, which not only extended 

residential and commercial tax credits, but also removed a $2,000 cap that existed under EESA. 

Residential customers may claim a tax credit up to 30% of the installed cost of their GHP 

systems, and commercial customers may receive up to 10%. Other elements, such as accelerated 

depreciation, were also extended. Substantial funds from the Recovery Act have also been 

allocated to other offices within DOE, other Federal agencies, and channeled to state and local 

9.
36 2008 Geothermal Technologies Market Report | July 2009

governments to improve building energy efficiency, and stimulate green jobs creation and 

economic growth. This new funding may also directly benefit GHPs and geothermal energy 

development. Some of the more notable Recovery Act funding provisions include:

• More than $11 billion is provided in grants for state and local governments through 

the Department of Energy’s Weatherization Assistance Program, which provides 

energy efficiency services to low-income households; the State Energy Program, 

which provides states with discretionary funding for energy efficiency and renewable 

energy projects and programs; and the new Energy Efficiency and Conservation 

Block Grant Program, which seeks to limit energy use and greenhouse gas emissions. 

Several jurisdictions have already devoted funding through these grant programs to a 

variety of renewable and efficient technologies, including geothermal heat pumps. 

• Approximately $8.8 billion was allocated to the Department of Education, to 

renovate schools and university campuses according to green standards. 

• The Recovery Act sets aside $3.7 billion for energy efficiency within the Department 

of Defense’s substantial building stock. The Department has previously been an active 

supporter of geothermal heat pump technology use across its facilities. 

• The Departments of the Interior and Veterans Affairs both received $1 billion in 

multi-purpose funds that can be dedicated to renewable energy and energy efficiency 

projects and upgrades to their facilities.64

As of May 29, 2009, major legislation is currently moving through the U.S. Congress that has 

the potential to significantly change the way energy is produced and consumed in the United 

States. The American Clean Energy and Security Act of 2009 (H.R. 2454) seeks to gradually 

reduce carbon emissions (by 17% below 2005 levels by 2020) and increase the proportion of 

energy that comes from renewable sources in the United States (20% by 2020). While specific 

targets will likely change as the bill undergoes revisions in various congressional committees 

in the coming months, if enacted, it will undoubtedly lead to increased investment and 

deployment of renewable energy technologies in the United States.
2008 Geothermal Technologies Market Report | July 2009 37

End Notes

1 Shepherd, William, “Energy Studies.” London: Imperial College Press, (2003), p. 206. 

2 Martin, Keith, “Geothermal Deal Structures”, Chadbourne & Parke, LLP, 2008 Geothermal Investment Conference, (November 2008). 

3 U.S. DOE Geothermal Technologies Program, Press Release, (2008).

4 Lund, John, Oregon Institute of Technology, Geo-Heat Center, (2007). 

5 Geothermal Technologies Program, U.S. Department of Energy: “DOE Funds 21 Research, Development and Demonstration Projects for up to $78 

million to Promote Enhanced Geothermal Systems.” http://www1.eere.energy.gov/geothermal/news_detail.html?news_id12018. 

6 Google.org, http://www.google.org/egs/index.html

7 Geothermal Technologies Program, U.S. Department of Energy: “BLM Offers Geothermal Leases in Utah, Idaho and Oregon.” 

http://www1.eere.energy.gov/geothermal/news_detail.html?news_id=12113 

8 New Energy Finance, “Meltdown: How Iceland’s Fall is Impacting Geothermal”, (November 2008). 

9 New Energy Finance, “To Drill or Not to Drill: Geothermal and the Credit Crunch”, (January 6, 2009). 

10 Personal Communication with Karl Gawell, Executive Director, GEA

11 Electric Power Monthly, EIA, (March 2009).

12 International geothermal capacity figures for 2008 are not scheduled to be released until late 2009. 

Source: Bertani, R. “World Geothermal Generation in 2007”, (September 2007)

13 United States Geological Survey, “Assessment of Moderate- and High-Temperature Geothermal Resources of the United States”, (2008).

