[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                     DEVELOPING UNTAPPED POTENTIAL: 
                       GEOTHERMAL AND OCEAN POWER 
                              TECHNOLOGIES 

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON ENERGY AND
                              ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 17, 2007

                               __________

                           Serial No. 110-32

                               __________

     Printed for the use of the Committee on Science and Technology


     Available via the World Wide Web: http://www.science.house.gov

                                 ______

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                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                 HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois          RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas         F. JAMES SENSENBRENNER JR., 
LYNN C. WOOLSEY, California              Wisconsin
MARK UDALL, Colorado                 LAMAR S. SMITH, Texas
DAVID WU, Oregon                     DANA ROHRABACHER, California
BRIAN BAIRD, Washington              KEN CALVERT, California
BRAD MILLER, North Carolina          ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois            VERNON J. EHLERS, Michigan
NICK LAMPSON, Texas                  FRANK D. LUCAS, Oklahoma
GABRIELLE GIFFORDS, Arizona          JUDY BIGGERT, Illinois
JERRY MCNERNEY, California           W. TODD AKIN, Missouri
PAUL KANJORSKI, Pennsylvania         JO BONNER, Alabama
DARLENE HOOLEY, Oregon               TOM FEENEY, Florida
STEVEN R. ROTHMAN, New Jersey        RANDY NEUGEBAUER, Texas
MICHAEL M. HONDA, California         BOB INGLIS, South Carolina
JIM MATHESON, Utah                   DAVID G. REICHERT, Washington
MIKE ROSS, Arkansas                  MICHAEL T. MCCAUL, Texas
BEN CHANDLER, Kentucky               MARIO DIAZ-BALART, Florida
RUSS CARNAHAN, Missouri              PHIL GINGREY, Georgia
CHARLIE MELANCON, Louisiana          BRIAN P. BILBRAY, California
BARON P. HILL, Indiana               ADRIAN SMITH, Nebraska
HARRY E. MITCHELL, Arizona           VACANCY
CHARLES A. WILSON, Ohio
                                 ------                                

                 Subcommittee on Energy and Environment

                   HON. NICK LAMPSON, Texas, Chairman
JERRY F. COSTELLO, Illinois          BOB INGLIS, South Carolina
LYNN C. WOOLSEY, California          ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois            JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
JERRY MCNERNEY, California           RANDY NEUGEBAUER, Texas
MARK UDALL, Colorado                 MICHAEL T. MCCAUL, Texas
BRIAN BAIRD, Washington              MARIO DIAZ-BALART, Florida
PAUL KANJORSKI, Pennsylvania             
BART GORDON, Tennessee               RALPH M. HALL, Texas
                  JEAN FRUCI Democratic Staff Director
            CHRIS KING Democratic Professional Staff Member
        MICHELLE DALLAFIOR Democratic Professional Staff Member
         SHIMERE WILLIAMS Democratic Professional Staff Member
         ELAINE PAULIONIS Democratic Professional Staff Member
          ADAM ROSENBERG Democratic Professional Staff Member
          ELIZABETH STACK Republican Professional Staff Member
                    STACEY STEEP Research Assistant

































                            C O N T E N T S

                              May 17, 2007

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Nick Lampson, Chairman, Subcommittee 
  on Energy and Environment, Committee on Science and Technology, 
  U.S. House of Representatives..................................    11
    Written Statement............................................    11

Statement by Representative Bob Inglis, Ranking Minority Member, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................    12
    Written Statement............................................    13

Prepared Statement by Representative Jerry F. Costello, Member, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................    13

Statement by Representative Jerry McNerney, Member, Subcommittee 
  on Energy and Environment, Committee on Science and Technology, 
  U.S. House of Representatives..................................    12

                               Witnesses:

Dr. Jefferson Tester, Meissner Professor of Chemical Engineering, 
  Massachusetts Institute of Technology
    Oral Statement...............................................    14
    Written Statement............................................    16

Mr. Paul A. Thomsen, Public Policy Manager, ORMAT Technologies, 
  Inc.
    Oral Statement...............................................    29
    Written Statement............................................    30

Dr. Annette von Jouanne, Professor of Power Electronics and 
  Energy Systems, Oregon State University
    Oral Statement...............................................    38
    Written Statement............................................    39
    PowerPoint Presentation......................................    43
    Biography....................................................    57

Mr. Sean O'Neill, President, Ocean Renewable Energy Coalition
    Oral Statement...............................................    57
    Written Statement............................................    58
    Biography....................................................    64

Mr. Nathanael Greene, Senior Policy Analyst, Natural Resources 
  Defense Council
    Oral Statement...............................................    64
    Written Statement............................................    66
    Biography....................................................    72

Discussion
  Past Funding Cuts to Geothermal Energy Research................    72
  Geo-pressured Resources........................................    73
  U.S. Army Corps of Engineers and Ocean Power Technologies......    73
  H.R. 2313 Recommendations......................................    74
  Geothermal Generating Capacity.................................    74
  Locations for Geothermal Energy Production.....................    75
  Geothermal Technology Readiness................................    75
  Geothermal Generating Capacity.................................    76
  Geothermal's Impact on the Economy.............................    77
  Not in My BackYard (NIMBY) and Cost Concerns for Renewables....    78
  Wave Energy Technology Readiness...............................    80
  Solar Augmented Geothermal Energy (SAGE).......................    81
  Geothermal Energy Transportation...............................    82
  Geothermal Production Tax Credit...............................    83
  Geothermal Resource Assessment.................................    83
  Environmental Benefits From Geothermal.........................    84

