---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 20-F

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12 (b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT")

OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT

For the fiscal year ended June 30, 2007

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
EXCHANGE ACT

For the transition period from ____________to ____________

OR

[ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT

Date of event requiring this shell company report
___________

Commission file number 000-49917

NEVADA GEOTHERMAL POWER
INC.(Exact name of Registrant as specified in its
charter)

Not Applicable(Translation of Registrant's
name into English)

British Columbia, Canada(Jurisdiction of
incorporation or organization)

900-409 Granville Street Vancouver, British Columbia,
Canada, V6C 1T2(Address of principal executive offices)

Securities registered or to be registered pursuant to Section
12(b) of the Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Not Applicable      | Not Applicable                           

Securities registered or to be registered pursuant to Section
12(g) of the Act.

---

|Common Shares Without Par Value | (Title of Class)
|------------------------------- | ----------------

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.

NoneTitle of Class

The number of outstanding common shares as of June 30, 2007
76,824,171

Indicate by check mark if the Registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act

YES [ ] NO [X]

If this report is an annual or transition report, indicate by
check mark if the Registrant is not required to file reports pursuant to Section
13 or 15(d) of the Exchange Act.

YES [ ] NO [X]

Note - Checking the box above will not relieve any registrant
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act
from their obligations under those Sections.

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.

YES [X] NO [ ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act

Large accelerated filer [ ]     
Accelerated filer [ ]      Non-accelerated filer
[X]

Indicate by check mark which financial statement item the
Registrant has elected to follow.

[X] Item 17     [ ] Item 18

If this is an annual report, indicate by check mark whether the
Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).

YES [ ] NO [X]

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)

Indicate by check mark whether the Registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Exchange Act subsequent to the distribution of securities under a plan confirmed
by a court.

YES [ ] NO [ ]

2

---

TABLE OF CONTENTS

Page No.

Forward
      Looking Statements
    5Presentation
      of Financial Information and Other Information
    5PART IITEM
      1
    Identity
      Of Directors, Senior Management And Advisers
    6ITEM
      2
    Offer
      Statistics And Expected Timetable
    6ITEM
      3
    Key
      Information
    6A.
    Selected
      Financial Data
    7B.
    Capitalization
      and Indebtedness
    8C.
    Reasons
      For The Offer and Use of Proceeds
    8D.
    Risk
      Factors
    8ITEM
      4
    Information
      On Our Company
    13A.
    History
      and Development of NGP
    13B.
    Business
      Overview
    15C.
    Organizational
      Structure
    21D.
    Property,
      Plants and Equipment
    22ITEM
      4A
    Unresolved
      Staff Comments
    44ITEM
      5
    Operating
      And Financial Review And Prospects
    44A.
    Operating
      Results
    46B.
    Liquidity
      and Capital Resources
    48C.
    Research
      and Development, Patents and Licenses, etc.
    50D.
    Trend
      Information
    50E.
    Off-Balance
      Sheet Arrangements
    50F.
    Tabular
      Disclosure of Contractual Obligations
    50G.
    Safe
      Harbor
    51ITEM
      6
    Directors,
      Senior Management And Employees
    51A.
    Directors
      and Senior Management
    51B.
    Compensation
    55C.
    Board
      Practices
    58D.
    Employees
    59E.
    Share
      Ownership
    60ITEM
      7
    Major
      Shareholders And Related Party Transactions
    61A.
    Major
      Shareholders
    61B.
    Related
      Party Transactions
    62C.
    Interests
      of Experts and Counsel
    63ITEM
      8
    Financial
      Information
    63A.
    Consolidated
      Statements and Other Financial Information
    63B.
    Significant
      Changes
    63


3

---

ITEM 9
    The Offer And
      Listing
    63A.
    Offer and Listing Details
    63B.
    Plan of Distribution
    64C.
    Markets
    64D.
    Selling Shareholders
    65E.
    Dilution
    65F.
    Expenses of the Issue
    65ITEM 10
    Additional
      Information
    65A.
    Share Capital
    65B.
    Memorandum and Articles
      of Association
    65C.
    Material Contracts
    67D.
    Exchange Controls
    70E.
    Taxation
    72F.
    Dividends
      and Paying Agents
    76G.
    Statement
      by Experts
    76H.
    Documents
      on Display
    77I.
    Subsidiary
      Information
    77ITEM
      11
    Quantitative
      And Qualitative Disclosures About Market Risk
    77ITEM
      12
    Description
      Of Securities Other Than Equity Securities
    77PART IIITEM
      13
    Defaults,
      Dividend Arrearages And Delinquencies
    77ITEM
      14
    Material
      Modifications To The Rights Of Security Holders And Use Of
      **Proceeds**
    77ITEM
      15
    Controls
      And Procedures
    77ITEM
      16
    Reserved
    78ITEM
      16A
    Audit
      Committee Financial Expert
    78ITEM
      16B
    Code
      Of Ethics
    78ITEM
      16C
    Principal
      Accountant Fees And Services
    79ITEM
      16D
    Exemptions
      From The Listing Standards For Audit Committees
    80ITEM
      16E
    Purchases
      Of Equity Securities By The Issuer And Affiliated Purchasers
    80PART IIIITEM
      17
    Financial
      Statements
    80ITEM
      18
    Financial
      Statements
    110ITEM
      19
    Exhibits
    110Signatures
    119


4

---

FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as "may",
"will", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

PRESENTATION OF FINANCIAL INFORMATION AND OTHER
INFORMATION

As used in this Annual Report, the terms "we", "us", "our",
Company and "NGP" mean Nevada Geothermal Power Inc. and our subsidiaries,
unless otherwise indicated. Our wholly-owned subsidiaries, Nevada Geothermal
Power Company, Desert Valley Gold Company, Blue Mountain Power, Company Inc.,
NGP Holdco LLC, NGP Holdco 11LLC, NGP Holdco 111 LLC, NGP Holdco 1V LLC, NGP
Blue Mountain 1 LLC, NGP Blue Mountain 11 LLC, NGP Blue Mountain 111 LLC and NGP
Blue Mountain 1V LLC, are referred to in this Annual Report as "Power Company",
Desert Valley Gold, "Blue Mountain Company", Holdco, Holdco 11, Holdco
111, Holdco 1V, NGP1, NGP11, NGP111 and NGPIV respectively.

Unless otherwise indicated, all dollar amounts referred to
herein are in Canadian dollars.

The information set forth in this Annual Report on Form 20-F
is as at June 30, 2007 unless an earlier or later date is indicated.

Financial information is presented in accordance with
accounting principles generally accepted in Canada. Measurement differences
between accounting principles generally accepted in Canada and in the United
States, as applicable to Nevada Geothermal Power Inc., are set forth in Item 5
of this Annual Report and in Note 16 to the accompanying Financial Statements of
Nevada Geothermal Power Inc.

Statements in this Annual Report regarding expected
completion dates of feasibility studies, anticipated commencement dates of
resource production operations, projected quantities of future resource
production and anticipated production rates, operating efficiencies, costs and
capital expenditures, as well as their timing are forward-looking statements.
Actual results could differ materially depending upon the availability of
materials, equipment, required permits or approvals and financing, the
occurrence of unusual weather or operating conditions, the accuracy of reserve
estimates, lower than expected results or the failure of equipment or processes
to operate in accordance with specifications. See "Risk Factors" for other
factors that may affect our future financial performance.

5

---

PART I

|ITEM 1 | Identity of Directors, Senior Management and
      Advisers
|------ | -----------------------------------------------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|ITEM 2 | Offer Statistics and Expected Timetable
|------ | ---------------------------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|ITEM 3 | Key Information
|------ | ---------------

|A. | Selected Financial Data
|-- | -----------------------

The following tables summarize our selected consolidated
financial data (stated in Canadian dollars) prepared in accordance with Canadian
generally accepted accounting principles (Canadian GAAP). The selected
historical financial data for the last five fiscal years has been extracted from
more detailed information and financial statements, including our audited
consolidated financial statements for the fiscal period ended June 30, 2007 and
for each of the years in the three years ended June 30, 2007 and the related
notes, which appear elsewhere in this Annual Report. The historical consolidated
financial data as of June 30, 2004 and for each of two years ended June 30,
2004, has been extracted from our audited consolidated financial statements not
included in this Annual Report.

The selected historic financial information may not be
indicative of our future performance and should be read in conjunction with
Item 5  Operating and Financial Review and Prospects and the consolidated
financial statements and the notes attached to those financial statements
included elsewhere in this Annual Report. Note 16 of our financial statements
included with this filing sets forth the measurement differences were such
information to be presented in conformity with United States generally accepted
accounting principles (United States GAAP). Results for the periods ended June
30, 2007 are not necessarily indicative of results for future periods.

Information in accordance with Canadian GAAP:

Year Ended June 302007
    2006
    2005
    2004
    2003(a)
    Total revenue
    $0
    $0
    $0
    $0
    $0(b)
    Earnings (loss) before other
      incomeTotal
    $(3,323,174)
    $(1,794,505)
    $(1,486,104)
    $(795,844)
    $(490,602)Per Share
    $(0.05)
    $(0.04)
    $(0.05)
    $(0.05)
    $(0.05)(c)
    Total assets
    $39,818,701
    $25,825,438
    $6,637,465
    $4,003,772
    $541,664(d)
    Total long-term debt
    $0
    $0
    $0
    $0
    $0(e)
    Capital stock
    $41,862,542
    $28,591,656
    $11,267,579
    $7,474,528
    $3,612,383(f)
    Weighted average number of
      shares
    61,294,757
    36,537,557
    24,967,821
    17,605,345
    9,722,816(g)
    Total shareholders' equity
      (deficiency)
    $36,455,784
    $23,826,567
    $6,327,029
    $3,599,006
    $388,247(h)
    Cash dividends declared per
      share
    Nil
    Nil
    Nil
    Nil
    Nil(i)
    Net earnings (loss) for the
      periodTotal
    $(2,874,979
    $(1,605,372)
    $(1,308,233)
    $(792,846)
    $(490,602)Per Share
    $(0.05)
    $(0.04)
    $(0.05)
    $(0.05)
    $(0.05)(j)
    Number of Shares
    76,824,171
    53,202,171
    29,403,074
    22,189,084
    10,273,224


6

---

Information in accordance with United States GAAP:

Year Ended June 302007
    2006
    2005
    2004
    2003(a)
    Total
      revenue
    $0
    $0
    $0
    $0
    $0(b)
    Earnings (loss) before extraordinary itemsTotal
    $(18,627,917)
    $(6,709,251)
    $(3,115,838)
    $(2,253,362)
    $(711,927)Per Share
    $(0.30)
    $(0.18)
    $(0.12)
    $(0.13)
    $(0.07)(c)
    Total
      assets
      $1,4638,126
    $16,397,801
    $2,313,707
    $1,361,705
    $64,339(d)
    Total
      long-term debt
    $0
    $0
    $0
    $0
    $0(e)
    Capital stock
    $41,862,542
    $28,591,656
    $11,267,579
    $7,474,528
    $3,612,383(f)
    Weighted average number of shares
    61,294,757
    36,537,557
    24,967,821
    17,605,345
    9,722,816(g)
    Total shareholders' equity (deficiency)
    $11,275,209
    $14,398,930
    $2,003,271
    $956,939
    $(89,078)(h)
    Cash dividends declared per share
    Nil
    Nil
    Nil
    Nil
    Nil(i)
    Net earnings (loss) for the periodTotal
    $(18,627,917)
    $(6,709,251)
    $(3,115,838)
    $(2,253,362)
    $(711,927)Per Share
    $(0.30)
    $(0.18)
    $(0.12)
    $(0.13)
    $(0.07)(j)
    Number
      of Shares
    76,824,171
    53,202,171
    29,403,074
    22,189,084
    10,273,224


We calculate loss per share using the treasury stock method.
Under the treasury stock method, only instruments with exercise amounts less
than market prices impact the diluted calculations. In computing diluted loss
per share, no shares were added to the weighted average number of common shares
outstanding as the effect of potentially issuable common shares is
anti-dilutive.

Disclosure of Exchange Rate History

On December 29, 2007, the exchange rate in effect for Canadian
dollars exchanged for United States dollars, expressed in terms of Canadian
dollars, and based on the noon buying rates in New York City, for cable
transfers in Canadian dollars, as certified for customs purposes by the Federal
Reserve Bank of New York was $0.9881.

For the past five fiscal years ended June 30, 2007, and for the
period between June 1, 2007 and December 30, 2007 (calculated monthly), the
following exchange rates were in effect for Canadian dollars exchanged for
United States dollars, expressed in terms of Canadian dollars and based upon the
exchange rate as determined above:

Year/Month End
    
    Average
    
    
    Low/HighYear:June 30, 2003
      
      $1.5069
    
    
    not applicableJune 30, 2004
      
      $1.3423
    
    
    not applicableJune 30, 2005
      
      $1.2448
    
    
    not applicableJune 30, 2006
      
      $1.1562
    
    
    not applicableJune 30, 2007
      
      $1.1322
    
    
    not applicableMonth:June, 2007
    
    not applicable
    
    
    1.0727/1.0578July, 2007
    
    not applicable
    
    
    1.0372/1.0689August, 2007
    
    not applicable
    
    
    1.0497/1.0754September, 2007
    
    not applicable
    
    
    0.9959/1.0546October, 2007
    
    not applicable
    
    
    0.9496/1.0002November, 2007
    
    not applicable
    
    
    0.9168/1.0007


7

---

Year/Month End
    
    Average
    
    
    Low/HighDecember, 2007
    
    not applicable
    
    
    0.9784/1.0216


|B. | Capitalization and Indebtedness
|-- | -------------------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|C. | Reasons for the Offer and Use of
      Proceeds
|-- | -----------------------------------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|D. | Risk Factors
|-- | ------------

The following is a brief discussion of those distinctive or
special characteristics of our operations and industry which may have a material
impact on, or constitute risk factors in respect of, our future financial
performance. You should carefully consider the following risks and uncertainties
in addition to other information in this Annual Report in evaluating our company
and our business before purchasing shares of our company's common stock. Our
business, operating and financial condition could be harmed due to any of the
following risks.

Risks Relating to our Business

There is risk that no commercially exploitable geothermal
energy will be found and our business will fail.

The search for geothermal energy as a business is risky. We can
provide investors with no assurance that our property interests contain
commercially exploitable reserves. Exploration is a speculative venture
necessarily involving substantial risk.

Our development activities are inherently very
risky.

The risks involved in the development of a geothermal resource
cannot be over-stated. Our drilling operations may be curtailed, delayed or
cancelled as a result of numerous factors, many of which are beyond our control,
including economic conditions, mechanical problems, title problems, weather
conditions, compliance with governmental requirements and shortages or delays of
equipment and services. If our drilling activities are not successful, we would
experience a material adverse effect on our future results of operations and
financial condition.

In addition to the substantial risk that wells drilled will not
be productive, or may decline in productivity after commencement of production,
hazards such as unusual or unexpected geologic formations, pressures, mechanical
failures, blowouts, cratering, explosions, uncontrollable flows of well fluids,
pollution and other physical and environmental risks are inherent in geothermal
exploration and production. These hazards could result in substantial losses to
us due to injury and loss of life, severe damage to and destruction of property
and equipment, pollution and other environment damage and suspension of
operations. As protection against operating hazards, we maintain insurance
coverage against some, but not all, potential losses. We do not fully insure
against all risks associated with our business either because such insurance is
not available or because the cost of such coverage is considered prohibitive.
The occurrence of an event that is not covered, or not fully covered, by
insurance could have a material adverse effect on our financial condition and
results of operations.

Proven reserves of geothermal energy on our
properties.

Despite exploration and development work, our properties, other
than Blue Mountain, are without a known geothermal reserve. Substantial
additional work is still required in order to determine if any

8

---

economic geothermal reserves are located on these properties.
Even in the event commercial quantities of geothermal resources are discovered,
the production facilities might not be brought into a state of commercial
production. Finding geothermal resources is dependent on a number of factors,
not the least of which is the technical skill of exploration personnel involved.
The commercial viability of a geothermal resource once discovered is also
dependent on a number of factors, some of which are particular attributes of the
resource, such as size, and proximity to infrastructure, as well as capital
costs and energy prices. Many of these factors are beyond our control. We are an
exploration stage company with no history of revenues. There can be no assurance
that our operations will be profitable in the future.

Geothermal energy prices are subject to dramatic and
unpredictable fluctuations.

The market price of geothermal energy is volatile and cannot be
controlled. If the price of electricity should drop significantly, the economic
prospects of the projects, excluding Blue Mountatin, that we have an interest in
could be significantly reduced or rendered uneconomic. There is no assurance
that, even if commercial quantities of geothermal resources are discovered, a
profitable market may exist for the sale of same. Factors beyond our control may
affect the marketability of any geothermal resources discovered. Prices have
fluctuated widely, particularly in recent years. The marketability of geothermal
energy is also affected by numerous other factors beyond our control, including
government regulations relating to royalties, allowable production and exporting
of energy sources, the effect of which cannot be accurately predicted.

Industry competition may impede our growth

Significant and increasing competition exists for the limited
number of geothermal opportunities available. As a result of this competition,
some of which is with large established companies with substantial capabilities
and greater financial and technical resources than us, we may be unable to
acquire additional geothermal projects beyond those on currently leased property
on terms we consider acceptable. There can be no assurance that our acquisition
programs will yield new geothermal projects.

Environmental and Other Regulatory Requirements

Our current or future operations, including development
activities and production on our properties, require permits from various
governmental authorities and such operations are and will be subject to laws and
regulations governing development, geothermal resources, production, exports,
taxes, labor standards, occupational health, waste disposal, toxic substances,
land use, environmental protection, project safety and other matters. Companies
can experience increased costs, and delays in production and other schedules as
a result of the need to comply with applicable laws, regulations and permits.
There is no assurance that all approvals and required permits will be obtained.
Additional permits and studies, which may include environmental impact studies
conducted before permits can be obtained, may be necessary prior to operation of
the properties in which we have interests, and there can be no assurance that we
will be able to obtain or maintain all necessary permits that may be required on
terms that enable operations to be conducted at economically justifiable
costs.

Failure to comply with applicable laws, regulations, and
permitting requirements may result in enforcement actions thereunder, including
orders issued by regulatory or judicial authorities causing operations to cease
or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment, or remedial actions. We may
be required to compensate those suffering loss or damage by reason of our
activities, and may have civil or criminal fines or penalties imposed upon us
for violations of applicable laws or regulations.

Amendments to current laws, regulations and permits governing
operations and activities of geothermal companies, or more stringent
implementation thereof, could have a material adverse impact on the Company and
cause increases in capital expenditures or production costs, or reduction in
levels of production, or abandonment, or delays in development of the
business.

9

---

To the best of our knowledge, we are currently operating in
compliance with all applicable environmental regulations.

While we maintain appropriate insurance for liability and
property damage, we may become subject to liability for hazards that cannot be
insured against, which if such liabilities arise, they could reduce or eliminate
profitability for our company.

Our operations involve the use of dangerous and hazardous
substances. While extensive measures are taken to prevent discharges of
pollutants in the ground water and the environment, and we believe that we
maintain appropriate insurance for liability and property damage in connection
with our business, we may become subject to liability for hazards that cannot be
insured against or for which we may elect not to insure ourselves due to high
premium costs or other reasons. Should such liabilities arise, they could reduce
or eliminate our profitability, resulting in a decline in the value of our
securities. In the course of exploration, development and production, certain
risks and, in particular, unexpected or unusual geological operating conditions
may occur. It is not always possible to fully insure against such risks and we
may decide not to take out insurance against such risks as a result of high
premiums or other reasons. Should such liabilities arise, they could reduce or
eliminate any future profitability and result in increasing costs and a decline
in the value of our securities.

Adverse claims on our title may adversely affect our
business

Although we have taken reasonable precautions to ensure that
legal title to our properties is properly documented, there can be no assurance
of title to any of our property interests, or that such title will ultimately be
secured. Our property interests may be subject to prior unregistered agreements
or transfers or other land claims, and title may be affected by undetected
defects and adverse laws and regulations.

The success of our business relies on our ability to retain
others.

We are dependent upon outside sources for the leasing or
renting of crucial drilling equipment, and related equipment, essential in the
conduct of our business. There can be no assurance that required equipment will
be available to us when needed, that it can be leased or rented economically, or
that such equipment will perform satisfactorily.

Risks Relating to Financial Matters

The fact that we have not earned any revenues since our
incorporation raises substantial doubt about our ability to continue as a going
concern.

We have not generated any operating revenues since our
incorporation and we will, in all likelihood, continue to incur operating
expenses without revenues until we are in commercial production. We had cash and
equivalents in the amount of $13,540,315 as of June 30, 2007. At November 30,
2007 the Company had approximately $5,100,000 in cash as well as access to $20
million in the form of a bridge loan from Glitnir bank. In addition, commitments
to approximately $100 million construction and take out equity financing had
been received from Morgan Stanley Senior Secured Lending (Morgan Stanley) and
MS Greenrock LLC (MS Greenrock) respectively. As a result, assuming conditions
precedent to the Morgan Stanley construction loan are met the Company has access
to the estimated funds required to build up to 35 MW generating plant, as
announced, at Blue Mountain, Nevada. Nevertheless, we cannot assure that viable
geothermal energy reserves exist. If EPC quotations differ from expectations or
if we are unable to raise capital as anticipated we may be forced to delay,
scale back, or cease our activities. If any of these actions were to become
necessary, we might not be able to continue to operate our business.

We have limited financial resources and there can be no
assurance that we will be able to obtain adequate financing in the future.
Failure to obtain such financing may result in a delay or indefinite
postponement of further exploration and development of our projects.

10

---

We have limited financial resources and have no assurances,
given conditions precedent to the Morgan Stanley financing, that additional
funding will be available to us as anticipated. Although we have been successful
in the past in obtaining financing through the sale of equity securities, there
can be no assurance that we will be able to obtain adequate financing in the
future or that the terms of such financing will be favourable. Failure to obtain
such additional financing could result in a delay or indefinite postponement of
further exploration and development of our projects with the possible loss of
such properties.

Fluctuation in foreign currency exchange rates may affect
our results.

We maintain our accounts in Canadian dollars. Our operations in
Nevada make us subject to foreign currency fluctuations. Foreign currency
fluctuations are material to the extent that fluctuations between the Canadian
and U.S. dollar and/or US dollar balances are material. We do not at present,
nor do we plan in the future, to engage in foreign currency transactions to
hedge exchange rate risks but we do convert Canadian funds to US dollars
anticipating US expenditures.

Risk Relating to Personnel

We are dependant on the services of certain key officers and
consultants, namely Brian Fairbank, Kim Niggemann, Max Walenciak and Andrew
Studley, and the loss of these key persons may have a materially adverse effect
on our company.

Not all of our directors and officers have direct training or
experience in geothermal energy projects, and as a result, they may not be fully
aware of all (or any) of the specific requirements related to working within the
industry. Their decisions and choices may not take into account standard
engineering or managerial strategies that geothermal companies commonly use.
Consequently, our operations, earnings and ultimate financial success could
suffer irreparable harm.

Our ability to continue our business, and to develop a
competitive edge in the marketplace, depends, in large part, on our ability to
attract and maintain qualified key management personnel. Competition for such
personnel is intense, and we may not be able to attract and retain such
personnel. Our growth has depended, and in the future will continue to depend,
on the efforts of our key management personnel. Loss of any of these people
could have a material adverse effect on us.

Currently we do not carry key-personnel life insurance.

Shortages of skilled labor, work stoppages or other labor
disruptions at our operations could have an adverse effect on our profitability
and financial condition.

Our continued operations require an adequate number of skilled
workers such as engineers, trades people and equipment operators. We cannot
assure you that we will be able to maintain an adequate skilled labor force or
that our labor expenses will not increase. A shortage of skilled labor may
require us to curtail our planned internal growth or may require us to use less
skilled labor which could adversely affect our ability to construct our capital
projects and/or perform other work.

Conflicts of interest may arise as a result of our directors
and officers being directors and officers of other companies.

Certain of our directors and officers may continue to be
involved in a wide range of business activities through their direct and their
indirect participation in corporations, partnerships or joint ventures.
Situations may arise in connection with potential acquisitions and investments
where the other interests of these directors and officers may conflict with the
interests of our company. Our directors and officers with conflicts of interest
will be subject to and will follow the procedures set out in the applicable
corporate legislation.

11

---

Our articles indemnify our officers and directors against
all costs, charges and expenses incurred by them.

Our Articles contain provisions limiting the liability of our
officers and directors for all acts, receipts, neglects or defaults of
themselves and all of our other officers or directors or for any other loss,
damage or expense incurred by our company which shall happen in the execution of
the duties of such officers or directors, as do indemnification agreements
between us and our directors. Such limitations on liability may reduce the
likelihood of derivative litigation against our officers and directors and may
discourage or deter our shareholders from suing our officers and directors based
upon breaches of their duties to our company, though such an action, if
successful, might otherwise benefit our company and our shareholders.

Risks Related to Investing in our Shares

Trading in our common shares on the TSX Venture Exchange and
the OTC Bulletin Board (OTCBB) is limited and sometimes sporadic. At times it
may be difficult for our shareholders to sell their shares or liquidate their
investments.

The trading price of our shares has been and may continue to be
subject to wide fluctuations. Trading prices of our shares may fluctuate in
response to a number of factors, many of which are beyond our control. In
addition, the stock market in general, and the market for geothermal energy
companies in particular, has experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance
of such companies. These broad market and industry factors may adversely affect
the market price of our shares, regardless of our operating performance.

In the past, following periods of volatility in the market
price of a company's securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs and a diversion of management's attention and resources.

Investors' interests in our Company will be diluted and
investors may suffer dilution in their net book value per share if we issue
additional shares or raise funds through the sale of equity securities.

In the event that we issue additional shares or decide to enter
into joint ventures with other parties in order to raise financing through the
sale of equity securities, investors' interests in our Company will be diluted
and investors may suffer dilution in their net book value per share depending on
the price at which such securities are sold.

There are also outstanding common share purchase warrants and
options (at December 15, 2007) exercisable into 56,282,653 common shares which,
if exercised, would represent approximately 42% of our issued and outstanding
shares. If all of these rights are exercised and all shares issued, such
issuance would cause a reduction in the proportionate ownership and voting power
of all other shareholders. The dilution may result in a decline in the market
price of our shares.

Trading of our stock may be restricted by the Commissions
"Penny Stock" regulations which may limit a stockholder's ability to buy and
sell our stock.

The U.S. Securities and Exchange Commission (the "Commission")
has adopted regulations which generally define "penny stock" to be any equity
security that has a market price (as defined) less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. Our
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than
established customers and "accredited investors". The term "accredited investor"
refers generally to institutions with assets in excess of $5,000,000 or
individuals with a net worth in excess of $1,000,000 or annual income for the
past two years, exceeding $200,000 or $300,000 jointly with their spouse. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document in a form prepared by the SEC which provides information
about penny stocks and the nature and level of

12

---

risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.

U.S. investors could suffer adverse tax consequences as we
are characterized as a Passive Foreign Investment Company (PFIC).

For United States federal income tax purposes, we are a PFIC
because previous and current financings were invested and produced passive
income while the Companys exploration and development evolved. Additionally,
U.S. citizens should review the section entitled "Taxation-U.S. Federal Income
Taxation -Passive Foreign Investment Companies" contained in this Annual report
for a more detailed description of the PFIC rules and how those rules may affect
their ownership of our capital shares.

Since the Company is a PFIC U.S. shareholders should consult a
tax expert and make appropriate tax elections to reduce or eliminate the
following potentially adverse tax consequences:

- tax at the highest ordinary income tax rates in effect during their holding
  period on certain distributions on our capital shares, and gains from the sale
  or other disposition of our capital shares;
- interest on taxes allocable to prior periods; and
- a tax basis of our capital shares increased to fair market value at the
  date of their sale.

Dividends

All of our available funds will be invested to finance the
growth of our business and therefore investors cannot expect and should not
anticipate receiving a dividend on our common shares in the foreseeable
future.

|**ITEM 4** | Information on our Company
|---------- | --------------------------

|A. | History and Development of NGP
|-- | ------------------------------

We were originally incorporated under the laws of the Province
of British Columbia, Canada on April 13, 1995 under the name "Blue Desert Mining
Inc." Since that time, we have had the following name changes:

- On May 25, 2000, to "Canada Fluorspar Inc."
- On February 5, 2001, to "Continental Ridge Resources Inc."
- On May 13, 2003, to "Nevada Geothermal Power Inc."

Our principal place of business is located at Suite 900-409
Granville Street, Vancouver, British Columbia, V6C 1T2, Canada. Our telephone
number is 604-688-1553, and our facsimile number is 604-688-5926.

Our agent in Nevada is Richard W. Harris, of the firm Harris
& Thompson, of 6121 Lakeside Drive, Suite 260, Reno Nevada, 89511.

13

---

Our company is currently a reporting issuer under the
securities laws of the Provinces of British Columbia and Alberta, Canada.

Principal Investments/Divestitures for the Last Three Fiscal
Years

Fiscal2007
    We incurred $12,988,398 in expenses that were
      capitalized as Geothermal property interests. We sold marketable
      securities, the proceeds of which were $197,660.2006
    We incurred $5,123,879 in expenses that were
      capitalized as Geothermal property interests. We sold marketable
      securities, the proceeds of which were $128,500.2005
    We incurred $1,808,000 in expenses that were
      capitalized as Geothermal property interests.


Subsequent to our June 30, 2007 fiscal year end the Company agreed
  to hire the former employees of Fairbank Engineering and simultaneously acquire
  certain assets from Fairbank Engineering Ltd (FEL) for consideration comprising
  of up to 175,000 common shares of the Company. Fairbank Engineering was a geological
  consulting firm owned by Mr. Brian Fairbank, President of NGP.

Current and Planned Capital
Expenditures/Divestitures

Our plan of operations for the next twelve (12) months includes
the following elements:

- Finalize negotiations with qualified Engineering Procurement and
  Construction (EPC) contractors to build up to 35 MW power generation
  capacity at Blue Mountain, Nevada and execute the first year of the
  construction plan.
- Drill 3 production and 3 injection wells, which together with the 2
  production wells already drilled will provide the power required under the
  Purchase Power Agreement (PPA) with Nevada Power.
- Work with government agencies to meet all associated permit
  requirementsBegin construction of the 75 MW transmission line between the
  Blue Mountain generating plant and Sierra Pacific transmission grid at
  Winnemuca, Nevada.
- Meet the conditions precedent to and close the Morgan Stanley construction
  loan.
- Continue evaluating the geothermal resource potential of Pumpernickel,
  Black Warrior and Crump Geyser.Continue evaluating the expansion potential
  of Blue Mountain.
- Complete one deep exploratory well at the Pumpernickel joint venture
  property.

Project Financing -Our cash position as at December,
2007, is adequate to fund our general operating activities through June 30, 2008
and beyond. The $20 million bridge loan with Glitnir Bank, as well as the
construction loan commitment from Morgan Stanley Senior Secured Lending is
estimated to be adequate for building up to 35 MW electricity generation at Blue
Mountain. As a result, we do not intend to seek additional financing during
2008. However, some equity may be raised through the issuance of shares
associated with the exercise of options and outstanding warrants.

Permitting -Our permitting activities are continuing as
projects develop. For more detailed information respecting the status of
required permits for our Blue Mountain project, please refer to the heading
"Property, plants and equipment" under Item 4.D. below.

Potential Acquisitions -We intend to continue our
growth through the acquisition of leasehold interests in properties and/or
property rights that we believe will add to the value of our geothermal
resources.

Public Takeover Offers

14

---

During the previous fiscal year, we have not received any
public takeover offers from third parties, nor have we made any such takeover
offers.

|B. | Business Overview
|-- | -----------------

We are engaged in the business of developing renewable
geothermal energy projects in Nevada and Oregon, to provide electrical energy
that is clean, efficient and sustainable, in order to meet existing and future
demands for power.

We hold 100% leasehold interests in three Nevada projects  our
Blue Mountain, Pumpernickel and Black Warrior projects, and one Oregon project 
our Crump Geyser project. The Pumpernickel project is subject to an earn in
interest by Sierra Geothermal Power Inc. (Sierra). Sierra will earn its 50%
interest by making certain payments to NGP and executing $5 million exploration
by year end 2008. At December 31, 2007 Sierra is up to date with its
commitments.

Geothermal energy is a clean, renewable and a generally
sustainable energy source that, because it does not utilize combustion in the
production of electricity, releases significantly lower levels of emissions,
principally steam, than those that result from energy generation based on the
burning of fossil fuels. Geothermal energy is derived from the natural heat of
the earth when water comes sufficiently close to hot molten rock to heat the
water to temperatures of 300 degrees Fahrenheit (150 degrees Celsius) or more.
The heated geothermal fluid then ascends toward the surface of the earth where,
if geological conditions are commercially suitable, it can be extracted by
drilling geothermal wells.

The energy necessary to operate a geothermal power plant is
typically obtained from several such wells which are drilled using established
technology that is in some respects similar to that employed in the oil and gas
industry. Geothermal production wells are normally located within approximately
one to two miles of the power plant, as geothermal fluids cannot be transported
economically over longer distances due to heat and pressure loss. The geothermal
reservoir is a renewable source of energy if natural ground water sources and
re-injection of extracted geothermal fluids allows replenishing the geothermal
reservoir following the withdrawal of geothermal fluids, and if the well field
is properly operated. Geothermal energy projects typically have high capital
costs, partly as a result of the costs attributable to well field development,
but tend to have significantly lower variable operating costs, principally
consisting of



15

---

maintenance expenditures, rather than fossil fuel- fired power
plants that require ongoing fuel expenses.

Two power generation technologies dominate geothermal
electricity generation. We have yet to determine which method is best suited to
our resource at Blue Mountain. The two techologies are binary and flash.

In a "binary system" geothermal fluid, either hot water (also
called brine) or steam or both, is extracted from the underground reservoir and
flows from the wellhead through a gathering system of insulated steel pipelines
to a heat exchanger, which heats a secondary working fluid that has a low
boiling point. This is typically an organic fluid, such as isopentane or
isobutane, which is vaporized and is used to drive the turbine. The organic
fluid is then condensed in a condenser which may be cooled by air or by water
from a cooling tower.



In the second technology, a "flash system", geothermal fluid is
extracted from the underground reservoir and flows from the wellhead through a
gathering system of insulated steel pipelines to flash tanks and/or separators.
There, the steam is separated from the brine and is sent to a demister in the
plant, where any remaining water droplets are removed. This produces a stream of
dry saturated steam, which drives a turbine generator to produce electricity. In
some cases, the brine at the outlet of the separator is flashed a second time
(dual flash), providing additional steam at lower pressure used in the low
pressure section of the steam turbine to produce additional electricity. Steam
exhausted from the steam turbine is condensed in a surface or direct contact
condenser cooled by cold water from a cooling tower. The non-condensable gases
(such as carbon dioxide) are removed through the removal system in order to
optimize the performance of the steam turbines. The condensate is used to
provide make-up water for the cooling tower. The hot brine remaining after
separation of steam is injected back into the geothermal resource through a
series of injection wells. In some instances, the wells directly produce dry
steam (the flashing occurring under ground). In such cases, the steam is fed
directly to the steam turbine and the rest of the system is similar to the flash
power plant described above.

16

---



Nature of companys operations

To date, we have not commenced commercial operations. Our
activities have focussed on the development of renewable geothermal energy
projects with an emphasis on the exploration and development of supporting
production of up to 35 megawatts (gross), or more, of geothermal power at Blue
Mountain, Nevada.

Reference is made to the heading "Property, plants and
equipment" under Item 4.D. below for information relating to development of
Blue Mountain, Pumpernickel, Black Warrior and Crump Geyser geothermal energy
projects.

Description of the Market

The geothermal energy industry in the United States experienced
significant growth in the 1970s and 1980s, followed by a period of consolidation
of owners and operators in the 1990s. The industry, once dominated by large oil
companies and investor-owned electric utilities, now includes several
independent power producers. During the 1990s, growth and development in the
geothermal energy industry occurred primarily in foreign markets, with minimal
growth and development in the United States. Since 2001, there has been renewed
interest in geothermal energy in the United States as production costs for
electricity generated from geothermal resources have become more competitive
relative to fossil fuel-based electricity generation, due to the increasing cost
of natural gas, and more prevalent legislative and regulatory incentives, such
as state renewable portfolio standards.

