Geothermal Power
Calpine to Pump Up Its Geothermal Power Source

By Elizabeth Douglass
Los Angeles Times
May 31, 2007

Hoping to tap into California’s growing appetite for renewable power, Calpine
Corp. today will unveil an ambitious expansion of its geothermal operations,
considered one of the state’s most promising clean-energy sources.
The overhaul of the Geysers geothermal project, expected to cost $75 million in
its first year, is evidence of the strong demand for cleaner energy in
California. It is spurred by legislation aimed at reducing greenhouse gas
emissions, which is pushing utilities to ramp up their use of energy from water,
wind and sun.

Under goals set by the California Public Utilities Commission, Pacific Gas &
Electric Co., Southern California Edison, San Diego Gas & Electric Co. and
others must get 20% of their electricity from renewable sources by 2010.
In recent months, Edison signed the largest wind energy contract by a U.S.
utility and agreed to a new, 10-year contract with Calpine for 225 megawatts of
geothermal power from the Geysers. Calpine, one of the nation’s largest
wholesale power sellers, also has a new, long-term contract to provide
geothermal power to PG&E, California’s largest electric utility.

“The Geysers has not seen a huge infusion of capital into it for many years
The Geysers expansion represents a departure for the San Jose-based power
producer, which has been selling power plants and other assets since it fell
into bankruptcy protection in late 2005. And it comes at a time when it is
strapped for cash.

“I’m very excited and really proud of Calpine

Bernadette Del Chiaro, clean-energy advocate at advocacy group Environment
California, said she applauded Calpine’s plans to draw more power from the
Geysers, which naturally produces steam from hot rock formations deep underground.

“Geothermal is a terrific, clean, renewable resource that should be expanded,”
she said. “It’s a no-brainer to tap into the immense energy that we have just
under the earth. And it’s 24-7, it’s not intermittent, so it’s a crucial piece
to have in the mix.”

Gilles, who has worked at the Geysers since 1987, said Calpine’s five-year
expansion plan included drilling as many as 80 new wells, adding more
water-injection systems to rejuvenate existing wells, and replacing or
rebuilding steam turbines, cooling towers and generators on some of the existing
power plants. The project would add as many as 80 megawatts to the current
output of 725 megawatts and would breathe new life into plants that provide 147 megawatts.

The total tab is expected to be “well into the hundreds of millions of dollars,”
Gilles said, but how the projects unfold will depend on getting approvals from
Calpine creditors, as well as on the company’s ability to land long-term power
contracts with utilities.

“The people we owe money to have to be convinced that spending money today on
investments in existing facilities or on new development is in their best
interest in the long haul,” Gilles said. “We have convinced them of some of it”
already, he said, adding that he expected the argument for increased investments
in the Geysers to strengthen as Calpine signs more contracts.

The Geysers is the world’s largest geothermal operation, boasting 21 power
plants and 350 steam wells spread over 40 square miles in the Mayacamas
Mountains, about 70 miles north of San Francisco. Calpine owns and operates 19
of the power plants; the other operator is the Northern California Power Agency.
The natural resource’s rich history began with its discovery in 1847 by a man
who happened upon a steaming valley and named it the Geysers. The name stuck
even though there were no true geysers in the area, only hot springs and steam
coming from holes in the ground, called fumaroles, according to a history
compiled by Calpine.

The Geysers was first developed as part of a spa called the Geysers Resort
Hotel. Its first power plant was built in 1921, but the process wasn’t a
commercial success until the 1950s. The resource was divvied up among many
companies for decades, and Calpine began buying sites in 1989.

Calpine, founded in 1984, was among the most aggressive among a group of
unregulated wholesale power providers that hoped to thrive amid a wave of
deregulation in states such as California. The company bought and built natural
gas-fired power plants but was saddled with too much debt to survive both high
natural gas prices and the regulatory retrenchment that followed the Enron debacle.

The company’s bankruptcy filing led to a string of divestitures. On Wednesday,
Calpine gave its creditors a draft reorganization plan intended to pave the way
for its emergence from bankruptcy protection this year.

Power producer

The company

Name: Calpine Corp.
Headquarters: San Jose
Founded: 1984
Bankruptcy filing: December 2005
Employees: 2,300
Holdings: 65 natural gas-fired power plants, plus 19 of the 21 geothermal power
plants at the Geysers
Notable: Calpine is the nation’s largest geothermal producer.
The Geysers
Location: Steam fields cover 40 square miles of land in the Mayacamas Mountains,
about 70 miles north of San Francisco.
Notable: The world’s largest single geothermal resource, with 21 power plants,
350 steam wells and 58 injection wells
First commercial steam well: 1954
Power generation: As much as 25% of California’s renewable energy. Calpine’s
plants produce as many as 725 megawatts, enough to power 725,000 homes.
Technology: Wells drilled as deep as two miles below ground tap naturally
occurring steam, which is brought to the surface, powering turbines and
producing electricity. In some locations, Calpine injects wastewater to augment
steam production.


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