             Appendix 1: Answers to Post-Hearing Questions

Dr. Jefferson Tester, Meissner Professor of Chemical Engineering, 
  Massachusetts Institute of Technology..........................    86

Mr. Paul A. Thomsen, Public Policy Manager, ORMAT Technologies, 
  Inc............................................................    88

             Appendix 2: Additional Material for the Record

H.R. 2304, the Advanced Geothermal Energy Research and 
  Development Act of 2007........................................    96

Section-by-Section Analysis of H.R. 2304.........................   110

H.R. 2313, the Marine Renewable Energy Research and Development 
  Act of 2007....................................................   112

Section-by-Section Analysis of H.R. 2313.........................   118

Statement of UTC Power...........................................   119


 DEVELOPING UNTAPPED POTENTIAL: GEOTHERMAL AND OCEAN POWER TECHNOLOGIES

                              ----------                              


                         THURSDAY, MAY 17, 2007

                  House of Representatives,
            Subcommittee on Energy and Environment,
                       Committee on Science and Technology,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:05 a.m., in 
Room 2325 of the Rayburn House Office Building, Hon. Nick 
Lampson [Chairman of the Subcommittee] presiding.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                            hearing charter

                 SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                     U.S. HOUSE OF REPRESENTATIVES

                     Developing Untapped Potential

                       Geothermal and Ocean Power

                              Technologies

                         thursday, may 17, 2007
                         10:00 a.m.-12:00 p.m.
                   2325 rayburn house office building

Purpose

    On Thursday, May 17, at 10:00 a.m., the Energy & Environment 
Subcommittee of the House Committee on Science and Technology will hold 
a legislative hearing on two renewable energy bills.
    H.R. 2304, introduced by Mr. McNerney of California, directs the 
Secretary of Energy to support research, development, demonstration, 
and commercial application of advanced technologies to locate and 
characterize geothermal resources and produce geothermal energy. The 
bill is co-sponsored by Mr. Gordon of Tennessee and Mr. Lampson of 
Texas.
    H.R. 2313, introduced by Ms. Hooley of Oregon, directs the 
Secretary of Energy to support research, development, demonstration, 
and commercial application of technologies to produce electric power 
from renewable marine resources, including: waves, tidal flows, ocean 
currents, and thermal gradients.

Witnesses

  Dr. Jefferson Tester is the H.P. Meissner Professor of 
Chemical Engineering at the Massachusetts Institute of Technology. Dr. 
Tester is an internationally recognized expert in Enhanced Geothermal 
Systems and he served as chair of the MIT-led panel that produced the 
report: The Future of Geothermal Energy, released in January, 2007.

  Mr. Paul Thomsen is Public Policy Manager for ORMAT 
Technologies, Inc., a leading provider of geothermal exploration, 
development, and power conversion technologies. Mr. Thomsen is 
responsible for ORMAT's federal, State and local legislative programs. 
He is testifying today on behalf of both ORMAT and the Geothermal 
Energy Association.

  Dr. Annette von Jouannne is a Professor in the School of 
Electrical Engineering and Computer Science at Oregon State University 
in Corvallis, Oregon. She specializes in Energy Systems, including 
power electronics and power systems, and she leads the Wave Energy 
program at OSU.

  Mr. Sean O'Neill is President of the Ocean Renewable Energy 
Coalition (OREC), a trade association representing the marine renewable 
energy industry.

  Mr. Nathanael Greene is a Sr. Energy Policy Specialist with 
the Natural Resources Defense Council. His areas of expertise include 
utility regulation, renewable energy, energy taxes and energy 
efficiency.

Overarching Questions

    The hearing will address the following overarching questions:
Geothermal

         1.  What is the current state of development of geothermal 
        energy technologies? Are they mature? If not, what major 
        research, development, and demonstration work remains to be 
        done to increase their commercial viability?

         2.  What new opportunities might be created by the development 
        of Enhanced Geothermal Systems?

         3.  What are the largest obstacles to the widespread 
        commercial development of geothermal energy? How can these 
        hurdles be addressed?

         4.  What is the appropriate role for the Federal Government in 
        supporting RD&D in marine renewable energy technologies?

         5.  Are there environmental concerns associated with 
        geothermal energy development? What are they? Can they be 
        mitigated?

         6.  Does the bill under consideration--the Advanced Geothermal 
        Energy Research and Development Act of 2007--address the most 
        significant RD&D barriers to the widespread development of 
        geothermal energy? How can the bill be improved?

Ocean Power

         7.  What is the state of development of marine power 
        technologies? Are they mature? Does this assessment vary by 
        resource (i.e., waves vs. tidal vs. currents vs. thermal)? If 
        these technologies are not mature, what major research, 
        development, and demonstration work remains to be done to make 
        marine renewable energy technologies commercially viable?

         8.  What are the largest obstacles to the widespread 
        commercial development of marine renewable energy? How can 
        these hurdles be addressed?

         9.  What is the appropriate role for the Federal Government in 
        supporting RD&D in marine renewable energy technologies?