Electricity generation from geothermal resources is currently
concentrated in California, Nevada, Hawaii and Utah, although there are
opportunities for development in other states such as Alaska, Arizona, Idaho,
New Mexico and Oregon where there are geothermal resources and, in some cases, a
favorable regulatory environment.

An additional factor fueling recent growth in the renewable
energy industry is global concern about the environment. Power plants that use
fossil fuels generate higher levels of air pollution and their emissions have
been linked to acid rain and global warming. In response to an increasing demand
for green energy, many countries have adopted legislation requiring, and
providing incentives for, electric utilities to sell electricity generated from
renewable energy sources.

17

---

Raw Materials, Suppliers and Subcontractors

We do not rely on any one supplier for the raw materials used
in our activities, as all of such raw materials are readily available from
various suppliers.

Seasonality

Project work in Nevada, including drilling and other surface
surveys can be conducted at any time of year. Winter weather is cold, but
precipitation is low and snow does not accumulate significantly. Topography is
moderate.

In 2006, widespread flooding occurred in low valley areas in
Oregon as a result of unusually prolonged winter and spring rains. Most of the
flooding occurred east of our areas of interest, but could impact future efforts
at our Crump Geyser property should similar conditions be encountered in the
future.

Dependence

In contemplation of locating appropriate geothermal resources
at Blue Mountain, we sought out and were awarded a power purchase contract. On
August 18, 2006, our wholly-owned subsidiary Nevada Geothermal Power Company,
entered into a long-term firm portfolio energy credit and renewable power
purchase agreement with Nevada Power Company, an operating electric public
utility. Pursuant to the terms of this agreement, we will supply and deliver
electrical energy (measured in MWh) that is generated from our Faulkner 1 plant
to be constructed at the Blue Mountain project in Humboldt County, Nevada. We
have agreed that all of our energy from this phase 1 project will be dedicated
exclusively to the utility for a period of twenty years commencing immediately
following the commercial operation date. Commercial operation means that the
Faulkner 1 plant has been constructed and has delivered energy to the Winnemucca
substation or another new switching or transmission station mutually agreeable
to us and to the utility. We anticipate that the Faulkner 1 plant will commence
operations in late 2009 or early 2010.

Marketing

Pursuant to the terms of the August 18, 2006 power purchase
agreement described above, we have agreed to provide all geothermal energy
generated at the yet-to-be-built phase 1 Faulkner 1 plant to Nevada Power
Company.

Competition

The power generation industry is characterized by intense
competition from electric utilities, other power producers, and marketers. In
recent years, the United States in particular has seen increasing competition in
power sales, in part due to excess capacity in a number of U.S. markets and an
emphasis on short-term sales. While the current demand for renewable energy is
strong, this increased competition may contribute to a reduction in electricity
prices for new renewable projects.

We also compete with companies engaged in the power generation
business from renewable energy sources other than geothermal energy, such as
wind power, solar power and hydro-electric power.

Regulation of the Electric Utility Industry

The following is a summary overview of the electric utility
industry and applicable federal and state regulation, and should not be
considered a full statement of the law or all issues pertaining thereto.

18

---

PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978 (PURPA)

The Public Utility Regulatory Policies Act of 1978 (PURPA)
provides certain benefits described below, if a project is a Qualifying
Facility. There are two types of Qualifying Facilities: cogeneration facilities
and small power production facilities. A small power production facility is a
Qualifying Facility if (i) the facility does not exceed 80 megawatts, (ii) the
primary energy source of the facility is biomass, waste, renewable resources, or
any combination thereof, and 75% of the total energy input of the facility is
from these sources; and (iii) the facility has filed with the Federal Energy
Regulatory Commission (FERC) a notice of self-certification of qualifying
status, or has filed with FERC an application for FERC certification of
qualifying status, that has been granted. The 80 megawatt size limitation,
however, does not apply to certain types of facility certified prior to 1995 and
designated as eligible under Section 3(17)(E) of the Federal Power Act
(FPA).

PURPA exempts Qualifying Facilities from regulation under the
Public Utility Holding Company Act of 1935 (PUHCA) and most provisions of the
Federal FPA and state laws relating to the financial, organization and rate
regulation of electric utilities. In addition, FERCs regulations promulgated
under PURPA require that electric utilities purchase electricity generated by
Qualifying Facilities at a rate based on the purchasing utilitys incremental
cost of purchasing or producing energy (also known as avoided cost).

Pursuant to the Energy Policy Act of 2005, FERC has recently
issued a final rule that will require Qualifying Facilities to obtain
market-based rate authority pursuant to the FPA for sales of energy or capacity
either (i) from facilities larger than 20 MW in size; (ii) pursuant to a
contract executed after March 17, 2006 that is not a contract made pursuant to a
state regulatory authoritys implementation of PURPA; or (iii) not pursuant to
another provision of a state regulatory authoritys implementation of PURPA. The
practical effect of this final rule is to require Qualifying Facilities that are
larger than 20 MW in size that seek to engage in non-PURPA sales of power (i.e.
power that is sold in a manner that is not consistent with state implementation
of PURPA) to obtain market-based rate authority from FERC for these non-PURPA
sales.

The Energy Policy Act of 2005 also allows FERC to terminate a
utility's obligation to purchase energy from Qualifying Facilities upon a
finding that Qualifying Facilities have non-discriminatory access to either (i)
independently administered, auction-based day ahead and real time markets for
energy and wholesale markets for long-term sales of capacity; (ii) transmission
and interconnection services provided by a FERC-approved regional transmission
entity and administered under an open-access transmission tariff that affords
non-discriminatory treatment to all customers, and competitive wholesale markets
that provide a meaningful opportunity to sell capacity and energy, including
long and short term sales; or (iii) wholesale markets for the sale of capacity
and energy that are at a minimum of comparable competitive quality as markets
described in (i) and (ii) above. FERC has recently proposed a rule to implement
these provisions of the Energy Policy Act of 2005. This proposed rule, if
enacted, would eliminate the mandatory purchase obligation of utilities that are
members of four regional transmission organizations. None of our projects sell
power pursuant to contracts with utilities in any of these four regional
transmission organizations. The proposed rule also would create a rebuttable
presumption that a utility provides non-discriminatory access if it has an open
access transmission tariff in compliance with FERCs pro forma open access
transmission tariff, which is currently under review by FERC to ensure that its
provisions prevent undue discrimination in the provision of transmission
service. Further, the proposed rule would provide a procedure for utilities that
are not members of the four named regional transmission organizations to file to
obtain relief from the mandatory purchase obligation on a service territory-wide
basis, and would establish procedures for affected Qualifying Facilities to seek
reinstatement of the purchase obligation. The proposed rule would protect a
Qualifying Facilitys rights under any contract or obligation involving
purchases or sales that are entered into after August 8, 2005 but before FERC
has determined that the contracting utility is entitled to relief from the
mandatory purchase obligation. The proposed rule would also protect a Qualifying
Facility's rights under any contract or obligation for the

19

---

sale of energy in effect or pending approval before the
appropriate state regulatory authority or non-regulated electric utility on
August 8, 2005.

In addition, the Energy Policy Act of 2005 eliminates the
restriction on utility ownership of a Qualifying Facility. Prior to the Energy
Policy Act of 2005, electric utilities or electric utility holding companies
could not own more than a 50% equity interest in a Qualifying Facility. Under
the Energy Policy Act of 2005, electric utilities or holding companies may own
up to 100% of the equity interest in a Qualifying Facility.

We anticipate that our projects will meet all of the criteria
required for Qualifying Facilities under PURPA.

PUBLIC UTILITY HOLDING COMPANY ACT (PUHCA)

The Public Utility Holding Company Act (PUHCA) has been
repealed, effective February 8, 2006, pursuant to the Energy Policy Act of 2005.
Although PUHCA was repealed, the Energy Policy Act of 2005 created a new Public
Utility Holding Company Act of 2005 (PUHCA 2005). Under PUHCA 2005, the books
and records of a utility holding company, its affiliates, associate companies,
and subsidiaries are subject to FERC and state commission review with respect to
transactions that are subject to the jurisdiction of either FERC or the state
commission. If a company is a utility holding company solely with respect to
Qualifying Facilities, exempt wholesale generators, or foreign utility
companies, it will not be subject to review of books and records by FERC,
provided that the company files an appropriate exemption form with FERC. By
virtue of being Qualifying Facilities that make only wholesale sales of
electricity, Qualifying Facilities already are not subject to state commissions
rate, financial and organizational regulations and, therefore, in all likelihood
would not be subject to any review of their books and records by state
commissions pursuant to PUHCA 2005.

FEDERAL POWER ACT (FPA)

Pursuant to the FPA, the FERC has exclusive rate-making
jurisdiction over wholesale sales of electricity and transmission in interstate
commerce. These rates may be based on a cost of service approach or may be
determined on a market basis through competitive bidding or negotiation.
Qualifying Facilities are generally exempt from the FPA. If any of the projects
fails to qualify as a Qualifying Facility, such project could also become
subject to the full scope of the FPA and applicable state regulations. The
application of the FPA and other applicable state regulations to any of our
projects could require our operations to comply with an increasingly complex
regulatory regime that may be costly and greatly reduce our operational
flexibility.

State Regulation

Qualifying Facilities that engage in wholesale sales of
electricity to public utilities in Nevada, are not subject to rate, financial
and organizational regulations applicable to electric utilities in those states.
We intend to sell electrical output under power purchase agreements to electric
utilities (such as Nevada Power Company), which are regulated by their
respective state public utility commission. Nevada Power Company is regulated by
the Public Utilities Commission of Nevada.

Permits

Our drilling and exploration activities require us to comply
with numerous federal, regional, state and local statutory and regulatory
environmental standards and to maintain numerous environmental permits and
governmental approvals. We believe that we are in substantial compliance with
such laws and regulations relating to our exploration activities. However, such
laws and regulations may change in the future in a manner which will increase
the burden and cost of compliance.

20

---

Environmental Laws and Regulations

We are subject to the provisions of the Clean Air Act,
Endangered Species Act, Clean Water Act, Rivers and Harbors Act, National
Historic Preservation Act, National Pollutant Discharge Elimination System,

Resource Conservation and Recovery Act, the Nevada Revised
Statutes, Nevada Administrative Codes and federal regulations.

Geothermal operations can produce significant quantities of
brine, and scale which builds up on metal surfaces in our equipment with which
the brine comes into contact. These waste materials, most of which are
re-injected into the subsurface, can contain various concentrations of hazardous
materials, including arsenic, lead, and naturally occurring radioactive
materials. We also use various substances, including isobutane, isopentane, and
industrial lubricants, that could become potential contaminants and are
generally flammable. As a result, our projects are subject to numerous federal,
state and local statutory and regulatory standards relating to the use, storage,
fugitive emissions and disposal of hazardous substances. The cost of any
remediation activities in connection with a spill or other release of such
contaminants could be significant.

Although we are not aware of any mismanagement of these
materials, including any mismanagement prior to the acquisition of our projects,
that has materially impaired any of the project sites, disposal or release of
these materials onto project sites, other than into permitted injection wells,
could result in material cleanup requirements or other responsive obligations
under applicable environmental laws.

At this time, the company does not believe that the cost of
compliance at the federal, state and local levels will be significant.

Incentive Programs

The United States extended a tax subsidy and increased the
amount of the tax subsidy for companies that use geothermal steam or fluid to
generate electricity as part of the Energy Policy Act of 2005 that became law on
August 8, 2005. The tax subsidy is a production tax credit of 1.9 cents per
kilowatt hour. It may be claimed for ten years on the electricity output of new
geothermal power plants put into service now until December 31, 2008. The
Company may be affected by an extension (or not) of the subsidy beyond 2008.

|C. | Organizational Structure
|-- | ------------------------

As at the date of this Annual Report, we have the following
wholly-owned subsidiaries:

|1. | Nevada Geothermal Power Company (NGPC formerly Noramex
      Corp.), a company incorporated in the State of Nevada;                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                               
|2. | Blue Mountain Power Company Inc. (formerly Powertec
      Development Company Ltd.), a company incorporated in the Province of
      British Columbia, Canada;
|   |                                                                                                                                                               
|3. | Desert Valley Gold Co., a company incorporated in the
      State of Nevada;                                                                                  
|   |                                                                                                                                                               
|4. | NGP Blue Mountain Holdco LLC (NGP Holdco), a limited
      liability company incorporated in the State of Delaware;                                         
|   |                                                                                                                                                               
|5. | NGP Blue Mountain Holdco 11 LLC, a limited liability
      company incorporated in the State of Delaware                                                      
|   |                                                                                                                                                               
|6. | NGP Blue Mountain Holdco 111 LLC, a limited liability
      company incorporated in the State of                                                              

21

---

|   | Delaware                                                                                                     
|-- | -------------------------------------------------------------------------------------------------------------
|   |                                                                                                              
|7. | NGP Blue Mountain Holdco 1V LLC, a limited liability
      company incorporated in the State of Delaware     
|   |                                                                                                              
|8. | NGP Blue Mountain 1 LLC (NGP1), a limited liability
      company incorporated in the State of Delaware;   
|   |                                                                                                              
|9. | NGP Blue Mountain 11 LLC (NGP11), a limited liability
      company incorporated in the State of Delaware;  
|   |                                                                                                              
|10 | NGP Blue Mountain 111 LLC (NGP111), a limited liability
      company incorporated in the State of Delaware;
|   |                                                                                                              
|11 | NGP Blue Mountain 1V LLC (NGP1V), a limited liability
      company incorporated in the State of Delaware;  

|D. | Property, Plants and Equipment
|-- | ------------------------------

Executive Offices

We rent approximately 3,600 sq. ft. of executive and
administrative office space, located at Suite 900-409 Granville Street,
Vancouver, B.C., V6C 1T2, for the sum of approximately $7,300 per month.

In Winnemucca, Nevada, we rent approximately 1,200 sq. ft. of
office space located at 657 Anderson Street, Winnemucca, Nevada, 89445-3657, at
a cost of US $650 per month.

In Reno, Nevada, we also rent approximately 300 sq. ft. of
office space located at 1755 East Plumb Lane, Suite 101, Reno, Nevada, 89502, at
a cost of US $1,450 per month.

We believe that our current office arrangements provide
adequate space at this time.

Area of Interest and Interests Held

The geothermal systems of Nevada and Oregon are located in the
region known as the Basin and Range, an area linked to tectonic extension,
rifting and high heat flow. The Earth's crust in north-western Nevada is the
thinnest in the Basin and Range and is characterized by extensive deep faulting
and fracturing, which allows water to circulate in the hot, primarily volcanic
rock formations. All of our property interests lay in the Basin and Range.

Nevada Geothermal Power Company, our indirectly held,
wholly-owned subsidiary, is the exploration manager for all of our projects. It
holds all lease rights, except those held by NGP1 relating to Blue Mountain, to
federal lands and patented lands, as well as private lands. The Federal Bureau
of Land Management ("BLM") is empowered to grant lease rights on federal lands.
The Nevada Land and Resource Company, LLC ("NLRC") grants leases covering
patented lands, while other lessors such as Burlington Northern Santa Fe
("BNSF"), JHG, LLC c/o Will DeLong ("DeLong"), The Crawford Farm ("Crawford"),
Newmont USA Limited, dba Newmont Mining Corporation ("Newmont"), Ormat Nevada,
Inc. ("Ormat"), 1988 Stabb Living Trust ("Stabb"), LX Ranch Inc. ("LX Ranch"),
O'Keeffe Ranch ("O'Keeffe Ranch") and RLF Nevada Properties, LLC ("RLF") have
granted leases to us on private lands. All leases grant surface rights, while
those leases granted by NLRC and RLF also grant water rights.

Location

22

---



BLUE MOUNTAIN PROJECT

All assets relating to the Blue Mountain project, including
leases, were contributed to NPG1 during 2007. The Blue Mountain property is
located in north-central Nevada, 32 km (20 mi) west of Winnemucca, in Humboldt
County. Blue Mountain is 24 km (15 mi) from the power grid servicing all of the
major power consumers in northern Nevada with interconnections to California and
Idaho. From Winnemucca, the property is accessible year-round via Jungo Road, an
improvised gravel road that passes to the south of Blue Mountain. At a point
just west of Blue Mountain, a dirt road off Jungo Road leads north, about 5.5 km
(3.5 mi) to the site.

Our plans call for the construction and operation of a power
plant at Blue Mountain, which will be named the "Faulkner 1 Power Plant". It is
intended to be a state-of-the-art, near zero-emission, water-cooled, geothermal
plant with >150°C (300°F) thermal water supplied by up to seven production
wells. Geothermal water will be re-injected to maintain reservoir pressure and
productivity. Negotiations have commenced regarding construction of the Faulkner
1 plant, and an EPC contractor will be selected shortly. The technology
evaluation process is nearing completion.

BLUE MOUNTAIN LEASES

In July 2003, we acquired a 100% interest in and to the share
capital of Blue Mountain Company, in a non-arms length transaction, from the
shareholders of Blue Mountain Company, who included Brian Fairbank, Jack
Milligan, and Mr. Fairbank's wholly-owned companies Tywell Management Inc. and
Fairbank Engineering Ltd. As consideration for the acquisition, we issued an
aggregate of 5,500,000 of our common shares, of which Mr. Fairbank received
3,932,000 shares, Mr. Milligan received 510,000 shares, and Frank Diegmann,
formerly a major shareholder of NGP, received 407,000 shares.

At the time of acquisition, Blue Mountain Company held, through
its wholly-owned subsidiary Nevada Geothermal Power Company, geothermal leases
covering 100% of 7,000 acres. NGPC subsequently acquired geothermal leases
covering an additional 3,984.3 acres.

Particulars with respect to the Blue Mountain leases are as
follows:

23

---

Owner
    Lease No.
    Sections
    Acreage
    Effective Date
    Expiry Date1
    BNSF
    187556
    15, 23
    1,280.00
    March
      1, 1994
    February 28, 20142
    NLRC
    189093
    1, 11,
      25, 35
    2,532.28
    March
      31, 2003
    March
      30, 20133
    BLM
    N58196
    14
    663.76
    April
      1, 1994
    March
      31, 20444
    BLM
    N77668
    10, 12, 22,
    3,297.94
    August 1, 2004
    July 31, 201424, 265
    BLM
    N80086
    16
    650.32
    August
      1, 2006
    July
      31, 20166
    BLM
    N80159
    28
    640.00
    August
      1, 2006
    July
      31, 20167
    Crawford
    Private
    21
    640.00
    January 10, 2006
    January 9, 20168
    JHG,LLC (DeLong)
    Private
    27
    640.00
    April 15, 2006
    April 14, 20169
    RLF
      Total
    Private
    13
    640.00
      10,984.30
    October 3, 2006
    March
      30, 2013


| | 1. | Lease No. 187556 with BNSF
| | -- | --------------------------

This lease was renewed for consideration of US $6,400. To keep
this lease in good standing we must pay BNSF rental payments of US $5.00 per
acre, per year.

We are committed to pay the following royalties to BNSF:

| | a) | 5% of the proceeds from the sale of any geothermal
      energy, less any sales, excise or other taxes and any cost to us of any
      transportation or transmission to the point of sale;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 2% of the proceeds from the sale of by-products, less
      taxes and transportation costs;                                                                                                
| | c) | 1.5%-2.0% of the proceeds from the sale of electric
      power, less taxes and transportation costs:                                                                                      
| |    | i.                                                                                                                                                                                         
| |    | ii.                                                                                                                                                                                        
| |    | iii.                                                                                                                                                                                       

This lease includes the exclusive right to use the Leased
Premises for the slant drilling of wells having their surface locations upon
either the Leased Premises or adjoining land and having their well bores passing
through the subsurface of the leased premises.

We are committed to paying the following royalties from each
slant well drilled:

| | a) | 3% of the gross proceeds for geothermal energy used for
      electric or non-electric purposes.                                                                
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 5% of the proceeds at point of sale from the sale of
      by-products or substances other than geothermal energy which are produced
      in paying quantities.

| | 2. | NLRC lease No. 189093
| | -- | ---------------------

This lease was granted for consideration of US $5,117.60,
representing US $2.00 per acre for each acre that comprised the original lease.
To keep the lease in good standing we must:

24

---

| | a) | Pay NLRC the following rental payments per acre, per
      year, to begin on the first anniversary of the Effective Date:
| | -- | -------------------------------------------------------------------------------------------------------------------------
| |    | i.                                                                                                                       
| |    | ii.                                                                                                                      
| |    | iii.                                                                                                                     
| |    |                                                                                                                          
| | b) | Expend the following amounts in work commitments
      per lease year:                                                   
| |    | i.                                                                                                                       
| |    | ii.                                                                                                                      
| |    | iii.                                                                                                                     
| |    | iv.                                                                                                                      
| |    | v.                                                                                                                       

If in any year, we do not fulfill the
work commitments, we must pay NLRC the sum equal to the difference between the
work commitment obligation and the actual work expenditures for the lease
year.

We have the option to purchase the surface rights any time on
or before the fifth anniversary of the Effective Date for US $100.00 per acre.
Beginning on and including the sixth anniversary of the Effective Date, this
purchase price will be increased by 3% annually. This option to purchase the
surface rights is subject to the royalties payable to NLRC.

We are committed to pay the following royalties to NLRC:

| | a. | 3.5% of the gross revenues from the availability, sale or
      use of electricity from an electrical power generating plant built on or
      utilizing geothermal resources from the property;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | 10% of the gross proceeds from the sale or use of any
      geothermal resources or associated energy consumed, processed, sold,
      shipped or utilized for non-electric commercial purposes;
| | c. | 10% of the gross proceeds from the sale or use of any
      geothermal resources produced on the property and utilized for the
      production of a product other than electricity.            

We have the option to purchase this
royalty for US $1,000,000 at any time not later than 6 months following the
commencement of commercial production.

| | 3. | BLM Lease No. 58196
| | -- | -------------------

This lease has been determined by BLM to be capable of
commercial production.

We are committed to pay BLM the following royalties:

| | a) | 10% from the sale of steam, heat or energy;
| | -- | -------------------------------------------
| | b) | 5% from the sale of by products;           
| | c) | 5% from the sale of de-mineralized
  water.

25

---

A minimum royalty of US $2.00 per acre shall be due for any
lease year beginning on or after BLM determines we have a well capable of
commercial production but we have not begun actual production.

| | 4. | BLM Lease No. 77668
| | -- | -------------------

To keep this lease in good standing, during the first five
years of the primary term, the Company is required to make rental payments of US
$1.00 per acre. During years six through ten, the Company must make diligent
exploration expenses as follows:

- Year 6 - US $4.00 per acre
- Year 7  US $6.00 per acre
- Year 8  US $8.00 per acre
- Year 9 - US $10.00 per acre
- Year 10  US $12.00 per acre

Approved expenditures that exceed the minimum in any one year
will be applied to subsequent years. If the total expenditures do not meet the
requirement for any lease year, the diligent exploration expenditure requirement
can be met by paying an additional rent of US $3.00 per acre. If the diligent
exploration requirement is not met and the additional rent is not paid, BLM will
cancel the lease.

We are committed to pay BLM the following royalties:

| | a) | 10% from the sale of steam, heat or energy;
| | -- | -------------------------------------------
| | b) | 5% from the sale of by products;           
| | c) | 5% from the sale of de-mineralized
  water.

A minimum royalty of US $2.00 per acre shall be due for any
lease year beginning on or after BLM determines we have a well capable of
commercial production but we have not begun actual production.

| | 5. | BLM Lease No. 80086
| | -- | -------------------

To keep this lease in good standing, during the first five
years of the primary term, the Company is required to make rental payments of US
$1.00 per acre. During years six through ten, the Company must make diligent
exploration expenses as follows:

- Year 6 - US $4.00 per acre
- Year 7  US $6.00 per acre
- Year 8  US $8.00 per acre
- Year 9 - US $10.00 per acre
- Year 10  US $12.00 per acre

Approved expenditures that exceed the minimum in any one year
will be applied to subsequent years. If the total expenditures do not meet the
requirement for any lease year, the diligent exploration expenditure requirement
can be met by paying an additional rent of US $3.00 per acre. If the diligent
exploration requirement is not met and the additional rent is not paid, BLM will
cancel the lease.

We are committed to pay BLM the following royalties:

| | a) | 10% for the sale of steam, heat or energy;
| | -- | ------------------------------------------
| | b) | 5% for the sale of by
products;           

26

---

| | c) | 5% for the sale of de-mineralized
water.
| | -- | ----------------------------------------

A minimum royalty of US $2.00 per acre shall be due for any
lease year beginning on or after BLM determines we have a well capable of
commercial production but we have not begun actual production.

| | 6. | BLM Lease No. 80159
| | -- | -------------------

To keep this lease in good standing, during the first five
years of the primary term, the Company is required to make rental payments of US
$1.00 per acre. During years six through ten, the Company must make diligent
exploration expenses as follows:

- Year 6 - US $4.00 per acre
- Year 7  US $6.00 per acre
- Year 8  US $8.00 per acre
- Year 9 - US $10.00 per acre
- Year 10  US $12.00 per acre

Approved expenditures that exceed the minimum in any one year
will be applied to subsequent years. If the total expenditures do not meet the
requirement for any lease year, the diligent exploration expenditure requirement
can be met by paying an additional rent of US $3.00 per acre. If the diligent
exploration requirement is not met and the additional rent is not paid, BLM will
cancel the lease.

We are committed to pay BLM the following royalties:

| | a) | 10% for the sale of steam, heat or energy;
| | -- | ------------------------------------------
| | b) | 5% for the sale of by products;           
| | c) | 5% for the sale of de-mineralized
water.  

A minimum royalty of US $2.00 per acre shall be due for any
lease year beginning on or after BLM determines we have a well capable of
commercial production but we have not begun actual production.

| | 7. | Crawford Farm Lease
| | -- | -------------------

This lease was granted for consideration of US $2,560.00,
representing US $4.00 per acre for each acre of the property. To keep this lease
in good standing, we must:

| | a) | Pay Crawford US $4.00 per acre per year beginning on the
      first anniversary of the Effective Date, and on each subsequent
      anniversary:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                  
| | b) | Expend the following amounts in work commitments per
      lease year:                                                                           
| |    | i.                                                                                                                                               
| |    | ii.                                                                                                                                              
| |    | iii.                                                                                                                                             
| |    | iv.                                                                                                                                              
| |    | v.                                                                                                                                               

If in any year, we do not fulfill the
work commitments, we must pay Crawford the sum equal to the difference between
the work commitment obligation and the actual work expenditures for the lease
year.

27

---

We have the option to purchase the surface rights any time on
or before the fifth anniversary of the Effective Date for US $125.00 per acre.
Beginning on and including the sixth anniversary of the Effective Date, this
purchase price will be increased by 3% annually. This option to purchase the
surface rights is subject to the royalties payable to Crawford.

We are committed to pay the following royalties to
Crawford:

| | a) | 3% of the gross revenues from the availability, sale or
      use of electricity from an electrical power generating plant built on or
      utilizing geothermal resources from the property;  
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 10% of the gross proceeds from the sale or use of any
      geothermal resources or associated energy consumed, processed, sold,
      shipped or utilized for non-electric commercial purposes;
| | c) | 10% of the gross proceeds from the sale or use of any
      geothermal resources produced on the property and utilized for the
      production of a product other than electricity.            

We have the option to buy 1.5 % of this
royalty for US $200,000 at any time not later than 6 months following the
commencement of commercial production.

| | 8. | DeLong
| | -- | ------

This lease was granted for consideration of US $2,560.00,
representing US $4.00 per acre for each acre of the property. To keep this lease
in good standing, we must:

| | a) | Pay DeLong US $4.00 per acre per year beginning on the
      first anniversary of the Effective Date, and on each subsequent
      anniversary.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                
| | b) | Expend the following amounts in work commitments per
      lease year:                                                                         
| |    | i.                                                                                                                                             
| |    | ii.                                                                                                                                            
| |    | iii.                                                                                                                                           
| |    | iv.                                                                                                                                            
| |    | v.                                                                                                                                             

If in any year, we do not fulfill the
work commitments, we must pay DeLong the sum equal to the difference between the
work commitment obligation and the actual work expenditures for the lease
year.

We are committed to pay the following royalties to DeLong:

| | a) | 3% of the gross revenues from the availability, sale or
      use of electricity from an electrical power generating plant built on or
      utilizing geothermal resources from the property;  
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 10% of the gross proceeds from the sale or use of any
      geothermal resources or associated energy consumed, processed, sold,
      shipped or utilized for non-electric commercial purposes;
| | c) | 10% of the gross proceeds from the sale or use of any
      geothermal resources produced on the property and utilized for the
      production of a product other than
electricity.            

28

---

| | 9. | RLF
| | -- | ---

Effective October 3, 2006, RLF Nevada Properties, LLC purchased
Section 13 of Lease No. 189093 from the NLRC, which maintains the Companys
lease agreement terms including the effective date of this lease as at March 31,
2003.

| | a) | Pay RLF the following rental payments per acre, per year,
      to begin on the first anniversary of the original Effective Date of the
      NLRC Lease No. 189093 (which is March 31, 2003):
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | i.                                                                                                                                                                                            
| |    | ii.                                                                                                                                                                                           
| |    | iii.                                                                                                                                                                                          
| |    |                                                                                                                                                                                               
| | b) | Expend the following amounts in work commitments per
      lease year:                                                                                                                        
| |    | i.                                                                                                                                                                                            
| |    | ii.                                                                                                                                                                                           
| |    | iii.                                                                                                                                                                                          
| |    | iv.                                                                                                                                                                                           
| |    | v.                                                                                                                                                                                            

If in any year, we do not fulfill the
work commitments, we must pay NLRC the sum equal to the difference between the
work commitment obligation and the actual work expenditures for the lease
year.

We have the option to purchase the surface rights any time on
or before the fifth anniversary of the Effective Date for US $100.00 per acre.
Beginning on and including the sixth anniversary of the Effective Date, this
purchase price will be increased by 3% annually. This option to purchase the
surface rights is subject to the royalties payable to RLF.

We are committed to pay the following royalties to RLF:

| | a. | 3.5% of the gross revenues from the availability, sale or
      use of electricity from an electrical power generating plant built on or
      utilizing geothermal resources from the property;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | 10% of the gross proceeds from the sale or use of any
      geothermal resources or associated energy consumed, processed, sold,
      shipped or utilized for non-electric commercial purposes;
| | c. | 10% of the gross proceeds from the sale or use of any
      geothermal resources produced on the property and utilized for the
      production of a product other than electricity.            

We have the option to purchase this
royalty for US $1,000,000 at any time not later than 6 months following the
commencement of commercial production.

29

---

Unit Agreement

The above leases are the subject of a Unit Agreement for the
Development and Operation of the Blue Mountain Unit Area, bearing an Effective
Date of June 1, 2006. The purpose of this Unit Agreement is to create a
contiguous area which allows a cooperative plan of development or operation and
to more properly conserve natural resources and prevent waste. The United States
Department of the Interior approved this agreement, with the above mentioned
effective date, on September 8, 2006.

Description, History and Development

A number of wells drilled around Blue Mountain have intersected
hot water, suggesting that there is a large volume of high temperature fluid
flowing up along high angle fractures. Available thermal gradient and
geological/structural information indicates that the "deeper hotter" source
waters probably originate from 4,000 to 6,000 feet below the surface, according
to a third party consulting firm (Thermochem Inc.), over a large area west of
the shallow thermal anomaly, migrating upward in a series of well known,
north-south and north-easterly trending faults.

In the summer of 2004 eight thermal gradient holes were drilled
to help define the thermal anomaly, with geothermal gradients in excess of
400°C/km (1,210°F/mi) on the west side of Blue Mountain, covering an area of
approximately 10.4 square km (4 square mi)

The results of the thermal water chemistry from a February 2005
flow test at slim well DB-2 indicated the presence of a high temperature parent
reservoir, possibly as high as 250°C (480°F). The geothermal waters supplying
the observed moderate temperature zone of around 160°C (320°F) in DB-2 are
interpreted to be directly connected with the reservoir with little mixing of
other fluids.

In August, 2005, a ground magnetic survey was completed
covering approximately 30 square km (11 square mi).

In January 2006, a detailed gravity survey was completed by
Quantech Geosciences of Reno, Nevada. The gravity survey effectively mapped the
topography of subsurface bedrock and outlined buried faults.

The geophysical data has been used in planning the location of
both the production wells and water wells.

Again in January, 2006, we completed a major environmental
assessment of our Blue Mountain project, in order to obtain permits for eight
initial production wells, and other deep exploration drilling sites. Results
from the assessment concluded that there are no impediments to drilling. The
required permits were subsequently obtained from the BLM in February, 2006.

In July 2006, two additional thermal gradient holes had been
drilled: TG-7 was completed to a depth of 503 meters (1,650 feet) with a maximum
temperature of 133°C (271°F); TG-12 was completed to 160 meters (525 feet) with
a temperature of 76°C (169°F).

In September, 2006 an interconnection study was completed by
Sierra Pacific Power Company Regional Planning, which identifies the Winnemucca
120 kV Substation as the preferred tie-in point into the northern Nevada power
grid.

In the initial production well drilling program, the production
wells were positioned with the intent to intersect the moderate to high
temperature resource. The production wells were designed to reach depths of
approximately 1,200 meters (4,000 ft); where the 30 conductor pipe was set up
to approximately 15 meters (50 feet) with an auger drill; 20 surface casing,
drilled with a water well rig, was set up to 10% of the total planned hole
depth; 13 3/8 production casing set at around 610 meters (2000 feet), and the
remaining 12 1⁄4 production interval drilled to the end of hole.

30

---

Of the planned production wells, two wells, 34-23 and 63-14,
were completed to the conductor depth. A water well rig was used to drill and
set the 20 surface casing on three wells: 26A-14 to 171 meters (560 ft); on
well 38-14 to 142 meters (465 ft); and on well 66-14 to 245 meters (805 ft). A
production drilling rig with a substructure to accommodate
blow-out-prevention-equipment was used to drill 26A-14 and 38-14. The 13 3/8
production casing was set in well 26A-14 to 593 meters (1,946 ft), in well 38-14
to 516 meters (1,694 feet). Currently, well 38-14 is at 612 meters (2,008 ft)
with the intention to deepen it another approximately 305 to 610 meters (1,000
to 2,000 ft). Well 26A-14 intersected an artesian pressured geothermal system
with a temperature of up to 192oC (377oF) on bottom, and
flowed at a maximum rate of approximately 1200gpm.

Well 26A-14 was completed to 858 meters (2,815 feet) in
September 2006 and subsequently flow tested for approximately 60 hours in
October 2006. The 26A-14 60 hour flow test, including approximately 48 hours of
full-open flow, flowed unassisted at rates over 295 tonnes/hr (650,000 lb/hr)
with an enthalpy indicating a reservoir temperature of over 185°C (365°F).
Following the flow test, the well head pressure returned to the original
pre-test shut in pressure within 24 hours, which has positive implications for
the overall size of the resource and the reservoir capacity. The test results of
the geochemical analysis of geothermal brine from 26A-14, combined with the
results from well DB-2, which predict reservoir temperatures up to 240°C
(460°F), suggests that a higher temperature parent source may be present. The
well (26A-14) has a gross power capacity of 9.6 MW (enough to supply power to
7,000-10,000 homes).

In December, 2006 the second production well 38-14 was only
drilled to a depth of 612 meters (2,008 feet) due to excessive equipment
breakdowns. Subsequently well 38-14 was completed by ThermaSource to a depth of
1654 metres (5,426 feet) There were no zones intersected that showed similar
pressure or permeability characteristics as encountered in well 26A-14.
Evaluation of the well is ongoing as the well heated up after being disturbed by
the drilling process.

Well 23-14 was completed to a depth of 1,041metres (3,415 feet)
in September 2007 and subsequently flow tested for approximately 46 hours,
including 28 hours of full flow. The principal production zones indicated by
spinner surveys are located below 3,300 feet depth (1006 metres), with one major
zone near 3,310 feet (1009 metres) depth and a second near 3380 feet (1030
metres).Flow testing of 23-14 was done under the supervision of GeothermEx, Inc.
("GeothermEx") an independent consultant based in Richmond California.
GeothermEx, reports that:

- Well 23-14 produced roughly 700,000 lb/hr fully open
equivalent to a volumetric flow rate of 1,590 gpm (100 l/s) at a wellhead
pressure of about 100 psig (690kPa).

- The maximum temperature measured in the flowing survey was
slightly more than 375°F (190°C) at 3,250-3,300 feet depth (990 metres to 1006
metres).