14 Geothermal Energy Association, “U.S. Geothermal Power Production and Development”, (March 2009)

15 Ibid.

16 Tester, J., et al., Massachusetts Institute of Technology, “The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems (EGS) 

on the United States in the 21st Century”, (2006).

17 U.S. DOE Geothermal Technologies Program, (2008)

18 Ibid.

19 Ibid.

20 North American Clean Energy Magazine, “Assessment of the Price of Geothermal Power”, Volume 3, Issue 1. (2009) ($4,000/kW)

Lovekin, J, et al., “Potential improvements to existing geothermal facilities in California”, (2006) ($3,000-$3,500/kW)

New Energy Finance, Direct Communication with Mark Taylor ($3,600-$3,900/kWh). 

21 Sison-Lebrilla, Elaine and Valentino Tiangco, “Geothermal Strategic Value Analysis”, 

California Energy Commission Report #CEC-500-2005-105-SD, (June 2005), pgs.12-17. 

22 Davidson, Paul “Declining energy prices extend to electricity”, USA TODAY, (December 17, 2008).

23 “To Drill or Not to Drill”, New Energy Finance, (January 6, 2009), p.1. 

24 “Geothermal Deal Structures”, Presentation by Keith Martin, Chadbourne & Parke, LLP, Geothermal Financing Summit 2008. 

25 “What’s Hot in Renewable Energy Project Financing” by Ed Feo, Milbank Tweed Hadley & McCloy LLP, published in North American Clean Energy 

(www.nacleanenergy.com), Volume 2, Issue 1, (2008).

26 “Geothermal Deal Structures”, Presentation by Keith Martin, Chadbourne & Parke, LLP, Geothermal Financing Summit 2008. 

27 Ibid. 

28 “Geothermal Energy Stocks Should Recover Steam If Government Support Lasts”, The Globe and Mail – Globe Investor Magazine, October 28, 2008. 

29 “Geothermal Deal Structures”, Presentation by Keith Martin, Chadbourne & Parke, LLP, Geothermal Financing Summit 2008. 

30 “To Drill or Not to Drill: Geothermal and the Credit Crunch”, New Energy Finance, January 6, 2009, pgs. 1-2.

31 “Credit Crunch Darkens Solar’s Prospects”, Fortune, October 28, 2008. Via CNN.com. 

32 “Geothermal Deal Structures”, Presentation by Keith Martin, Chadbourne & Parke, LLP, Geothermal Financing Summit 2008. 

33 “Geothermal Energy – An Overnight Success in 104 Years”, Dundee Capital Markets, Ian Tharp CFA, March 17, 2008, p. 27.

34 Jason Gold interview, January 9, 2009. 
38 2008 Geothermal Technologies Market Report | July 2009

35 New Energy Finance, “To Drill or Not to Drill: Geothermal and the Credit Crunch”, January 6, 2009, p. 3.

36 Lazard Investment Bank, (2008). Download at: http://www.narucmeetings.org/Presentations/2008%20EMP%20Levelized%20Cost%20of%20

Energy%20-%20Master%20June%202008%20(2).pdf

37 Ibid. 

38 Database of State Incentives for Renewable Energy (DSIRE). Available at: www.dsireusa.org

39 U.S DOE EERE Network News, 2008

40 Mostow, P. and Braff, A., “Geothermal Site Acquisition and Early Development: Key Legal Issues and Emerging Strategies”, 

Presented at Geothermal Energy 2008. 

41 U.S. Department of the Interior, Bureau of Land Management, “Record of Decision and Resource Management Plan Amendments for Geothermal 

Leasing in the Western United States”, (December 2008). 

42 Lund et al, “Direct application of geothermal energy: 2005 Worldwide review”, Geothermics 34 (2005) 691-727

43 Characteristics, Development and Utilization of Geothermal Resources, John W. Lund, Geo-Heat Center, Oregon Institute of Technology, 

GHC Bulletin, June 2007, p.6. 