        10.  Are there environmental concerns associated with marine 
        renewable energy development? What are they? Can they be 
        mitigated?

        11.  Does the bill under consideration--the Marine Renewable 
        Energy Research and Development Act of 2007--address the most 
        significant RD&D barriers to the widespread development of 
        marine power technologies?

Overview of Geothermal Energy

Hydrothermal Systems
    Geothermal energy is heat from the Earth's core that is trapped in 
the Earth's crust. In locations where high temperatures coincide with 
naturally-occurring, underground, fluid-filled reservoirs, the 
resulting hot water or steam can be tapped and used either to generate 
electricity or for direct use (e.g., heating buildings, greenhouses, or 
aquaculture operations). Such locations are referred to as hydrothermal 
(hot water) resources, and they have been the focus of traditional 
geothermal energy development.
    By tapping hydrothermal resources, the United States has become the 
world's largest producer of electric power from geothermal energy. 
About 2,800 megawatts (MW) of geothermal electrical generating capacity 
is connected to the grid in the United States; 8,000 MW of geothermal 
generating capacity is installed worldwide. Geothermal energy is 
currently the third largest source of renewably-generated grid power in 
the United States, behind hydropower and biomass. In 2003, it accounted 
for seven percent of U.S. electricity generated from renewable sources. 
The largest geothermal development in the world is at The Geysers in 
Northern California. This series of plants, which started to come 
online in 1960, has a cumulative capacity of over 850 MW and satisfies 
nearly 70 percent of the average electrical demand for the California 
North Coast region.
    Although the United States is the world leader in hydrothermal 
development, significant potential remains untapped. The U.S. 
Geological Survey (USGS) has estimated there to be 22,000 MW of 
hydrothermal resources sufficient for electrical power generation in 
the United States. However, many of these resources remain hidden and 
unconfirmed. H.R. 2304 contains provisions to support research and 
development of advanced technologies to assist in locating and 
characterizing hidden hydrothermal resources, and to encourage 
demonstration of advanced exploration technologies by the geothermal 
industry.

Enhanced (or Engineered) Geothermal Systems (EGS)
    Enhanced Geothermal Systems (EGS) differ from hydrothermal systems 
in that they lack either a natural reservoir (i.e., the cracks and 
spaces in the rock through which fluid can circulate), the fluid to 
circulate through the reservoir, or both. In EGS development, sometimes 
referred to as ``heat mining,'' an injection well is drilled to a depth 
where temperatures are sufficiently high; if necessary, a reservoir is 
created, or ``cracked,'' in the rock by using one of various methods of 
applying pressure; and a fluid is introduced to circulate through the 
reservoir and absorb the heat. The fluid is extracted through a 
production well, the heat is extracted to run a geothermal power plant 
or for some direct use application, and the fluid is re-injected to 
start the loop all over again.
    Although it has been the subject of preliminary investigations in 
the United States, Europe, and Australia, the EGS concept has yet to be 
demonstrated as commercially viable. However, experts familiar with the 
resource and the associated technologies believe the technical and 
economic hurdles are surmountable. In January, 2007, a panel led by the 
Massachusetts Institute of Technology produced a report entitled The 
Future of Geothermal Energy, which contained an updated assessment of 
EGS potential in the United States. The authors of the report estimated 
the Nation's total EGS resource base to be ``greater than 13 million 
quads or 130,000 times the current annual consumption of primary energy 
in the United States.'' \1\ After accounting for the fact that the 
actual amount of recoverable energy will be much lower, due to 
technical and economic constraints, the authors conservatively estimate 
that two percent of the EGS resource could be economically 
recoverable--an amount that is still more than 2,000 times larger than 
all the primary energy consumed in the United States in 2005.\2\ In 
other words, if the technological hurdles to EGS development can be 
overcome, the potential of the resource is enormous. H.R. 2304 contains 
provisions to support research and development of advanced technologies 
to advance the commercial viability of EGS development, and to 
encourage demonstration of reservoir engineering and stimulation 
technologies by the geothermal industry.
---------------------------------------------------------------------------
    \1\ The Future of Geothermal Energy, Massachusetts Institute of 
Technology, 2006; pp. 1-15.
    \2\ Ibid, pp. 1-17.

---------------------------------------------------------------------------
Applications of Geothermal Energy

  Electric power: Geothermal power plants pump hot fluid 
(usually water or brine) from the Earth and either use it to power a 
turbine directly, or run it through a heat exchanger to boil a 
secondary fluid into a gas, which then powers a turbine, to create 
electricity.

  Direct use applications: Geothermal water of at least 
70+F can be used directly for heating homes or offices, 
growing plants in greenhouses, heating water for fish farming, and for 
other industrial uses. Some cities (e.g., Boise, Idaho) pipe geothermal 
hot water under roads and sidewalks to keep them clear of snow and ice. 
District heating applications use networks of piped hot water to heat 
buildings throughout a community.

Benefits of Geothermal Energy

  Base load power: Unlike most renewable energy sources, 
electric power from geothermal energy is available at a constant level, 
24 hours a day. Because of this lack of intermittency, geothermal power 
may provide baseload power production.