- Using the measured pressure drawdown and the total flow rate,
a productivity index of 7.1 gpm/psi is calculated, indicating good
productivity.

- The well can be pumped using a conventional line-shaft pump
to maximize its power output. Assuming a flow of 2,500 gpm (160 l/s) under pump,
the gross power potential of 23-14 is 10 MW and the net output would be about
7.5 MW, accounting for parasitic load for the combination of the production pump
in the well and the well's proportionate share of a hypothetical binary plant
and injection pumps.

A total of CDN $15,688,031 was expended on our Blue Mountain
project during the 2007 fiscal year.

GeothermEx predicts the resource to be capable of producing 30
megawatt (MW) net. In order to develop a 30 megawatt (MW) net resource capable
of supplying electricity under our power purchase agreement with Nevada Power
Company (NPC), Power Company plans to drill three or four more production
wells, two or three injection wells, and one to four water well(s), in order to
develop the proposed 30 megawatt (MW) Faulkner-1 geothermal power plant.

Power Purchase Agreement(s)

On June 17, 2005, the Company submitted a power bid, based on a
plan to generate up to 35 megawatts (gross) electricity, to Sierra Pacific Power
Company (SPPC) and Nevada Power Company (NPC) in

31

---

response to a request for proposal issued on May 4, 2005. SPPC
is the electric utility for most of northern Nevada and the Lake Tahoe area of
California, and NPC is the electric utility for most of southern Nevada. On
August 18, 2006, we were awarded a 20 year power purchase agreement by Nevada
utility NPC to provide up to 35 megawatts (gross) of geothermal power from a new
geothermal power plant. Approval of the agreement was received in February 2007
from the Public Utilities Commission of Nevada and Federal Energy Regulatory
Commission (FERC) approval was also received in early 2007. A FERC application
for a Small Power Plant Generator was made in August 2007 using the self
certifying exemption process.

Under the terms of the agreement, we provided NPC with a US
$645,000 security deposit in the form of a letter of credit, backed by a cash
deposit. NPC has the right to draw upon these funds in the following
circumstances: (i) if we fail to make required payments under the contract; (ii)
if the letter of credit is not renewed by the required date; or (iii) if certain
conditions regarding the credit rating of the issuing financial institution are
not met.

Our subsidiary, Nevada Geothermal Power Company, continues to
submit bids for supplying additional power as opportunities arise.

Permitting

The following is a summary of the most important permits that
will be required in order to further the Blue Mountain project:

|1. | A transmission line right-of-way application was
      submitted to the BLM September 29, 2006. The application review included a
      plan of development for the transmission line right of way, a plan of
      operation for the steam gathering system and a plan of utilization for the
      power plant. An Environmental Assessment was completed and approval is
      proceeding is expected shortly.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|2. | A request for an initial UEPA permit was submitted in
      November 2006 to the Public Utilities Commission of Nevada ("PUCN"). A
      full application will be submitted to the PUCN subsequent to approval of
      the transmission line right-of-way environmental assessment and
      preliminary engineering design. Approval is expected during Q2
  2008.                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|3. | Application to the Bureau of Water Pollution Control for
      an Underground Injection Control Permit can begin while project production
      and injections systems are still in the conceptual and development phases.
      Application was made in December, 2006.                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4. | A request for an Air Quality Permit is expected to be
      made to the Bureau of Air Quality in early 2008, once preliminary
      engineering is complete and levels of emissions can be estimated. Approval
      is expected to take three to four months.                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|5. | Following completion of facilities engineering, an
      application for a Chemical Accident Prevention Program Permit will be
      submitted to the Bureau of Air Pollution Control if we elect to construct
      a binary plant that requires volatile hydrocarbon fluids. If submitted,
      approval is expected to take six months.                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|6. | Following completion of facilities engineering, an
      application for a County Special Use Permit will be made to Humboldt and
      Pershing Counties. Detailed drawings and specifications must accompany the
      application. Three months processing time is
expected.                                                                                                                                  

32

---

PUMPERNICKEL

Location

Our Pumpernickel property is located in north-central Nevada,
approximately 30 km (20 mi) east of Winnemucca, in Humboldt County. The property
is accessible year round traveling from Winnemucca via Interstate Highway I-80,
24 km east to Golconda. From Golconda 19 km due south, a well-maintained county
gravel road leads into Pumpernickel Valley and the project area. Variable and
unimproved loose surface tracks provide further access to the western portion of
the property.

Transmission grid access is 19 km (12 mi) from the Kramer Hill
Substation on a 120 kV transmission line, and 14 km (9 mi) from a 690 kV
transmission line of the northern Nevada power grid owned by Sierra Pacific
Power Company, or 24 km (15 mi) over flat land to the Lone Tree Mine operated by
Newmont.

Option Agreement

On October 12, 2004, and as subsequently amended Nevada
Geothermal Power Inc (NGP) and Nevada Geothermal Power Company entered into an
Option Agreement with Sierra Geothermal Power Corp (SGP formerly Inovision
Solutions Inc) which provides SGP an opportunity to earn a 50% interest in the
geothermal leases at the Pumpernickel property by making Cash payments
totalling Cdn $120,000, completing work programs on the Property totalling Cdn.
$5,000,000 and issuing to NGP a total of 600,000 common shares, all in
accordance with an agreed schedule. At December 31, 2007 SGP was up to date with
its scheduled commitments.

SGP has the right to satisfy all or any portion of the cash
payments by issuing to NGP within 60 days of the date such payment was due,
additional common shares of SGP having a deemed value equal to the average
closing price of the shares of SGP for the 20 consecutive trading days
immediately preceding the date such payment was due, subject to prior Exchange
approval to the issuance of any additional shares.

SGP is responsible for all lease payments, BLM fees and
property maintenance costs arising during the Option period which will be
credited as part of the Work Programs on the Property. During the Option Period,
NGP is appointed as SGPs agent and Project Exploration Manager for the purposes
of conducting the Work Programs on the Property.Upon fulfilment of the Terms,
SGP will have earned a 50% interest in the Property and SGP and NGP will enter
into a Joint Venture agreement concerning the Property.

PUMPERNICKEL LEASES

The Company acquired the Pumpernickel leases beginning in
February, 2004. They are listed below:

Owner
    Lease No.
    Sections
    Acreage
    Effective Date
    Expiry Date1
    Newmont
    29-462-0003
    3, 5, 9, 27, 33
    3,150.85
    February 13, 2004
    February 12, 20142
    BLM
    78124
    10,
      28, 34
    1,898.06
    June
      1, 2006
    May
      31, 20163
    BLM
    80070
    32
    640.00
    August
      1, 2006
    July
      31, 20164
    BLM (Ormat/Ehni)
    74855
    N 1⁄2 4, 8
    933.50
    October 1, 2002
    September 30, 2012TOTAL
    
    
    6,622.41


33

---

| | 1. | Newmont Mining Corporation Lease No.
      29-462-0003
| | -- | ------------------------------------------------------

To keep this lease in good standing we must:

| | a) | Pay Newmont the following rental payments, per acre (full
      or fraction), per year:
| | -- | ---------------------------------------------------------------------------------------
| |    | i.                                                                                     
| |    | ii.                                                                                    

We are committed to pay Newmont the following royalties:

| | a) | 3.5% of the gross proceeds of the sale of electric power,
      less taxes and transportation costs;                                          
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 5% of the gross proceeds of the sale of geothermal
      substances in arms length transactions, less taxes and transmission
      costs;    
| | c) | 2% of the gross proceeds of the sale of any by-products,
      less taxes and transportation costs;                                           
| | d) | 10% of the net profits produced from the use of
      geothermal substances at a commercial facility other than an electric
      power plant.

Substances or electric power used by Power Company for the
operations on-site are not subject to royalties.

| | 2. | BLM Lease N78124
| | -- | ----------------

To keep this lease in good standing, during the first five
years of the primary term, the Company is required to make rental payments of US
$1.00 per acre. During years six through ten, the Company must make diligent
exploration expenses as follows:

- Year 6 - US $4.00 per acre
- Year 7  US $6.00 per acre
- Year 8  US $8.00 per acre
- Year 9 - US $10.00 per acre
- Year 10  US $12.00 per acre

Approved expenditures that exceed the minimum in any one year
will be applied to subsequent years. If the total expenditures do not meet the
requirement for any lease year, the diligent exploration expenditure requirement
can be met by paying an additional rent of US $3.00 per acre. If the diligent
exploration requirement is not met and the additional rent is not paid, BLM will
cancel the lease.

We are committed to pay BLM the following royalties:

| | a) | 10% from the sale of steam, heat or energy;
| | -- | -------------------------------------------
| | b) | 5% from the sale of by products;           
| | c) | 5% from the sale of de-mineralized water.  

A minimum royalty of US $2.00 per acre shall be due for any
lease year beginning on or after BLM determines we have a well capable of
commercial production but we have not begun actual production.

34

---

| | 3. | BLM Lease N80070
| | -- | ----------------

To keep this lease in good standing, during the first five
years of the primary term, the Company is required to make rental payments of US
$1.00 per acre. During years six through ten, the Company must make diligent
exploration expenses as follows:

- Year 6 - US $4.00 per acre
- Year 7  US $6.00 per acre
- Year 8  US $8.00 per acre
- Year 9 - US $10.00 per acre
- Year 10  US $12.00 per acre

Approved expenditures that exceed the minimum in any one year
will be applied to subsequent years. If the total expenditures do not meet the
requirement for any lease year, the diligent exploration expenditure requirement
can be met by paying an additional rent of US $3.00 per acre. If the diligent
exploration requirement is not met and the additional rent is not paid, BLM will
cancel the lease.

We are committed to pay BLM the following royalties:

| | a) | 10% from the sale of steam, heat or energy;
| | -- | -------------------------------------------
| | b) | 5% from the sale of by products;           
| | c) | 5% from the sale of de-mineralized water.  

A minimum royalty of US $2.00 per acre shall be due for any
lease year beginning on or after BLM determines we have a well capable of
commercial production but we have not begun actual production.

| | 4. | BLM (Ormat/Ehni) N74855
| | -- | -----------------------

We acquired this lease from Ormat for a one-time purchase price
of US $15,000 and a commitment to use Ormats equipment at the Pumpernickel
site.

Pursuant to a Royalty Agreement dated April 26, 2006 between
Power Company, Ormat and Ehni Enterprises, Inc., we are required to pay
Ehni:

| | a) | US $10,000 within ten business days of entering into a
      power purchase agreement with respect to this lease; and           
| | -- | --------------------------------------------------------------------------------------------------------------------------------
| | b) | A royalty of 0.5% of the gross proceeds received from the
      sale of electrical power, less taxes and transportation
  costs.

We have the option to purchase the Royalty from Ehni for the
sum of US $200,000, payable in stages up to the commencement of commercial
production under a power purchase agreement.

To keep this lease in good standing, during the first five
years of the primary term, the company is required to make rental payments of US
$1.00 per acre. During years six through ten, the company must make diligent
exploration expenses as follows:

- Year 6 - US $4.00 per acre
- Year 7 - US $6.00 per acre
- Year 8 - US $8.00 per acre
- Year 9 - US $10.00 per acre
- Year 10 - US $12.00 per acre

35

---

Approved expenditures that exceed the minimum in any one year
will be applied to subsequent years. If the total expenditures do not meet the
requirement for any lease year, the diligent exploration expenditure requirement
can be met by paying an additional rent of US $3.00 per acre. If the diligent
exploration requirement is not met and the additional rent is not paid, BLM will
cancel the lease.

We are committed to pay BLM the following royalties:

| | a) | 10% from the sale of steam, heat or energy;
| | -- | -------------------------------------------
| | b) | 5% from the sale of by products;           
| | c) | 5% from the sale of de-mineralized water.  

A minimum royalty of US $2.00 per acre shall be due for any
lease year beginning on or after BLM determines we have a well capable of
commercial production but we have not begun actual production.

Description, History and Development

The most obvious indication of geothermal potential in
Pumpernickel Valley is a series of active geothermal springs and relic
alteration minerals precipitated from extinct springs, along the western edge of
the valley, apparently associated with the Pumpernickel fault. The maximum
temperature recorded from an active spring was 88°C (191°F). Pumpernickel Valley
area is within the Humboldt Structural zone which hosts other reported major
geothermal fields, including Bradys Hot Springs, Steamboat, Soda Lake, Dixie
Valley, and Beowawe.

Previous work on the property dates back to 1974 when Magma
Power Company drilled a 920 meter (3,071 ft) hole offsetting the hot springs
about 150 metres (492 ft). The temperature on the bottom was reported to have
been 135°C (275°F) with the last 90 meters (300 ft) having a thermal gradient of
160°C/km.

The University Of Nevada System (UNS), under contract to the
U.S. Department of Energy, completed an aerial assessment at Pumpernickel Valley
in 19811982. UNS field work included geologic reconnaissance, satellite
imagery, hot spring geochemistry, air photo analysis, a 2 metre depth
temperature probe survey, gravity survey, soil mercury survey, 35 metre (115 ft)
temperature gradient drilling, and additional shallow 65-148 meter (213-485 ft)
temperature gradient drilling. UNS work demonstrated that the geothermal fluids
are likely channelled to the surface via range bounding faults, such as the
Pumpernickel fault.

Under the terms of an October, 2004 cost sharing agreement, the
US Department of Energy (DOE) agreed to fund 80% of exploration and drilling
program costs at Pumpernickel. Sierra Geothermal Power Corp., is responsible for
the remaining 20%.

In July, 2005, Premier Geophysics completed an E-SCAN
resistivity survey to 3-dimensionally map Pumpernickel Valley, and the
geothermal waters. The E-SCAN identifies a conductive anomaly, covering an area
of about 7.8km 2 (3 mi2), with probable fluid up-flow
zones.

In August, 2005, a ground magnetic survey was completed and
used to aid in the structural mapping and subsequently in identifying potential
drill targets.

In November, 2005, four thermal gradient holes were completed,
recording thermal gradients between 75°C/km and 200°C/km. Previous mineral
exploration drill holes recorded thermal gradients of up to 283°C/km. Water
samples collected from the thermal gradient drill holes and geothermal springs
were sent for third party analysis and the geothermometry indicated commercial
reservoir temperatures.

36

---

Drilling corroborates earlier studies indicating geothermal
fluids are being channelled to the surface through range-front faults, and
suggests that the site is an excellent prospect for a geothermal resource
capable of generating electricity. Additionally, the site is located in an area
of reasonably well-developed infrastructure with no apparent environmental
issues.

In February, 2006, Quantec Consulting completed a gravity
survey at Pumpernickel Valley, mapping the topography of subsurface bedrock,
outlining faults, and evaluating the thickness of the overburden. The survey
successfully defined the contact between the valley fill and the basement rocks,
and most importantly it established the positions of valley faults and their
relationship to the geothermal system. The data showed a good correlation with
the 2005 3-D resistivity and drilling data. The combined data will aid in
defining the boundaries of the geothermal reservoir.

In March, 2006, a sage grouse study was completed by SRK
Consulting to determine that the federal leases then under application were not
sage grouse habitat.

Pursuant to the terms of an April, 2006 agreement, Ormat has a
right of first refusal to construct an electrical power plant at our
Pumpernickel site. If Ormat is ultimately successful in their bid to construct
the plant, they will provide a "most favoured customer" price for such a
facility on a first offer basis for the manufacture and construction of a binary
geothermal power plant using Ormat's proprietary technology.

A total of CDN $293,385 was expended on seismic work at our
Pumpernickel project during the 2007 fiscal year, funded by Sierra Geothermal
Power Corp. In 2008 exploration plans include a deep test well to confirm the
geothermal resource.

BLACK WARRIOR

Location

Our Black Warrior property covers a land area of 262km (10 mi2), and is located south and east of Black Warrior
peak, in Washoe and Churchill Counties, Nevada. Access to the property via a
loose surface road, 447, is from Fernley, located only 30km south of the
property. An alternative is Interstate Highway I-80 from Fernley to Brady's Hot
Springs, then 28 km NW on loose surface road to Nightingale Mine area, and south
along the road that follows the power line.

BLACK WARRIOR LEASES

Black Warrior leases, which include surface and water rights,
are as follows:

Owner
    Lease No.
    Sections
    Location
    Acreage
    Effective Date
    Expiry Date1
    NLRC
    189099
    1, 3, 5, 7, 11, 29, 31, 35
    Washoe Co. and Churchill Co.
    5,066.69
    August 1, 2004
    July 31, 20142
    BLM
    79745
    8
    Churchill Co.
    640.00
    March 1, 2006
    February 29, 20163
    BLM
    78777
    30
    Churchill Co.
    566.40
    March 1, 2006
    February 29, 2016TOTAL
    
    
    
    6,273.09


37

---

| | 1. | NLRC Lease No. 189099
| | -- | ---------------------

This lease was granted for consideration of US $8,853.38,
representing US $2.00 per acre for each acre that comprised the original lease.
To keep the lease in good standing we must:

| | a) | Pay NLRC the following rental payments per acre, per
      year, to begin on the first anniversary of the Effective Date:
| | -- | -------------------------------------------------------------------------------------------------------------------------
| |    | i.                                                                                                                       
| |    | ii.                                                                                                                      
| |    | iii.                                                                                                                     
| |    |                                                                                                                          
| | b) | Expend the following amounts in work commitments
      per lease year:                                                   
| |    | i.                                                                                                                       
| |    | ii.                                                                                                                      
| |    | iii.                                                                                                                     
| |    | iv.                                                                                                                      
| |    | v.                                                                                                                       

If in any year, we do not fulfill the
work commitments, we must pay NLRC the sum equal to the difference between the
work commitment obligation and the actual work expenditures for the lease
year.

We are committed to pay the following royalties to NLRC:

| | a) | 3.5% of the gross revenues from the availability, sale or
      use of electricity from an electrical power generating plant built on or
      utilizing geothermal resources from the property;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 10% of the gross proceeds from the sale or use of any
      geothermal resources or associated energy consumed, processed, sold,
      shipped or utilized for non-electric commercial purposes;
| | c) | 10% of the gross proceeds from the sale or use of any
      geothermal resources produced on the property and utilized for the
      production of a product other than electricity.            

We have the option to purchase this
royalty for US $1,000,000 at any time not later than 6 months following the
commencement of commercial production.

| | 2. | BLM Lease N79745
| | -- | ----------------

To keep this lease in good standing, during the first five years
  of the primary term, the Company is required to make rental payments of US $1.00
  per acre. During years six through ten, the Company must make diligent exploration
  expenses as follows:

- Year 6 - US $4.00 per acre
- Year 7  US $6.00 per acre
- Year 8  US $8.00 per acre
- Year 9 - US $10.00 per acre
- Year 10  US $12.00 per acre

38

---

Approved expenditures that exceed the minimum in any one year
will be applied to subsequent years. If the total expenditures do not meet the
requirement for any lease year, the diligent exploration expenditure requirement
can be met by paying an additional rent of US $3.00 per acre. If the diligent
exploration requirement is not met and the additional rent is not paid, BLM will
cancel the lease.

We are committed to pay BLM the following royalties:

| | a) | 10% from the sale of steam, heat or energy;
| | -- | -------------------------------------------
| | b) | 5% from the sale of by products;           
| | c) | 5% from the sale of de-mineralized water.  

A minimum royalty of US $2.00 per acre shall be due for any
lease year beginning on or after BLM determines we have a well capable of
commercial production but we have not begun actual production.

| | 3. | BLM Lease N78777
| | -- | ----------------

To keep this lease in good standing, during the first five
years of the primary term, the Company is required to make rental payments of US
$1.00 per acre. During years six through ten, the Company must make diligent
exploration expenses as follows:

- Year 6 - US $4.00 per acre
- Year 7  US $6.00 per acre
- Year 8  US $8.00 per acre
- Year 9 - US $10.00 per acre
- Year 10  US $12.00 per acre

Approved expenditures that exceed the minimum in any one year
will be applied to subsequent years. If the total expenditures do not meet the
requirement for any lease year, the diligent exploration expenditure requirement
can be met by paying an additional rent of US $3.00 per acre. If the diligent
exploration requirement is not met and the additional rent is not paid, BLM will
cancel the lease.

We are committed to pay BLM the following royalties:

| | a) | 10% from the sale of steam, heat or energy;
| | -- | -------------------------------------------
| | b) | 5% from the sale of by products;           
| | c) | 5% from the sale of de-mineralized water.  

A minimum royalty of US $2.00 per acre shall be due for any
lease year beginning on or after BLM determines we have a well capable of
commercial production but we have not begun actual production.

Description, History and Development

This project is located within a prolific power producing
region of Nevada comprising geothermal power plants having an aggregate
production capacity of over 100 megawatts. Four separate power lines cross the
region with convenient interconnections to the power transmission grid at Marble
Bluff Substation, 16 km (10mi) west, or 19 km (12 mi) south east of the Brady's
Geothermal Power Plant Substation.

At Black Warrior, the potential for a geothermal reservoir
suitable for electric power generation was indicated throughout the leased area
by temperature gradients greater than 200°C/km in ten widely spaced holes
drilled by Phillips Petroleum in the early 1980's. The deepest test hole
(NV-ST-1) recorded a

39

---

temperature of 128°C (262°F) at its maximum depth
of 552 meters (1,810 feet) with temperatures still increasing at the bottom of
the hole. Thus commercial resource temperatures may occur within 1,000 meters
(3,000 feet) of the surface. The geology and fault structures appear to permit
deep circulating ground water to be heated by anomalously high rock formation
temperatures.

During the summer of 2005, we conducted field investigations
including preliminary work to prepare the site for a full Schlumberger
resistivity survey. The investigations included limited testing of the
Schlumberger survey at a few points. It was determined that noise from overhead
power lines would not cause problems while conducting the survey, and that a
Schlumberger survey of the area could be conducted.

A total of CDN $16,025 was expended on our Black Warrior
project during the 2007 fiscal year. In 2008 we plan to continue exploration
surveys to further define the resource and develop plans for drilling.

CRUMP GEYSER

Location

Our Crump Geyser property is a hot spring system located in
Warner Valley, Lake County, north of Adel, Oregon, 53 km (22 mi) east of
Lakeview Oregon, and 287 km (178 mi) north and west from Winnemucca, Nevada.
Access to the property is via Highway 140.

A power line connection to the regional power grid and a
transformer substation, both owned by Surprise Valley Electrification
Corporation, are located approximately 0.35km (0.2 mi) to the west on Highway
140 at Adel.

CRUMP GEYSER LEASES

Particulars with respect to our Crump Geyser leases are as
follows:

Owner
    Acreage
    Effective Date
    Expiry Date1
    LX
      Ranch
    5,000
    August 1, 2005
    July
      31, 20152
    OKeeffe Ranch
    733.76
    August 1, 2005
    July
      31, 20153
    Stabb
    1,471.84
    August 1, 2005
    July
      31, 2015TOTAL
    7,205.60


| | 1. | LX Ranch
| | -- | --------

This lease was granted for consideration of US $10,000,
representing US $2.00 per acre for each acre that comprises the lease. To keep
the lease in good standing we must:

| | a) | Pay LX Ranch the following rental payments per acre, per
      year, to begin on the first anniversary of the Effective Date:
| | -- | -----------------------------------------------------------------------------------------------------------------------------
| |    | i.                                                                                                                           
| |    | ii.                                                                                                                          
| |    | iii.                                                                                                                         
| |    | iv.                                                                                                                          
| |    | v.                                                                                                                           
| |    | vi.                                                                                                                          
| |    | vii.                                                                                                                         
| |    | viii.                                                                                                                        
| |    | ix.                                                                                                                          
| |    | x.                                                                                                                           

40

---

| | b) | Expend the following amounts in work commitments per
      lease year:
| | -- | ----------------------------------------------------------------------
| |    | i.                                                                    
| |    | ii.                                                                   
| |    | iii.                                                                  
| |    | iv.                                                                   
| |    | v.                                                                    

If in any year, we do not fulfill the
work commitments, we must pay LX Ranch the sum equal to the difference between
the work commitment obligation and the actual work expenditures for the lease
year.

We are committed to pay the following royalties to LX
Ranch:

| | a) | 3.5% of the gross revenues from the availability, sale or
      use of electricity from an electrical power generating plant built on or
      utilizing geothermal resources from the property;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 10% of the gross proceeds from the sale or use of any
      geothermal resources or associated energy consumed, processed, sold,
      shipped or utilized for non-electric commercial purposes;
| | c) | 10% of the gross proceeds from the sale or use of any
      geothermal resources produced on the property and utilized for the
      production of a product other than electricity.            

Provided we have established a binary
power plant utilizing hot water and/or steam at temperatures less than 179°C
(355°F), we have the option to purchase 1% of this royalty for US $500,000 at
any time not later than 36 months following the commencement of commercial
production.

If LX Ranch is receiving production royalties, LX Ranch grants
us the right to lease that portion of the surface of the property as is required
for production and/or transmission facilities at a surface lease rate of:

| | a) | US $600 per acre, per year for productive crop
      land;                     
| | -- | -------------------------------------------------------------------------------
| | b) | US $300 per acre, per year for pasture land;
      and                         
| | c) | US $150 per acre, per year for hillside or
      otherwise non-productive land.
| |    |                                                                                
| | 2. | OKeeffe Ranch                                                                 

This lease was granted for consideration of US $1,467.52,
representing US $2.00 per acre for each acre that comprises the lease. To keep
the lease in good standing we must:

| | a) | Pay OKeeffe Ranch the following rental payments per
      acre, per year, to begin on the first anniversary of the Effective
      Date:
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------
| |    | i.                                                                                                                                       
| |    | ii.                                                                                                                                      
| |    | iii.                                                                                                                                     
| |    | iv.                                                                                                                                      
| |    | v.                                                                                                                                       
| |    | vi.                                                                                                                                      
| |    | vii.                                                                                                                                     

41

---

| |    | viii.                                                                  | Eighth anniversary: US $4.50                                                                                                 
| | -- | ---------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------
| |    | ix.                                                                    | Ninth anniversary: US $4.64                                                                                                  
| |    | x.                                                                     | Tenth anniversary: US $4.78                                                                                                  
| |    |                                                                        |                                                                                                                              
| | b) | Expend the following amounts in work commitments
      per lease year:
| |    | i.                                                                     | Year 1: US $10,000                                                                                                           
| |    | ii.                                                                    | Year 2: US $20,000                                                                                                           
| |    | iii.                                                                   | Year 3: US $30,000                                                                                                           
| |    | iv.                                                                    | Year 4: US $40,000                                                                                                           
| |    | v.                                                                     | Year 5 and each subsequent lease year until commercial
      production of geothermal resources on the property: US
  $50,000

If in any year, we do not fulfill the
work commitments, we must pay OKeeffe Ranch the sum equal to the difference
between the work commitment obligation and the actual work expenditures for the
lease year.

We are committed to pay the following royalties to OKeeffe
Ranch:

| | a) | 3.5% of the gross revenues from the availability, sale or
      use of electricity from an electrical power generating plant built on or
      utilizing geothermal resources from the property;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 10% of the gross proceeds from the sale or use of any
      geothermal resources or associated energy consumed, processed, sold,
      shipped or utilized for non-electric commercial purposes;
| | c) | 10% of the gross proceeds from the sale or use of any
      geothermal resources produced on the property and utilized for the
      production of a product other than electricity.            

Provided we have established a binary
power plant utilizing hot water and/or steam at temperatures less than 179°C
(355°F), we have the option to purchase 1% of this royalty for US $500,000 at
any time not later than 36 months following the commencement of commercial
production.

If OKeeffe Ranch is receiving production royalties, OKeeffe
Ranch grants us the right to lease that portion of the surface of the property
as is required for production and/or transmission facilities at a surface lease
rate of:

| | a) | US $600 per acre, per year for productive crop
    land;                       
| | -- | -------------------------------------------------------------------------------
| | b) | US $300 per acre, per year for pasture land;
and                               
| | c) | US $150 per acre, per year for hillside or otherwise
      non-productive land.

| | 3. | Stabb
| | -- | -----

This lease was granted for consideration of US $2,943.68,
representing US $2.00 per acre for each acre that comprises the lease. To keep
the lease in good standing we must:

| | a) | Pay Stabb the following rental payments per acre, per
      year, to begin on the first anniversary of the Effective Date:
| | -- | --------------------------------------------------------------------------------------------------------------------------
| |    | i.                                                                                                                        
| |    | ii.                                                                                                                       
| |    | iii.                                                                                                                      
| |    | iv.                                                                                                                       

42

---

| |    | v.                                                                     | Fifth anniversary: US $4.12                                                                                                  
| | -- | ---------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------
| |    | vi.                                                                    | Sixth anniversary: US $4.24                                                                                                  
| |    | vii.                                                                   | Seventh anniversary: US $4.37                                                                                                
| |    | viii.                                                                  | Eighth anniversary: US $4.50                                                                                                 
| |    | ix.                                                                    | Ninth anniversary: US $4.64                                                                                                  
| |    | x.                                                                     | Tenth anniversary: US $4.78                                                                                                  
| |    |                                                                        |                                                                                                                              
| | b) | Expend the following amounts in work commitments
      per lease year:
| |    | i.                                                                     | Year 1: US $10,000                                                                                                           
| |    | ii.                                                                    | Year 2: US $20,000                                                                                                           
| |    | iii.                                                                   | Year 3: US $30,000                                                                                                           
| |    | iv.                                                                    | Year 4: US $40,000                                                                                                           
| |    | v.                                                                     | Year 5 and each subsequent lease year until commercial
      production of geothermal resources on the property: US
  $50,000

If in any year, we do not fulfill the
work commitments, we must pay Stabb the sum equal to the difference between the
work commitment obligation and the actual work expenditures for the lease
year.

We are committed to pay the following royalties to Stabb:

| | a) | 3.5% of the gross revenues from the availability, sale or
      use of electricity from an electrical power generating plant built on or
      utilizing geothermal resources from the property;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 10% of the gross proceeds from the sale or use of any
      geothermal resources or associated energy consumed, processed, sold,
      shipped or utilized for non-electric commercial purposes;
| | c) | 10% of the gross proceeds from the sale or use of any
      geothermal resources produced on the property and utilized for the
      production of a product other than electricity.            

Provided we have established a binary
power plant utilizing hot water and/or steam at temperatures less than 179°C
(355°F), we have the option to purchase 1% of this royalty for US $500,000 at
any time not later than 36 months following the commencement of commercial
production.

If Stabb is receiving production royalties, Stabb grants us the
right to lease that portion of the surface of the property as is required for
production and/or transmission facilities at a surface lease rate of:

| | a) | US $600 per acre, per year for productive crop
    land;                       
| | -- | -------------------------------------------------------------------------------
| | b) | US $300 per acre, per year for pasture land;
and                               
| | c) | US $150 per acre, per year for hillside or otherwise
      non-productive land.

Description, History and Development

Numerous springs, seepages and warm water marshes are present
throughout Warner Valley. The two primary zones of interest are Crump Geyser and
Fisher Hot Springs. The Crump Geyser hot springs occur over four miles along the
western edge of Warner Valley and extend about 3,000 feet east into the valley.
Fisher Hot Springs, a separate area of geothermal interest in north eastern
Warner Valley, covers 2,600 acres.

Crump Geyser was formed in 1959 when a 512 meter (1,680 feet)
well drilled by Magma Power

43

---

Company spontaneously erupted a few days after it was
abandoned. The well flowed 30 litres/second (500 gallons/minute) of boiling
water 45 meters (150 feet) into the air continuously for 6 months before
reverting to a geyser erupting at regular intervals. During the 1960s the well
was plugged with rocks to stem the geyser flow, and boiling water still rumbles
at depth and bubbles to the surface.

In the southern geothermal zone, which includes Crump Geyser,
geothermal springs are abundant as is an extensive series of northwest-southeast
trending elongate mounds of siliceous/calcareous tufa. The zone appears to be
structurally controlled and located along and immediately east of the prominent
western scarp of Warner Valley. The northern geothermal zone is located along
the northwestern and northeastern shore of Crump Lake. This zone is
characterized by hot springs and seepages, which originate along the base of a
segmented, northwest-southeast trending fault system.

Waters from many springs in-and-around Warner Valley have been
sampled for geochemistry by the USGS. In 1975 a series of geophysical studies
conducted by the USGS, including magnetic, gravity and resistivity surveys,
assessed the geothermal potential of Warner Valley. Thermal data collected from
13 heat-flow holes were reported by the USGS in 2005.

In November 2005, a series of geothermal springs were sampled
and sent to Thermochem for analysis to confirm the results of the previous USGS
study. The geothermometers calculated from the geochemistry suggested a
reservoir source temperature of around 150°C +/- 10°C (302°F +/- 50°F).

In November, 2005, Northwest Wildlife Consultants completed a
preliminary wildlife survey of the Crump Geyser project area, determining that
there are no endangered species that would prohibit development.

From November, 2005 until the end of 2007, we have conducted
geophysical field studies and developed plans for drilling, including electrical
resistivity, Schlumberger and ground magnetic surveys. The geophysical work
mapped subsurface structures and indicated an excellent target indicative of
geothermal fluids. Results suggest that the hot springs are associated with
structurally permeable zones due to extensional faulting.

An independent review by GeothermEx estimates that the
potential capacity of the Crump Geyser reservoir is a minimum of 40 megawatt
(90% probability) for 20 years, and most likely 60 megawatt for 20 years. This
capacity estimate is based on a volumetric estimate of heat in place which
assumes an area of 5.4 to 16 km2 (most likely 10.7 km2), a
reservoir thickness of 760 to 1,680 m (most-likely 1,070 m), and average
reservoir temperature 140 to 160°C (most-likely 150°C).

A total of CDN $52,841 was expended on Crump Geyser project
during the 2007 fiscal year.

We intend to advance the Crump Geyser project through reservoir
drilling and testing as well as project feasibility studies to confirm the
presence of a commercially productive geothermal system. Plans for 2008 include
continued exploration surveys to confirm the resource and develop targets for
drilling.

|ITEM 4A. | Unresolved Staff Comments
|-------- | -------------------------

Not Applicable.

|ITEM 5 | Operating and Financial Review and
      Prospects
|------ | --------------------------------------------------

The information in this section is presented in accordance with
Canadian Generally Accepted Accounting Principles. The following discussion of
our financial condition and results of operations for the fiscal years ended
June 30, 2007, June 30, 2006 and June 30, 2005 should be read in conjunction
with our consolidated financial statements and related notes attached
thereto.

44

---

Critical Accounting Policies

Management is required to make judgments, estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. On a regular basis, we
evaluate our estimates and assumptions. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

The consolidated financial statements are prepared on the basis
that we will continue as a going concern. The going concern basis of
presentation assumes we will continue in operation for the foreseeable future
and will be able to realize our assets and settle our liabilities and
commitments in the normal course of business. Our ability to continue as a going
concern and to realize our assets and discharge our liabilities when due in the
normal course of business is dependent upon the existence of economically
recoverable geothermal resources and our ability to raise adequate financing
from lenders, shareholders and other investors to support such business
activities. The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.

Effective January 1, 2007, the Company adopted three new
accounting standards related to financial instruments that were issued by the
Canadian Institute of Chartered Accountants (CICA) in 2005. These accounting
policy changes were adopted on a prospective basis with no restatement of prior
period financial statements. The new standards and policies are as follows:

| | (i)   | Financial Instruments  Recognition and
  Measurement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       | In accordance with this new standard the Company now
      classifies all financial instruments as either held to maturity, available
      for sale, held for trading or loans and receivables. Financial assets
      classified as held to maturity, loans and other receivables and financial
      liabilities other than those held for trading are measured at amortised
      cost. Available for sale financial instruments are measured at fair value
      with unrealized gains and losses recorded in other comprehensive income.
      Instruments classified as held for trading are measured at fair value with
      unrealized gains and losses recognized in the income statement for the
      period.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (ii)  | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       | The standard introduces the concept of comprehensive
      income, which consists of net income and other comprehensive income. The
      Company financial statements now include a Statement of Comprehensive
      Loss, which includes the components of comprehensive income. For the
      Company, other comprehensive income (OCI) is comprised of the unrealized
      gains on its marketable security investments.                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       | Cumulative changes in OCI are included in Accumulated
      Other Comprehensive Income (AOCI) which is presented as a new category
      within shareholders equity in the balance sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (iii) | Hedges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       | The new standard specifies the criteria under which hedge
      accounting can be applied and how hedge accounting can be executed. As at
      June 30, 2007 the Company has not designated any hedging
    relationships.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

We account for employee stock-based compensation and
non-employee stock based compensation under the fair value method. Pursuant to
this method, we estimate the fair value of stock options and warrants granted
using an option pricing model. Assumptions used in an option pricing model
include estimates of future market price volatility, expected life and
dividends. Although management used available

45

---

historical information and current information to arrive at
such estimates, different assumptions will create different option and warrant
values.