44 Lund et al, “Direct application of geothermal energy: 2005 Worldwide review”, Geothermics 34 (2005) 691-727

45 WaterFurnace Investors Presentation, (November, 2008). Available at www.waterfurnance.com. 

46 Personal communication with ClimateMaster staff, (April 2009).

47 Holihan, Peter, “Analysis of Geothermal Heat Pump Manufacturers Survey Data”, Energy Information Administration, Renewable Energy 1998: 

Issues and Trends, p.59 

48 The American Council for an Energy-Efficient Economy, “Emerging Technologies Report: Residential Ground-Source Heat Pumps July”, (2007), p. 3. 

49 Hughes, Patrick, “Geothermal (Ground-Source) Heat Pumps: Market Status, Barriers to Adoption, and Actions to Overcome Barriers, Oak Ridge 

National Laboratory, Report # ORNL/TM-2008/232 (December 2008), p. 17. 

50 Ibid.

51 Personal communication with ClimateMaster staff, (April 2009).

52 Database of State Incentives for Renewable Energy (DSIRE). Available at: www.dsireusa.org. 

53 Johnson, Katherine and Ed Thomas, “Helping Utilities and Customers Quantify the Benefits of Geothermal Heat Pumps”, Market Development 

Group. Paper presented at IEA Heat Pump Conference, (2008).

54 Ibid.

55 Le Feuvre, P., Kummert, M., “Ground Source Heat Pumps in the UK – Market Status and Evaluation.” Proceedings of the 9th Annual IEA Heat 

Pump Conference, (2008).

56 Council of the European Union, Presidency conclusions 7224/1/07 REV 1: III. An integrated climate and energy policy, (2007) p. 10-14. 

Download at: http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/93135.pdf

57 “Proposal for a Directive of the European Parliament and of the Council on the Promotion of the Use of Energy from Renewable Sources”, 

Brussels, (January 23, 2008) Download at: http://ec.europa.eu/energy/climate_actions/doc/2008_res_directive_en.pdf 

58 www.groundreach.eu

59 “Research Agenda for Geothermal Energy – Strategy 2008 to 2030”, European Geothermal Energy Council (EGEC), (2008). 

Download at: http://www.groundreach.eu/script/tool/forg/doc795/EGEC%20RESEARCH%20AGENDA%202009.pdf

60 Ibid, p.3. 

61 Form EIA-902, “Annual Geothermal Heat Pump Manufacturers Survey”, Released February, 2009. 

62 “WaterFurnace Renewable Energy Is Poised to Contribute to Economic Recovery and Long-Term Energy Goals”, Reuters, (Feb 16, 2009). Article’s 

figures based on an internal WaterFurnace study.

63 “Geothermal Revenue under the Energy Policy Act of 2005: Income Distribution at Federal, State and County Levels.” GEA, (2008). pgs. 11-12. 

64 Sissine, Fred et. al., Congressional Research Service, “Energy Provisions in the American Recovery and Reinvestment Act of 2009”, (2009). 

. 
2008 Geothermal Technologies Market Report | July 2009 39

References

American Council for an Energy-Efficient Economy (2007). Emerging Technologies Report - Residential Ground-Source Heat Pumps, p. 3. 

Bertani, Ruggero (2007). World Geothermal Generation in 2007. pp. 8-19 GHC Bulletin September 2007.

Cambridge Energy Research Associates (2008).

Commission of the European Communities. 2008. Proposal for a Directive of the European parliament and of the council on the promotion of the use of 

energy from renewable sources. Brussels, 23.1.2008. Download at: http://ec.europa.eu/energy/climate_actions/doc/2008_res_directive_en.pdf

Council of the European Union. 2007: Presidency conclusions – Brussels, 8/9 March 2007 (7224/1/07 REV 1) Section III; An integrated climate 

and energy policy. p. 10-14. Download at www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/93135.pdf

Davidson, Paul (2008). Declining energy prices extend to electricity. USA TODAY December 17, 2008.