  Pollution prevention: A geothermal steam plant emits almost 
50 times less carbon dioxide (CO2) than the average U.S. 
coal power plant per kilowatt of electricity produced.\3\ Every year, 
geothermal electricity plants prevent 4.1 million tons of CO2 
emissions that coal-powered plants would have generated. A geothermal 
plant's cooling towers emit mostly water vapor, and emit no 
particulates, hydrogen sulfide, or nitrogen oxides. Plants that employ 
binary conversion technology emit only water vapor, and in very small 
amounts.
---------------------------------------------------------------------------
    \3\ According to the National Renewable Energy Lab, http://
www.nrel.gov/geothermal/geoelectricity.html

  Jobs and security: Geothermal energy can be produced 
domestically, thereby providing jobs for Americans and reducing 
security concerns associated with dependence on foreign sources of oil 
and natural gas. The large size of the resource, both in the United 
States and overseas, creates significant market opportunities for 
---------------------------------------------------------------------------
geothermal technology companies.

Cost
    Electricity from The Geysers sells for a wholesale price of $0.03 
to $0.035 per kilowatt-hour (kWh), while electricity from newer 
geothermal plants (using lower temperature resources) costs between 
$0.05 and $0.08 wholesale per kWh. Wholesale prices for electricity 
produced from EGS reservoirs is likely to be higher in the initial 
stages of developing the technology, but projections by the MIT panel 
that produced The Future of Geothermal Energy anticipate that it would 
fall to a comparable level (i.e., $0.05 to $0.08 per kWh) by the time a 
100 MW of cumulative capacity have been developed in the United States, 
which amounts to bringing only a few EGS projects online.\4\
---------------------------------------------------------------------------
    \4\ The Future of Geothermal Energy, Massachusetts Institute of 
Technology, 2006; pp. 1-30.
---------------------------------------------------------------------------
    Direct use of geothermal resources is cost-competitive in many 
applications. For example, according to DOE, commercial greenhouses 
heated with geothermal resources, instead of traditional energy 
sources, average an 80 percent savings on fuel costs--about five to 
eight percent of average total operating costs.

Issues

  Subsidence and production declines: At some geothermal power 
plants, energy production may gradually decline over time, through a 
loss of water/steam or declining water temperatures. If water or steam 
is removed from an underground reservoir, the land above the reservoir 
may slowly start to sink. Municipalities can inject their treated 
wastewater into the underground reservoir to replenish the hot water 
supply and avoid land subsidence. Newer geothermal plants tend to 
employ binary conversion technology, which re-injects the geofluid into 
the ground after extracting the heat, thereby replenishing the 
reservoir. Since almost no fluid is lost in these systems, reservoir 
depletion and subsidence are less significant concerns.

  Induced seismicity: Good hydrothermal resources usually 
coincide with areas of volcanic activity and so are almost always 
seismically active to begin with, and developing a geothermal resource 
can cause additional earthquakes. These induced quakes are usually 
small and imperceptible by humans, registering only two to three on the 
Richter scale. The process of developing EGS resources may also induce 
some seismic activity through the act of cracking the rock to create an 
underground reservoir. Experience to date suggests that the induced 
quakes from EGS development are also quite small, but this is an area 
that warrants further study. H.R. 2304 calls for the Secretary of 
Energy to study induced seismicity as a consequence of EGS development.

  Water use: Geothermal projects require access to water 
throughout development and operation. Water is used during well 
drilling, reservoir stimulation, and circulation. Cooling water is also 
used in most plants for condensing the hot working fluid after it has 
powered the turbine. In locations where water resources are in high 
demand, as in the western U.S., water use for geothermal projects 
requires careful management and conservation. Steps must also be taken 
to ensure that geothermal development does not contaminate groundwater 
and that noxious geofluids that are produced from deep wells are not 
disposed of on the surface.

Geothermal Energy Programs at DOE
    The United States has been involved in geothermal energy R&D since 
the 1970s. The program reached a high point in FY 1980 with funding of 
approximately $150 million (1980 dollars). Since then, funding has 
gradually declined to its present level of $5 million (2007 dollars) in 
FY 2007.
    Historically, many important technological advances have emerged 
from DOE-supported work at the national labs and U.S. universities. The 
current geothermal program has allocated its FY 2007 budget of $5 
million to support work on two EGS development projects, assess the 
potential of using hot water co-produced with oil and gas drilling to 
produce electricity, and to close down remaining program operations and 
establish an historical archive of the program.
    In the Energy Policy Act of 2005, Section 931(a)(2)(C) included a 
broad authorization for research, development, demonstration, and 
commercial application programs for geothermal energy, with a focus on 
``developing improved technologies for reducing the costs of geothermal 
energy installations, including technologies for (i) improving 
detection of geothermal resources; (ii) decreasing drilling costs; 
(iii) decreasing maintenance costs through improved materials; (iv) 
increasing the potential for other revenue sources, such as mineral 
production; and (v) increasing the understanding of reservoir life 
cycle and management.''
    While broad-ranging, the EPACT authorization lacks specific 
provisions for cost-shared programs with industry partners (which have 
led to many advances in geothermal technology in the past and 
facilitated adoption of those advances by the private sector) and it 
makes no specific mention of developing Enhanced Geothermal Systems 
(EGS), an area of significant potential. Also, the authorization 
expires after FY 2009. Despite the authorization in EPACT '05, the 
Administration requested zero dollars for geothermal programs at DOE 
for FY 2007 and FY 2008 and is currently making plans to shut down the 
geothermal program.
    As justification for terminating the geothermal program, the 
Administration has claimed that geothermal technologies are mature--a 
claim disputed by geothermal researchers and the industry. Recent 
indications suggest DOE officials may be open to reexamining investment 
in geothermal R&D, particularly in light of the opportunities in 
Enhanced Geothermal Systems that were highlighted in the recent MIT 
report: The Future of Geothermal Energy.