Reconciliation to United States Generally Accepted
Accounting Principles

We prepare our financial statements in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP") which
differ in certain respects from those principles that we would have followed had
our financial statements been prepared in accordance with accounting principles
generally accepted in the United States ("US GAAP"). Differences between
Canadian GAAP and US GAAP include:

- Under Canadian GAAP, companies have the option to defer exploration
  expenditures on prospective properties until such time as it is determined
  that further work is not warranted, at which point capitalized costs would be
  written off. Under US GAAP, all exploration expenditures are expensed until an
  independent feasibility study has determined that the property is capable of
  commercial production. At this stage, our company has not yet identified
  economically recoverable reserves on any of its interests. Accordingly, under
  US GAAP, all exploration costs incurred are expensed.
- Investments in shares with a trading restriction period of greater than one
  year are recorded at cost for Canadian GAAP purposes. For United States GAAP
  purposes, investments with a hold period of greater than one year are not
  classified as available for sale securities and are also recorded at
  cost.Investments with a trading restriction of one year or less are
  classified as marketable securities for Canadian GAAP purposes and are
  recorded at the lower of cost and market value. For United States GAAP
  purposes, these securities are classified as trading securities and are
  recorded at market value at the reporting date.
- In fiscal 2004, we issued 5,500,000 common shares at a value of $1,705,000
  (Canadian GAAP), and $1,000,774 (US GAAP). For Canadian GAAP purposes, the
  amount of $1,705,000 was based on a valuation of the property interests,
  approved by Canadian regulatory authorities. Blue Mountain Company and NGP are
  controlled by related persons. Under US GAAP, the value ascribed to the shares
  was the amount of expenditures previously made by Blue Mountain Company on the
  property interests. The difference of $704,226 has been deducted, therefore,
  from the Canadian GAAP amount of $2,164,742 to arrive at the amount of
  $1,460,516 that would have been charged to operations under US GAAP.

|A. | Operating Results
|-- | -----------------

June 30, 2007 Compared to June 30, 2006

During the year ended June 30, 2007, the Company invested
heavily in its Blue Mountain resource and building its organizational
capabilities. As a result the Company incurred a loss of $2,874,979 or $0.05 per
share compared to a loss for the year ended June 30, 2006 of $1,605,372 or $0.04
per share. The net loss increase primarily results from an increase of $587,086
in stock-based compensation and an increase of $638,072 in the loss on foreign
exchange, a result of the strengthening of the Canadian dollar.

Operating Expenses increased with the size and scope of
operations as the Company invested in its capabilities and further developed the
Blue Mountain project. Administrative expenses of $225,592 (2006  $110,083)
increased with the hiring of employees for the increased level of activity.
Consulting fees of $360,877 (2006 - $180,689) rose as a result of search fees,
assistance required with regulatory activities, and payments to directors and
contractors for activities such as assistance with project financing. Office
expenses of $78,334 (2006 - $48,646), legal costs of $148,576 (2006 - $90,522),
transfer agent and regulatory costs of $76,865 (2006 - $63,925), investor
relations costs of $119,712 (2006 - $85,623), insurance costs of $88,000 (2006 -
$50,000) and rent and telephone costs $77,365 (2006 - $56,112) also increased.
Conventions and publishing costs of $177,047 (2006 - $486,108) decreased as a
result of lower marketing expense associated with the stock issuances.

46

---

Losses were offset in part by increased interest income
$448,195 (2006 - $189,133), a gain resulting from the continued disposition of
marketable securities $103,965 (2006 - $62,780) and, as explained in Note 3 e)
to the financial statements, option payments in excess of deferred exploration
costs on the Pumpernickel project that were taken into income.

We expect to incur a net operating loss for the fiscal year
ending June 30, 2008.

June 30, 2006 Compared to June 30, 2005

For the year ended June 30, 2006, we incurred a loss of
$1,605,372 or $0.04 per share. This compares to a loss for the year ended June
30, 2005 of $1,308,233 or $0.05 per share. The main reason for the increased
loss is that non-cash stock-based compensation granted to directors, employees
and consultants increased by $357,000 in a year to year comparison. Non-cash
stock-based compensation increased in 2006 as we added an additional director
and an officer to our management executive team, and employed an investor
relations firm for the final six months of the year. In order to attract quality
candidates, each of these three parties was awarded share purchase options.

Administrative expenses increased as a result of additional
accounting and audit expenses incurred during the year and the hiring of the
Companys first full-time employees. Consulting fees rose as a direct result of
engaging a qualified individual in the role of chief financial officer and
paying market rate directors fees. Convention and publishing expenses rose as
we produced our first annual report. We also realized a foreign exchange gain
($143,837) as the Canadian dollar strengthened with respect to the US dollar and
we sold 185,000 shares of Running Fox Resources realizing a gain of $62,780. On
a year to year comparison, our investor relations costs have declined by
$43,291. During the 2006 fiscal year, we delayed hiring an external firm for the
first five months of the year and then hired Pro-Edge Consultants Inc. at a
lower rate than the firm performing this task in fiscal 2005. During fiscal
2006, liability insurance coverage was obtained for the first time and the
related expense recorded. Legal expenses rose during the year as the direct
function of the large financing we completed in 2006.

The increase in rent and telephone expenses was caused by two
factors. In 2005, we shared our office space with another company. This
relationship ended in mid 2006 and consequently we now have larger premises. The
increased telephone costs are the result of the financing activities and the
follow on drilling activities undertaken in Nevada. As a result of the
financing, our transfer agency and regulatory fees increased by $17,633. Travel
and business development expenses increased by $27,634 as management traveled
more frequently pursuing various financing options during fiscal 2006. During
fiscal 2005, we had a net write down on the value of certain marketable
securities. There were no further write downs in fiscal 2006. Interest income
increased by $170,957 in 2006 as we placed the proceeds of the financing in
short term investments.

The increased losses and net losses reflect additional overhead
expenses associated with our escalating exploration activities since 2003.
Similarly, the increases in total assets, on a year to year comparison, results
from a combination of the capitalization of exploration costs and the increasing
cash position that has resulted from the financing activities. On a comparative
basis, we have increased the relative level of these activities as a direct
function of the successful results of our exploration program.

During the fiscal year ended June 30, 2006, we recorded
interest income of $189,133. Expenses for the fiscal year ended June 30, 2006
were $1,794,505, up from $1,486,104 for the fiscal year ended June 30, 2005.
This increase is primarily due to increased stock-based compensation costs that
rose to $692,059 from $335,064.

The net loss for the fiscal year ended June 30, 2006 was
$1,605,372 or $0.04 per share as compared with a net loss for the fiscal year
ended June 30, 2005 of $1,308,233 or $0.05 per share.

47

---

June 30, 2005 Compared to June 30, 2004

During the fiscal year ended June 30, 2005, we recorded other
income of $177,871, $18,176 of which represents interest income, and $159,695
reflecting a gain on the sale of a subsidiary. During the fiscal year ended June
30, 2004, we recorded interest income of $2,998.

Expenses for the fiscal year ended June 30, 2005 were
$1,486,104, up from $795,844 for the fiscal year ended June 30, 2004. This
increase is primarily due to increased stock-based compensation costs that rose
to $335,064 from $302,844, investor relations, conventions and publishing and
news dissemination costs of $577,448 (2004: $114,717), and consulting costs of
$119,729 (2004: $80,676) primarily related to the preparation and review of a
report on Crump Geyser, and implementation of new corporate governance
policies.

The net loss for the fiscal year ended June 30, 2005 was
$1,308,233 or $0.05 per share as compared with a net loss for the fiscal year
ended June 30, 2004 of $792,846 or $.05 per share.

Foreign Currency Exchange Rates

A significant portion of our business is conducted in
currencies other than the United States dollar. As a result, we are subject to
exposure from movements in foreign currency exchange rates. We do not currently
engage in hedging transactions designed to manage currency fluctuation risks.
Please refer to Note 2.k) "Foreign Currency Translation" in our June 30, 2007
financial statements, which form a part of this Annual Report.

|B. | Liquidity and Capital Resources
|-- | -------------------------------

Cash and Financial Condition

We do not have operations that generate cash flow. Our
financial success relies on managements ability to find and develop
economically viable geothermal resources. This process can take many years and
involves many factors that are beyond our control.

To June 30, 2007 we financed our activities through brokered
and non-brokered private placements, and from the exercise of stock options and
warrants. Debt financing had not been available. At November 30, 2007 the
Company had approximately $5,100,000 in cash as well as access to $20 million in
the form of a bridge loan from Glitnir bank that closed November 2, 2007 and is
available until the earlier of the closing of a construction loan with Morgan
Stanley or one year. Commitments to an approximately $100 million construction
loan and take out equity financing were previously received during August, 2007
from Morgan Stanley Senior Secured Lending (Morgan Stanley) and MS Greenrock
LLC (MS Greenrock) respectively. As a result, assuming conditions precedent to
the Morgan Stanley construction loan are met and the Company meets the
milestones required by both the Glitnir loan and the Morgan Stanley commitment
the Company has access to the estimated funds required to build up to 35 MW
generating plant, as announced, at Blue Mountain,

In order to finance our other exploration and development
activities we are dependent upon the exercise of options and warrants as well as
issuance of shares. In turn these sources of funds are dependent upon investor
sentiment towards the geothermal business generally, and towards NGP in
particular. Many factors have an influence on investor sentiment, including a
positive climate for geothermal development, the companys track record and the
experience and calibre of its management. There is no certainty that further
equity funding will be available at the times and in the amounts required to
fund our activities.

As of the fiscal period ended June 30, 2007, we had working
capital of $10,962,394. At June 30, 2007, we had $13,540,315 in cash and
equivalents on hand (2006: $16,117,092; 2005: $1,964,047), and marketable
securities in the amount of $126,000 (2006: $133,305; 2005: $91,610).

48

---

Operating Activities

Cash used for operations during fiscal 2007 amounted to
$3,233,453 (2006: $762,405); 2005: $906,753), and included a net loss of
$2,874,979 (2006: $1,605,372; 2005: $1,308,233).

During this same period, significant adjustments included
$1,279,145 in non-cash stock-based compensation (2006: $692,059; 2005:
$335,064), amortization of $20,549 (2006: $10,900; 2005: $3,005), and a gain of
$103,965 on the sale of securities (2006: $62,780 and 2005: Nil).

Investing Activities

During 2007, our cash outflows for investing activities was
$13,517,733, (2006: $5,022,211; 2005: $1,814,821). Most expenditures were in
connection with our Blue Mountain project ($4,747,451).

Financing Activities

During the fiscal year ended June 30, 2007, we raised a total
of $14,174,409 (2006: $18,412,851; 2005: $3,701,192) comprised of $13,879,209
from the private placement of our securities, including non-cash consideration
of $1,036,530, and $295,200 through the exercise of stock option. We also had
interest income of $448,195, and our Pumpernickel joint venture partner, Sierra
Geothermal Power Corp., advanced the sum of $293,385 to cover expenditures.

The private placement consisted of the issuance of 23,077,000
units at a price of $0.65 per unit for proceeds of $15,000,050 before issue
costs of $2,157,371 including non-cash consideration of $1,036,530. Each unit
consisted of one common share and one share purchase warrant. One warrant
entitles the holder to purchase one common share at a price of $1.10 per share
for a two-year period. As a finance fee, we granted the agents the right to
acquire up to 1,846,160 units at a price of $0.65 per unit until March 1, 2009.
Each of these units consists of one share ("Agents Shares") and one share
purchase warrant, exercisable for one further common share ("Agents Warrant
Share") for a period of two years at a price of $1.10 each. The value of the
agents units, aggregating $1,036,530, was calculated using the Black-Scholes
option pricing model, with an interest rate of 4.13%, a dividend rate of 0%, a
volatility of 60% and a two year term for both the common share portion and the
warrant portion.

A total of 545,000 common shares were issued at various times
throughout the 2007 fiscal year, upon exercise of stock options, for proceeds of
$295,200.

Outstanding Share Data as of December 15, 2007

As at June 30, 2007, we had 76,824,171common shares issued and
outstanding, none of which were held in escrow pursuant to the terms of a June
30, 2003 escrow agreement between Nevada Geothermal Resources Inc. (sic),
Computershare Investor Services Inc. and Brian D. Fairbank, John W. Milligan,
Tywell Management Inc. and Fairbank Engineering Ltd. These last shares were
released from escrow on July 23, 2006.

As of June 30, 2007, the following rights to purchase our
securities were outstanding:

|(a) | stock options           | 6,540,000 
|--- | ----------------------- | ----------
|(b) | share purchase warrants | 42,743,667
|(c) | Agents Shares          | 3,419,493 
|(d) | Agents Warrant Shares  | 3,419,493 
|    |                         | 56,122,653

Subsequent to our 2007 fiscal year end, we granted options,
under our stock option plan, to acquire a total of 595,000 common shares with
exercise prices of $0.80 - $1.20 per share expiring at various dates during
2012.

49

---

Subsequent to our 2007 fiscal year end, stock options for the
purchase of an aggregate of 205,000 common shares were exercised at prices of
$0.54 - $0.67 each, for total proceeds of $126,000.

Subsequent to our 2007 fiscal year end, stock options for the
purchase of 230,000 common shares exercisable at prices of $0.65  $0.90 each
until January 18, 2011 were cancelled.

As of December 15, 2007, the following rights to purchase our
securities were outstanding:

|(a) | stock options           | 6,700,000 
|--- | ----------------------- | ----------
|(b) | share purchase warrants | 42,743,667
|(c) | Agents Shares          | 3,419,493 
|(d) | Agents Warrant Shares  | 3,419,493 
|    |                         | 56,282,653

As of December 15, 2007, our issued and outstanding share
capital consisted of 77,029,171 common shares, which, when combined with
29,621,333 common shares issuable pursuant to rights granted to purchase our
securities, would result in a fully-diluted share capital of 133,311,824 common
shares.

|C. | Research and Development, patents,
      licenses etc.
|-- | ------------------------------------------------------

We do not currently and did not previously have research and
development policies in place.

|D. | Trend Information
|-- | -----------------

Historically, the geothermal industry in the United States has
experienced significant growth followed by a consolidation of owners and
operators of geothermal power plants. During the 1990s, growth and development
in the geothermal industry occurred primarily in foreign markets and only
minimal growth and development occurred in the United States. Since 2001, there
has been increased demand for energy generated from geothermal resources in the
United States as production costs for electricity generated from geothermal
resources have become more competitive relative to fossil fuel generation due to
increasing gas prices and as a result of newly enacted legislative and
regulatory incentives, such as state renewable portfolio standards. We see an
increasing demand for energy generated from geothermal and other renewable
resources in the United States, the rise in oil and gas prices, and further
introduction of renewable portfolio standards as the most significant trends
affecting our industry today and in the immediate future.

|E. | Off-balance Sheet Arrangements
|-- | ------------------------------

We do not have any off-balance sheet arrangements.

|F. | Tabular Disclosure of Contractual
      Obligations
|-- | ---------------------------------------------------

We have entered into operating leases for premises and
geothermal resources. Our minimum annual commitments in each of the next five
fiscal years and thereafter (including work commitments) are as follows:

Payments due by periodTotal
    Less than 1 Year
    1 to 3 Years
    3 to 5 Years
    More than 5 YearsFuture Mineral Property Costs
    $3,908,646
    $350,487
    $1,078,078
    $1,141,460
    $1,338,621Total
    $3,908,646
    $350,487
    $1,078,078
    $1,141,460
    $1,338,621


50

---

We have no debt, and are not subject to any purchase
obligations.

|G. | Safe Harbor
|-- | -----------

Not applicable

|ITEM 6 | Directors, Senior Management and
      Employees
|------ | ------------------------------------------------

|A. | Directors and Senior Management
|-- | -------------------------------

The following information relates to our directors and
officers:

Brian D. Fairbank, B.A.Sc., P. Eng. President, Chief
Executive Officer Director since April 1995

Mr. Fairbank is responsible for the day to day operations of
NGP and our subsidiaries and for the development of strategic direction.

Mr. Fairbank is a geological engineer, with 30 years of
geothermal engineering, exploration and resource assessment, business management
and project finance experience. He founded Fairbank Engineering Ltd. in 1986,
specializing in international project development. He was project manager
through the discovery of Canadas Meager Creek Geothermal Area (1978-1982),
which was then operated by BC Hydro and Power Authority. He also assisted in the
development of a National Power Plan for Kenya, East Africa and subsequently
consulted on a production drilling program which developed 60 megawatts of steam
reserves to augment 45 megawatts of existing generating capacity at the Olkaria
Power Station, Kenya. Mr. Fairbank is a long-standing member of the Geothermal
Resource Council and a Past President of the Canadian Geothermal Energy
Association.

Andrew T. Studley C.P.A, M.B.A. P. EngSecretary
and Chief Financial Officer Since August 2007

Mr. Studley is responsible for the financial supervision of the
affairs and business of NGP and our subsidiaries.

Since earning his C.P.A. Mr. Studley has held a number of
senior financial positions with public companies, as well as a number of
operating positions with Imperial Oil Ltd. From 1998 to 2007 these positions
included V.P. Corporate Planning and Treasurer for A.T. Plastics Inc. and
Corporate Controller for Marsulex Inc. Mr. Studley obtained his B.A.S.c
(Chemical Engineering) from University of Toronto and M.B.A. from Harvard
University.

R. Gordon Bloomquist, Ph.D. Director since March
2003

Dr. Bloomquist has been a senior scientist and director of the
Integrated Community Energy Program at Washington State University since 1980.
As director of Geothermal and District Energy Programs with the Washington State
Energy Office, Dr. Bloomquist is responsible for all state geothermal policy
decisions, technical assistance to geothermal resource developers, investigation
of regional and local resources, and district heating feasibility studies and
programs.

Dr. Bloomquist has consulted with a wide variety of private
corporations and institutions on legislative issues for geothermal development,
power generation, environmental regulation and regional geothermal resource
assessment. Dr. Bloomquist has been a visiting professor at the International
School of Geothermics in Pisa, Italy since 1990, and a member of the Geothermal
Resource Council since 1972 (past Chairman and President). He has a Ph.D in
Geochemistry and a Masters degree in Geology from the University of Stockholm as
well as a Bachelors Degree in Geology from Portland State University.

51

---

Richard G. Campbell, M.S. Chemical Engineer Director since
December 2005

Mr. Campbell has been Manager of the Technical and Engineering
Services division of TIC (The Industrial Company since 2005. He has an extensive
background in geothermal development and in the design, procurement,
construction support and start-up of geothermal power plants. Mr. Campbell is
the past President (1995-1996) and currently a director of the Geothermal
Resources Council, one of the worlds premier geothermal associations, from
which he received the Joseph W. Aidlin Award (2000) for Outstanding Contribution
to the Development of Geothermal Energy. He has a Masters Degree in Chemical
Engineering from California Institute of Technology.

Markus K. Christen Director since January 2003

Mr. Christen received a law degree from the University of
Zurich in 1981. He joined Credit Suisse in Zurich in 1983. From 1989 to 1996, he
was a member of senior management, head of Project Finance and Structured
Finance for Credit Suisse, New York, and he successfully led a global expansion
with teams based in London and Hong Kong. From 1997 to 2000, Mr. Christen was
Managing Director of Credit Suisse First Boston, New York where he was
responsible for the acquisition and execution of major project finance
transactions on a global basis. In 2000, Mr. Christen began working as an
independent financial advisor specializing in mergers, acquisitions and project
finance.

Mr. Christen has extensive geothermal power industry contacts
and project finance or project acquisition experience in Nevada (Brady, Desert
Peak), California (Coso, Geysers, Salton Sea, East Mesa, Ormesa), Hawaii,
Indonesia, and the Philippines (Mahanagdong, Malitbog Visayas, Upper
Mahiao).

Domenic J. Falcone, CPA Director since January
2004

Mr. Falcone is currently an independent financial consultant.
He was a founder of Geothermal Resource International Inc. (1971 to 1987), a
power developer in California that played a significant role in building a
viable U.S. geothermal industry. Mr. Falcone has an extensive background in
geothermal project financing, acquisitions and business development, and a broad
knowledge of the independent power and energy industries. He has a Bachelor of
Arts in Economics and is a Certified Public Accountant.

As President and principal of Domenic J. Falcone Associates
Inc. from 1991 to 1997, he provided project financing and financial services to
the independent power, co-generation, solid waste and wastewater industries.

Mr. Falcone was Chief Financial Officer and Vice President of
PG & E Energy Services during its startup period, Chief Financial Officer
NUVANT systems and was President of Creston Financial Group (1991-1997). Mr.
Falcone received the Joseph W. Aidlin Award in 1991 from the Geothermal Resource
Council recognizing his outstanding contribution to the development of
geothermal resources. Mr. Falcone is a long-standing member of the Geothermal
Resource Council.

Jack W. Milligan, B.A.Sc., P. Eng. Director since April
1995

Mr. Milligan is a civil engineer with many of engineering and
management experience in power plant and transmission line construction. Mr.
Milligan held senior management positions with the BC Hydro and Power Authority
from 1949-1982, when he retired, managing the Construction Division with
responsibility for dam, power plant and transmission line installations during a
period of major project construction (1974-1979) including the Meager Creek
Geothermal Project. Since 1982, Mr. Milligan has acted as an independent
consultant to institutions, private corporations and mining companies.

James Ernest Yates Director since December 1996

52

---

Mr. Yates is an independent businessman with 20 years of
experience in corporate development and the financing of start-up resource
companies. Mr. Yates financed and developed to production, the Crowfoot Lewis
open-pit gold mine in Nevada. Mr. Yates is the also a founder and President of
Hycroff Realty Ltd., a company involved in real estate sales and
development.

The following information relates to our non-director/officer
senior management and consultants upon whose work we are dependent:

Kim Niggemann, B.Sc., Geologist Project Director

Ms. Niggemann has been the Project Director with responsibility
for day-to-day operations, scheduling, permitting, communications, program
efficiency, budget control and data completeness.

Ms. Niggemann obtained a B.Sc. degree in geology from the
University of New Brunswick in 1980 and worked with the Department of Natural
Resources of New Brunswick, Shell Canada, and Home Oil in eastern Canada before
joining Chevron Resources in Vancouver B.C. in 1981. Chevron field projects
included potash deposits in Cape Breton, mining exploration in the Yukon and
British Columbia, and major field involvement in drilling at the Muddy Lake gold
discovery. Muddy Lake was later developed as the Golden Bear Mine.

In 2001, she obtained a Management Systems Certificate with
honours from the British Columbia Institute of Technology (BCIT) and gained
business management, project accounting, bookkeeping and consulting experience
working on contacts for the Insurance Corporation of British Columbia (ICBC) and
small businesses.

In 2003 Ms. Niggemann joined Fairbank Engineering as a Project
Manager. She was also program director for Deep Blue No. 2, a high-temperature,
slim-hole drilling project at Blue Mountain, Nevada for Noramex Corp, with
responsibility for permitting and drilling operations.

Max Walenciak P.Eng Manager Project Development

Mr. Walenciak has the Manger for Project Development since
early 2007 with primary responsibility for bringing our Blue Mountain project
through to electric power production. Mr. Walenciak has over 30 years experience
in geothermal power plant development and operations management. He is
knowledgeable in engineering, development, construction, and permitting , having
worked as Owners Engineer during the Malaga Peaking Project near Fresno,
California and River Road Generating Project in Washington as well as providing
engineering design, project management and construction management services to
Klamath Cogeneration Project near Klamath Falls, Oregon, Toltac Power Project,
Steamboat and Bottle Rock Geothermal projects. He has a Bachelor of Science
degree in Mechanical Engineering from San Jose State University.

Subsidiaries

The following persons are the directors and officers of our
wholly-owned subsidiaries:

|Blue Mountain Company   | Brian Fairbank | President, and Director
|----------------------- | -------------- | -----------------------
|                        |                |                        
|                        | Andrew Studley | CFO and Secretary      
|                        |                |                        
|Nevada Geothermal Power | Brian Fairbank | President, and Director
|Company                 |                |                        
|                        | Andrew Studley | CFO and Secretary      
|                        |                |                        
|Desert Valley Gold Co.  | Brian Fairbank | President, and Director

53

---

|                      | Andrew Studley  | CFO and Secretary      
|--------------------- | --------------- | -----------------------
|                      |                 |                        
|NGP Blue Mountain     | Brian Fairbank  | President, and Director
|Holdco LLC            |                 |                        
|                      | Andrew Studley  | CFO and Secretary      
|                      |                 |                        
|                      | Markus Christen | Vice President         
|                      |                 |                        
|NGP Blue Mountain     | Brian Fairbank  | President, and Director
|Holdco 11 LLC         |                 |                        
|                      | Andrew Studley  | CFO and Secretary      
|                      |                 |                        
|                      | Markus Christen | Vice President         
|                      |                 |                        
|NGP Blue Mountain     | Brian Fairbank  | President, and Director
|Holdco 111 LLC        |                 |                        
|                      | Andrew Studley  | CFO and Secretary      
|                      |                 |                        
|                      | Markus Christen | Vice President         
|                      |                 |                        
|NGP Blue Mountain     | Brian Fairbank  | President, and Director
|Holdco 1V LLC         |                 |                        
|                      | Andrew Studley  | CFO and Secretary      
|                      |                 |                        
|                      | Markus Christen | Vice President         
|                      |                 |                        
|NGP Blue Mountain 1   | Brian Fairbank  | President, and Director
|LLC                   |                 |                        
|                      | Andrew Studley  | CFO and Secretary      
|                      |                 |                        
|                      | Markus Christen | Vice President         
|                      |                 |                        
|NGP Blue Mountain 11  | Brian Fairbank  | President, and Director
|LLC                   |                 |                        
|                      | Andrew Studley  | CFO and Secretary      
|                      |                 |                        
|                      | Markus Christen | Vice President         
|                      |                 |                        
|NGP Blue Mountain 111 | Brian Fairbank  | President, and Director
|LLC                   |                 |                        
|                      | Andrew Studley  | CFO and Secretary      
|                      |                 |                        
|                      | Markus Christen | Vice President         
|                      |                 |                        
|NGP Blue Mountain IV  | Brian Fairbank  | President, and Director
|LLC                   |                 |                        
|                      | Andrew Studley  | CFO and Secretary      
|                      |                 |                        
|                      | Markus Christen | Vice President         

Family Relationships

There are no family relationships between any of the persons
named above.

54

---

Other Relationships

There are no arrangements or understandings between any major
shareholder, customer, supplier or others, pursuant to which any of the
above-named persons were selected as directors or members of senior
management.

|B. | Compensation
|-- | ------------

We are required, under applicable securities legislation in
Canada to disclose to our shareholders details of compensation paid to our
executive officers. The following fairly reflects all material information
regarding compensation paid to our executive officers, which has been disclosed
to our shareholders under applicable Canadian law.

The number of current Executive Officers of the Company is two
(2), namely Brian D. Fairbank, President and CEO and Andrew T. Studley,
Secretary and CFO. During our last three financial years ended, the following
persons were and are our executive officers:

|Name             | Principal Position                                | From                                 | To                                  
|---------------- | ------------------------------------------------- | ------------------------------------ | ------------------------------------
|                 |                                                   |                                      |                                     
|Brian Fairbank   | President Chief Executive
      Officer           | Apr. 13/95 May 1/95                  | Present                             
|                 |                                                   |                                      |                                     
|Andrew Studley   | Chief Financial Officer and
      Secretary       | Aug. 1/07                            | Present                             
|                 |                                                   |                                      |                                     
|Don J.A. Smith   | Secretary and Chief
      Financial Officer       | Oct. 6/05                            | April 30/07                         
|                 |                                                   |                                      |                                     
|Jack W. Milligan | Secretary Treasurer
      Chief Financial Officer | May 1/95 Mar. 16/00
      Jan. 14/04 | Oct. 1/05 Jan. 14/04
      Oct. 6/05

The following table sets forth all annual and long term
compensation for services provided to us during the fiscal years ended June 30,
2007, 2006 and 2005

Summary Compensation Table

Set out below is a summary of the compensation paid to the
Chief Executive Officer and all Executive Officers receiving total compensation
in excess of $150,000 (collectively Named Executive Officers) of the Company
for the three most recently completed fiscal years is set out below:

Name and Principal Position and Country of Residence
      Fiscal
        Year
      Annual Compensation
      Long Term
        Compensation
      All Other
        Compen- sation ($)Awards
      PayoutsSalary($)
      Bonus ($)
      Other Annual Compen-
        sation ($)
      Securities Under Option/SA
        Rs Granted (#)
      Restricted Shares or Restricted Share Units ($)
      LTIP Payouts ($)Brian D. Fairbank, President, CEO Canada
      2007
      108,000 (1)
      nil
      nil
      1,000,000 (2)
      nil
      nil
      nil2006
      75,500 (1)
      nil
      nil
      300,000 (2)
      nil
      nil
      nil (3)2005
      30,000 1)
      nil
      nil
      450,000 (2)
      nil
      nil
      nil (3)


55

---

Name and Principal
      Position and Country of Residence
    Fiscal
      Year
    Annual
      Compensation
    Long
      Term Compensation
    All Other
      Compen- sation ($)Awards
    PayoutsSalary($)
    Bonus ($)
    Other Annual
      Compen- sation ($)
    Securities Under
      Option/SA Rs Granted (#)
    Restricted Shares or
      Restricted Share Units ($)
    LTIP Payouts
      ($)Don Smith, former CFO and 
        Secretary Canada
    2007 2006 2005
    48,000 nil nil
    nil nil nil
    nil nil nil
    nil 15,000 nil
    nil nil nil
    nil nil nil
    nil nil nilAndrew T. Studley CFO and Secretary 
        Canada
    2007 2006 2005
    nil(4)nil nil
    nil nil nil
    nil nil nil
    nil nil nil
    nil nil nil
    nil nil nil
    nil nil nil


|(1) | consisting of a management fees paid to Fairbank
      Engineering Ltd and Tywell Management Inc., non- reporting companies
      controlled by Brian D. Fairbank.                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | indirectly through Tywell Management Inc., a private
      company controlled by Brian D. Fairbank.                                                                                                                                                        
|(3) | the table does not include fees paid to Fairbank
      Engineering Ltd, a non-reporting company controlled by Brian D. Fairbank,
      for geothermal consulting services provided by employees of Fairbank
      Engineering Ltd. other than Mr. Fairbank.
|(4) | Mr. Studley was appointed to serve as CFO and Secretary
      on August 2, 2007.                                                                                                                                                                           

The following table sets forth stock options granted by us
during the fiscal year ended June 30, 2007, to our current executive
officers:

Name
    Securities
      Under Options/SARs Granted(#)
    % of Total
      Options/SARs Granted to Employees in
      Financial Year
    Exercise or
      Base Price ($/Security)
    Market Value of Securities
      Underlying Options/SARs on the Date of
      Grant ($/security)
    Expiration
      DateBrian D. Fairbank
    1,000,000
    25%
    $0.65
    $90,000
    April 4, 2012Don Smith
    nil
    nil
    nil
    nil
    nil


The following table sets forth details of all exercises of
stock options during the fiscal year ended June 30, 2006 by our current
executive officers, and the fiscal year-end value of unexercised options on an
aggregate basis:

Name
    Securities Acquired
      or Exercised
    Aggregate Value
      Realized(1)($)
    Unexercised
      Options/SARs at June 30, 2007
    Value of Unexercised in-
      the-Money Options/SARs at June 30, 2007(2)Brian D. Fairbank
    nil
    nil
    1,600,000
    $243,980Don Smith
    nil
    nil
    nil
    nil


|(1) | Aggregate Value Realized is calculated by determining
      the difference between the market value of the securities underlying the
      options or SARs at the date of exercise and the exercise price of the
      options or
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

56

---

|    | SARs and is not necessarily indicative of the value (i.e.
      loss or gain) actually realized by the Named Executive Officer.                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | This represents the closing price of the Companys shares
      on the Exchange (being $0.77) on the last day
      the shares traded on or before June 30, 2007 (being June 29, 2007) less
      the per option exercise price.

No options held by any executive officer were re-priced
downward during our most recently completed financial year.

During Fiscal 2007 the Company hired Mr. M. Walenciak as
Manager, Project Development for its Blue Mountain construction project. Also,
subsequent to the 2007 year end, the Company hired Mr. A. Studley as Chief
Financial Officer and the Tywell Management Agreement was terminated and
replaced by an employment agreement dated October 1, 2007, whereby the Company
retained the services of Mr. Fairbank on a full-time basis for a period of two
years. The associated employment agreements provide for severance payments up to
24 months salary in the event of termination without cause, and up to 48 months
salary if termination is a result of a change of control of the Company.

We do not provide retirement benefits for directors, officers,
employees or consultants. No funds were set aside or accrued by us during the
fiscal year ended June 30, 2007 to provide pension, retirement or similar
benefits for our directors or officers pursuant to any existing plan provided or
contributed to by us or our subsidiaries.

Compensation of Directors

Following are our policies regarding the compensation of our
directors and others:

|(a) | The Company pays each director the sum of $500 per month,
      or $1,000 per month for the Chairman of a Committee.                                                             
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Directors and non-director committee members are
      compensated for their actual expenses incurred in the pursuance of their
      duties.                                    
|(c) | Directors may be compensated for services rendered as
      consultants or experts.                                                                                              
|(d) | Directors may be awarded special remuneration, if such
      director undertakes any special services on our behalf, other than
      services ordinarily required of a director.
|(e) | A committee chairman receives the aggregate sum of US
      $12,000 per fiscal year, regardless of the number of committees that such
      person may chair.                    
|(f) | A non-chair committee member receives the aggregate sum
      of US $6,000 per fiscal year, regardless of the number of committees that
      such person may contribute to.     

We carry $3 million in director and officer liability
insurance.

The Company paid Markus Christen, a director of the Company,
the sum of $130,394 for consulting services during the 2007 fiscal year pursuant
to an agreement dated January 12, 2007. Mr. Christen is also entitled to receive
fees for financial advisory services in connection with arranging financing for
development and construction of a power plant at the Blue Mountain Project.

The Company paid Domenic Falcone, a director of the Company,
the sum of $19,473 during the 2007 fiscal year as remuneration for consulting
services.

The Company paid Gordon Bloomquist, a director of the Company,
the sum of $9,320 during the 2007 fiscal year as remuneration for consulting
services.

The Company has granted the following incentive stock options
to directors, officers, consultants and employees of the Company during the
Companys most recently completed financial year:

57

---

|Number Granted(1) | Exercise Price per Share | Date of Grant
|----------------- | ------------------------ | -------------
|3,927,000         | $0.65                    | April 4, 2007

|(1) includes the number granted to Named Executive Officers
      previously disclosed
|--------------------------------------------------------------------------------------

No options held by a non-executive officer director were
re-priced downward during our most recently completed financial year.

|C. | Board Practices
|-- | ---------------

The election and retirement of our directors are provided for
in our articles. An election of directors takes place at each annual meeting of
shareholders and all the directors then in office retire but, if qualified, are
eligible for re-election. A director retains office only until the election of
his successor. The number of directors to be elected at such meeting is the
number of directors then in office, unless the directors or the shareholders
otherwise determine. The election is by ordinary resolution of shareholders. If
an election of directors is not held at the proper time, the incumbent directors
continue in office until their successors are elected. Our last annual general
meeting was held on November 29, 2007.

The Board is currently composed of seven directors, four of
whom (Messrs. Campbell, Yates, Falcone, and Bloomquist) are independent. The
remaining directors (Messrs. Fairbank, Christen and Milligan) are not considered
to be independent as a result of their work for the Company.

Our articles also permit the directors to add additional
directors to the Board between annual general meetings as long as the number
appointed does not exceed more than one-third of the number of directors elected
at the last annual general meeting. Individuals appointed as directors to fill
casual vacancies created on the Board or added as additional directors hold
office like any other director until the next annual general meeting at which
time they may be re-elected or replaced.

Our officers are re-elected at a directors meeting following
each annual general meeting.