Database of State Incentives for Renewable Energy (DSIRE) website: www.dsireusa.org

Energy Information Administration, U.S. Department of Energy (2009). Electric Power Monthly, March 2009. 

www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html

Energy Information Administration, U.S. Department of Energy (2009). Geothermal Heat Pump Manufacturing Activities 2007. 

www.eia.doe.gov/fuelrenewable.html

European Geothermal Energy Council (2008). Research Agenda for Geothermal Energy – Strategy 2008 to 2030. 

www.groundreach.eu/script/tool/forg/doc795/EGEC%20RESEARCH%20AGENDA%202009.pdf

Feo, Ed of Milbank Tweed Hadley & McCloy LLP (2008). What’s Hot in Renewable Energy Project Financing. 

North American Clean Energy Vol. 2, Issue 1.

Fleischmann, Daniel J. (2007). Getting Geothermal Electricity Projects Online, Presentation by ORMAT Nevada, Inc., July 23, 2007. 

Gawell, Karl, Geothermal Energy Association (GEA) (2009). Personal Communication.

Geothermal Energy Association (2005). Geothermal Industry Employment: Survey Results and Analysis. p. 2.

Geothermal Energy Association, U.S. Geothermal Power Production and Development (March 2009) 

www.geo-energy.org/publications/reports/Industry_Update_March_Final.pdf

Geothermal Energy Association (2008). Geothermal Revenue Under the Energy Policy Act of 2005: Income Distribution at Federal, 

State and County Levels. p. 11-12. 

Geothermal Resource Council (2009). Assessment of the Price of Geothermal Power. North American Clean Energy Magazine, Vol. 3 Issue 1. 

Geothermal Technologies, U.S. Department of Energy website: www1.eere.energy.gov/geothermal/

Geothermal Technologies Program, U.S. Department of Energy. BLM Offers Geothermal Leases in Utah, Idaho and Oregon. 

www1.eere.energy.gov/geothermal/news_detail.html?news_id=12113 

Geothermal Technologies Program, U.S. Department of Energy DOE Funds 21 Research, Development and Demonstration Projects for 

up to $78 million to Promote Enhanced Geothermal Systems. www1.eere.energy.gov/geothermal/news_detail.html?news_id12018

Google.org website: www.google.org/egs/index.html

Ground Reach website: www.groundreach.eu

Hughes, Patrick (2008). Geothermal (Ground-Source) Heat Pumps: Market Status, Barriers to Adoption, and Actions to Overcome Barriers. 

Oak Ridge National Laboratory (ORNL/TM-0000/00). 

International Partnership for Geothermal Technologies website: http://internationalgeothermal.org

Jason Gold interview, January 9, 2009. 

Johnson, Katherine and Thomas, Ed. (2008). Helping Utilities and Customers Quantify the Benefits of Geothermal Heat Pumps. 

Market Development Group. Paper presented at IEA Heat Pump Conference, 2008.

Khan, Ali (2008). The Geysers Geothermal Field, an Injection Success Story. Geothermal Technologies Program – 2008 
40 2008 Geothermal Technologies Market Report | July 2009

Lazard, (2008). 

www.narucmeetings.org/Presentations/2008%20EMP%20Levelized%20Cost%20of%20Energy%20-%20Master%20June%202008%20(2).pdf

Le Feuvre, P., Kummert, M., (2008). Ground Source Heat Pumps in the UK – Market Status and Evaluation. 

In: Proc. 9th Annual IEA Heat Pump Conference 2008.

Lovekin, James, et al. (2006). Potential improvements to existing geothermal facilities in California. GRC Transactions, Vol. 30 pp. 885-890

Lund, John (2007). Characteristics, Development and Utilization of Geothermal Resources. Geo-Heat Center, Oregon Institute of Technology, 

GHC Bulletin, p.6. 