Overview of Marine Renewable Energy

    Marine Renewable Energy refers to energy that can be extracted from 
ocean water. (In some contexts the term may also encompass offshore 
wind developments, but that is beyond the scope of H.R. 2313 and this 
hearing.) For purposes of H.R. 2313, the marine renewable energy refers 
to energy derived from ocean waves, tidal flows, ocean currents, or 
ocean thermal gradients. Each is these is described in greater detail 
below.
    Moving water contains a much higher energy concentration, measured 
in watts per meter (for waves) or watts per square meter (for tides and 
currents), than other renewable resources, such as wind and solar. This 
creates an opportunity to extract comparable amounts of energy with a 
smaller apparatus. The challenge lies in developing technologies to 
effectively and efficiently harness the energy contained in ocean 
movement or thermal gradients and use it to generate electric power, or 
for other purposes.
    Their potential debated for many years, marine renewable energy 
technologies appear to be on the verge of a technological breakthrough. 
Prototypes or small demonstration installations have recently been 
hooked into the power grid in Australia, Portugal, the United Kingdom, 
and the United States. H.R. 2313 would support technology research and 
development to ensure that U.S. companies are competitive in this 
emerging global market, and that emerging technologies are developed in 
an environmentally sensitive way.

  Waves: Ocean waves are really a super concentrated form of 
solar energy. The sun makes the wind blow, and the wind blowing across 
the ocean surface creates waves. Waves may travel unimpeded through the 
ocean for thousands of miles, accruing significant amounts of 
mechanical energy. Wave power devices extract energy directly from 
surface waves or from pressure fluctuations below the surface.

   According to a study by the Electric Power Research Institute 
(EPRI),\5\ the total annual wave energy resource in the United States 
is approximately 2,300 TWh per year (2,300 terawatt hours = 2,300 
billion kilowatt hours). If we were to harness 24 percent of that 
resource, at 50 percent efficiency, it would generate an amount of 
electricity roughly comparable to all of our current output from 
hydroelectric sources (270 TWh per year, or approximately seven 
percent of current U.S. electricity generation\6\ ).
---------------------------------------------------------------------------
    \5\ EPRI Offshore Wave Power Feasibility Demonstration Project, 
Final Report; http://www.epri.com/oceanenergy/attachments/wave/reports/
009-Final-Report-RB-Rev-
2-092205.pdf
    \6\ Energy Information Administration, http://www.eia.doe.gov/
fuelelectric.html

   Wave-power rich areas of the world include the western coasts of 
Scotland, northern Canada, southern Africa, Australia, and the 
northeastern and northwestern coasts of the United States. In the 
Pacific Northwest alone, DOE estimates that wave energy could produce 
40-70 kilowatts (kW) per meter (3.3 feet) of western coastline.\7\
---------------------------------------------------------------------------
    \7\ http://www.eere.energy.gov/consumer/
renewable-energy/ocean/index.cfm/mytopic=50009

   Wave energy can be converted into electricity through either 
offshore and onshore systems. Offshore systems are situated in deep 
water, typically between 40 and 70 meters (131 and 230 feet). Most 
offshore systems take the form either of a single point absorber, which 
is a vertical buoy design, similar in appearance to a navigation buoy, 
or an attenuator, which is a long, segmented tube that generates energy 
as waves flow along its length, flexing the adjacent segments against 
---------------------------------------------------------------------------
one another and powering hydraulic pumps inside.

   Onshore wave energy systems are situated on the shoreline and 
exposed to oncoming waves. Oscillating water column designs enclose a 
column of air above a column of water. As waves enter the air column, 
they cause the water column to rise and fall, alternately compressing 
and depressurizing the air column, which powers a turbine. The tapchan, 
or tapered channel system, consists of a tapered channel, which feeds 
into a reservoir constructed on cliffs above sea level. The narrowing 
of the channel causes the waves to increase in height as they move 
toward the cliff face. The waves spill over the walls of the channel 
into the reservoir and the stored water is then fed through a turbine. 
Pendulor devices consist of a rectangular box, which is open to the sea 
at one end. A flap is hinged over the opening and the action of the 
waves causes the flap to swing back and forth, powering a hydraulic 
pump and a generator.

  Tidal Flows: Tides are controlled primarily by the Moon, and 
so can legitimately be thought of as lunar power. As the tides rise and 
fall twice each day, they create tidal currents in coastal locations 
with fairly narrow passages. Good examples include San Francisco's 
Golden Gate, the Tacoma Narrows in Washington's Puget Sound, and 
coastal areas of Alaska and Maine. Technologies of various designs may 
be used to harness these flows.