We have established the following committees:

Compensationand
    CorporateAudit
    Nominating
    GovernanceDomenic Falcone *
    Gordon Bloomquist *
    Domenic Falcone *James Yates
    Markus Christen
    James YatesRichard Campbell
    James Yates
    Markus ChristenRichard CampbellJack Milligen


* Chairman of the Committee;

Audit Committee

Our Audit Committee is appointed by the Board, and its members
hold office until removed by the Board, their resignation, or until our next
annual general meeting, at which time their appointments expire and they are
then eligible for re-appointment. The Audit Committee operates pursuant to a
charter adopted by the Board, and reviews and approves the scope of the audit
procedures employed by our independent auditors, reviews the results of the
auditors examination, the scope of audits, the auditors opinion on the
adequacy of internal controls and quality of financial reporting and our
accounting and reporting principles, policies and practices, as well as our
accounting, financial and operating controls. The audit committee also reports
to the Board with respect to such matters and recommends the selection of
independent auditors. Before the financial statements are presented to the
shareholders at an annual general meeting they are submitted to the audit
committee for review with the independent auditors, following which the report
of

58

---

the audit committee on the financial statements is submitted to
the Board. The quarterly unaudited consolidated financial statements prepared by
management and the quarterly Management and Discussion Analysis are also
submitted to the audit committee for their review prior to dissemination to the
shareholders.

Compensation and Nominating Committee

This committee is responsible for, among other things,
undertaking an annual review of the efficiency of our organizational structure,
identifying candidates for election to the Board and/or committees, and
reviewing succession practices for management, and the performance of
management. It is also responsible for undertaking an annual review of
compensation for management and for directors who serve on committees,
developing compensation guidelines for management, administration of the
incentive stock option plan and reporting to the Board on its activities and
recommendations.

Corporate Governance Committee

This committee is responsible for monitoring the governance
practices and procedures of our Board, as well as the effectiveness of the Board
and all committees of the Board.

|D. | Employees
|-- | ---------

Nevada Geothermal Power Inc. (NGP) re-newed the technical
consulting services agreement, dated January 1, 2006, with Fairbank Engineering
Ltd. ("FEL"), a non-reporting company controlled by Brian Fairbank. FEL provided
certain geological, specialist, technical and support personnel. As
consideration for these services, FEL invoiced monthly at set charge-out rates
for its personnel. FEL also received its out-of-pocket expenses. The term of
this agreement was effective for two years, automatically renewable thereafter
for one year term(s) unless otherwise terminated.

During the fiscal years ended June 30, 2007, 2006 and 2005, an
average of eight (8), eight (8) and six (6) people, respectively, were provided
by FEL to satisfy our accounting, administrative, geological and technical
needs. Also during these fiscal years ended, FEL provided us with casual
labourers for work on site at our various projects.

Management services were provided to us by Brian Fairbank
pursuant to the terms of a Management Consulting Services Agreement dated
December 1, 2005 between Nevada Geothermal Power Inc. and Tywell Management
Inc., a non-reporting company controlled by Brian Fairbank. As consideration for
these management services, Tywell received the sum of $9,000 per month, plus
GST, together with out-of-pocket expenses. The term of this agreement was for
one year, automatically renewable for further one year terms unless otherwise
terminated. The Tywell Management Agreement was terminated and replaced by an
employment agreement dated October 1, 2007, whereby the Company retained the
services of Mr. Fairbank on a full-time basis for a period of two years.

Nevada Geothermal Power Inc. entered into a letter agreement
with Domenic J. Falcone Associates, Inc. ("DJF"), the principal of which is
Domenic Falcone, a director of NGP, dated May 25, 2005, agreed and accepted to
on June 9, 2005, and as amended. Pursuant to the terms of this agreement, DJF
provides consulting services in exchange for fees and out-of-pocket expenses.
These consulting services are provided in connection with the long term power
purchase agreement, renewable energy credit agreement relating to Blue Mountain,
and other services provided on a project by project basis.

Nevada Geothermal Power Inc. entered into a letter agreement
with Markus K. Christen, a director of NGP, dated January 12, 2007. Pursuant to
the terms of this agreement, Mr. Christen provides consulting services in
exchange for fees and out-of-pocket expenses. These consulting services are
provided in connection with financial advisory services in connection with
arranging financing for development and construction of a power plant at the
Blue Mountain Project. On July 26, 2007, the Company announced it had signed a
commitment letter and term sheet for a construction loan and permanent financing
with Morgan Stanley whereby Morgan Stanley will extend a loan facility of up to
US$100-million for the

59

---

construction of the 35-megawatt Blue Mountain I project in
Nevada. The closing of the construction loan is subject to certain conditions
precedent and is expected to occur on or before June 30, 2008. The proceeds of
the loan will be used to finance construction of the Faulkner I geothermal power
plant, geothermal well field, related infrastructure and development costs.

Subject to customary conditions precedent, at substantial
completion of the project, Morgan Stanley will make an equity investment of
approximately US$100-million into a project-level, single-purpose entity holding
the Blue Mountain Faulkner I assets. Proceeds from this investment will repay
the construction loan. The transaction will employ a "flip structure," which
will allocate substantially all distributable cash flow to the Company until its
invested capital is returned. Once Morgan Stanley reaches a target after-tax
yield on its investment in the project, the Company will receive substantially
all of both distributable cash and taxable income. The Company also has the
option to buy out the investor's remaining interest in the project at the
then-current fair market value. The Company will be operating the power plant
and geothermal field, and receive compensation for such services.

Upon satisfaction of the conditions precedent to the loan, the
Company shall pay a success fee to Markus K. Christen (a director of the
Company). See ITEM 7 B subsequent events for further details.

On October 1, 2005, Nevada Geothermal Power Inc. entered into a
professional services agreement with Frank Misseldine, having an initial term of
one year to provide consulting services for the sum of $106,000 per year plus
reimbursement for all reasonable travel and other expenses. The parties
contracted for an additional three year term, cancellable on 30 days notice,
June 1, 2007 for the sum of $180,000 per year plus expenses.

None of our wholly-owned subsidiaries has any employees.

|E. | Share Ownership
|-- | ---------------

The following table sets forth the share ownership of our
directors and officers, and includes the details of all options or warrants to
purchase shares of NGP held by such persons as of December 15, 2007. In
computing the number of common shares owned by a person and the percentage
ownership of that person, common shares subject to options and warrants held by
that person that are currently exercisable or exercisable within 60 days of
December 15, 2007, are deemed outstanding. Such shares, however, are not deemed
outstanding for the purposes of computing the percentage ownership of any other
person.

Name
    Number of
      Common Shares(1)
    Number of
      **Common** Shares Subject to Options
      or Warrants
    Beneficial
      Percentage Ownership
    Exercise
      Price
    Expiry
      DateBrian Fairbank
    6,974,703
    153,000 80,000 67,000 300,000
      1000000 1750
    8.9%
    $0.28 $0.35 $0.54 $0.90 $0.65
      $1.10
    Jan. 20/09 Feb. 27/09 Oct. 4/09
      Jan. 18/11 Apr. 4/12 Feb.28/09Andrew Studley
    300,000
    250,000 50,000
    0.4%
    $0.80 $1.20
    Aug 1/12 Nov 21/12Jack W. Milligan
    572,000
    40,000 63,000 32,000
    0.7%
    $0.54 $0.90 $0.65
    Oct. 4/09 Jan. 18/11 Apr.4/12James Yates
    325,000
    175,000 150,000
    0.4%
    $0.90 $0.65
    Jan. 18/11 Apr. 4/12


60

---

Name
    Number of Common Shares(1)
    Number of Common
      Shares Subject to Options or Warrants
    Beneficial
      Percentage Ownership
    Exercise Price
    Expiry DateMarkus Christen
    750,000
    100,000 100,000 75,000 475,000
    1.0%
    $0.28 $0.28 $0.90 $0.65
    Jan. 15/08 Aug. 13/08 Jan. 18/11
      Apr. 4/12Gordon Bloomquist
    480,000
    150,000 300,000
    0.6%
    $0.90 $0.65
    Jan. 18/11 Apr. 4/12Richard Campbell
    500,000
    200,000 300,000
    0.6%
    $0.90 $0.65
    Jan. 18/11 Apr.4/12Domenic Falcone
    750,000
    100,000 100,000 75,000 475,000
    1.0%
    $0.28 $0.35 $0.90 $0.65
    Aug. 13/08 Feb. 27/09 Jan. 18/11
      Apr.4/12


|(1) | These figures include options and warrants
      exercisable within sixty days.
|--- | -------------------------------------------------------------------------------

The voting rights attached to the common shares owned by our
officers and directors do not differ from those voting rights attached to shares
owned by people who are not officers or directors of our company.

Stock Option Plan

On November 29, 2007, we renewed and adopted a new stock option
plan (the "Plan"), which authorizes our Board to grant incentive stock options
to directors, officers, employees and consultants of NGP and our associated,
affiliated, controlled or subsidiary companies, subject to the terms of the Plan
and in accordance with the rules and policies of the governing regulatory
authorities

Under the Plan, we may reserve up to 10% of our issued and
outstanding common shares (on a non-diluted basis) for the granting of options
from time to time. As a Tier 2 TSXV company, the number of common shares that
may be reserved for issuance to any one person during any 12 month period shall
not exceed 5% of our issued and outstanding share capital, or in the case of a
consultant or investor relations employee, 2%.

As of December 15, 2007, the maximum number of shares reserved
for issuance under the Plan was 7,702,917 common shares, of which a total of
6,700,000 have been granted, leaving 1,002,917 common shares available under the
Plan for future granting.

|ITEM 7 | Major Shareholders and Related Party
      Transactions
|------ | -------------------------------------------------------

|A. | Major Shareholders
|-- | ------------------

As of December 15, 2007, we had 77,029,171 common shares issued
and outstanding. To the best of our knowledge, the following table sets forth
persons known to us to be the beneficial owners of five percent (5%) or more of
our common shares:

Name
    Amount Owned
    Percentage of ClassWexford Funds
    6,733,000
    8.7%


61

---

Brian D.
      Fairbank (1)
    5,372,953
    7.0%Skyberry Holdings Ltd.
    3,850,000
    5.0%


|(1) | Certain of these shares may be registered in the name of
      CDS & Co. 2,362,250 and 1,150,703 of these shares are registered in
      the names of Tywell Management Inc. and Fairbank Engineering Ltd.,
      respectively, companies wholly-owned by Brian
Fairbank.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The voting rights of our major shareholders do not differ from
the voting rights of holders of our companys shares who are not major
shareholders.

As of December 15, 2007, Computershare Investor Services Inc.,
our registrar and transfer agent, reported that we had 77,029,171 common shares
issued and outstanding. Of those common shares, 45,100,961 common shares were
registered to Canadian residents (27 shareholders), 27,892,377 common shares
were registered to residents of the United States (46 shareholders) and
4,035,833 common shares were registered to residents of other foreign countries
(4 shareholders).

We are not directly or indirectly owned or controlled by
another corporation, by any foreign government or by any other natural or legal
person, severally or jointly.

There are no arrangements known to us, the operation of which
may at a subsequent date result in a change in the control of our company.

|B. | Related Party Transactions
|-- | --------------------------

Other than as disclosed below or elsewhere in this Annual
Report, to the best of our knowledge, there have been no material transactions
or loans from the commencement of our 2007 fiscal year to the date of this
Annual Report between our Company and: (a) enterprises that directly or
indirectly through one or more intermediaries, control or are controlled by, or
are under common control with, our Company; (b) associates; (c) individuals
owning, directly or indirectly, an interest in the voting power of our Company
that gives them significant influence over our Company, and close members of any
such individuals family; (d) key management personnel of our Company, including
directors and senior management of our Company and close members of such
individuals families; and (e) enterprises in which a substantial interest in
the voting power is owned, directly or indirectly, by any person described in
(c) or (d) or over which such a person is able to exercise significant
influence.

Subsequent Events:

On October 1, 2007, the Company entered into an employment
contract with Mr. Brian Fairbank, President and CEO. Simultaneously, the Company
agreed to hire the former employees and acquire certain assets from Fairbank
Engineering Ltd. (FEL). FEL is a consulting company owned by Brian Fairbank.
As consideration, the Company has agreed to issue to FEL, up to 175,000 common
shares and pay the balance of the purchase price in cash. The agreement is
subject to the acceptance of the TSX Venture Exchange.

Upon both the closing of the anticipated Morgan Stanley
construction loan and the subsequent take out Equity financing the Company shall
pay a success fee to Markus K. Christen (a director of the Company). The Company
retained Mr. Christen as its financial adviser in connection with arranging
financing for development of the Blue Mountain Faulkner 1 power plant. Together
with a success fee relating to the closing of the November 2007 bridge financing
these fees will comprise approximately $1.9 million.

62

---

|C. | Interests of Experts and Counsel
|-- | --------------------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|ITEM 8 | Financial Information
|------ | ---------------------

|A. | Consolidated Statements and Other
      Financial Information
|-- | -------------------------------------------------------------

Financial Statements filed as part of this Annual
Report

Our financial statements are stated in Canadian dollars and are
prepared in accordance with Canadian generally accepted accounting principles.
The following financial statements are filed as part of the Annual Report:

- Independent Auditors Report dated October 12, 2007
- Consolidated balance sheets as at June 30, 2007 and 2006.
- Consolidated statements of loss and deficit for the years ended June 30,
  2007, 2006 and 2005.
- Consolidated statements of cash flows for the years ended June 30, 2007,
  2006 and 2005.
- Consolidated statements of Comprehensive Loss for the years ended June 30,
  2007, 2006 and 2005.
- Notes to consolidated financial statements

Legal Proceedings

The Company is disputing certain expenses with a former
drilling contractor. The maximum amount under dispute approximates US$900,000.
The Company is confident that the amounts owing are substantially less and
accordingly has accrued a smaller amount; however the outcome of the legal
proceedings is not presently determinable.

Dividend Distributions

Holders of our common shares are entitled to receive such
dividends as may be declared from time to time by our board, in its discretion,
out of funds legally available for that purpose. We intend to retain future
earnings, if any, for use in the operation and expansion of our business and do
not intend to pay any cash dividends in the foreseeable future.

|B. | Significant Changes
|-- | -------------------

Other than as disclosed in this Annual Report, no significant
change has occurred in our companys financial statements since the financial
year ended June 30, 2007.

|ITEM 9 | The Offer and Listing
|------ | ---------------------

|A. | Offer and Listing Details
|-- | -------------------------

Price History

Following are the high and low market prices for our common
shares for the periods indicated:

TSX Venture Exchange
    Over-the-Counter
      Bulletin Board *Period
      Ended
    High
    Low
    High
    Low2007December
    $1.35
    1.25
    1.35
    1.20


63

---

TSX Venture Exchange
    Over-the-Counter
      Bulletin Board *Period
      Ended
    High
    Low
    High
    LowNovember
    1.35
    0.95
    1.55
    0.99October
    1.34
    0.82
    1.40
    0.82September
    0.85
    0.70
    0.86
    0.66August
    0.83
    0.68
    0.80
    0.62July
    1.05
    0.73
    0.97
    0.70Annual June 30, 2007
    0.93
    0.66
    0.83
    0.554thQuarter June
    0.89
    0.70
    0.83
    0.603rdQuarter March
    0.91
    0.66
    0.81
    0.552ndQuarter December
    0.84
    0.69
    0.78
    0.581stQuarter September
    0.93
    0.66
    0.85
    0.602006Annual June 30, 2006
    1.25
    0.70
    1.07
    0.604thQuarter June
    1.25
    0.71
    1.07
    0.643rdQuarter March
    1.25
    0.75
    1.07
    0.652ndQuarter December
    0.96
    0.70
    0.82
    0.601stQuarter September
    1.05
    0.76
    0.98
    0.62June 30, 2005
    0.97
    0.42
    0.80
    0.33


* Reflected in United States dollars.

|B. | Plan of Distribution
|-- | --------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|C. | Markets
|-- | -------

On January 31, 1996, our common shares were listed for trading
on the TSX Venture Exchange (formerly known as the CDNX, and the Alberta Stock
Exchange). Our trading symbol is "NGP", and we are classified by the TSX Venture
Exchange as a Tier 2 company.

Since July 2003, our common shares have also traded on the OTC
Bulletin Board (OTCBB) under the symbol "NGLPF".

Our common shares are also quoted on the Frankfurt Exchange in
Germany under the symbol "A2V.F".

64

---

|D. | Selling Shareholders
|-- | --------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|E. | Dilution
|-- | --------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|F. | Expenses of the Issue
|-- | ---------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|ITEM 10 | Additional Information
|------- | ----------------------

|A. | Share Capital
|-- | -------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|B. | Memorandum and Articles of
      Association
|-- | --------------------------------------------

The information required by this section is incorporated by
reference from our Registration Statement on Form 20-F Amendment No. 2, filed on
February 3, 2003.

On November 30, 2005 we adopted new articles in order to
conform to the Business Corporations Act, implemented in British
Columbia, Canada on March 29, 2004 (the "BCBCA").

With respect to our directors, our Articles provide that a
director who is, in any way, directly or indirectly interested in an existing or
proposed contract or transaction with NGP, or who holds any office or possesses
any property whereby, directly or indirectly, a duty or interest might be
created to conflict with his duty or interest as a director, shall declare the
nature and extent of his interest in such contract or transaction or the
conflict or potential conflict with his duty and interest as a director, as the
case may be, in accordance with the provisions of the BCBCA and shall abstain
from voting in respect thereof. This prohibition does not apply to:

|(a) | any such contract or transaction relating to a loan to
      NGP, which a director or a specified corporation or a specific firm in
      which he has an interest has guaranteed or joined in guaranteeing the
      repayment of the loan or any part of the loan;                                                                                                       
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(b) | any contract or transaction made or to be made with, or
      for the benefit of a holding corporation or a subsidiary corporation of
      which a director is a director;                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(c) | any contract by a director to subscribe for or underwrite
      shares or debentures to be issued by us or our subsidiaries, or any
      contract, arrangement or transaction in which a director is, directly or
      indirectly, interested if all the other directors are also, directly or
      indirectly interested in the contract, arrangement or
  transaction;
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(d) | determining the remuneration of the directors;                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(e) | purchasing and maintaining insurance to cover directors
      against liability incurred by them as directors; or                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                            
|(f) | the indemnification of any director by
  us.                                                                                                                                                                                                                                                                                                                               

65

---

Our Articles also provide that the directors may from time to
time on our behalf borrow such money in such manner and amount, on such
security, from such sources and upon such terms and conditions as they think
fit; issue bonds, debentures and other debt obligations, either outright or as
security for any liability or obligation of NGP, or any other person; and
mortgage, charge, whether by way of specific or floating charge, or give other
security on the undertaking, or on the whole or any part of our property and
assets (both present and future). Variation of these borrowing powers would
require an amendment to our Articles which would, in turn, require the approval
of our shareholders by way of a special resolution.

A special resolution means a resolution cast by a majority of
not less than 2/3 of the votes cast by our shareholders who, being entitled to
do so, vote in person or by proxy at our general meeting of which notice as our
Articles provide and not being less than 21 days notice specifying the intention
to propose the resolution as a special resolution, has been duly given (or, if
every shareholder entitled to attend and vote at the meeting agrees, at a
meeting of which less than 21 days notice has been given), or a resolution
consented to in writing by each of our shareholders who would have been entitled
to vote in person or by proxy at our general meeting, and a resolution so
consented to is deemed to be a special resolution passed at our general
meeting.

There is no requirement in our Articles or in the BCBCA
requiring retirement or non-retirement of directors under an age limit
requirement, nor is there any minimum shareholding required for a director's
qualification.

Holders of our common shares are entitled to vote at meetings
of shareholders, and a special resolution, as described above, is required to
effect a change in the rights of shareholders. Holders of common shares are not
entitled to pre-emptive rights. Holders of common shares are entitled, rateably,
to the remaining property of NGP upon our liquidation, dissolution or winding
up, and such holders receive dividends if, as, and when, declared by our
directors. There are no restrictions on the purchase or redemption of common
shares by us while there is an arrearage in the payment of dividends or sinking
fund instalments. There is no liability on the part of any shareholder to
further capital calls by us or any provision discriminating against any existing
or prospective holder of our securities as a result of such shareholder owning a
substantial number of shares. There are no limitations on the rights to own
securities, including the rights of non-resident or foreign shareholders to hold
or exercise voting rights on the securities imposed by the BCBCA or by our
constating documents.

We are required to give our registered shareholders not less
than 21 days notice of any general meeting held by us unless all such
shareholders consent to reduce or waive the period. In addition, we are obliged
to give notice to registrants and intermediaries who hold shares on behalf of
the ultimate beneficial owners no fewer than 35 or more than 60 days prior to
the date of the meeting. We then deliver, in bulk, proxy-related materials in
amounts specified by the intermediaries. None of our shares owned by registrants
or intermediaries may be voted at our general meeting unless all proxy-related
materials are delivered to the ultimate beneficial owners of such shares. Such
ultimate beneficial owner must then deliver a proxy to us within the time
limited by us for the deposit of proxies in order to vote the shares in respect
of which such person is the beneficial owner.

There is no provision in our Articles that would have an effect
of delaying, deferring or preventing a change in control, and that would operate
only with respect to a merger, acquisition or corporate restructuring involving
NGP or any of our subsidiaries.

Securities legislation in our home jurisdiction of British
Columbia Canada requires that shareholder ownership must be disclosed once a
person owns beneficially or has control or direction over greater than 10% of
our issued shares. This threshold is higher than the 5% threshold under U.S.
securities legislation at which shareholders must report their share
ownership.

66

---

|C. | Material Contracts
|-- | ------------------

Other than contracts entered into during the ordinary course of
business, we have entered into the following material contracts during the past
two years:

|1.  | Technical Consulting Services Agreement between Nevada
      Geothermal Power Inc. and Fairbank Engineering Ltd., dated January 1,
      2006                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                   
|2.  | Geothermal Lease Agreement for The Crawford Farm area,
      Humboldt County, Nevada, between Power Company and The Crawford Farm
      regarding Blue Mountain, dated January 10, 2006                                                                           
|    |                                                                                                                                                                                                                                                                   
|3.  | Standard Publicity Agreement between Jefferson Direct,
      Inc. and Nevada Geothermal Power Inc., dated February 2, 2006                                                                                                                                        
|    |                                                                                                                                                                                                                                                                   
|4.  | Amendment Agreement to Geothermal Option Agreement
      between Nevada Geothermal Power Inc. and Sierra Geothermal Power Corp.
      (formerly Inovision Solutions Inc.) regarding Pumpernickel, dated February
      14, 2006                                   
|    |                                                                                                                                                                                                                                                                   
|5.  | BLM Winnemucca Field Office Geothermal Lease Stipulations
      No. NVN-78777, dated February 21, 2006                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                   
|6.  | BLM Winnemucca Field Office Geothermal Lease Stipulations
      No. NVN-79745, dated February 21, 2006                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                   
|7.  | Offer to Lease and Lease for Geothermal Resources Lease
      No. 79745 between the Federal Bureau of Land Management and Power Company
      regarding Black Warrior, effective date of March 1, 2006                                                            
|    |                                                                                                                                                                                                                                                                   
|8.  | Offer to Lease and Lease for Geothermal Resources Lease
      No. 78777 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Black Warrior, effective date of March 1, 2006                                                            
|    |                                                                                                                                                                                                                                                                   
|9.  | Geothermal Lease Agreement between Nevada Geothermal
      Power Company and Will DeLong regarding Blue Mountain, dated of April 15,
      2006                                                                                                                   
|    |                                                                                                                                                                                                                                                                   
|10. | Royalty Agreement between Nevada Geothermal Power
      Company, Ehni Enterprises Inc. and Ormat Nevada, Inc. regarding
      Pumpernickel, dated April 26, 2006                                                                                                  
|    |                                                                                                                                                                                                                                                                   
|11. | Agreement regarding the sale and purchase of BLM Lease
      No. 74855 between Ormat Nevada, Inc. and Nevada Geothermal Power Company
      regarding Pumpernickel, dated April 26, 2006                                                                          
|    |                                                                                                                                                                                                                                                                   
|12. | Unit Agreement for the Development and Operation of the
      Blue Mountain Unit Area, dated June 1, 2006                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                   
|13. | Offer to Lease and Lease for Geothermal Resources Lease
      No. 78124 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Pumpernickel, effective date of June 1, 2006                                                              
|    |                                                                                                                                                                                                                                                                   
|14. | Assignment of Record Title Interest in a Lease for Oil
      and Gas or Geopthermal Resources for Lease No. 74855 from the Federal
      Bureau of Land Management to Nevada Geothermal Power Company regarding
      Pumpernickel, effective date of June 1, 2006
|    |                                                                                                                                                                                                                                                                   
|15. | Daywork Drilling Contract between Nevada Geothermal Power
      Company and Calco Oil Field Industries, Inc. for Blue Mountain Geothermal,
      dated June 19, 2006                                                                                              
|    |                                                                                                                                                                                                                                                                   
|16. | Internet Services & Consulting Contract between
      Nevada Geothermal Power Inc. and Inveslogic Inc., dated June 26,
    2006                                                                                                                                   
|    |                                                                                                                                                                                                                                                                   
|17. | Offer to Lease and Lease for Geothermal Resources Lease
      No. 80070 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Pumpernickel, effective date of August 1, 2006                                                            
|    |                                                                                                                                                                                                                                                                   
|18. | Offer to Lease and Lease for Geothermal Resources Lease
      No. 80086 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Blue Mountain, effective date of                                                                          

67

---

|    | August 1, 2006                                                                                                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                             
|19. | Offer to Lease and Lease for Geothermal Resources Lease
      No. 80159 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Blue Mountain, effective date of August 1, 2006                                                                                                     
|    |                                                                                                                                                                                                                                                                                                             
|20. | Revised International Association of Drilling Contracts
      Drilling Bid Proposal and Daywork Drilling Contract  U.S. (Original Black
      Gold Contract) between Nevada Geothermal Power and Black Gold Equipment
      & Leasing LLC for Blue Mountain Geothermal Project, dated August 17,
      2006
|    |                                                                                                                                                                                                                                                                                                             
|21. | Long Term Firm Portfolio Energy Credit And Renewable
      Power Purchase Agreement between Nevada Geothermal Power Company, Inc. and
      Nevada Power Company, dated August 18, 2006                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                             
|22. | Partial Assignment of Geothermal Lease No. 189093 between
      Nevada Land and Resource Council and Nevada Geothermal Power Company, Inc.
      regarding Blue Mountain, effective October 3, 2006                                                                                                         
|    |                                                                                                                                                                                                                                                                                                             
|23. | Notice of Lease Amendment for Lease No. 189093 between
      Nevada Land and Resource Council and Nevada Geothermal Power Company, Inc.
      regarding Blue Mountain, effective October 3, 2006                                                                                                            
|    |                                                                                                                                                                                                                                                                                                             
|24. | Offer to Renew Lease Agreement between Nevada Geothermal
      Power Inc. and United Kingdom Building Limited for 409 Granville Street,
      Suite 900, Vancouver, BC, dated January 10, 2007                                                                                                              
|    |                                                                                                                                                                                                                                                                                                             
|25. | Financial Consulting Agreement between Markus K. Christen
      and Nevada Geothermal Power Inc., dated January 12, 2007, and July 2, 2007
      financing engagement letter amendment.                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                             
|26. | Amendment to Exhibits A and B of the Unit Agreement for
      the Development and Operation of the Blue Mountain Unit Area, dated
      January 24, 2007                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                             
|27. | Confidentiality Agreement between Morgan Stanley & Co
      Incorporated, Greenrock Capital, LLC and Nevada Geothermal Power Company,
      Inc., dated January 25, 2007                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                             
|28. | Form of Subscription Agreement for Units being purchased
      by residents of Alberta, British Columbia, Ontario, Quebec, Nova Scotia,
      Saskatchewan and offshore residents; closing February 22, 2007                                                                                                
|    |                                                                                                                                                                                                                                                                                                             
|29. | Form of Subscription Agreement for Units being purchased
      by residents or citizens of the United States; closing February 22,
      2007                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                             
|30. | Lease Agreement between Sheppard Rentals and Nevada
      Geothermal Power Company for 657 Anderson Street near Winnemucca in
      Humboldt County, Nevada, dated March 20, 2007                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                             
|31. | Development Loan Agreement between NGP Blue Mountain I
        LLC and Glitnir Bank, dated November 1, 2007.                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                             
|32. | Promissory Note between NGP Blue Mountain I LLC and
        Glitnir Bank, dated November 1, 2007.                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                             
|33. | Pledge and Security Agreement between NGP Blue Mountain
        I LLC and Glitnir Bank, dated November 1, 2007.                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                             
|34. | Acknowledgement and Consent between NGP Blue Mountain
        I LLC and Glitnir Bank, dated November 1, 2007.                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                             
|35. | Assignment and Assumption of Power Purchase Agreement, by
      and between Nevada Geothermal Power Company and Borrower, dated October
      24, 2007                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                             
|36. | Standard Large Generator Interconnect Agreement, by and
      between Sierra Pacific Power Company and Borrower, dated November 5,
      2007                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                             
|37. | Assignment and Assumption of Leases, by and among NGPI
      and NGPC, collectively as assignor, and Borrower, as assignee, dated as of
      October 24, 2007                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                             
|38. | State of Nevada Division of Water Resources Permit Nos.
        72978, 73541,73542 and 73543                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                             
|39. | Quitclaim Deed between Nevada Geothermal Power Inc. and
        NGP Blue Mountain I LLC dated September 20, 2007 (2)                                                                                                                                                                                        

68

---

|40  | Amended and Restated Commitment Letter for US$100,000,000
      Construction and Loan Facility For Project                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                           
|41. | Commitment Letter for US$100,000,000 Equity Financing to
      be used to repay Construction Loan Financing                                               
|    |                                                                                                                                                           
|42. | Borrowers Officers & Secretarys Certificate,
      Exhibit B- Certificate of Formation                                                                 
|    |                                                                                                                                                           
|43. | NGPs Officers & Secretarys Certificate, Exhibit B-
      Certificate of Formation                                                                      
|    |                                                                                                                                                           
|44. | Contribution Agreement, by and among NGPI, NGPC, NGP and
      Borrower, dated as of September 19, 2007                                                   
|    |                                                                                                                                                           
|45. | First Amendment to Contribution Agreement, by and among
      NGPI, NGPC, NGP and Borrower, dated as of October 12, 2007                                  
|    |                                                                                                                                                           
|46. | Member Interest Certificate of Borrower                                                                                                                   
|    |                                                                                                                                                           
|47. | Indemnification Letter                                                                                                                                    
|    |                                                                                                                                                           
|48. | Drilling Bid Proposal and Daywork Drilling Contract with
      ThermaSource Inc. dated December 1, 2007                                                   
|    |                                                                                                                                                           
|49. | Employment Agreement- Fairbank                                                                                                                            
|    |                                                                                                                                                           
|50. | Employment Agreement- Studley                                                                                                                             
|    |                                                                                                                                                           
|51. | Employment Agreement-Walenciak                                                                                                                            
|    |                                                                                                                                                           
|52. | Second Amendment to Option Agreement for Pumpernickel
      Geothermal Property, dated 12 December, 2007                                                 
|    |                                                                                                                                                           
|53. | Letter Agreement between Nevada Geothermal Power Inc. and
      Markus Christen, dated January 12, 2007                                                   
|    |                                                                                                                                                           
|54. | Professional Services Agreement between Integral Energy
      Management and Nevada Geothermal Power Company, dated June 1,
  2007                        
|    |                                                                                                                                                           
|55. | Chief Development Geologist Contract- Glenn Melosh, dated
      November 6, 2007                                                                          
|    |                                                                                                                                                           
|56. | Fairbank Engineering Ltd purchase contract, dated October
      1 2007                                                                                    
|    |                                                                                                                                                           
|57. | Professional Services Agreement, dated May 21, 2007
      between R. Gordon Bloomquist and Nevada Geothermal Power Inc.                                   
|    |                                                                                                                                                           
|58. | Professional Services Agreement, dated June 25, 2007
      between Global Power Solutions and Nevada Geothermal Power
  Company.                          
|    |                                                                                                                                                           
|59. | Engineering Services Agreement, dated August 8, 2007
      between GeothermEx Inc. and Nevada Geothermal Power Inc.                                       
|    |                                                                                                                                                           
|60. | Consulting Agreement, dated November 28, 2007 between CCM
      Consulting a division of Cronus Capital Markets Inc. and Nevada Geothermal
      Power Co.

69

---

|D. | Exchange Controls
|-- | -----------------

There are no governmental laws, decrees or regulations in
Canada relating to restrictions on the export or import of capital, or affecting
the remittance of interest, dividends or other payments to non-resident holders
of our common shares. Any remittances of dividends to United States residents
are, however, subject to a 15% withholding tax (5% if the shareholder is a
corporation owning at least 10% of our outstanding common shares) pursuant to
Article X of the reciprocal tax treaty between Canada and the United States. See
"Item 10  Additional Information  E. Taxation" below.

Except as provided in the Investment Canada Act (the
"Investment Act"), which has provisions that govern the acquisition of a control
block of voting shares by non-Canadians of a corporation carrying on a Canadian
business, there are no limitations specific to the rights of non-Canadians to
hold or vote our common shares under the laws of Canada or the Province of
British Columbia or in our charter documents.

Our management considers that the following general summary
fairly describes those provisions of the Investment Act pertinent to an
investment in NGP by a person who is not a Canadian resident (a
"non-Canadian").

The Investment Act requires a non-Canadian making an investment
that would result in the acquisition of control of the Canadian business to
notify the Investment Review Division of Industry Canada, the federal agency
created by the Investment Act; or in the case of an acquisition of a Canadian
business, the gross value of the assets of which exceeds certain threshold
levels or the business activity of which is related to Canada's cultural
heritage of national identity, to file an application for review with the
Investment Review Division.

The notification procedure involves a brief statement of
information about the investment on a prescribed form that is required to be
filed with Investment Canada by the investor at any time up to 30 days following
implementation of the investment. Once the completed notice has been filed, a
receipt bearing the certificate date will be issued to the non-Canadian
investor. The receipt must advise the investor either that the investment
proposal is unconditionally non-reviewable or that the proposal will not be
reviewed as long as notice of review is not issued within 21 days of the date
certified under the receipt. It is intended that investments requiring only
notification will proceed without government intervention unless the investment
is in a specific type of business activity related to Canada's cultural heritage
and national identity.

If an investment is reviewable under the Investment Act, an
order for review must be issued within 21 days after the certified date on which
notice of investment was received. An application for review in the form
prescribed is required to be filed with Investment Canada prior to the
investment taking place. Once the application has been filed, a receipt will be
issued to the applicant, certifying the date on which the application was
received. For incomplete applications, a deficiency notice will be sent to the
applicant, and if not cured within 15 days of receipt of application, the
application will be deemed to be complete as of the date it was received. Within
45 days after the complete application has been received, the Minister
responsible for the Investment Act must notify the potential investor that the
Minister is satisfied that the investment is likely to be of net benefit to
Canada. If within such 45-day period the Minister is unable to complete the
review, the Minister has an additional 30 days to complete the review, unless
the applicant agrees to a longer period. Within such additional period, the
Minister must advise either that he is satisfied or not satisfied that the
investment is likely to be of net benefit to Canada. If the time limits have
elapsed, the Minister will be deemed to be satisfied that the investment is
likely to be of net benefit to Canada. The investment may not be implemented
until the review has been completed and the Minister is satisfied that the
investment is likely to be of net benefit to Canada.

If the Minister is not satisfied that the investment is likely
to be of net benefit to Canada, the non-Canadian must not implement the
investment or, if the investment has been implemented, could be penalized by
being required to divest him/her/itself of control of the business that is the
subject of the investment. To date, the only types of business activities that
have been prescribed by regulation as

70

---

related to Canada's cultural heritage or national identity deal
largely with publication, film and music industries.

The following investments by non-Canadians are subject to
notification under the Investment Act:

|1. | an investment to establish a new Canadian business;
      and                                                       
|-- | --------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                     
|2. | an investment to acquire control of a Canadian business
      that is not reviewable pursuant to the Investment
Act.

