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Computershare Trust Company of Canada
Tel: 1-800-564-6253
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The earth’s interior provides heat energy naturally. Geothermal heat originates from the earth's core, which reaches over 5000ºC (9000ºF). The molten mantle beneath the earth’s solid crust is about 1200°C (2000°F).

The tremendous heat from the earth's core is under constant pressure to escape through the earth's crust. As it moves closer to the surface it transfers (conducts) heat to the crustal rocks. The meteoric (surface) waters travel through fractures and faults in the rocks. The water is heated by the rocks. Rocks are poor conductors of heat while water is a good conductor. If the rocks are hot enough the water is turned into steam. The hot water or steam contained within the fractures, faults or pore spaces in the rocks form the geothermal reservoir.

It is estimated that geothermal sources have the potential to provide up to 200,000 MW of power. This would be sufficient to supply power to about one fifth of the US. The US currently produces about 3000 MW from geothermal sources. As the technology improves, this number can rise significantly. As a point of reference, 1000 MW can provide 800,000 homes with power.

Since the earth’s heat is continuously radiated from within, geothermal energy is classified as renewable. Geothermal energy production can be sustained for decades and potentially even centuries. A geothermal reservoir may only be depleted if the resource is poorly managed and the production rates exceed the recharge rates, or if there is no reinjection of produced fluids for recharge. In a well-managed geothermal field, the resource can be sustained almost indefinitely.

A geothermal reservoir can last indefinitely as long as the heat that is extracted does not exceed the rate at which the reservoir is renewed by the heat from the earth’s surface. The plant equipment typically has a lifespan of 30-50 years but may last longer if properly maintained.

SGP presently has 10-year leases with two 5-year renewals available. When a power plant is operating the leases are converted to a production lease which can be maintained as long the facility remains in operation.

Geothermal power plants have a minimal impact on the environment. When exploring for geothermal resources, the drilling and surveying are short term operations. During operation, geothermal facilities have a small surface footprint when compared to other forms of power generation. Geothermal facilities do not require any fuel to operate. As such, they are considered to have near zero emissions.

The costs affiliated with the development of geothermal projects depend on a variety of factors that include location, megawatt size, distance of the resource to the power infrastructure, and the type of geothermal resource (hot water or steam). Acquisition costs have ranged from $1 per acre to $14,000 per acre in the US. Exploration costs to feasibility range from $0.3 - $1.0 million per megawatt. All in, capital expenditure is estimated to be between $3-$4 million/MW, with roughly 30% for drilling, roughly 40% for the plant, and roughly 30% for all other costs.

When SGP begins generating electricity, it would likely sell the power to major utility companies on a 20-year power purchase agreement.

Transmission is a key issue for all power projects. Rising costs and capacity constraints are the major challenges. Fortunately, all of SGP’s projects are closely located to transmission lines.

Renewable energy developers in the US qualify for a Production Tax Credit (PTC) that is presently set at ~$20/MW for the first 10 years of a plant’s operation. To qualify for the PTC, the plant must be generating electricity by the PTC expiry date.

The PTC expires on December 31, 2008. The extension of the PTC is presently being reviewed by the House of Representatives. The bill has bipartisan support as it is expected to benefit both the renewable energy industries and the economy.

The Renewable Portfolio Standard (RPS) is a state policy that requires electricity providers to obtain a certain percentage of their power from renewable sources by a specified date. As of September 2008, 28 states have adopted an RPS policy. These include Nevada and California which are the two states where SGP’s projects are located. Both Nevada and California require electrical providers to meet 20% of their electricity needs from renewable energy sources by 2015 and 2010 respectively.