   Many tidal turbines look like wind turbines, and engineers of tidal 
technologies have been able to draw on many of the lessons learned from 
30 years of wind-turbine development. They may be arrayed underwater in 
rows, anchored to the sea floor. Because the energy in moving water is 
so much more concentrated than the energy in moving air, the turbines 
can be much smaller than wind turbines and still generate comparable 
amounts of electricity. The turbines function best where coastal 
currents run at between 3.6 and 4.9 knots (four and 5.5 mph). In 
currents of that speed, a 15-meter (49.2 feet) diameter tidal turbine 
can generate as much energy as a 60-meter (197 feet) diameter wind 
turbine. Ideal locations for tidal turbine arrays are close to shore in 
water depths of 20-30 meters (65.5-98.5 feet).

  Currents: Ocean currents are similar to tidal flows, but 
significantly larger. As an example, the energy contained in the Gulf 
Stream current in the Atlantic Ocean is equivalent to approximately 30 
times the energy contained in all the rivers on Earth.

   The only area in the United States where ocean currents come close 
enough to land to make potential power extraction attractive at this 
time is in South Florida, where the Gulf Stream swings in close to 
shore. It is envisioned that undersea turbines, similar to those being 
developed to harness tidal flows, might be deployed to tap into this 
massive current.

  Ocean Thermal Energy Conversion (OTEC): Thermal gradients are 
the only marine renewable energy resource addressed in this bill that 
is not based on moving water. Instead, thermal technologies use the 
difference in temperature between deep and shallow waters to run a heat 
engine. This temperature difference contains a vast amount of solar 
energy. If extraction could be done profitably, the resource is 
virtually limitless.

   OTEC works best when the temperature difference between the warmer, 
top layer of the ocean and the colder, deep ocean water is about 
20+C (36F), conditions that exist in tropical coastal 
areas. To bring the cold water to the surface, OTEC plants require a 
large diameter intake pipe, which is submerged a mile or more into the 
ocean's depths. Heat is extracted from warm surface water.

Applications of Marine Renewable Energy

  Electric power production: The primary application of marine 
energy technologies is electrical power production. Most planned 
installations would consist of arrays of multiple, small generating 
devices, optimally positioned to take advantage of a particular 
resource (e.g., waves, tidal flows, etc.). The multiple devices would 
feed their power into a centralized hub located on the sea floor, 
which, in turn, would be connected to a substation on the beach, and 
from there to the power grid.

  Desalination: One virtue of locating a clean, renewable 
energy producing device in seawater is that it is optimally positioned 
to use that energy for desalination. In areas where fresh drinking 
water is at a premium, marine renewables can make an important 
contribution to solving that problem.

  Air conditioning: Air conditioning is a possible byproduct of 
some marine energy technologies. For example, spent cold seawater from 
a thermal conversion plant can chill fresh water in a heat exchanger or 
flow directly into a cooling system on shore. Simple systems of this 
type have air conditioned buildings at the Natural Energy Laboratory in 
Hawaii for several years.

Benefits of Marine Renewable Energy

  Predictability: Unlike some renewable energy sources, notably 
wind, marine renewable energy production can be forecast to a high 
degree of certainty well in advance. Using satellite observations, wave 
power can be forecast up to three days in advance. Tides can be 
forecast years in advance. Ocean thermal is capable of providing a 
constant, base-load supply of power. This predictability makes it 
easier to integrate marine renewables into a diverse generation 
portfolio.

  No fuel costs: Marine renewables benefit from a free and 
inexhaustible source of ``fuel,'' freeing operators and consumers from 
concerns about future fuel availability and price volatility.

  Pollution prevention: Like other renewable energy 
technologies, marine renewables are attractive because they emit no 
pollutants or greenhouse gases in the process of producing energy. 
Devices are also designed to prevent any pollution to the ocean waters.

  Jobs and security: Marine renewable energy technologies can 
be produced domestically, thereby providing jobs for Americans and 
helping to reduce security concerns associated with depending on 
foreign countries for oil and natural gas. The large size of the 
resource, both in the United States and overseas, creates significant 
market opportunities for marine renewable energy technology companies.

  Aesthetically unobjectionable: Often opposition to energy 
development projects, whether onshore or off, is motivated by 
complaints that they obstruct or detract from otherwise beautiful land- 
or sea-scapes. In contrast to most other technologies, many marine 
renewable energy technologies are submerged out of sight. Other marine 
renewables have such a low profile and/or are located so far from shore 
that they generate no significant opposition on aesthetic grounds.

Cost
    Cost estimates are difficult for wave and tidal, which, in contrast 
to offshore wind, lack operational history. For wave, costs have been 
estimated as between nine and 16 cents/kWh, far more favorable than the 
40 cents/kWh that offshore wind cost ``out of the box.'' For in-stream 
tidal, the Electric Power Research Institute has predicted costs from 
four to 12 cents/kWh, depending on the rate of water flow. Because of 
tidal power's similarities to wind, it may benefit from the 
advancements already made in wind turbine development and may 
potentially share economies of scale with that industry.

Issues

  Environmental Impact: The greatest concern with marine 
renewables is the impact of power generation technologies on the marine 
environment and ecosystems. Significant research remains to be done in 
this area to ensure that these devices do not have significant negative 
environmental impacts. Turbine technologies, to harness tides and ocean 
currents, have raised particular questions. There are open questions 
about the impact of tidal turbines on local fisheries and marine 
mammals. This is an area requiring in-depth study. It is important that 
studies look not just at the impact of individual turbines, but also 
the impacts of large arrays of multiple turbines in a give location, as 
such arrays are what would be necessary to generate power on a utility 
scale.