The following investments by a non-Canadian are subject to
review under the Investment Act:

|1. | direct acquisition of control of Canadian businesses with
      assets of $5 million or more, unless the acquisition is being made by a
      World Trade Organization ("WTO") member "country investor" (the United
      States being a member of the WTO);                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                      
|2. | direct acquisition of control of Canadian businesses with
      assets of $250,000,000 or more by a WTO investor;                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                      
|3. | indirect acquisition of control of Canadian business with
      assets of $5 million or more if such assets represent more than 50% of the
      total value of the assets of the entities, the control of which is being
      acquired, unless the acquisition is being made by a WTO investor, in which
      case there is no review;            
|   |                                                                                                                                                                                                                                                                                                                                                      
|4. | indirect acquisition of control of Canadian businesses
      with assets of $50 million or more even if such assets represent less than
      50% of the total value of the assets of the entities, the control of which
      is being acquired, unless the acquisition is being made by a WTO investor,
      in which case there is no review; and
|   |                                                                                                                                                                                                                                                                                                                                                      
|5. | an investment subject to notification that would not
      otherwise be reviewable if the Canadian business engages in the activity
      of publication, distribution or sale of books, magazines, periodicals,
      newspapers, film or video recordings, audio or video music recordings, or
      music in print or machine-readable form.      

Generally speaking, an acquisition is direct if it involves the
acquisition of control of the Canadian business or of its Canadian parent or
grandparent and an acquisition is indirect if it involves the acquisition of
control of a non-Canadian parent or grandparent of an entity carrying on the
Canadian business. Control may be acquired through the acquisition of actual
voting control by the acquisition of voting shares of a Canadian corporation or
through the acquisition of substantially all of the assets of the Canadian
business. No change of voting control will be deemed to have occurred if less
than one-third of the voting control of a Canadian corporation is acquired by an
investor.

A WTO investor, as defined in the Investment Act, includes an
individual who is a national of a member country of the World Trade
Organization, or who has the right of permanent residence in relation to that
WTO member, a government or government agency of a WTO investor-controlled
corporation, limited partnership, trust or joint venture and a corporation,
limited partnership, trust or joint venture that is neither WTO-investor
controlled or Canadian controlled of which two-thirds of its board of directors,
general partners or trustees, as the case may be, or any combination of
Canadians and WTO investors.

The higher thresholds for WTO investors do not apply if the
Canadian business engages in activities in certain sectors such as uranium,
financial services, transportation services or communications.

The Investment Act specifically exempts certain transactions
from either notification or review. Included among this category of transactions
is the acquisition of voting shares or other voting interests by any person in
the ordinary course of that person's business as a trader or dealer in
securities.

71

---

|E. | Taxation
|-- | --------

Material Canadian Federal Income Tax Consequences

Management believes that the following general summary
accurately describes all material Canadian federal income tax consequences
applicable to a holder of our common shares who is a resident of the United
States and who is not a resident of Canada and who does not use or hold, and is
not deemed to use or hold, his common shares of NGP in connection with carrying
on a business in Canada (a "non-resident "holder").

This summary is based upon the current provisions of the Income
Tax Act (Canada) (the "ITA"), the regulations thereunder (the "Regulations")
"the current" publicly announced administrative and assessing policies of
Canada, Customs and Revenue Agency, and all specific proposals (the "Tax
Proposals") to amend the" ITA and Regulations announced by the Minister of
Finance (Canada) prior to the date hereof. This summary assumes that the Tax
Proposals will be enacted in their form as of the date of this Annual Report.
This description, except for the Tax Proposals, does not take into account or
anticipate any changes in law, whether by legislative, government or judicial
action, nor does it take into account provincial, territorial, or foreign tax
considerations which may differ significantly from those discussed herein.

Dividends

Dividends paid on common shares to a non-resident holder will
be subject to withholding tax. The Canada-U.S. Income Tax Convention (1980) (the
"Treaty") provides that the normal 25% withholding tax rate under the ITA is
reduced to 15% on dividends paid on shares of a corporation resident in Canada
to beneficial owners of the dividends who are residents of the United States,
and also provides for a further reduction of this rate to 5% where the
beneficial owner of the dividends is a corporation that is a resident of the
United States which owns at least 10% of the voting shares of the corporation
paying the dividend. No dividends have ever been paid by NGP.

Capital Gains

Under the ITA, a taxpayer's capital gain or capital loss from a
disposition of a share of our company is the amount, if any, by which the
proceeds of disposition exceed (or are exceeded by) the aggregate of the
adjusted cost base of the share and reasonable expenses of disposition. One half
of a capital gain (the "taxable capital gain") is included in income, and one
half of a capital loss in a year (the "allowable capital loss") is deductible
from taxable capital gains realized in the same year. The amount by which a
shareholder's allowable capital loss exceeds his taxable capital gains in a year
may be deducted from a taxable capital gain realized by the shareholder in the
three previous or any subsequent year, subject to certain restrictions in the
case of a corporate shareholder.

A non-resident holder is not subject to tax under the ITA in
respect of a capital gain realized upon the disposition of a share of a public
corporation unless the share represents "taxable Canadian property" to the
holder thereof. We are a public corporation for purposes of the ITA and a common
share of NGP will be taxable Canadian property to a non-resident holder if, at
any time during the period of five years immediately preceding the disposition,
the non-resident holder, persons with whom the non-resident holder did not deal
at arm's length, or the non-resident holder and persons with whom he did not
deal at arm's length together owned not less than 25% of the issued shares of
any class of shares of NGP.

Where a non-resident holder who is an individual ceased to be
resident in Canada, and at the time they ceased to be a Canadian resident
elected to have the shares treated as taxable Canadian property, they will be
subject to Canadian tax on any capital gain realized on disposition of the
shares, subject to the relieving provisions of the Treaty described below. Our
shares may also be taxable Canadian property to a holder if the holder acquired
them pursuant to certain tax-deferred "rollover" transactions" whereby the
holder exchanged property that was taxable Canadian property for our shares.

72

---

Where the non-resident holder realized a capital gain on a
disposition of our shares that constitute taxable Canadian property, the Treaty
relieves the non-resident shareholder from liability for Canadian tax on such
capital gains unless:

|(a) | the value of the shares is derived principally from "real
      property" in Canada, including the right to explore for or exploit natural
      resources and rights to amounts computed by reference to production from
      natural resources, which is the case for NGP;                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                    
|(b) | the non-resident holder is an individual who was resident
      in Canada for not less than 120 months during any period of 20 consecutive
      years preceding, and at any time during the 10 years immediately
      preceding, the disposition and the shares were owned by them when they
      ceased to be resident in Canada or are property substituted for property
      that was owned at that time, or
|    |                                                                                                                                                                                                                                                                                                                                                                                                                    
|(c) | the shares formed part of the business property of a
      permanent establishment or pertained to a fixed base used for the purpose
      of performing independent personal services that the shareholder has or
      had in Canada within the 12 months preceding the
  disposition.                                                                                                                           

Material United States Federal Income Tax
Consequences

The following is a summary of United States federal income tax
considerations material to a holder of our common shares who is a United States
citizen or resident or a United States domestic corporation ("U.S. Investor").
The summary is of a general nature only and is not exhaustive of all possible
income tax consequences applicable to U.S. Investors and does not address the
tax consequences of U.S. Investors subject to special provisions of federal
income tax law.

This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations, court decisions and current
administrative rulings and pronouncements of the United States Internal Revenue
Service ("IRS") that are currently applicable, all of which are subject to
change, possibly with retroactive effect. There can be no assurance that future
changes in applicable law or administrative and judicial interpretations thereof
will not adversely affect the tax consequences discussed herein.

Since the United States federal income and withholding tax
treatment may vary depending upon your particular situation, you may be subject
to special rules not discussed below. Special rules will apply, for example, if
you are:

- an insurance company;
- a tax-exempt organization;
- a financial institution;
- a person subject to the alternative minimum tax;
- a person who is a broker-dealer in securities;
- an S corporation;
- an expatriate subject to Section 877 of the Code;
- an owner of, directly, indirectly or by attribution, 10% or more of the
  outstanding common shares; or
- an owner holding common shares as part of a hedge, straddle, synthetic
  security or conversion transaction.

In addition, this summary is generally limited to persons
holding common shares as "capital assets" within the meaning of Section 1221 of
the Code, and whose functional currency is the U.S. dollar. The discussion below
also does not address the effect of any United States state or local tax law or
foreign tax law.

Dividends

For United States federal income tax purposes, the gross amount
of a distribution, including any foreign withholding taxes, with respect to your
common shares will be treated as a taxable dividend to the extent of our current
and accumulated earnings and profits, computed in accordance with United States
federal

73

---

income tax principles. For taxable years beginning before
January 1, 2011, if you are a non-corporate taxpayer such dividends may be taxed
at the lower applicable capital gains rate provided (1) certain holding period
requirements are satisfied, (2) we are eligible for the benefits of the income
tax treaty, and (3) we are not, for the taxable year in which the dividend was
paid, or in the preceding taxable year, a "passive foreign investment company."
Non-corporate U.S. Investors are strongly urged to consult their own tax
advisors as to the applicability of the lower capital gains rate to dividends
received with respect to the common shares. Distributions in excess of our
current or accumulated earnings and profits will be applied against and will
reduce your tax basis in your common shares and, to the extent in excess of such
tax basis, will be treated as gain from a sale or exchange of such common
shares. You should be aware that we do not intend to calculate our earnings and
profits for United States federal income tax purposes and, unless we make such
calculations, you should assume that any distributions with respect to common
shares generally will be treated as a dividend, even if that distribution would
otherwise be treated as a return of capital or as capital gain pursuant to the
rules described above. If you are a corporation, you will not be allowed a
deduction for dividends received in respect of distributions on common shares,
which is generally available for dividends paid by U.S. corporations.

A dividend distribution will be treated as foreign source
income and will generally be classified as "passive income" or, in some cases,
"financial services income" for United States foreign tax credit purposes. For
taxable years beginning after December 31, 2006, dividends will generally
constitute "passive category income" but could, in the case of certain U.S.
Investors, constitute "general category income." The rules relating to the
determination of the foreign tax credit, or deduction in lieu of the foreign tax
credit, are complex and you should consult your own tax advisors with respect to
those rules.

Dispositions of Common Shares

Subject to the discussion below of the consequences of being
treated as a passive foreign investment company, gain or loss realized by a U.S.
Investor (other than a ten percent shareholder) on the sale or other disposition
of common shares will be subject to United States federal income tax as capital
gain or loss in an amount equal to the difference between such U.S. Investors
basis in the common shares and the amount realized on the disposition. In
general, such capital gain or loss will be long-term capital gain or loss if the
U.S. Investor has held the common shares for more than one year at the time of
the sale or exchange. If you are an individual, such realized long-term capital
gain is generally subject to a reduced rate of United States federal income tax.
Limitations may apply to your ability to offset capital losses against ordinary
income.

In general, gain from a sale, exchange or other disposition of
the common shares by a U.S. Investor will be treated as U.S. source income.
Therefore, the use of foreign tax credits relating to any foreign taxes imposed
upon such sale may be limited. You are strongly urged to consult your own tax
advisors as to the availability of tax credits for any foreign taxes withheld on
the sale of common shares.

Special United States Federal Income Tax
Considerations

Passive Foreign Investment Company

During the 2007 fiscal year the Company was a passive foreign
investment company ("PFIC") for United States federal income tax purposes and
may be treated as a PFIC for the current and future taxable years. This
conclusion is a factual determination made annually and thus subject to change.
We will be a PFIC with respect to a U.S. Investor if, for any taxable year in
which such U.S. Investor held our common shares, either (i) at least 75% of our
gross income for the taxable year is passive income, or (ii) at least 50% of our
assets are attributable to assets that produce or are held for the production of
passive income. In each case, we must take into account a pro rata share of the
income and the assets of any company in which we own, directly or indirectly,
25% or more of the stock by value (the "look-through" rules). Passive income
generally includes dividends, interest, royalties, rents (other than rents and
royalties derived from the active conduct of a trade or business and not derived
from a related person), annuities, and gains from assets that produce passive
income. Because we are not publicly traded as defined under the statute and
regulations governing PFICs, and are not a controlled foreign corporation
("CFC"), we

74

---

would apply the 50% asset test based on fair market values
unless we elect to use the adjusted tax bases of our assets.

If we are determined to be a passive foreign investment company
for any taxable year during which a U.S. Investor holds common shares the U.S.
Investor will be subject to special tax rules with respect to:

- any "excess distribution" that the U.S. Investor receives on common shares,
  and
- any gain the U.S. Investor realizes from a sale or other disposition
  (including a pledge) of the common shares, unless the U.S. Investor makes a
  "mark-to-market" election as discussed below.

Distributions the U.S. Investor receives in a taxable year that
are greater than 125% of the average annual distributions the U.S. Investor
received during the shorter of the three preceding taxable years or the U.S.
Investors holding period for the common shares will be treated as an excess
distribution. Under these special tax rules:

- the excess distribution or gain will be allocated rateably over your
  holding period for the common shares,
- the amount allocated to the current taxable year, and any taxable year
  prior to the first taxable year in which we were a passive foreign investment
  company, will be treated as ordinary income, and
- the amount allocated to each other year will be subject to tax at the
  highest tax rate in effect for that year and the interest charge generally
  applicable to underpayments of tax will be imposed on the resulting tax
  attributable to each such year.

The tax liability for amounts allocated to years prior to the
year of disposition or "excess distribution" cannot be offset by any net
operating losses, and gains (but not losses) realized on the sale of the common
shares cannot be treated as capital, even if the U.S. Investor holds the common
shares as capital assets.

A U.S. Investor of a passive foreign investment company may
avoid taxation under the excess distribution rules discussed above by making a
"qualified electing fund" election to include the U.S. Investors share of our
income on a current basis. However, a U.S. Investor may make a qualified
electing fund election only if we, as a passive foreign investment company,
furnish the shareholder annually with certain tax information. We provide such
information.

Alternatively, a U.S. Investor of "marketable stock" in a
passive foreign investment company may make a mark-to-market election for stock
of a passive foreign investment company to elect out of the excess distribution
rules discussed above. If a U.S. Investor makes a mark-to-market election for
the common shares, the U.S. Investor will include in income each year an amount
equal to the excess, if any, of the fair market value of the common shares as of
the close of the U.S. Investors taxable year over the U.S. Investors adjusted
basis in such shares. A U.S. Investor is allowed a deduction for the excess, if
any, of the adjusted basis of the shares over their fair market value as of the
close of the taxable year only to the extent of any net mark-to-market gains on
the shares included in the U.S. Investors income for prior taxable years.
Amounts included in a U.S. Investors income under a mark-to-market election, as
well as gain on the actual sale or other disposition of the common shares is
treated as ordinary income. Ordinary loss treatment also applies to the
deductible portion of any mark-to-market loss on the common shares, as well as
to any loss realized on the actual sale or disposition of the common shares, to
the extent that the amount of such loss does not exceed the net mark-to-market
gains previously included for such common shares. A U.S. Investors basis in the
common shares will be adjusted to reflect any such income or loss amounts. The
tax rules that apply to distributions by corporations which are not passive
foreign investment companies would apply to distributions by us.

75

---

The mark-to-market election is available only for stock which
is regularly traded on a national securities exchange that is registered with
the Securities and Exchange Commission, or the national market system
established pursuant to section 11A of the Exchange Act, or any exchange or
market that the IRS has determined has rules sufficient to carry out the
purposes of the income tax rules. We are not currently a company meeting the
requirements of the mark-to-market definition so such an election is not
currently available if we were determined to be a PFIC.

Non-U.S. Investor

A Non-U.S. Investor generally will not be subject to U.S.
federal income tax on dividends paid by us with respect to our common shares
unless the income is effectively connected with the Non-U.S. Investors conduct
of a trade or business in the United States.

A Non-U.S. Investor generally will not be subject to U.S.
federal income tax on any gain attributable to a sale or other disposition of
our common shares unless such gain is effectively connected with the Non-U.S.
Investors conduct of a trade or business within the United States or the
Non-U.S. Investor is a natural person who is present in the United States for
183 days or more and certain other conditions exist.

Dividends and gains that are effectively connected with a
Non-U.S. Investors conduct of a trade or business in the United States
generally will be subject to tax in the same manner as they would be if the
Non-U.S. Investor were a U.S. Investor, except that the passive foreign
investment company rules will not apply. Effectively connected dividends and
gains received by a corporate Non-U.S. Investor may also be subject to an
additional branch profits tax.

U.S. Information Reporting and Backup Withholding

In general, information reporting requirements will apply to
dividends in respect of our common shares, or the proceeds received on the sale,
exchange or redemption of our common shares paid within the United States (and,
in certain cases, outside the United States) to U.S. Investors other than
certain exempt recipients, such as corporations, and backup withholding tax may
apply to such amounts if the U.S. Investor fails to provide an accurate taxpayer
identification number or to report interest and dividends required to be shown
on its U.S. federal income tax returns. The amount of any backup withholding
from a payment to a U.S. Investor will be allowed as credit against the U.S.
Investors U.S. federal income tax liability provided that the appropriate
returns are filed. Holders that are not U.S. persons generally are not subject
to information reporting or backup withholding, but such holders may be required
to provide certification as to their non-U.S. status.

A U.S. Investor who holds common shares in any year in which we
are determined to be a passive foreign investment company would be required to
file IRS Form 8621 regarding distributions received on our shares and any gain
realized on the disposition of our common shares.

ALL INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON SHARES OF
OUR COMPANY.

|F. | Dividends and Paying Agents
|-- | ---------------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

|G. | Statements by Experts
|-- | ---------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

76

---

|H. | Documents on Display
|-- | --------------------

We file financial statements and other information with
Canadian securities regulatory authorities electronically through the System for
Electronic Document Analysis and Retrieval (SEDAR) which can be viewed at
www.sedar.com.

We file Annual Reports and other information with the United
States Securities and Exchange Commission. These documents are filed
electronically at the Commission's Edgar website. You may read and copy any
document that we file at the Commissions Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549 or by accessing the Commission's website
(http://www.sec.gov). Please call the Commission at 1-800-SEC-0330 for more
information about the Public Reference Room.

Any exhibits and documents referred to in this Annual Report
may be inspected at our head office, Suite 900-409 Granville Street, Vancouver,
British Columbia, by making an appointment during normal business hours.

|I | Subsidiary Information
|- | ----------------------

There is no information relating to our subsidiaries that must
be provided in Canada and that is not otherwise called for by the body of
generally accepted accounting principles used in preparing our financial
statements.

|ITEM 11 | Quantitative and Qualitative Disclosures
      About Market Risk
|------- | ----------------------------------------------------------------

We anticipate our primary market risk, if any, to be related to
fluctuations in exchange rates. Exchange rate risk may arise if we are required
to use different currencies for various aspects of our operations. At present,
our functional currency is the Canadian dollar. Based on our overall exchange
rate risk as at June 30, 2007, we believe that a ten percent change in exchange
rates would not have a material adverse effect on our financial position,
results of operations, or changes in financial position. We intend to monitor
our exchange rate risk and take reasonable steps to reduce our exposure. We do
not intend to purchase or sell derivative instruments for speculative
purposes.

|ITEM 12 | Description of Securities Other Than Equity
      Securities
|------- | ------------------------------------------------------------

This Form 20-F is being filed as an Annual Report under the
Exchange Act and, as such, there is no requirement to provide any information
under this Item.

PART II

|ITEM 13 | Defaults, Dividend Arrearages and
      Delinquencies
|------- | -----------------------------------------------------

There has not been a material default in the payment of
principal, interest, a sinking or purchase fund instalment, or any other
material default not cured within thirty days, relating to our indebtedness or
any of our significant subsidiaries. There are no payments of dividends by us in
arrears, nor has there been any other material delinquency relating to any class
of our preference shares.

|ITEM 14 | Material Modifications to the Rights of
      Security Holders and Use of Proceeds
|------- | ----------------------------------------------------------------------------------

Neither we nor, to the best of our knowledge, anyone else has
modified materially or qualified the rights evidenced by any class of registered
securities.

|ITEM 15 | Controls and Procedures
|------- | -----------------------

Based on their evaluation as of the end of the period covered
by this Annual Report on Form 20-F, our principal executive officer and
principal financial officer have concluded that our disclosure controls and
procedures (as defined in Rules 13a and 15d) under the Exchange Act are
effective to ensure that the information required to be disclosed by us in
reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Commission rules
and forms.

77

---

Our officers have also concluded that our disclosure controls
and procedures are effective to ensure that information required under the
Exchange Act is accumulated and communicated to other members of our management,
to allow all timely decisions regarding required disclosure.

It should be noted that while management believes that our
disclosure controls and procedures provide a reasonable level of assurance, they
do not expect that our disclosure controls and procedures or internal financial
controls will prevent all errors and fraud. A control system, no matter how well
conceived or operated, can provide only reasonable, not absolute, assurance that
the objectives of the control system are met.

During the fiscal year ended June 30, 2007, there were no
significant changes in our internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

|ITEM 16  | Reserved                        
|-------- | --------------------------------
|         |                                 
|ITEM 16A | Audit Committee Financial Expert

Domenic J. Falcone, CPA, is our "audit committee financial
expert", as defined by the rules of the Commission. Mr. Falcone possesses the
educational and professional qualifications and experience to qualify as such.
In addition to Mr. Falcone's experience, we also believe that all members of the
audit committee and of our Board are collectively capable of analyzing and
evaluating our financial statements and understanding internal controls and
procedures for financial reporting.

|ITEM 16B | Code of Ethics
|-------- | --------------

Code of Ethics

Effective August 23, 2005, our Board adopted a Policy Manual
that includes a Code of Business Conduct and Ethics that applies to, among other
persons, our chief executive officer (being our principal executive officer) and
our chief financial officer (being our principal financial and accounting
officer), as well as persons performing similar functions. As adopted, our Code
of Business Conduct and Ethics sets forth written standards that are designed to
deter wrongdoing and to promote:

|(1) | honest and ethical conduct, including the ethical
      handling of actual or apparent conflicts of interest between personal and
      professional relationships;                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                  
|(2) | full, fair, accurate, timely, and understandable
      disclosure in reports and documents that we file with, or submit to, the
      Commission and in other public communications made by us;  
|    |                                                                                                                                                                                                  
|(3) | compliance with applicable governmental laws, rules and
      regulations;                                                                                                                       
|    |                                                                                                                                                                                                  
|(4) | the prompt internal reporting of violations of the Code
      of Business Conduct and Ethics to an appropriate person or persons
      identified in the Code of Business Conduct and Ethics; and
|    |                                                                                                                                                                                                  
|(5) | accountability for adherence to the Code of Business
      Conduct and Ethics.                                                                                                                   

Our Code of Business Conduct and Ethics requires, among other
things, that all of our personnel shall be accorded full access to our chief
executive and chief financial officers with respect to any matter which may
arise relating to the Code of Business Conduct and Ethics. Further, all of our
company's personnel are to be accorded full access to our company's Board if any
such matter involves an alleged breach of the Code of Business Conduct and
Ethics by our president or chief financial officer.

In addition, our Code of Business Conduct and Ethics emphasizes
that all employees, and particularly managers and/or supervisors, have a
responsibility for maintaining financial integrity within our company,
consistent with generally accepted accounting principles, and federal,
provincial and state securities laws. Any employee who becomes aware of any
incidents involving financial or accounting

78

---

manipulation or other irregularities, whether by witnessing the
incident or being told of it, must report it to his or her immediate supervisor
or to our company's president or secretary. If the incident involves an alleged
breach of the Code of Business Conduct and Ethics by the president or secretary,
the incident must be reported to any member of our Board. Any failure to report
such inappropriate or irregular conduct of others is to be treated as a severe
disciplinary matter. It is against our company policy to retaliate against any
individual who reports in good faith the violation or potential violation of our
company's Code of Business Conduct and Ethics by another.

We undertake to provide a copy of our Code of Business Conduct
and Ethics to any person, without charge, upon request in writing to our
secretary. Alternatively, you may view a copy of our Code of Business Conduct
and Ethics by visiting our web site located at www.nevadageothermal.com .

|ITEM 16C | Principal Accountant Fees and Services
|-------- | --------------------------------------

Our audit committee pre-approves all services provided by our
independent auditors. All of the services and fees described below were reviewed
and pre-approved by our audit committee.

Our audit committee may delegate to one or more designated
members of the audit committee the authority to grant pre-approvals. The
decisions of any audit committee member to whom authority is delegated to
pre-approve a service must be presented to the full audit committee at its next
scheduled meeting.

Our auditors, Morgan & Company, Chartered Accountants, were
first appointed by our shareholders on October 31, 1995.

The audit committee has considered the nature and amount of the
following fees billed by Morgan & Company, Chartered Accountants, and
believes that the provision of the services for activities unrelated to the
audit is compatible with maintaining Morgan & Company, Chartered
Accountants, independence.

Audit Fees

The aggregate fees billed by Morgan & Company, Chartered
Accountants, for professional services rendered for the audit of our annual
financial statements included in this Annual Report for the fiscal years ended
June 30, 2007 and 2006 were $18,800 and $15,900, respectively. These services
also include those that are normally provided in connection with statutory and
regulatory filings or engagements for those fiscal years.

Audit Related Fees

For the fiscal years ended June 30, 2007 and 2006, the
aggregate fees billed for assurance and related services by Morgan &
Company, Chartered Accountants, relating to our financial statements and which
are not reported under the caption "Audit Fees" above, were $3960 and $Nil,
respectively.

Tax Fees

For the fiscal years ended June 30, 2007 and 2006, the
aggregate fees billed for tax compliance, tax advice and tax planning by Morgan
& Company, Chartered Accountants, were $2,500 and $2,400, respectively.

All Other Fees

For the fiscal years ended June 30, 2007 and 2006, the
aggregate fees billed by Morgan & Company, Chartered Accountants, for other
non-audit professional services, other than those services listed above,
totalled $Nil and $Nil, respectively.

79

---

|ITEM 16D. | Exemption from the Listing Standards
      for Audit Committees
|--------- | ---------------------------------------------------------------

Not Applicable.

|ITEM 16E | Purchases of Equity Securities by the Issuer
      and Affiliated Purchasers
|-------- | ----------------------------------------------------------------------------

Not Applicable.

PART III

|ITEM 17 | Financial Statements
|------- | --------------------

The following financial statements were prepared in accordance
with Canadian GAAP and are expressed in Canadian dollars. Such financial
statements have been reconciled to U.S. GAAP (see Note 16 therein). For a
history of exchange rates in effect for Canadian dollars as against U.S.
dollars, see Pages 7 and 8 of this Annual Report.

The following financial statements are filed as part of the
Annual Report:

- Independent Auditors Report dated October 12, 2007.
- Consolidated balance sheets for the years ended June 30, 2007 and 2006.
- Consolidated statements of loss and deficit for the years ended June 30,
  2007, 2006 and 2005.
- Consolidated statements of cash flows for the years ended June 30, 2007,
  2006 and 2005.
- Consolidated statements of comprehensive loss for the years ended June 30,
  2007, 2006, 2005.
- Notes to consolidated financial statements

80

---

NEVADA GEOTHERMAL POWER INC.

CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2007 and 2006

81

---



INDEPENDENT AUDITORS' REPORT

To the Shareholders of Nevada Geothermal Power Inc.

We have audited the consolidated balance sheets of Nevada
Geothermal Power Inc. as at June 30, 2007 and 2006, and the consolidated
statements of loss and deficit, cash flows and comprehensive loss for the years
ended June 30, 2007, 2006 and 2005. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally
accepted auditing standards and the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
June 30, 2007 and 2006, and the results of its operations and its cash flows for
the years ended June 30, 2007, 2006 and 2005 in accordance with Canadian
generally accepted accounting principles.

|Vancouver, Canada | Morgan & Company   
|----------------- | ---------------------
|                  |                      
|October 12, 2007  | Chartered Accountants

Comments by Auditors for U.S. Readers on Canada-U.S.
Reporting Conflict

In the United States, reporting standards for auditors require
the addition of an explanatory paragraph (following the opinion paragraph) when
the financial statements are affected by going concern considerations such as
described in Note 1 to the financial statements. Our report to the shareholders,
dated October 12, 2007, is expressed in accordance with Canadian reporting
standards which do not permit a reference to such events and conditions in the
Independent Auditors Report when these are adequately disclosed in the
financial statements.

|Vancouver, Canada | Morgan & Company   
|----------------- | ---------------------
|                  |                      
|October 12, 2007  | Chartered Accountants



82

---

|                                     
|-------------------------------------
|                                     
|NEVADAGEOTHERMAL POWER INC.          
|CONSOLIDATED BALANCE SHEETS          
|(Expressed in
      Canadian Dollars)

|                                                 |   | June 30     |  
|------------------------------------------------ | - | ----------- | -
|                                                 |   | 2007        |  
|ASSETS                                           |   |             |  
|                                                 |   |             |  
|Current Assets                                   |   |             |  
|Cash and cash equivalents                        | $ | 13,540,315  |  
|Amounts receivable                               |   | 75,580      |  
|Marketable securities (Note 4)                   |   | 126,000     |  
|Prepaid expenses                                 |   | 159,039     |  
|                                                 |   | 13,900,934  |  
|                                                 |   |             |  
|Restricted Cash(Note 6(a))                       |   | 683,249     |  
|Capital Assets(Note 5)                           |   | 53,943      |  
|Interests In
      Geothermal Properties(Note 6) |   | 25,180,575  |  
|                                                 |   |             |  
|                                                 | $ | 39,818,701  |  
|LIABILITIES                                      |   |             |  
|                                                 |   |             |  
|Current Liabilities                              |   |             |  
|Accounts payable and accrued liabilities         | $ | 2,938,540   |  
|                                                 |   |             |  
|Asset
      Retirement Obligation(Note 7)        |   | 424,377     |  
|                                                 |   | 3,362,917   |  
|SHAREHOLDERS' EQUITY                             |   |             |  
|                                                 |   |             |  
|                                                 |   |             |  
|Share Capital(Note 8)                            |   | 41,862,542  |  
|Contributed Surplus(Note 9)                      |   | 4,557,978   |  
|Accumulated Other Comprehensive
      Income     |   | 50,642      |  
|Deficit                                          |   | (10,015,378 | )
|                                                 |   | 36,455,784  |  
|                                                 |   |             |  
|                                                 | $ | 39,818,701  |  

Commitments(Note 12) Subsequent Events(Note
15)

Approved on behalf of the Board of Directors:

| | Brian Fairbank |  |  | Domenic
| | ---------------- |  |  | --------
| | Director         |  |  | Director

See accompanying notes to the consolidated financial
statements

83

---

|NEVADA GEOTHERMAL POWER INC.               
|-------------------------------------------
|                                           
|CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
|(Expressed in Canadian Dollars)            

|                                                                      |   | For the Years Ended June 30 |  
|--------------------------------------------------------------------- | - | --------------------------- | -
|                                                                      |   | 2007                        |  
|                                                                      |   |                             |  
|Operating Expenses                                                    |   |                             |  
|Accounting and audit                                                  | $ | 39,651                      |  
|Administration                                                        |   | 225,592                     |  
|Amortization                                                          |   | 20,549                      |  
|Consulting fees                                                       |   | 360,877                     |  
|Conventions and publishing                                            |   | 177,047                     |  
|Foreign exchange loss (gain)                                          |   | 638,072                     |  
|(Gain) on sale of marketable securities                               |   | (103,965                    | )
|Investor relations                                                    |   | 119,712                     |  
|Insurance                                                             |   | 88,000                      |  
|Legal                                                                 |   | 148,576                     |  
|News dissemination                                                    |   | 17,777                      |  
|Office expenses                                                       |   | 78,334                      |  
|Option proceeds in excess of geothermal property
      costs          |   | (56,907                     | )
|Rent and telephone                                                    |   | 77,365                      |  
|Site investigation                                                    |   | 5,640                       |  
|Stock-based compensation                                              |   | 1,279,145                   |  
|Transfer agent and regulatory fees                                    |   | 76,865                      |  
|Travel and business development                                       |   | 130,844                     |  
|Unrealized
      loss on marketable securities                        |   | -                           |  
|                                                                      |   |                             |  
|                                                                      |   | 3,323,174                   |  
|                                                                      |   |                             |  
|Other Income                                                          |   |                             |  
|Interest income                                                       |   | 448,195                     |  
|Gain on disposal
      of subsidiary                                  |   | -                           |  
|                                                                      |   |                             |  
|                                                                      |   | 448,195                     |  
|Net Loss For The Year                                                 |   | (2,874,979                  | )
|                                                                      |   |                             |  
|                                                                      |   |                             |  
|Deficit,
      Beginning Of Year                                      |   | (7,140,399                  | )
|                                                                      |   |                             |  
|Deficit, End
      Of Year                                            |   | (10,015,378                 | )
|                                                                      |   |                             |  
|Basic And
      Diluted Loss Per Common Share                         | $ | (0.05                       | )
|                                                                      |   |                             |  
|Weighted Average Number Of Common Shares
      Issued And Outstanding |   |                             |  
|                                                                      |   | 61,294,757                  |  

See accompanying notes to the consolidated financial
statements

84

---

|                                     
|-------------------------------------
|                                     
|NEVADA GEOTHERMAL POWER INC.         
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(Expressed in Canadian Dollars)      

|                                                       |   | For the Years Ended June 30 |  
|------------------------------------------------------ | - | --------------------------- | -
|                                                       |   | 2007                        |  
|                                                       |   |                             |  
|Cash Provided By (Used In)                             |   |                             |  
|Operating Activities                                   |   |                             |  
|Net loss for the year                                  | $ | (2,874,979                  | )
|Items not affecting cash:                              |   |                             |  
|Amortization                                           |   | 20,549                      |  
|(Gain) on sale of marketable
      securities          |   | (103,965                    | )
|(Gain) on
      disposal of subsidiary                 |   | -                           |  
|Marketable securities received
      as option payment |   | (47,000                     | )
|Foreign exchange
      loss on marketable securities   |   | 11,252                      |  
|Unrealized loss on marketable
      securities         |   | -                           |  
|Stock-based compensation                               |   | 1,279,145                   |  
|                                                       |   |                             |  
|Net changes in non-cash operating
      working        |   | (1,714,998                  | )
|capital items:                                         |   |                             |  
|(Increase)
      Decrease in amounts receivable        |   | 16,632                      |  
|Increase (Decrease) in accounts
      payable          |   |                             |  
|and accrued liabilities                                |   | (1,400,494                  | )
|(Increase) Decrease in prepaid expenses                |   | (134,593                    | )
|                                                       |   | (3,233,453                  | )
|Investing Activities                                   |   |                             |  
|Geothermal property interests                          |   | (12,988,398                 | )
|Proceeds from disposal of marketable securities        |   | 197,660                     |  
|Restricted cash                                        |   | (683,249                    | )
|Acquisition of
      capital assets                    |   | (43,746                     | )
|                                                       |   | (13,517,733                 | )
|Financing Activities                                   |   |                             |  
|Net proceeds from private placements                   |   | 13,879,209                  |  
|Proceeds from stock options exercised                  |   | 295,200                     |  
|Proceeds from warrants exercised                       |   | -                           |  
|                                                       |   | 14,174,409                  |  
|                                                       |   |                             |  
|Increase (Decrease) In Cash and Cash Equivalents       |   | (2,576,777                  | )
|Cash and Cash Equivalents, Beginning Of Year           |   | 16,117,092                  |  
|                                                       |   |                             |  
|Cash and Cash Equivalents, End Of Year                 | $ | 13,540,315                  |  
|                                                       |   |                             |  
|Cash And Cash Equivalents Is Comprised
      Of:       |   |                             |  
|Cash                                                   | $ | 503,224                     |  
|Short-term deposits                                    |   | 13,037,091                  |  
|                                                       | $ | 13,540,315                  |  
|Supplementary Information                              |   |                             |  
|Income taxes paid                                      | $ | -                           |  

Supplemental Disclosure Of Non-Cash Investing
ActivitiesOn December 20, 2006, 100,000 shares of common stock of Sierra
Geothermal Corp. were received as partial payment under the option agreement for
the Pumpernickel Valley Geothermal Project. (Note 6b) See accompanying notes to
the consolidated financial statements

85

---

|                                             
|---------------------------------------------
|NEVADA GEOTHERMAL POWER INC.                 
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|(Expressed in Canadian Dollars)              

|                                                                    |   | For the Years Ended June 30 |  
|------------------------------------------------------------------- | - | --------------------------- | -
|                                                                    |   | 2007                        |  
|Net Loss For The Year                                               | $ | (2,874,979                  | )
|                                                                    |   |                             |  
|                                                                    |   |                             |  
|Other Comprehensive Income                                          |   |                             |  
|Increase in unrealized holding gains on marketable
      securities |   | 50,642                      |  
|                                                                    |   |                             |  
|Comprehensive Loss                                                  | $ | (2,824,337                  | )

86

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|1. | NATURE OF OPERATIONS AND GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Nevada Geothermal Power Inc. (the Company) was
      incorporated on April 13, 1995 under the laws of British Columbia and is
      currently in the development stage. The Companys common shares are traded
      on the TSX Venture Exchange under the trading symbol NGP and on the OTC
      Bulletin Board in the United States.                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company is in the process of exploring, evaluating
      and developing its geothermal properties and has not yet determined
      whether these properties contain economically recoverable geothermal
      resources. The recoverability of the amounts shown for geothermal
      properties and related deferred costs is dependent upon the existence of
      economically recoverable reserves, the ability of the Company to obtain
      necessary financing to complete the development of the properties, and
      upon future profitable production.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These consolidated financial statements have been
      prepared on the basis of accounting principles applicable to a going
      concern which assume the realization of assets and discharge of
      liabilities in the normal course of business. As at June 30, 2007, the
      Company has a working capital of $10,962,394, and has accumulated losses
      totalling $10,015,378.                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Companys ability to continue as a going concern is
      dependent upon successful completion of additional financing, and upon its
      ability to attain profitable operations. Management is confident that it
      will be able to secure the necessary financing; however, there is no
      assurance that management will be successful in achieving this
      objective.                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These consolidated financial statements do not reflect
      adjustments to the carrying value of assets and liabilities, the reported
      expenses and other income and balance sheet classifications used that
      would be necessary if the going concern assumption were not appropriate.
      Such adjustments could be material.                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | NEWLY ADOPTED ACCOUNTING
POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Financial Instruments

Effective January 1, 2007, the Company
adopted three new accounting standards related to financial instruments that
were issued by the Canadian Institute of Chartered Accountants (CICA) in
2005.