Lund, John, et al. (2005). Direct application of geothermal energy: 2005 Worldwide review. Geothermics 34 pp.691-727

Martin, Keith (2008). Geothermal Deal Structures. Chadbourne & Parke, LLP. November 2008 Geothermal Investment Conference.

Mostow, P. and Braff, A (2008). Geothermal Site Acquisition and Early Development: Key Legal Issues and Emerging Strategies. 

Presented at Geothermal Energy 2008

New Energy Finance (2008). Meltdown: How Iceland’s fall is impacting geothermal.

New Energy Finance (2009). Direct communication with Mark Taylor.

New Energy Finance (2009). To Drill or Not to Drill: Geothermal and the Credit Crunch.

Raser Technologies website: www.rasertech.com/geothermal/projects-in-development 

Shepherd, William (2006). Energy Studies.London. pp. 206; Imperial College Press, 2003 

Silcoff, Sean (2008). Geothermal Energy Stocks Should Recover Steam If Government Support Lasts. The Globe and Mail, October 28, 2008. 

Sissine, Fred, et al. (2009). Energy Provisions in the American Recovery and Reinvestment Act of 2009. Prepared by the Congressional Research Service.

Tester, J., et al. (2006). The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems (EGS) on the United States in the 21st Century.

Tharp, Ian and Mahesh, Sumeet (2008). Geothermal Energy – An Overnight Success in 104 Years. Dundee Capital Markets March 17, 2008, p. 27.

US Renewables Group (2007). Geothermal Investment: An Equity Provider’s Perspective, Geothermal Investors’ Forum, October 2007.

United States Geological Survey, U.S. Department of the Interior (2008). Assessment of Moderate- and High-Temperature Geothermal 

Resources of the United States

WaterFurnace Investors Presentation, November, 2008, www.waterfurnance.com

Woody, Todd (2008). Credit Crunch Darkens Solar’s Prospects. Fortune, October 24, 2008. Via CNN.com
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Geothermal Web Sites 

Geothermal Energy Association (GEA)

www.geo-energy.org/

Geothermal Resource Council (GRC)

www.geothermal.org/

International Energy Agency Geothermal Implementing Agreement (IEA – GIA)

www.iea-gia.org/

Geothermal Heat Pump Consortium 

www.geoexchange.org/

International Ground Source Heat Pump Association

www.igshpa.okstate.edu/

Geo-Heat Center, Oregon Institute of Technology

geoheat.oit.edu/

Lawrence Berkeley National Laboratory Geothermal Program 

esd.lbl.gov/ER/geolbnl.html

National Renewable Energy Laboratory (NREL) Geothermal Technologies

nrel.gov/geothermal/

Oak Ridge National Laboratory

www.ornl.gov

Sandia National Laboratories Geothermal Research Department 

www.sandia.gov/geothermal/

U.S. Geological Survey (USGS)

www.usgs.gov/

U.S. Bureau of Land Management (BLM) Geothermal Program 

www.blm.gov/wo/st/en/prog/energy/geothermal.html

U.S. Department of Energy Geothermal Technologies Program 

www.eere.energy.gov/geothermal/

Key Report Contacts 

For more information on this report, please contact: 

Ed Wall, Program Manager, Geothermal Technologies Program, U.S. Department of Energy

202-586-0410; ed.wall@ee.doe.gov

On the Cover

Electricity generated from U.S. geothermal sources, such as the Desert Peak geothermal field in Nevada, reached 15 billion kilowatt-hours in 2008.

Courtesy of Ormat Technologies Inc.

For more information contact:

EERE Information Center

1-877-EERE-INF (1-877-337-3463)

www.eere.energy.gov/informationcenter 

Printed with a renewable-source ink on paper containing at 

least 50% wastepaper, including 10% post consumer waste.

Prepared by the National Renewable Energy Laboratory (NREL)

NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency and Renewable Energy

Operated by the Alliance for Sustainable Energy, LLC

DOE/GO-102009-2864

July 2009

Energy Efficiency &

Renewable Energy