   For marine renewable technologies that engage in desalination, steps 
must be taken to ensure that the concentrated brine produced as a 
byproduct of these operations does not have a negative impact on local 
marine ecosystems.

   Finally, there are open questions relating to potential 
environmental impacts of extracting too much energy from tidal flows or 
ocean currents. In the case of tidal flows, care must be taken not to 
reduce the flow by too much to avoid harm to marine ecosystems. In the 
case of the Gulf Stream, the same ecological concerns apply, and in 
addition, since the thermal energy carried by the Gulf Stream plays an 
important role in regulating the climate in Europe, it is important to 
understand whether extracting energy from this system might have 
negative impacts on weather systems that depend on its steady flow. 
While this possibility may be remote, it is a question that warrants 
further study.

  Marine navigation: Since many marine renewable energy 
conversion devices float on the water, or rest on the bottom of 
navigable waterways, they raise concerns about possible interference 
with marine navigation. It is important that devices be well-marked, 
easily visible by day and night, and appear on all current nautical 
charts. Efforts should be made to make devices visible to radar as 
well.

  Survivability: Marine renewable energy devices spend their 
entire life cycle immersed in corrosive seawater and exposed to severe 
weather and sea conditions. Steps must be taken to ensure the 
survivability, and reliability, of these devices in these harsh 
conditions to ensure the uninterrupted supply of power.

Marine Renewable Energy Programs at DOE
    The United States became involved in marine renewable energy 
research in 1974 with the establishment of the Natural Energy 
Laboratory of Hawaii Authority. The Laboratory became one of the 
world's leading test facilities for Ocean Thermal Energy Conversion 
technology, but work there was discontinued in 2000. Existing OTEC 
systems have an overall efficiency of only one percent to three 
percent, but there is reason to believe that subsequent technology 
advances and changes in the overall electric power environment may make 
a fresh look at OTEC technologies worthwhile.
    In the Energy Policy Act of 2005, Section 931(a)(2)(E) included a 
broad authorization for research, development, demonstration, and 
commercial application programs for ``(i) ocean energy, including wave 
energy.'' However, that authorization contains no further instructions 
on how to structure such a program and the authorization expires after 
FY 2009. Despite this authorization, DOE has not made a budget request 
to support marine energy programs since EPACT '05 was passed, nor have 
funds been appropriated. This is despite the fact that FERC has begun 
to issue permits to companies and investors interested in developing 
in-stream tidal sites, and several private companies--in Europe, 
Australia, and the United States--have begun to test prototype marine 
renewable energy technologies of various design.
    Chairman Lampson. Good morning, ladies and gentlemen. This 
hearing will come to order, and I want to welcome everyone to 
our hearing today on geothermal and ocean power technologies. 
We will be examining two bills: H.R. 2304, the Advanced 
Geothermal Energy Research and Development Act of 2007, 
introduced by our colleague from California, Representative 
McNerney, and H.R. 2313, the Marine Renewable Energy Research 
and Development Act of 2007, introduced by Representative 
Hooley of Oregon.
    Things are quite busy this morning and I want to interrupt 
my comments for just a second. We are probably going to be 
interrupted with votes at around 10:30. We are going to do all 
that we can as quickly as we can and then come back and 
complete our effort.
    Each of these bills is designed to accelerate the 
development of a specific renewable energy resource that has 
great potential as a source of clean power generation, is vast 
in size, and three, is currently receiving little support for 
research and development. In other words, these bills are about 
addressing overlooked opportunities in our collective efforts 
to create good American jobs, diversify our energy supply, 
increase our security and reduce the environmental impact of 
energy production.
    At this time I want to yield to Mr. McNerney, the author of 
H.R. 2304, to make a brief opening statement.
    [The prepared statement of Chairman Lampson follows:]
              Prepared Statement of Chairman Nick Lampson
    Good morning everyone and welcome to our hearing today on 
geothermal and ocean power technologies. We will be examining two 
bills:

