TSX Venture 50 Spotlight: Nevada Geothermal Power Inc
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By Jordan Luy
Brian Fairbank, President and CEO of Nevada Geothermal Power Inc
Nevada Geothermal Power Inc (TSXV:NGP) ranks ninth this year in the Clean Technology sector of the TSX Venture 50. It is a renewable energy developer focused on producing geothermal electric power in the United States.
Based in Vancouver, the company owns leasehold interests in five properties: Blue Mountain, Pumpernickel Valley, Edna Mountain and North Valley in Nevada, and Crump Geyser in Oregon. Its flagship Blue Mountain “Faulkner 1” geothermal power plant in northern Nevada was built from scratch and went into service in the fall of 2009.
The company initially listed on the Alberta Stock Exchange in January 1996 and eventually moved to the TSX Venture Exchange in mid 2003. This marks the third straight year that NGP has been named to the TSX Venture 50.
Geothermal energy uses heat from the earth to power turbines, producing clean and renewable electricity. There is no fuel required and is therefore unaffected by energy costs and fluctuations. Historically, geothermal energy's downsides have been high capital costs and geographical limitations but recent technology has improved its economics and expanded its potential as a sustainable energy alternative.
President and CEO Brian Fairbank has over 30 years of experience in geothermal engineering, exploration and resource assessment, business management and project finance. He discusses the company's achievement, his plans for the company's properties and the continuing emergence of geothermal energy.
TMX: What factors led to the company's success in the past year?
BF: We're the only company in our peer group to have built a power plant from scratch and it's one of the largest of its kind ever done. It was a new project that we put in service in the fall of 2009 and we were the first company to receive a federal government cash grant which was a new program put together by the Obama administration. We were also the first geothermal company to receive a Department of Energy loan guarantee. We also did a joint venture with Ormat Technologies on a second property called the Crump property and we're going to jointly develop what is I hope, a 30 MW power plant in southern Oregon. Ormat is putting up all the funds and that was something we did towards the end of last year.
TMX: What sets NGP apart from other geothermal power companies?
BF: One thing that differentiates us is that we're focused on the US where there is an established industry. It's a world centre of expertise and there will be some fairly active development over the next several years. There are other areas of the world where there are good resources but usually it's politically less easy to move ahead in those places. We started in Nevada because that's the easiest state in the US to work in. Once we've established that, we can look at other countries. But even if we did, we would go to industries that have a resource history and legacy. Geothermal is not unsimilar to mining in terms of the resource aspect. Chile would be a country that I would be comfortable in going to but places like Indonesia and Africa have all sorts of other challenges besides the resource and at times it can be hard just to get anything done.
TMX: Outside of the US, what are key areas where geothermal is thriving, politics aside?
BF: On the resource side, Indonesia is very good. As are the Philippines, New Zealand, Italy, Iceland and then up and down the western parts of North America, so Canada has some resources as does the US, Mexico, Chile and Peru. But the biggest one in terms of resources is still the US which produces about one third of the world output with around 3000 megawatts installed. Next would be Indonesia and the Philippines.
TMX: What challenges did your company face in the past year?
BF: For us, access to capital is always the hardest thing. We're sort of a small start-up company but even the larger companies have the same sort of issues. Last year we also had to do a lot of problem solving and work on the resource. We put in place the plant which is a live system so you have to balance off and stabilize production. I would say the senior debt financing with the DOE loan guarantee which closed in September of 2010 was a monumental achievement for us. We were then able to put the company on better footing in terms of our financing costs. I'd say a couple of things we achieved is getting Blue Mountain up and running properly and getting our finances in order. I think all of the companies were having a tough time last year. The geothermal companies all lost a lot of value but we're now in a position to move forward fairly aggressively so that's what we're doing.
TMX: What challenges does the geothermal industry face?
BF: It's still emerging. One thing that differentiates it from other types of renewable resources is that it's base load. These plants run all the time and they're very reliable as opposed to wind and solar which might be only available about 30% of the time. So the economics for geothermal are much better, except that the industry is not as visible as those two industries. That can be a challenge as well as the fact that the geothermal hydrothermal resources are restricted geographically to areas where the plate margins are, meaning more on the west coast than on the east coast. There is another facet of the geothermal industry called geopressured-geothermal or engineered geothermal systems. There's a lot of research going into that because there is enough energy in the shallow crust to save the world. It's not quite there yet because of a lot of technical challenges in drilling the deep wells and getting everything organized but there's a tremendous amount of research happening. Now NGP is not doing any of that. Everything we think is worthwhile to do is at the plate margins. You can find the windy areas throughout the US but in geothermal it's a bit more restricted geographically.
TMX: What is your ultimate vision for the company and what is planned in the next year or so to get there?
BF: We just acquired some new properties in Imperial Valley which is in Southern California from Iceland America Energy and I think that will take us to a new level. These are advanced-stage development properties. We believe that we can develop New Truckhaven ourselves and we'll put a lot of focus on that through the next several years. A second property is called East Brawley and we've got a very strong land position there. This is an area where Ram Power, which is one of our competitors and geothermal sister company, has a project called Orita. This is an interesting situation for us because Ram drilled four wells there and so we should get some education around what its well results look like. Ram right now is experiencing a lot of difficulty with its operations in Nicaragua. The company is having trouble getting things done because of the Third World conditions. We're going to use setbacks like those as opportunities for us. We're going to come charging up through the middle. I think the rest of the industry is thinking that the future is pretty bright too.
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