These accounting policy changes were
adopted on a prospective basis with no restatement of prior period financial
statements.

The new standards and policies are as
follows:

|(i) | Financial Instruments  Recognition and
  Measurement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | In accordance with this new standard the Company now
      classifies all financial instruments as either held to maturity, available
      for sale, held for trading or loans and receivables. Financial assets
      classified as held to maturity, loans and other receivables and financial
      liabilities other than those held for trading are measured at amortised
      cost. Available for sale financial instruments are measured at fair value
      with unrealized gains and losses recorded in other comprehensive income.
      Instruments classified as held for trading are measured at fair value with
      unrealized gains and losses recognized in the income statement for the
      period.

87

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|(ii)  | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                           
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                
|      | The standard introduces the concept of comprehensive
      income, which consists of net income and other comprehensive income. The
      Company financial statements now include a Statement of Comprehensive
      Loss, which includes the components of comprehensive income. For the
      Company, other comprehensive income (OCI) is comprised of the unrealized
      gains on its marketable security investments.
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                
|      | Cumulative changes in OCI are included in Accumulated
      Other Comprehensive Income (AOCI) which is presented as a new category
      within shareholders equity in the balance sheet.                                                                                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                
|(iii) | Hedges                                                                                                                                                                                                                                                                                                                                                                                                                         
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                
|      | The new standard specifies the criteria under which hedge
      accounting can be applied and how hedge accounting can be executed. As at
      June 30, 2007 the Company has not designated any hedging
    relationships.                                                                                                                                                                                                    

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES
|-- | --------------------------------------------
|   |                                             
|   | a)                                          
|   |                                             
|   |                                             
|   |                                             
|   |                                             
|   |                                             
|   | b)                                          
|   |                                             
|   |                                             
|   |                                             
|   | c)                                          
|   |                                             
|   |                                             
|   |                                             
|   | d)                                          
|   |                                             
|   |                                             

88

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|**3.** | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|------ | ------------------------------------------------------------

| |    | proven geothermal resources of the areas. If an area of
      interest is abandoned, the costs thereof are charged to income in the year
      of abandonment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | The Company does not accrue the estimated future costs of
      maintaining its geothermal interests in good standing. The amounts shown
      for geothermal properties and deferred exploration costs represent costs
      to date and do not necessarily reflect present or future values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | e) | Option Proceeds Received On Geothermal
  Properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | Option proceeds received are treated as a reduction of
      the carrying value of the related geothermal properties and deferred
      exploration costs and the excess, if any, is taken into income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | f) | Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | Comprehensive income (loss) is the change in the
      Companys net assets that results from transactions, events, and
      circumstances from other than the Companys shareholders. This policy
      requires certain gains and losses that would otherwise be recorded as part
      of net earnings to be presented in other comprehensive income (loss)
      until it is considered appropriate to recognize into net earnings (loss).
      This policy requires the presentation of comprehensive income (loss), and
      its components in a separate financial statement that is displayed with
      the same prominence as the other financial statements. Accordingly, the
      Company now reports a consolidated statement of comprehensive income and
      includes the account accumulated other comprehensive income in the
      shareholders equity section of the consolidated balance sheet.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | g) | Capital Assets and Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | Capital assets are recorded at cost and are amortized
      over their useful lives by the declining balance method at the following
      annual rates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| | Computer equipment             | 30% 
| | ------------------------------ | ----
| | Field equipment                | 30% 
| | Office furniture and equipment | 20% 
| | Computer software              | 100%

| | h) | Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The Company applies the Canadian Institute of Chartered
      Accountants Handbook Section 3063, Impairment of Long-Lived Assets,
      which addresses the recognition, measurement and disclosure of the
      impairment of long-lived assets. Section 3063 requires that an impairment
      loss be recognized if the carrying amount of a long-lived asset is not
      recoverable. The carrying amount of a long-lived asset is not recoverable
      if the carrying amount exceeds the sum of the undiscounted cash flows
      expected to result from its use and eventual disposition. The impairment
      loss to be recognized is measured as the amount by which the carrying
      amount of the long-lived asset exceeds its fair value. The Company has
      determined there is no impact on its results of operations and financial
      position.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | i) | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The Company follows the recommendations of CICA Handbook
      Section 3870  Stock Based Compensation and Other Stock Based Payments
      to record stock based transactions with officers, directors, and outside
      consultants. Accordingly, the fair value of stock options is charged to
      operations or geothermal property costs as appropriate, with an offsetting
      credit to contributed surplus. The fair value of stock options which vest
      immediately is recorded at the date of grant and the fair value of options
      which vest in the future is recognized on a straight-line basis over the
      vesting period. Any consideration received on exercise of stock options
      together with the related portion of contributed surplus is credited to
      share capital.                                                      

89

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|---------------------------------------------------------------

| | j) | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The preparation of financial statements in accordance
      with Canadian generally accepted accounting principles requires management
      to make estimates and assumptions that affect the reported amounts of
      assets and liabilities at the date of the financial statements, and the
      reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from managements best estimates as additional
      information becomes available in the future                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | k) | Loss Per Common Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The Company calculates loss per share using the treasury
      stock method. Under the treasury stock method, only instruments with
      exercise amounts less than market prices impact the diluted calculations.
      In computing diluted loss per share, no shares were added to the weighted
      average number of common shares outstanding as the effect of potentially
      issuable common shares is anti-dilutive.                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | l) | Asset Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | Future costs to retire an asset, including remediation
      and ongoing treatment and monitoring of the site, have been recognized and
      recorded as a liability at fair value. The liability is accreted over time
      through periodic charges to operations. In subsequent periods, the
      liability is adjusted for any changes in the amount or timing of the
      underlying cash flows. The asset retirement cost is capitalized as part of
      the assets carrying value and amortized over the assets useful life.
      Future asset retirement obligations are not recorded where timing or
      amount of the remediation costs cannot be reasonably estimated.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | m) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | Income taxes are calculated using the liability method of
      accounting. Temporary differences arising from the difference between the
      tax basis of an asset or liability and its carrying amount on the balance
      sheet are used to calculate future income tax liabilities or assets.
      Future tax assets are recognized to the extent that they are considered
      more likely than not to be realized. Future income tax liabilities or
      assets are calculated using the tax rates anticipated to apply in the
      periods that the temporary differences are expected to reverse.                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | n) | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The financial statements of the 100% owned U.S.
      subsidiaries have been translated using the temporal method whereby the
      assets and liabilities are translated at the year end exchange rate,
      capital accounts at the historical exchange rate, and revenues and
      expenses at the average exchange rate for the period. Foreign exchange
      gains and losses resulting from these transactions are reflected in the
      consolidated statement of loss and deficit.                                                                                                                                                                                             

90

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

| | o) | Financial Instruments
| | -- | ---------------------

The Companys financial instruments
consist of cash and cash equivalents, amounts receivable, marketable securities,
and accounts payable and accrued liabilities. It is managements opinion that
the Company is not exposed to significant interest or credit risk arising from
these financial instruments. The fair value of the financial instruments
approximates their carrying value.

|4. | MARKETABLE SECURITIES
|-- | ---------------------

| |                                  |  | 2007      |  |   |         |  |   | 2006      |  |   |         | 
| | -------------------------------- |  | --------- |  | - | ------- |  | - | --------- |  | - | ------- | 
| |                                  |  |           |  |   |         |  |   |           |  |   |         | 
| |                                  |  | NUMBER OF |  |   |         |  |   | NUMBER OF |  |   |         | 
| |                                  |  | SHARES    |  |   | AMOUNT  |  |   | SHARES    |  |   | AMOUNT  | 
| |                                  |  |           |  |   |         |  |   |           |  |   |         | 
| |                                  |  |           |  |   |         |  |   |           |  |   |         | 
| | Sierra Geothermal Power Corp:    |  | 300,000   |  | $ | 75,358  |  |   | 200,000   |  | $ | 39,610  | 
| | Cost 
      common shares,      |  | -         |  |   | 20,642  |  |   | -         |  |   | -       | 
| | net of foreign exchange          |  |           |  |   |         |  |   |           |  |   |         | 
| | Unrealized
      gain recognized |  | -         |  |   | 50,642  |  |   | -         |  |   | -       | 
| |                                  |  | 300,000   |  |   | 126,000 |  |   | 200,000   |  |   | 39,610  | 
| |                                  |  |           |  |   |         |  |   |           |  |   |         | 
| |                                  |  |           |  |   |         |  |   |           |  |   |         | 
| |                                  |  |           |  |   |         |  |   |           |  |   |         | 
| | Running Fox Resources:           |  | -         |  |   | -       |  |   | 265,000   |  |   | 93,695  | 
| | Cost 
      common shares,      |  |           |  |   |         |  |   |           |  |   |         | 
| | net of foreign exchange          |  |           |  |   |         |  |   |           |  |   |         | 
| | Unrealized
      gain recognized |  |           |  |   |         |  |   |           |  |   |         | 
| |                                  |  | -         |  |   | -       |  |   | 265,000   |  |   | 93,695  | 
| |                                  |  | -         |  |   |         |  |   |           |  |   |         | 
| |                                  |  |           |  |   |         |  |   |           |  |   |         | 
| |                                  |  |           |  |   |         |  | $ | 126,000   |  | $ | 133,305 | 

|**5.** | CAPITAL ASSETS
|------ | --------------

| | 2007                           |   |         |  |   | 2006   | 
| | ------------------------------ | - | ------- |  | - | ------ | 
| |                                |   |         |  |   |        | 
| | Computer equipment             | $ | 41,649  |  | $ | 29,543 | 
| | Field equipment                |   | 14,446  |  |   | -      | 
| | Office furniture and equipment |   | 31,314  |  |   | 22,258 | 
| | Computer software              |   | 18,883  |  |   | 10,745 | 
| |                                |   | 106,292 |  |   | 62,546 | 
| | Accumulated amortization       |   | 52,349  |  |   | 31,800 | 
| |                                | $ | 53,943  |  | $ | 30,746 | 

91

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|**6.** | INTERESTS IN GEOTHERMAL PROPERTIES
|------ | ----------------------------------

The acquisition and deferred
exploration and development expenditures of the Company's geothermal property
interests, all located in the U.S., are as follows:

| |                                                 |   | 2007       |  |   | 2006      | 
| | ----------------------------------------------- | - | ---------- |  | - | --------- | 
| | Blue Mountain Geothermal Project - Nevada       | $ | 24,662,966 |  | $ | 8,974,935 | 
| | Pumpernickel Valley Geothermal Project - Nevada |   | -          |  |   | -         | 
| | Black Warrior Peak Project - Nevada             |   | 101,247    |  |   | 85,222    | 
| | Crump Geyser - Oregon                           |   | 416,362    |  |   | 363,521   | 
| | Other potential projects                        |   | -          |  |   | 3,959     | 
| |                                                 | $ | 25,180,575 |  | $ | 9,427,637 | 

| | a) | Blue Mountain Geothermal Project, Nevada,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | The Company holds a 100% leasehold interest on certain
      lands located in Humboldt County, Nevada. The leasehold interest, covering
      4,445.195 hectares (10,984.30 acres) on 17 geothermal sections. The
      interest entitles the Company to explore, develop and produce any
      geothermal resources located on the properties. The Company also has the
      option to purchase the freehold interest, consisting of five square miles
      (13km2) out of a total of the 15mi2(39km2) of the leasehold interest. The property interests are subject to
      production royalties ranging from 1.5% to 3.5% on sales of electrical
      power, and 5% to 10% from sale proceeds of direct energy.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | The Company signed a 20-year power purchase agreement
      with Nevada Power Company (NPC), a subsidiary of Sierra Pacific
      Resources, for up to approximately 35 gross megawatts of geothermal power
      to be produced from a new geothermal power plant to be built at the
      Companys Blue Mountain geothermal site, in northern Nevada. The power
      will be used by the utility to serve its customers in Nevada.                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | Under the terms of the agreement, the Company has
      provided to NPC a $683,249 (US$645,000) security deposit in the form of a
      letter of credit. NPC has the right to draw upon these funds in the
      following circumstances: i) if the Company fails to make any required
      payments under the contract; ii) if the letter of credit is not renewed by
      the required date; or iii) if certain conditions regarding the credit
      rating of the issuing financial institution are not met. This security
      deposit has been disclosed as restricted cash in these financial
      statements.                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | The Company has placed on deposit with a Canadian
      Chartered Bank a deposit of US$645,000 as security for this letter of
      credit. The deposit currently earns interest at the rate of 4.2% per annum
      which accrues to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

92

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|6. | INTERESTS IN GEOTHERMAL PROPERTIES
    (CONTINUED)
|-- | --------------------------------------------------
|   |                                                   
|   | a)                                                

| |                                         |   | 2007       |  |   | 2006      | 
| | --------------------------------------- | - | ---------- |  | - | --------- | 
| | Acquisition                             |   |            |  |   |           | 
| | Property leases, permits and regulatory | $ | 77,154     |  | $ | 34,349    | 
| | Deferred Exploration and Development    |   |            |  |   |           | 
| | Expenditures                            |   |            |  |   |           | 
| | Geological and geophysical              |   | 1,204,632  |  |   | 422,161   | 
| | Non-geological consulting               |   | 219,237    |  |   | 139,060   | 
| | Drilling                                |   | 10,860,898 |  |   | 3,842,566 | 
| | Plant feasibility study                 |   | 101,966    |  |   | 34,929    | 
| | Road maintenance                        |   | 520,800    |  |   | 161,942   | 
| | Camp and field supplies                 |   | 2,141,491  |  |   | 73,929    | 
| | Reports and maps                        |   | 14,420     |  |   | 4,813     | 
| | Testing                                 |   | 2,204      |  |   | -         | 
| | Water analysis                          |   | 91,644     |  |   | 26,202    | 
| | Water rights                            |   | 29,208     |  |   | 7,500     | 
| | Provision for remediation               |   | 424,377    |  |   | -         | 
| |                                         |   |            |  |   |           | 
| | Costs incurred during the year          |   | 15,688,031 |  |   | 4,747,451 | 
| | Balance, beginning of year              |   | 8,974,935  |  |   | 4,227,484 | 
| |                                         |   |            |  |   |           | 
| | Balance, end of year                    | $ | 24,662,966 |  | $ | 8,974,935 | 

Pumpernickel Valley Geothermal Project,
Nevada

The Company has a geothermal lease
agreement with Newmont USA Ltd., covering 13 km2 (5 mi2)
of land located approximately 16 km (10 miles) from Newmonts Lone Tree Mine. On
April 26, 2006, the Company entered into an agreement with ORMAT Nevada, Inc.
(ORMAT) whereby ORMAT would transfer BLM Lease #074855 (378 hectares (934
acres)) to the Company for a one time fee of US$15,000 and a commitment to use
ORMAT equipment, to be acquired at market rates, for the Pumpernickel project.
The lease is encumbered by an overriding loyalty interest with Ehni Enterprises
Inc. The Company was also granted two outstanding BLM leases, adding another
four sections of federal land, bringing the total leasehold to 2,809.498
hectares (6,942.41 acres).

93

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|**6.** | INTERESTS IN GEOTHERMAL PROPERTIES
      (CONTINUED)
|------ | ----------------------------------------------------

|b) | Pumpernickel Valley Geothermal Project,
      Nevada (Continued)
|-- | ----------------------------------------------------------------

The Newmont lease grants the Company the exclusive right to
drill for, produce, extract, take and remove all products of geothermal
processes including steam and other gases, hot water, hot brines, bi-products
and heat energy (collectively referred to as substances) along with surface
and water rights, subject to Nevada law. The Company will pay rentals of $2/acre
for the first two years and $3/acre thereafter, with all rental payments
creditable to royalties due upon production. The Company will pay royalties from
any geothermal production of:

- 31⁄2% of gross proceeds from electrical power sales (less taxes and
  transmission costs),
- 5% of the gross proceeds of a sale of any substances in an arms length
  transaction
- 2% of the gross proceeds from the sale of or manufacture there from of
  bi-products,
- 10% of net profits from the use of substances at a commercial facility
  other than an electric power generating facility
- Substances or electrical power used by the Company for operations at an
  on-site electrical generating plant or other commercial facilities are not
  subject to royalties.

In October 2004, the Company announced that Sierra Geothermal
Corp (formerly Inovision Solutions Inc.) (SGC) will finance up to $5-million
in exploration and development expenditures on the Pumpernickel Geothermal
Project under an option agreement to earn a 50% joint-venture interest. In order
to earn its interest, SGC must complete $5-million in project expenditures, make
$120,000 in cash payments and issue 600,000 shares to the Company over a
five-year period. Option proceeds received during the year in excess of the
exploration costs incurred to date have been recorded in the statements of loss
and deficit.

In addition, the Company was awarded a US Department of Energy
(DOE) cost sharing contract signed on October 13, 2004 whereby the DOE funded
80% of an initial field evaluation program at the Pumpernickel Valley Project.
The Company/DOE joint program included an advanced technology, three-dimensional
"E-SCAN" resistivity survey to map the deep geothermal resource waters and four
temperature gradient drill holes from 300 to 488 metres to test the E-SCAN
interpretation. The DOE cost share was US$592,272 of the total budget of
US$740,340. SGC covered the Company's cost share obligation of US$148,068 out of
the first year work commitment. The Company will manage the DOE sponsored
work.

94

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|**6.** | INTERESTS IN GEOTHERMAL PROPERTIES
      (CONTINUED)
|------ | ----------------------------------------------------

|b) | Pumpernickel Valley Geothermal Project, Nevada
      (Continued) The following
|-- | ------------------------------------------------------------------------------

costs have been incurred on the
project:

| |                                         |   | 2007     |   |   | 2006     |  
| | --------------------------------------- | - | -------- | - | - | -------- | -
| |                                         |   |          |   |   |          |  
| |                                         |   |          |   |   |          |  
| | Acquisition                             | $ | 10,710   |   | $ | 13,322   |  
| |                                         |   | 5,331    |   |   |          |  
| | Property leases, permits and regulatory |   | -        |   |   |          |  
| | Deferred Exploration Expenditures       |   | 268,342  |   |   | 59,255   |  
| | Camp and field supplies                 |   | 3,893    |   |   | 274,137  |  
| | Drilling                                |   | 5,109    |   |   | 290,841  |  
| |                                         |   | -        |   |   |          |  
| | Geological and geophysical              |   | -        |   |   | 3,600    |  
| | Non-geological consulting               |   | -        |   |   | 27,490   |  
| | Reports and maps                        |   |          |   |   | 5,402    |  
| | Road construction and maintenance Water |   | (293,385 | ) |   | 2,621    |  
| | analysis                                |   |          |   |   | (377,682 | )
| | U.S. Department of Energy grant         |   |          |   |   |          |  
| | Sierra Geothermal funding and option    |   |          |   |   | (314,145 | )
| | payments                                |   |          |   |   |          |  
| |                                         |   | -        |   |   | (15,159  | )
| | Costs incurred during the year          |   |          |   |   |          |  
| |                                         |   | -        |   |   | 15,159   |  
| | Balance, beginning of year              |   | -        |   |   | -        |  
| |                                         |   |          |   |   |          |  
| | Balance, end of year                    | $ |          |   | $ |          |  

| | c) | Black Warrior Peak Project, Nevada                                                                                                                                                                                                                                                                                                                                           
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                              
| |    | The project is located in Washoe and Churchill Counties,
      Nevada. The Company has a total of 26 km2(10 mi2)
      of both private land and federal lands including water and surface rights.
      The private leases are subject to a 3.5% royalty on gross revenue from
      electricity sales, although the Company can purchase the royalty for US$1
      million.

95

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|**6.** | INTERESTS IN GEOTHERMAL PROPERTIES
      (CONTINUED)
|------ | ----------------------------------------------------

|c) | Black Warrior Peak, Nevada, U.S.A. (Continued)
|-- | ----------------------------------------------

The following costs have been incurred
the project:

| | Acquisition                                   |   | 2007    |  |   | 2006   | 
| | --------------------------------------------- | - | ------- |  | - | ------ | 
| | Property leases,
      permits and regulatory | $ | 15,168  |  | $ | 12,582 | 
| | Deferred Exploration
      Expenditures       |   |         |  |   |        | 
| | Camp and field
      supplies                 |   | -       |  |   | 2,890  | 
| | Geological and geophysical                    |   | 857     |  |   | 9,741  | 
| | Costs incurred
      during the year          |   | 16,025  |  |   | 25,213 | 
| |                                               |   |         |  |   |        | 
| | Balance, beginning of
      year              |   | 85,222  |  |   | 60,009 | 
| | Balance, end of year                          | $ | 101,247 |  | $ | 85,222 | 

| | d) | Crump Geyser, Oregon
| | -- | --------------------

On August 1, 2005, the Company leased
28km2 (11 mi2) of geothermal land located in southeastern
Oregon. The leases are on private land and are subject to a 3.5% royalty of the
gross revenues from the availability, sale or use of electricity.

The following costs have been incurred
on the project:

| |                                                   |   | 2007    |  |   | 2006    | 
| | ------------------------------------------------- | - | ------- |  | - | ------- | 
| | Acquisition                                       |   |         |  |   |         | 
| | Property leases, permits and regulatory           | $ | 17,307  |  | $ | 16,779  | 
| |                                                   |   |         |  |   |         | 
| | Deferred Exploration Expenditures                 |   |         |  |   |         | 
| | Camp and field supplies                           |   | 6,220   |  |   | 21,507  | 
| | Geological and geophysical                        |   | 28,498  |  |   | 291,296 | 
| | Reports and maps                                  |   | -       |  |   | 716     | 
| | Water analysis                                    |   | 816     |  |   | 12,117  | 
| | Costs transferred from potential
      properties |   | -       |  |   | 21,106  | 
| | Costs incurred during the year                    |   | 52,841  |  |   | 363,521 | 
| |                                                   |   |         |  |   |         | 
| |                                                   |   |         |  |   |         | 
| | Balance, beginning of year                        |   | 363,521 |  |   | -       | 
| |                                                   |   |         |  |   |         | 
| | Balance, end of year                              | $ | 416,362 |  | $ | 363,521 | 

96

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|6. | INTERESTS IN GEOTHERMAL PROPERTIES
      (CONTINUED)
|-- | ----------------------------------------------------

| | e) | Other Potential Projects
| | -- | ------------------------

| |                                                        |   | 2007 |  |   | 2006  | 
| | ------------------------------------------------------ | - | ---- |  | - | ----- | 
| |                                                        |   |      |  |   |       | 
| | During the year ended June 30, 2007, the
      Company |   |      |  |   |       | 
| | wrote off the costs associated with a few potential    |   |      |  |   |       | 
| | properties that it had previously
      capitalized    | $ | -    |  | $ | 3,959 | 

|********7.******** | ASSET RETIREMENT OBLIGION
|------------------ | -------------------------

The undiscounted amount of expected
cash flows required to settle the asset retirement obligation is estimated at
$1,331,950 (2006 - $Nil). The liability for the expected cash flows, as
reflected in the consolidated financial statements, has been discounted at 5.21%
(2006  Nil%) and the inflation rate used is 3.08% (2006  Nil%).

| |                                 |   | 2007    |  |   | 2006 | 
| | ------------------------------- | - | ------- |  | - | ---- | 
| | Balance, beginning of year      | $ | -       |  | $ | -    | 
| | Additional liabilities incurred |   | 424,377 |  |   | -    | 
| | Accretion expense               |   | -       |  |   | -    | 
| | Balance, end of year            | $ | 424,377 |  | $ | -    | 

The majority of costs attributed to
these commitments and contingencies are expected to be incurred between 2008 and
2030 and are to be funded mainly from the Companys cash provided by operating
activities. The Companys provision for future site reclamation and closure
costs is based on known Federal and local laws and regulations concerning
environmental requirements.

|**8.** | SHARE CAPITAL
|------ | -------------

| | a) Authorized: | Unlimited voting common shares - no par value 25,000,000
      first preferred shares - no par value (none issued) 25,000,000 second
      preferred shares - no par value (none issued)
| | -------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the year ended June 30, 2007,
the Companys shareholders approved an increase in authorized common shares from
100,000,000 to an unlimited number.

97

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|**8.** | SHARE CAPITAL (CONTINUED)
|------ | -------------------------

| | b) | Common Shares Issued and Outstanding
| | -- | ------------------------------------

| |                                                        |   | SHARES     |  |   | AMOUNT     | 
| | ------------------------------------------------------ | - | ---------- |  | - | ---------- | 
| |                                                        |   |            |  |   |            | 
| | Balance, June 30, 2005                                 | $ | 29,403,074 |  | $ | 11,267,579 | 
| |                                                        |   |            |  |   |            | 
| | For cash                                               |   |            |  |   |            | 
| | Stock options exercised                                |   | 743,000    |  |   | 264,540    | 
| | Private placements, net
      of financing costs       |   | 19,666,667 |  |   | 15,137,241 | 
| | Share purchase warrants exercised                      |   | 3,389,430  |  |   | 1,755,015  | 
| | Stock options exercised - stock
      option valuation |   | -          |  |   | 167,281    | 
| |                                                        |   |            |  |   |            | 
| | Balance, June 30, 2006                                 |   | 53,202,171 |  |   | 28,591,656 | 
| |                                                        |   |            |  |   |            | 
| | For cash                                               |   |            |  |   |            | 
| | Stock options exercised                                |   | 545,000    |  |   | 295,200    | 
| | Private placements, net
      of financing costs       |   | 23,077,000 |  |   | 12,842,679 | 
| | Stock options exercised - stock option valuation       |   | -          |  |   | 133,007    | 
| | Balance, June 30, 2007                                 | $ | 76,824,171 |  | $ | 41,862,542 | 

During the year ended June 30, 2006,
the Company completed a private placement and issued 19,666,667 units at a price
of $0.90 per unit for proceeds of $17,700,000 before issuance costs of
$2,562,759, including non-cash consideration of $1,256,055. Each unit consisted
of one common share and one share purchase warrant. One whole warrant entitles
the holder to purchase one common share at a price of $1.40 per share for a
two-year period.

As a finance fee, the Company granted
the agents up to 1,573,333 units at a price of $0.90 per unit expiring April 28,
2008. Each unit consists of one common share and one share purchase warrant,
exercisable at $1.40 for a period of two years. The value of the agents units,
aggregating $1,256,055 was calculated using the Black-Scholes option pricing
model, with an interest rate of 4.16%, a dividend rate of 0%, a volatility of
70% and a two year term for both the common share portion and the warrant
portion.

During the year ended June 30, 2007,
the Company completed a private placement and issued 23,077,000 units at a price
of $0.65 per unit for gross proceeds of $15,000,050 before issuance costs of
$2,157,371, including non-cash consideration of $1,036,530. Each unit consisted
of one common share and one share purchase warrant. One whole warrant entitles
the holder to purchase one common share at a price of $1.10 per share for a
two-year period.

98

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|8. | SHARE CAPITAL (CONTINUED)
|-- | -------------------------
|   |                          
|   | b)                       
|   |                          
|   |                          
|   |                          
|   | c)                       
|   |                          
|   |                          
|   |                          
|   |                          

| |          |  | NUMBER        |  |  |                 |  |  |             |  |   | WEIGHTED | 
| | -------- |  | ------------- |  |  | --------------- |  |  | ----------- |  | - | -------- | 
| |          |  | OUTSTANDING   |  |  |                 |  |  | REMAINING   |  |   | AVERAGE  | 
| | EXERCISE |  | AT            |  |  | NUMBER          |  |  | CONTRACTUAL |  |   | EXERCISE | 
| | PRICE    |  | JUNE 30, 2007 |  |  | **EXERCISABLE** |  |  | LIFE        |  |   | PRICE    | 
| |          |  |               |  |  |                 |  |  |             |  |   |          | 
| | $0.28    |  | 478,000       |  |  | 478,000         |  |  | 1.14        |  | $ | 0.28     | 
| | $0.35    |  | 180,000       |  |  | 180,000         |  |  | 1.67        |  | $ | 0.35     | 
| | $0.54    |  | 232,000       |  |  | 232,000         |  |  | 2.27        |  | $ | 0.54     | 
| | $0.67    |  | 50,000        |  |  | 37,500          |  |  | 4.22        |  | $ | 0.67     | 
| | $0.90    |  | 1,723,000     |  |  | 1,723,000       |  |  | 3.57        |  | $ | 0.90     | 
| | $0.65    |  | 3,877,000     |  |  | 3,762,000       |  |  | 4.80        |  | $ | 0.65     | 
| |          |  | 6,540,000     |  |  | 6,412,500       |  |  | 4.01        |  | $ | 0.68     | 

99

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|**8.** | SHARE CAPITAL (CONTINUED)
|------ | -------------------------

| | c) | Stock Options (Continued)
| | -- | -------------------------

A summary of the changes in stock
options for the years ended June 30, 2007 and 2006 is presented below:

| |                        |   |           |   |   | WEIGHTED | 
| | ---------------------- | - | --------- | - | - | -------- | 
| |                        |   | NUMBER    |   |   | AVERAGE  | 
| |                        |   | OF        |   |   | EXERCISE | 
| |                        |   | SHARES    |   |   | PRICE    | 
| | Balance, June 30, 2005 | $ | 2,278,000 |   | $ | 0.41     | 
| |                        |   |           |   |   |          | 
| |                        |   |           |   |   |          | 
| | Granted                |   | 2,048,000 |   |   | 0.90     | 
| | Exercised              |   | (743,000  | ) |   | 0.36     | 
| | Cancelled/Expired      |   | (100,000  | ) |   | 0.50     | 
| | Balance, June 30, 2006 |   | 3,483,000 |   |   | 0.71     | 
| |                        |   |           |   |   |          | 
| |                        |   |           |   |   |          | 
| | Granted                |   | 3,927,000 |   |   | 0.65     | 
| | Exercised              |   | (545,000  | ) |   | 0.54     | 
| | Cancelled/Expired      |   | (325,000  | ) |   | 0.90     | 
| |                        |   |           |   |   |          | 
| | Balance, June 30, 2007 |   | 6,540,000 |   | $ | 0.68     | 

The Company has a stock option plan
that provides for the issuance of options to its directors, officers, employees
and consultants. The maximum number of outstanding options must be no more than
10% of the issued and outstanding shares at any point in time. During the year
ended June 30, 2007, the Company recorded $1,279,145 (2006 - $692,059) in stock
based compensation for options granted during the year.

The fair value of each option granted
is estimated on the date of grant using the Black-Scholes option pricing model
with the following weighted average assumptions:

| |                                                    | 2007         | 2006        
| | -------------------------------------------------- | ------------ | ------------
| |                                                    |              |             
| | Risk free interest rate                            | 3.98 - 4.17% | 3.80 - 4.43%
| | Expected life                                      | 1 - 2 yrs    | 1-2 yrs     
| | Expected volatility                                | 54 - 67%     | 70 - 75%    
| | Expected dividend yield                            | 0%           | 0%          
| | Weighted average of value of options
      granted | $0.32        | $0.37       

100

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|8. | SHARE CAPITAL (CONTINUED)
|-- | -------------------------
|   |                          
|   | d)                       

As at June 30, 2007, the following
agents units were outstanding:

| |          |  | NUMBER      |  |  |              |  |  |        |                    
| | -------- |  | ----------- |  |  | ------------ |  |  | ------ | -------------------
| |          |  | OUTSTANDING |  |  | REMAINING    |  |  |        |                    
| | EXERCISE |  | AT JUNE 30  |  |  | CONTRACTUAL  |  |  | EXPIRY |                    
| | PRICE    |  | 2007        |  |  | LIFE (YEARS) |  |  | DATES  |                    
| |          |  |             |  |  |              |  |  |        |                    
| | $0.90    |  | 1,573,333   |  |  | 0.83         |  |  |        | April 28, 2008     
| | $0.65    |  | 1,846,160   |  |  | 1.67         |  |  |        | March
      1, 2009
| |          |  | 3,419,493   |  |  | 1.28         |  |  |        |                    

A summary of the changes in agents
units for the years ended June 30, 2007 and 2006 is presented below:

| |                        |   |           |  |   | WEIGHTED | 
| | ---------------------- | - | --------- |  | - | -------- | 
| |                        |   | NUMBER    |  |   | AVERAGE  | 
| |                        |   | OF        |  |   | EXERCISE | 
| |                        |   | UNITS     |  |   | PRICE    | 
| |                        |   |           |  |   |          | 
| | Balance, June 30, 2005 | $ | -         |  | $ | -        | 
| | Granted                |   | 1,573,333 |  |   | 0.90     | 
| | Balance, June 30, 2006 |   | 1,573,333 |  |   | 0.90     | 
| | Granted                |   | 1,846,160 |  |   | 0.65     | 
| |                        |   |           |  |   |          | 
| | Balance, June 30, 2007 | $ | 3,419,493 |  | $ | 0.77     | 

101

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|**8.** | SHARE CAPITAL (CONTINUED)
|------ | -------------------------

| | e) | Share Purchase Warrants
| | -- | -----------------------

As at June 30, 2007, the following
share purchase warrants were outstanding:

| | NUMBEROF   | EXERCISE | EXPIRY
| | ---------- | -------- | ------
| | SHARES     | PRICE    | DATE  
| |            |          |       
| |            |          |       
| | 13,000,000 | 1.40     |       
| | 6,666,667  | 1.40     |       
| |            |          |       
| | 3,850,000  | 1.10     |       
| | 19,227,000 | 1.10     |       
| | 42,743,667 |          |       

A summary of the changes in share
purchase warrants for the years ended June 30, 2007 and 2006 is presented
below:

| |                        |  |            |   |   | WEIGHTED |  
| | ---------------------- |  | ---------- | - | - | -------- | -
| |                        |  | NUMBER     |   |   | AVERAGE  |  
| |                        |  | OF         |   |   | EXERCISE |  
| |                        |  | SHARES     |   |   | PRICE    |  
| | Balance, June 30, 2005 |  | 8,188,430  |   | $ | 0.77     |  
| |                        |  |            |   |   |          |  
| |                        |  |            |   |   |          |  
| |                        |  |            |   |   |          |  
| | Issued                 |  | 19,666,667 |   |   | 1.40     |  
| | Exercised              |  | (3,389,430 | ) |   | (0.52    | )
| | Balance, June 30, 2006 |  | 24,465,667 |   |   | 1.31     |  
| |                        |  |            |   |   |          |  
| |                        |  |            |   |   |          |  
| |                        |  |            |   |   |          |  
| | Issued                 |  | 23,357,000 |   |   | 1.10     |  
| | Expired                |  | (5,079,000 | ) |   | (0.80    | )
| |                        |  |            |   |   |          |  
| | Balance, June 30, 2007 |  | 42,743,667 |   | $ | 1.24     |  

| | f) | Escrow Shares                                                 
| | -- | --------------------------------------------------------------
| |    |                                                               
| |    | As at June 30, 2007, there are no shares held in
      escrow.

102

---

|                                              
|----------------------------------------------
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|9. | CONTRIBUTED SURPLUS
|-- | -------------------

| |                              |   | 2007      |   |   | 2006      |  
| | ---------------------------- | - | --------- | - | - | --------- | -
| |                              |   |           |   |   |           |  
| |                              |   |           |   |   |           |  
| | Balance, beginning of year   | $ | 2,375,310 |   | $ | 594,477   |  
| |                              |   |           |   |   |           |  
| | Compensation options granted |   | 1,279,145 |   |   | 692,059   |  
| | Agents' units granted        |   | 1,036,530 |   |   | 1,256,055 |  
| | Stock options exercised      |   | (133,007  | ) |   | (167,281  | )
| | Balance, end of year         | $ | 4,557,978 |   | $ | 2,375,310 |  

|**10.** | RELATED PARTY TRANSACTIONS
|------- | --------------------------

During the years ended June 30, 2007
and 2006, the following were paid or accrued to directors, officers, former
officers and to companies controlled by directors of the Company:

| |                       |   | 2007    |  |   | 2006    | 
| | --------------------- | - | ------- |  | - | ------- | 
| |                       |   |         |  |   |         | 
| | Consulting            | $ | 283,528 |  | $ | 93,424  | 
| | Director fees         | $ | 54,772  |  | $ | 24,600  | 
| | Geothermal consulting | $ | 693,374 |  | $ | 617,425 | 
| | Rent                  | $ | 2,888   |  | $ | -       | 

As at June 30, 2007, a total of
$153,533 was owing to directors, officers and companies controlled by directors
of the Company. This amount is included in accounts payable and accrued
liabilities, is interest free, unsecured and is repayable on demand.

|**11.** | INCOME TAXES
|------- | ------------

The recovery of Canadian income taxes
shown in the statements of loss and deficit differs from the amounts obtained by
applying statutory rates due to the following:

| |                                                                      |   | 2007       |   |   | 2006       |  
| | -------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                                      |   |            |   |   |            |  
| |                                                                      |   | 34%        |   |   | 34%        |  
| | Statutory tax rate                                                   |   |            |   |   |            |  
| |                                                                      |   |            |   |   |            |  
| | Expected income tax recovery                                         |   | (981,000   | ) |   | (546,000   | )
| | Net adjustment for amortization, deductible and
      non-deductible |   |            |   |   |            |  
| | differences                                                          |   | 109,000    |   |   | 112,000    |  
| | Geothermal property costs                                            |   | (4,633,000 | ) |   | (1,627,000 | )
| | Unrecognized benefit for non-capital losses                          |   | 5,505,000  |   |   | 2,061,000  |  
| |                                                                      |   |            |   |   |            |  
| | Future income tax recovery                                           | $ | -          |   | $ | -          |  

103

---

The significant components of the
Companys Canadian future income tax assets (liability) are as follows:

| |                                 |   | 2007       |   |   | 2006       |  
| | ------------------------------- | - | ---------- | - | - | ---------- | -
| |                                 |   |            |   |   |            |  
| | Operating losses                | $ | 8,948,000  |   | $ | 3,635,000  |  
| | Share issuance costs            |   | 1,159,000  |   |   | 422,000    |  
| |                                 |   | 10,107,000 |   |   | 4,057,000  |  
| | Valuation allowance             |   | (2,093,000 | ) |   | (1,575,000 | )
| |                                 |   |            |   |   |            |  
| | Net future income tax assets    |   | 8,014,000  |   |   | 2,482,000  |  
| | Geothermal properties           |   | (8,014,000 | ) |   | (2,482,000 | )
| |                                 |   |            |   |   |            |  
| | Net future income tax liability | $ | -          |   | $ | -          |  

The Company has non-capital losses
carried forward of approximately CDN$6,560,000 (2006  CDN$4,325,000) and
US$18,630,000 (2006  US$5,670,000), that may be available for tax purposes.

Losses for Canadian tax purposes expire
as follows:

2007
    $
    238,0002008
    
    184,0002009
    
    293,0002010
    
    456,0002014
    
    454,0002015
    
    1,070,0002026
    
    1,415,0002027
    
    2,450,000$
    6,560,000


The recovery of U.S. income taxes shown
in the statements of loss and deficit differs from the amounts obtained by
applying statutory rates due to the following:

Losses for US tax purposes expire as
follows:

2023
    
    US$ 40,0002024
    
    325,0002025
    
    1,153,0002026
    
    4,152,0002027
    
    12,960,000US$ 18,630,000


|**12.** | COMMITMENTS
|------- | -----------

The following are commitments at June
30, 2007 that are not otherwise disclosed elsewhere:

| | a) | On April 16, 2007 the Company entered into an agreement
      for the provision of management and technical services. Compensation under
      the agreement is US$15,000 per month for an initial term of three years.
      The agreement may be renewed for further annual terms upon the mutual
      agreement of the parties.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

104

---

|                                              
|----------------------------------------------
|                                              
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|12. | COMMITMENTS (CONTINUED)
|--- | -----------------------
|    |                        
|    | b)                     

| | 2008                      | $ | 350,487   | 
| | ------------------------- | - | --------- | 
| | 2009                      | $ | 508,216   | 
| | 2010                      | $ | 569,862   | 
| | 2011                      | $ | 587,050   | 
| | 2012                      | $ | 554,410   | 
| | 2013 and
      thereafter | $ | 1,338,621 | 
| |                           | $ | 3,908,646 | 

| | c) | On December 16, 2005, the Company entered into an
      agreement for the provision of investor relations services. Compensation
      under the agreement is $5,000 per month for an initial term of twelve
      months. The Company issued 50,000 options exercisable at $0.90 on signing
      and at three-month intervals thereafter with a maximum to be issued of
      200,000 options. As of June 30, 2007, 200,000 options have been issued,
      and the investor relations services continue to be provided on a
      month-to-month basis.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | d) | On January 12, 2006, the Company entered into a contract
      for the provision of management and technical services from a company
      controlled by a director and an officer. Compensation under the agreement
      is $9,000 per month for an initial term of twelve months. The contract
      commenced December 1, 2005 and is to be renewed annually until rescinded.
      The contract was terminated on October 1, 2007.                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | e) | On January 12, 2006, the Company entered into a contract
      for the provision of technical and geological services from a company
      controlled by a director and an officer. Compensation under the agreement
      varies according to the services provided. The contract commenced January
      1, 2006 and is to be renewed annually until rescinded. The contract was
      terminated on October 1, 2007                                                                                                                                    

|13. | SEGMENTED DISCLOSURE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company operates in a single reportable operating
      segment, being the exploration and development of geothermal properties.
      Geographically, all long-term assets of the Company are located in the
      U.S. Corporate administrative activities are conducted in
Canada.                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|14. | CONTINGENT LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | In December 2006, the Company and its former drilling
      contractor agreed to the binding arbitration process under the laws of the
      State of Nevada in order to resolve certain disputes regarding drilling
      services rendered. The maximum amount under dispute approximates
      US$900,000. The Company is confident that the amounts owing are
      substantially less and accordingly has accrued a smaller amount; however
      the outcome of the arbitration process is not presently
    determinable.

105

---

|                                              
|----------------------------------------------
|                                              
|                                              
|                                              
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|15. | SUBSEQUENT EVENTS           
|--- | ----------------------------
|    |                             
|    | Subsequent to June 30, 2007:
|    |                             
|    | a)                          
|    |                             
|    |                             
|    |                             
|    |                             
|    |                             
|    | b)                          
|    |                             
|    |                             
|    |                             
|    | c)                          
|    |                             
|    | d)                          
|    |                             
|    | e)                          

106

---

|                                              
|----------------------------------------------
|                                              
|                                              
|NEVADA GEOTHERMAL POWER INC.                  
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|JUNE 30, 2007 AND 2006                        
|(Expressed in Canadian Dollars)               

|**15.** | SUBSEQUENT EVENTS (CONTINUED)
|------- | -----------------------------

| | f) | On October 1, 2007, the Company cancelled 230,000 stock
      options held by a former employee and consultant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | g) | On October 1, 2007, the Company granted 80,000 incentive
      stock options to an employee of the Company. The options are exercisable
      at a price of $0.81 per share for a period of five years.                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | h) | On October 1, 2007, the Company entered into an
      employment contract with Mr. Brian Fairbank, President and CEO.
      Simultaneously, the Company agreed to hire the former employees and
      acquire certain assets from Fairbank Engineering Ltd. (FEL). FEL is a
      consulting company owned by Brian Fairbank. As consideration, the Company
      has agreed to issue to FEL, up to 175,000 common shares at a deemed price
      of $0.75 per share and pay the balance of the purchase price in cash. The
      agreement is subject to the acceptance of the TSX Venture
  Exchange.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | i) | On October 10, 2007, the Company received proceeds of
      $27,000 from the exercise of 50,000 stock
options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|**16 .** | MATERI AL DIFFERENCES BETWEEN CANADI AN AND
      UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
|-------- | ---------------------------------------------------------------------------------------------------------------

The Company prepares its financial
statements in accordance with accounting principles generally accepted in Canada
(Canadian GAAP), which differ in certain respects from those principles that
the Company would have followed had its financial statements been prepared in
accordance with accounting principles generally accepted in the United States
(US GAAP). The major differences between Canadian and US GAAP, which affect
the Companys financial statements, are described below, and their effect on the
financial statements is summarized as follows:

| |                                                             |   | 2007        |   |   | 2006       |   |   | 2005       |  
| | ----------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | -
| | Net loss in accordance with Canadian GAAP                   |   |             |   |   |            |   |   |            |  
| |                                                             |   |             |   |   |            |   |   |            |  
| |                                                             | $ | (2,874,979  | ) | $ | (1,605,372 | ) | $ | (1,308,233 | )
| | Deduct:                                                     |   |             |   |   |            |   |   |            |  
| | Unproven property interests and deferred
      expenditures |   |             |   |   |            |   |   |            |  
| | incurred in the year (Canadian                              |   |             |   |   |            |   |   |            |  
| | GAAP)                                                       |   | (15,752,938 | ) |   | (5,103,879 | ) |   | (1,807,605 | )
| |                                                             |   |             |   |   |            |   |   |            |  
| | Net loss in accordance with US GAAP                         | $ | (18,627,917 | ) | $ | (6,709,251 | ) | $ | (3,115,838 | )
| |                                                             |   |             |   |   |            |   |   |            |  
| |                                                             |   | 2007        |   |   | 2006       |   |   | 2005       |  
| |                                                             |   |             |   |   |            |   |   |            |  
| | Basic and diluted loss per common share (US
      GAAP)     |   |             |   |   |            |   |   |            |  
| |                                                             | $ | (0.30       | ) | $ | (0.18      | ) | $ | (0.12      | )
| | Weighted average number of common shares
      issued and   |   |             |   |   |            |   |   |            |  
| | outstanding (US GAAP)                                       |   | 61,294,757  |   |   | 36,537,557 |   |   | 24,967,821 |  

107

---

|16. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND
      UNITED STATES GENERALL ACCEPTED ACCOUNTING PRINCIPLES (GAPP)
      (CONTINUED)
|--- | ------------------------------------------------------------------------------------------------------------------------------

Statements of Cash Flows in Accordance
with US GAAP

| |                                                             |   | 2007        |   |   | 2006       |   |   | 2005       |  
| | ----------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | -
| |                                                             |   |             |   |   |            |   |   |            |  
| | Cash provided by (used in)                                  |   |             |   |   |            |   |   |            |  
| | Operating Activities                                        |   |             |   |   |            |   |   |            |  
| | Net loss
      in accordance with US GAAP                   | $ | (18,627,917 | ) | $ | (6,709,251 | ) | $ | (3,115,838 | )
| |                                                             |   |             |   |   |            |   |   |            |  
| | Adjustments to reconcile net loss to net
      cash used by |   |             |   |   |            |   |   |            |  
| | operating activities                                        |   |             |   |   |            |   |   |            |  
| | Asset retirement
      obligation                           |   | 424,377     |   |   | -          |   |   | -          |  
| |                                                             |   |             |   |   |            |   |   |            |  
| | Securities
      received for geothermal property option    |   | (47,000     | ) |   | (20,000    | ) |   | -          |  
| | Foreign exchange loss on
      marketable securities        |   |             |   |   |            |   |   |            |  
| |                                                             |   | 11,252      |   |   | -          |   |   | -          |  
| | Gain on sale of
      securities                            |   | (103,965    | ) |   | (62,780    | ) |   | -          |  
| | Gain on
      disposal of subsidiary                        |   | -           |   |   | -          |   |   | (159,695   | )
| | Amortization                                                |   | 20,549      |   |   | 10,900     |   |   | 3,005      |  
| | Stock-based compensation                                    |   | 1,279,145   |   |   | 692,059    |   |   | 335,064    |  
| | Unrealized loss on
      marketable securities              |   | -           |   |   | -          |   |   | 106,999    |  
| | Change in
      amounts receivable                          |   | 16,632      |   |   | (16,526    | ) |   | 262,102    |  
| | Change in prepaid
      expenses                            |   | (134,593    | ) |   | 55,689     |   |   | (51,665    | )
| |                                                             |   |             |   |   |            |   |   |            |  
| | Change in accounts payable and
      accrued liabilities    |   |             |   |   |            |   |   |            |  
| |                                                             |   | 939,669     |   |   | 1,688,435  |   |   | (94,330    | )
| |                                                             |   | (16,221,851 | ) |   | (4,361,474 | ) |   | (2,714,358 | )
| |                                                             |   |             |   |   |            |   |   |            |  
| | Investing activities                                        |   |             |   |   |            |   |   |            |  
| | Proceeds from
      disposal of marketable securities       |   |             |   |   |            |   |   |            |  
| |                                                             |   | 197,660     |   |   | 128,085    |   |   | -          |  
| | Restricted cash                                             |   | (683,249    | ) |   |            |   |   |            |  
| | Acquisition of capital assets                               |   | (43,746     | ) |   | (26,417    | ) |   | (7,216     | )
| |                                                             |   | (529,335    | ) |   | 101,668    |   |   | (7,216     | )
| |                                                             |   |             |   |   |            |   |   |            |  
| | Financing activity                                          |   |             |   |   |            |   |   |            |  
| | Common stock issued for cash                                |   | 14,174,409  |   |   | 18,412,851 |   |   | 3,701,192  |  
| |                                                             |   | 14,174,409  |   |   | 18,412,851 |   |   | 3,701,192  |  
| |                                                             |   |             |   |   |            |   |   |            |  
| |                                                             |   |             |   |   |            |   |   |            |  
| | Increase (Decrease) in cash and cash equivalents            | $ | (2,576,777  | ) | $ | 14,153,045 |   | $ | 979,618    |  

108

---

|16. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND
      UNITED STATES GENERALL ACCEPTED ACCOUNTING PRINCIPLES (GAPP)
      (CONTINUED)
|--- | ------------------------------------------------------------------------------------------------------------------------------

| |                                                        |   | 2007        |   |   | 2006       |   |   | 2005       |  
| | ------------------------------------------------------ | - | ----------- | - | - | ---------- | - | - | ---------- | -
| | Shareholders equity  Canadian GAAP                   | $ | 36,455,784  |   | $ | 23,826,567 |   | $ | 6,327,029  |  
| | Option interests and deferred exploration expenditures |   | (25,180,575 | ) |   | (9,427,637 | ) |   | (4,323,758 | )
| | Shareholders equity  US GAAP                         | $ | 11,275,209  |   | $ | 14,398,930 |   | $ | 2,003,271  |  
| |                                                        |   | 2007        |   |   | 2006       |   |   | 2005       |  
| |                                                        |   |             |   |   |            |   |   |            |  
| | Acquisition and deferred exploration                   |   |             |   |   |            |   |   |            |  
| | expenditures  Canadian GAAP                           | $ | 25,180,575  |   | $ | 9,427,637  |   | $ | 4,323,758  |  
| |                                                        |   |             |   |   |            |   |   |            |  
| | Acquisition and deferred exploration                   |   |             |   |   |            |   |   |            |  
| | expenditures expensed per US GAAP                      |   | (25,180,575 | ) |   | (9,427,637 | ) |   | (4,323,758 | )
| | Acquisition and deferred exploration                   |   |             |   |   |            |   |   |            |  
| | expenditures  US GAAP                                 | $ | -           |   | $ | -          |   | $ | -          |  

| | i)  | Under Canadian GAAP, companies have the option to defer
      exploration expenditures on prospective properties until such time as it
      is determined that further work is not warranted, at which point
      capitalized costs would be written off. Under US GAAP, all exploration
      expenditures are expensed until an independent feasibility study has
      determined that the property is capable of commercial production. At this
      stage, the Company has not yet identified economically recoverable
      reserves on any of its interests. Accordingly, under US GAAP, all
      exploration costs incurred are expensed.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ii) | Investments in shares with a trading restriction period
      of greater than one year are recorded at cost for Canadian GAAP purposes.
      For United States GAAP purposes, investments with a hold period of greater
      than one year are not classified as available for sale securities and are
      also recorded at cost.                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Investments with a trading restriction of one year or
      less are classified as marketable securities for Canadian GAAP purposes
      and are recorded at the lower of cost and market value. For United States
      GAAP purposes, these securities are classified as trading securities and
      are recorded at market value at the reporting date.                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | As at June 30, 2007, there is no difference between the
      Canadian GAAP and the United States GAAP recorded
values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|**17.** | COMPARATIVE FIGURES
|------- | -------------------

Certain of the prior years comparative
figures have been reclassified to conform with the current presentation.

109

---

|ITEM 18 | Financial Statements
|------- | --------------------

Refer to Item 17  Financial Statements.

|ITEM 19 | Exhibits
|------- | --------

The following exhibits are being filed as part of this Annual
Report, or are incorporated by reference where indicated:

EXHIBITS filed on FTP Site
    Description of Exhibit1.Articles of Incorporation and By-laws:1.1
    Certificate of Incorporation and Articles of Blue Desert
      Mining Inc. dated April 13, 1995 (1)1.2
    Special Resolution and Altered Memorandum filed October
      3, 1995 (1)1.3
    Certificate of Name Change from "Blue Desert Mining Inc."
      to "Canada Fluorspar Inc." dated May 25, 2000 (1)1.4
    Certificate of Name Change from "Canada Fluorspar Inc."
      to "Continental Ridge Resources Inc." dated February 5, 2001
      (1)1.5
    Certificate of Name Change from "Continental Ridge
      Resources Inc." to "Nevada Geothermal Power Inc." dated May 13, 2003
      (1)1.6
    Articles adopted by Nevada Geothermal Power Inc. on
      November 30, 2005 (1)1.7
    Notice of Articles dated January 25, 2006 (1)2.
      Instruments Defining Rights of Security Holders2.1
    Specimen Certificate of Common Stock (1)2.2
    Incentive Stock Option Plan adopted November 30, 2005
      (Also listed under Exhibit 4.33) (1)2.3
    Form of Option Agreement (1)2.4
    Warrant issued to Susan Power for 77,000 common shares
      dated June 2005 (1)2.5
    Form of Warrant dated April 21, 2006, with an exercise
      price of Canadian Dollars $1.40 (1)2.6
    Form of agent's compensation option dated April 28, 2006
      for the purchase of underwriting units, comprised of our common shares and
      share purchase warrants, at a price of $0.90 per underwriting unit until
      April 28, 2008 (1)


110

---

4.
      Material Contracts4.1
    Geothermal Lease No. 187556 between Burlington Northern
      Santa Fe (formerly The Atchison Topeka and Santa Fe Railway Company) and
      Power Company regarding Blue Mountain, dated October 19, 1993, as amended
      March 31, 2003 and November 1, 2005 (1)4.2
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 58196 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Blue Mountain, effective date of April 1, 1994 (1)4.3
    Grant Bargain and Sale Deed between Nevada Land &
      Resource Company, LLC and Delong Ranches, Inc., dated September 10, 1999
      (1)4.4
    Option Agreement between Continental Ridge Resources Inc.
      and Blue Mountain Power Company for Blue Mountain Geothermal Project,
      Humboldt County, Nevada, dated June 19, 2001 (1)4.5
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 74855 between the Federal Bureau of Land Management and Sierra Nevada
      Geothermal, Inc., effective date of June 1, 2002 (1)4.6
    Option Amendment Agreement between Continental Ridge
      Resources Inc. and Blue Mountain Power Company for Blue Mountain
      Geothermal Project, Humboldt County, Nevada, dated August 7, 2002
      (1)4.7
    Option Amendment Agreement between Continental Ridge
      Resources Inc. and Blue Mountain Power Company for Blue Mountain
      Geothermal Project, Humboldt County, Nevada, dated November 12, 2002
      (1)4.8
    Share Exchange Agreement between Continental Ridge
      Resources Inc. (subsequently Nevada Geothermal Power Inc.) and Blue
      Mountain Power Company Inc., dated December 13, 2002 (1)4.9
    Geothermal Lease Agreement No. 189093 between Nevada Land
      and Resource Council and Power Company regarding Blue Mountain, effective
      date of March 31, 2003, as amended November 1, 2005 (1)4.10
    Geothermal Lease Agreement between Nevada Land Resource
      Company, LLC and Noramex Corporation, dated March 31, 2003 (1)4.11
    Consulting Agreement between Continental Ridge Resources
      and Goodman Capital, dated April 13, 2003. (1)4.12
    Assignment of Record Title Interest in a Lease for Oil
      and Gas or Geothermal Resources from United States Department of the
      Interior Bureau of Land Management to Ormat Nevada Inc., dated August 1,
      2003 (1)4.13
    Memorandum of Geothermal Lease and Agreement No.
      29-462-0003 between Newmont USA Limited, dba Newmont Mining Corporation
      and Nevada Geothermal Power, Inc. regarding Pumpernickel, dated February
      13, 2004 (1)


111

---

4.14
    Exercise of Option to Renew Lease No. 187556 between The
      Burlington Northern and Santa Fe Railway Company and Noramex Corporation
      regarding Blue Mountain, effective date of March 1, 2004 (1)4.15
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 77668 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Blue Mountain, effective date of August 1, 2004 (1)4.16
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 80159 between, the Federal Bureau of Land Management and Noramex Corp.
      regarding Blue Mountain, effective date of August 1, 2004 (1)4.17
    Share Purchase Agreement between Nevada Geothermal Power
      Inc, Running Fox Resource Corp and Blue Desert Mining (US) Inc., dated
      August 27, 2004 (1)4.18
    Option Agreement between Nevada Geothermal Power Inc. and
      Sierra Geothermal Power Corp. (formerly Inovision Solutions Inc.)
      regarding Pumpernickel, dated October 12, 2004 (1)4.19
    Amendment Agreement to Geothermal Option Agreement
      between Nevada Geothermal Power Inc. and Normaex Corp. and Inovision
      Solutions Inc., dated January 12,2005 (1)4.20
    [Investor Relations Services] Agreement between Nevada
      Geothermal Power Inc. and The Equicom Group Inc., dated March 15, 2005
      (1)4.21
    Lease Amendment No. 189099 between Nevada Land and
      Resource Council and Noramex Corporation regarding Black Warrior, dated
      May 1, 2005 (1)4.22
    Letter Agreement for Contract for Services between Nevada
      Geothermal Power Inc. and Domenic J. Falcone Associates, Inc., dated May
      20, 2005, agreed and accepted on June 9, 2005(1)4.23
    Amendment 1 to Letter Agreement for Contract for Services
      dated May 20, 2005 between Nevada Geothermal Power Inc. and Domenic J.
      Falcone Associates, Inc., dated May 20, 2005(1)4.24
    Amendment 2 to Letter Agreement for Contract for Services
      dated May 20, 2005 between Nevada Geothermal Power Inc. and Domenic J.
      Falcone Associates, Inc., dated May 20, 2005(1)4.25
    Stabb Geothermal Lease Agreement between Noramex
      Corporation and Stabb regarding Crump Geyser, effective date of August 1,
      2005 (1)4.26
    Stabb Geothermal Lease Agreement between Noramex
      Corporation and LX Ranch Inc. regarding Crump Geyser, effective date of
      August 1, 2005 (1)4.27
    OKeefe Ranch Geothermal Lease Agreement between Noramex
      Corporation and O'Keefe Ranch regarding Crump Geyser, effective date of
      August 1, 2005 (1)4.28
    Consulting Agreement between Nevada Geothermal Power Inc.
      and Don J.A. Smith, dated


112

---

October 1, 2005 (1)4.29
    Lease Amendment for Lease No. 189093 between Nevada Land
      and Resource Council, LLC and Noramex Corp. regarding Blue Mountain, dated
      November 1, 2005 (1)4.30
    Lease Amendment for Lease No. 189099 between Nevada Land
      and Resource Company, LLC and Noramex Corp. regarding Black Warrior, dated
      November 1, 2005 (1)4.31
    Decision of Federal Bureau of Land Management to
      consolidate Geothermal Leases Nos. 77668 and 77669, dated November 3, 2005
      (1)4.32
    Offer to Renew Lease Agreement between Nevada Geothermal
      Power Inc. and United Kingdom Building Limited for 409 Granville Street,
      Suite 900, Vancouver, BC, dated November 16, 2005 (1)4.33
    Lease Extension and Amending Agreement between Nevada
      Geothermal Power Inc. and United Kingdom Building Limited for 409
      Granville Street, Suite 900, Vancouver, BC, dated November 29, 2005
      (1)4.34
    Incentive Stock Option Plan adopted November 30, 2005
      (Filed under Exhibit 2.2) (1)4.35
    Management Consulting Services Agreement between Nevada
      Geothermal Power Inc. and Tywell Management Inc., dated December 1, 2005
      (1)4.36
    Services Agreement between Nevada Geothermal Power Inc.
      and Pro-Edge Consultants Inc., dated December 13, 2005 (1)4.37
    Technical Consulting Services Agreement between Nevada
      Geothermal Power Inc. and Fairbank Engineering Ltd., dated January 1, 2006
      (1)4.38
    Geothermal Lease Agreement for The Crawford Farm area,
      Humboldt County, Nevada, between Power Company and The Crawford Farm
      regarding Blue Mountain, dated January 10, 2006 (1)4.39
    Standard Publicity Agreement between Jefferson Direct,
      Inc. and Nevada Geothermal Power Inc., dated February 2, 2006
      (1)4.40
    Amendment Agreement to Geothermal Option Agreement
      between Nevada Geothermal Power Inc. and Sierra Geothermal Power Corp.
      (formerly Inovision Solutions Inc.) regarding Pumpernickel, dated February
      14, 2006 (1)4.41
    BLM Winnemucca Field Office Geothermal Lease Stipulations
      No. NVN-78777, dated February 21, 2006 (1)4.42
    BLM Winnemucca Field Office Geothermal Lease Stipulations
      No. NVN-79745, dated February 21, 2006 (1)4.43
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 79745 between the Federal Bureau of Land Management and Power Company
      regarding Black Warrior, effective date of March 1, 2006 (1)


113

---

4.44
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 78777 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Black Warrior, effective date of March 1, 2006
    (1)4.45
    Geothermal Lease Agreement between Nevada Geothermal
      Power Company and Will DeLong regarding Blue Mountain, dated of April 15,
      2006 (1)4.46
    Royalty Agreement between Nevada Geothermal Power
      Company, Ehni Enterprises Inc. and Ormat Nevada, Inc. regarding
      Pumpernickel, dated April 26, 2006 (1)4.47
    Agreement regarding the sale and purchase of BLM Lease
      No. 74855 between Ormat Nevada, Inc. and Nevada Geothermal Power Company
      regarding Pumpernickel, dated April 26, 2006 (1)4.48
    Unit Agreement for the Development and Operation of the
      Blue Mountain Unit Area, dated June 1, 2006 (1)4.49
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 78124 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Pumpernickel, effective date of June 1, 2006
    (1)4.50
    Assignment of Record Title Interest in a Lease for Oil
      and Gas or Geopthermal Resources for Lease No. 74855 from the Federal
      Bureau of Land Management to Nevada Geothermal Power Company regarding
      Pumpernickel, effective date of June 1, 2006 (1)4.51
    Daywork Drilling Contract between Nevada Geothermal Power
      Company and Calco Oil Field Industries, Inc. for Blue Mountain Geothermal,
      dated June 19, 2006 (1)4.52
    Internet Services & Consulting Contract between
      Nevada Geothermal Power Inc. and Inveslogic Inc., dated June 26, 2006
      (1)4.53
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 80070 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Pumpernickel, effective date of August 1, 2006
    (1)4.54
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 80086 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Blue Mountain, effective date of August 1, 2006
      (1)4.55
    Offer to Lease and Lease for Geothermal Resources Lease
      No. 80159 between the Federal Bureau of Land Management and Noramex Corp.
      regarding Blue Mountain, effective date of August 1, 2006
      (1)4.56
    Revised International Association of Drilling Contracts
      Drilling Bid Proposal and Daywork Drilling Contract  U.S. (Original Black
      Gold Contract) between Nevada Geothermal Power and Black Gold Equipment
      & Leasing LLC for Blue Mountain Geothermal Project, dated August 17,
      2006 (1)4.57
    Long Term Firm Portfolio Energy Credit And Renewable
      Power Purchase Agreement between Nevada Geothermal Power Company, Inc. and
      Nevada Power Company, dated


114

---

August 18, 2006 (1)4.58
    Partial Assignment of Geothermal Lease No. 189093 between
      Nevada Land and Resource Council and Nevada Geothermal Power Company, Inc.
      regarding Blue Mountain, effective October 3, 2006 (1)4.59
    Notice of Lease Amendment for Lease No. 189093 between
      Nevada Land and Resource Council and Nevada Geothermal Power Company, Inc.
      regarding Blue Mountain, effective October 3, 2006 (1)4.60
    Offer to Renew Lease Agreement between Nevada Geothermal
      Power Inc. and United Kingdom Building Limited for 409 Granville Street,
      Suite 900, Vancouver, BC, dated January 10, 2007 (1)4.61
    Financial Consulting Agreement between Markus K. Christen
      and Nevada Geothermal Power Inc., dated January 12, 2007 and July 2,2007 financing engagement letter amendment. (1)4.62
    Amendment to Exhibits A and B of the Unit Agreement for
      the Development and Operation of the Blue Mountain Unit Area, dated
      January 24, 2007 (1)4.63
    Confidentiality Agreement between Morgan Stanley & Co
      Incorporated, Greenrock Capital, LLC and Nevada Geothermal Power Company,
      Inc., dated January 25, 2007 (1)4.64
    Form of Subscription Agreement for Units being purchased
      by residents of Alberta, British Columbia, Ontario, Quebec, Nova Scotia,
      Saskatchewan and offshore residents; closing February 22, 2007
      (1)4.65
    Form of Subscription Agreement for Units being purchased
      by residents or citizens of the United States; closing February 22, 2007
      (1)4.66
    Lease Agreement between Sheppard Rentals and Nevada
      Geothermal Power Company for 657 Anderson Street near Winnemucca in
      Humboldt County, Nevada, dated March 20, 2007 (1)4.67
    Development Loan Agreement between NGP Blue Mountain I
          LLC and Glitnir Banki hf dated November 1, 2007(3)4.68
    Promissory Note between NGP Blue Mountain I LLC and Glitnir
          Banki hf dated November 1, 2007(2)4.69
    Pledge and Security Agreement by NGP Blue Mountain Holdco
          LLC and Glitnir Banki hf dated November 1, 2007(2)4.70
    Acknowledgement and Consent by NGP Blue Mountain I LLC with regard to Pledge and Security Agreement dated November 1, 2007(2)4.71
    Assignment and Assumption of Power Purchase
      Agreement, by and between Nevada Geothermal Power Company and Borrower,
      dated October 24, 2007 (2)4.72
    Standard Large Generator Interconnect Agreement, by and
      between Sierra Pacific Power Company and Borrower, dated November 5, 2007
      (2)4.73
    Assignment and Assumption of Leases, by and among NGPI
      and NGPC, collectively as assignor, and Borrower, as assignee, dated as of
      October 24, 2007 (2)4.74
    State of Nevada Division of Water Resources Permit Nos.
      72978, 73541,73542 AND 73543 (2)


115

---

4.75
    Quitclaim Deed between Nevada Geothermal Power Inc. and NGP Blue Mountain I LLC dated September 20, 2007 (2)4.76
    Amended and Restated Commitment Letter for US$100,000,000
          Construction and Loan Facility For Project dated November 1, 2007 (2)4.77
    Commitment Letter for US$100,000,000 Equity Financing to
      be used to repay Construction Loan Financing dated July 24, 2007 (3)4.78
    Borrowers Officers & Secretarys Certificate,
      Exhibit B- Certificate of Formation dated November 1, 2007 (2)4.79
    NGPs Officers & Secretarys Certificate, Exhibit B-
      Certificate of Formation dated November 1, 2007 (2)4.80
    Contribution Agreement, by and among NGPI, NGPC, NGP and
      Borrower, dated as of September 19, 2007 (2)4.81
    First Amendment to Contribution Agreement, by and among
      NGPI, NGPC, NGP and Borrower, dated as of October 12, 2007 (2)4.82
    Member Interest Certificate of NGP Blue Mountain I LLC dated April 26, 2007 (2)4.83
    Indemnification Letter by Nevada Geothermal Power Inc. dated November 1, 2007 (2)4.84
    Drilling Bid Proposal and Daywork Drilling Contract with
          ThermaSource Inc. dated December 1, 2007(4)4.85
    Employment Agreement- Fairbank, dated October 1, 2007 (2)4.86
    Employment Letter Agreement- Studley, dated July 11, 2007(2)4.87
    Employment Agreement-Walenciak, dated April 16, 2007 (2)4.88
    Second Amendment to Option Agreement for Pumpernickel
          Geothermal Property dated December 12, 2007(2)4.89
    Letter Agreement between Nevada Geothermal Power Inc. and
      Markus Christen dated January 12, 2007(2)4.90
    Professional Services Agreement between Integral Energy
      Management and Nevada Geothermal Power Company dated June 1,
      2007(2)4.91
    Chief Development Geologist Contract- Glenn Melosh dated
      November 6, 2007(2)4.92
    Fairbank Engineering Ltd purchase and employment contract
          dated October 1, 2007(2)4.93
    Consulting agreement dated October 1 2005 between Nevada
      Geothermal Power Inc and Frank Misseldine(2)4.94
    Professional Services Agreement dated May 21, 2007
      between R. Gordon Bloomquist and Nevada Geothermal Power
      Inc.(2)4.95
    Professional Services Agreement dated June 25, 2007
      between Global Power Solutions and Nevada Geothermal Power
      Company.(2)


116

---

4.96
      Engineering Services Agreement dated August 8, 2007
          between GeothermEx Inc. and Nevada Geothermal Power Inc. (2)4.97
      Consulting Agreement dated November 28, 2007 between
          CCM Consulting a division of Cronus Capital Markets Inc. and Nevada
          Geothermal Power Co.(2)8.
      Subsidiaries8.1
      List of Subsidiaries (2)9.
      Statement re: Financial Statements9.1
      Financial Statements (3)11.
      Code of Ethics11.1
      Code of Business Conduct and Ethics, incorporated
          as part of Item 15.1 (1)12.
      302 Certification12.1
      Certification of Chief Executive Officer Pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002 (2)12.2
      Certification of Chief Financial Officer Pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002 (2)13.
      906 Certification


117

---

13.1
      Certification of Chief Executive Officer Pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002 (2)13.2
      Certification of Chief Financial Officer Pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002 (2)14.
      Legal OpinionNot
      Applicable15.
      Additional Exhibits15.1
    Board
      Policy Manual adopted August 23, 2005, as amended, filed as Exhibit 11.1
      (1)


(1) Incorporated by reference, to the same exhibit
number, to the Companys Annual Report on Form 20-F, Amendment No. 1, for the
year ended June 30, 2006, as filed with the Securities and Exchange Commission
on September 25, 2007.(2) Attached herewith.(3)
Application has been made to the Securities and Exchange Commission to seek
confidential treatment of certain portions of Exhibits 4.67 and 4.77 under Rule
24b-2 of the Securities Exchange Act of 1934, as amended. Omitted material for
which confidential treatment has been requested has been filed separately with
the Securities and Exchange Commission.(4)
To be filed by amendment.

118

---

SIGNATURES

The Registrant hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this Annual Report on its behalf.

NEVADA GEOTHERMAL POWER INC.

Per: /s/ Brian D. FairbankBrian D.
FairbankPresident, Chief Executive Officer and Director

Dated: January 15, 2008

119

---