    H.R. 2304, the Advanced Geothermal Energy Research and Development 
Act of 2007, introduced by our colleague from California, Rep. 
McNerney, and H.R. 2313, the Marine Renewable Energy Research and 
Development Act of 2007, introduced by Rep. Hooley of Oregon.
    Each of these bills is designed to accelerate the development of a 
specific renewable energy resource that: has great potential as a 
source of clean power generation, is vast in size, and is currently 
receiving little R&D attention or support.
    In other words, these bills are about addressing overlooked 
opportunities in our collective efforts to create good American jobs, 
diversify our energy supply, increase our security, and reduce the 
environmental impact of energy production.
    For decades, the United States has tapped geothermal energy for 
heating applications and to produce clean electric power. We know this 
resource works. But most geothermal development has occurred in 
locations where underground reservoirs of very hot water or steam--so 
called hydrothermal systems--have been shallow and easily identifiable 
from the surface. Unfortunately, since obvious surface manifestations 
of geothermal energy do not occur in very many places, geothermal is 
often thought of as a marginal resource--not one that can play a major 
role in our power generation portfolio across the Nation.
    This view is inaccurate. In actuality, the obvious locations barely 
scratch the surface of the total geothermal potential underneath the 
United States. By investing in advanced technologies for exploration 
and development, we can learn how to identify hidden resources that 
have no surface manifestations, and even learn to create new resources 
in hot rock where no natural reservoir or fluid exists. In doing so, we 
have the potential to dramatically expand our geothermal energy 
reserves.
    In addition to being clean, domestic, and renewable, geothermal 
energy flows in an uninterrupted stream, making it great for baseload 
power production. And the amount of energy stored in the Earth's crust 
is enormous. A recent report by an MIT-led panel of experts estimated 
that, with a comparatively modest investment in technology development, 
as much as 200,000 ``quads'' of geothermal energy could become 
commercially accessible--an amount equal to 2,000 times the total 
energy consumed in the U.S. each year.
    Marine renewable energy technologies are designed to harness the 
power contained in ocean waves, flowing tides, ocean currents, and 
ocean thermal gradients. The theoretical potential of these resources 
has been debated for years, but now marine renewables appear poised on 
the verge of a breakthrough. Countries such as Australia, the United 
Kingdom, and Portugal are investing heavily in technologies to tap the 
ocean's energy potential and will soon hook the first commercial 
projects into their power grids.
    In 2005, the Electric Power Research Institute completed a series 
of preliminary studies to quantify the wave and tidal resources in U.S. 
coastal waters. They found that the size of just one of these 
resources--waves--is big enough to provide as much electric power as 
all of the hydroelectric dams currently operating in the United 
States--almost seven percent of our nation's electricity in 2005. When 
other marine energy resources are added to the mix, the potential 
becomes truly significant.
    The title of this hearing says it all: Developing Untapped 
Potential. We owe it to current and future generations to develop our 
ability to tap the vast potential of geothermal and ocean energy. Doing 
so will increase our security, foster competitive new American 
industries, and ensure that energy production of the future is 
compatible with the highest standards of environmental stewardship. 
This is the purpose behind H.R. 2304 and H.R. 2313.

    Mr. McNerney. I would like to thank Chairman Lampson and 
Ranking Member Inglis for holding this hearing on geothermal 
and ocean energy technologies, and I would like to thank 
Chairman Gordon for his support of geothermal research.
    I have spent over 20 years of my professional career 
developing wind energy technology and there are some very 
interesting parallels. We saw the technology developed from 
very early stage, primitive technology to what we see today as 
a very successful, cost-effective technology in the wind 
industry that is now the fastest growing form of new energy 
technology. Much American money was spent and invested in this 
technology. Research was done here in the United States, 
especially in California, my home State. But what happened 
ultimately is the United States Government was very 
inconsistent in its support for the development and 
implementation of wind energy technology. Consequently, what 
happened is that the technology went overseas. It is now being 
produced in Europe and Japan, even though all the research 
dollars were spent here by American industry and by American 
government. The profits are now going to Europe and Japan.
    So I see now a very similar situation happening with 
geothermal. Geothermal is in a state now where we can move 
forward and become a world leader. We can develop the 
technology. We can have the technology for use at home and for 
sale overseas but inconsistent or nonexistent government 
support or policies will drive that industry and that business 
overseas, so it behooves us to develop this new technology. 
Geothermal has a vast potential. The reports that Dr. Tester 
and others have produced show that it can produce 10 percent or 
more of our electrical needs by 2050. So we need to embark on a 
path that helps us develop this technology and keep it at home 
and be the world leaders in this new emerging technology that 
has such tremendous potential.
    So with that, I will yield back to Mr. Lampson, to the 
Chairman.
    Chairman Lampson. Thank you very much, Mr. McNerney.
    At this time I would like to recognize the distinguished 
Ranking Member from South Carolina, Mr. Inglis, for his opening 
statement.
    Mr. Inglis. I thank you, Mr. Chairman, for holding this 
hearing and I appreciate the work of Ms. Hooley and Mr. 
McNerney on these bills and they do highlight the renewable 
energy sources that can help America achieve energy security.
    The solution to our energy problems will come from a 
variety of sources, no doubt. We hope that they are clean, 
renewable and affordable. Surely geothermal and marine-related 
energy sources fit that description and I am looking forward to 
hearing from our witnesses today about the research that will 
make these alternatives affordable in a commercial market.
    So thank you, Mr. Chairman, for holding this hearing and 
thank you to our colleagues, Ms. Hooley and Mr. McNerney, for 
these bills.
    [The prepared statement of Mr. Inglis follows:]
            Prepared Statement of Representative Bob Inglis
    Thank you for holding this hearing, Mr. Chairman. I also appreciate 
Mrs. Hooley's and Mr. McNerney's work to introduce these bills that 
highlight two renewable energy sources that can help America achieve 
energy security.
    The solution to our energy problems will come from a variety of 
sources, and they need to be clean, renewable, and affordable. Since 
geothermal and marine-related energy sources fit that description, I'm 
looking forward to hearing from our witnesses today about the research 
that will make these alternatives affordable in the commercial market.
    Thank you again, Mr. Chairman, and I look forward to discussing 
these two bills before the Committee.

    Chairman Lampson. Thank you, Mr. Inglis, Ranking Member.
    I ask unanimous consent that all additional opening 
statements submitted by the Subcommittee Members be included in 
the record. Without objection, so ordered.
    [The prepared statement of Mr. Costello follows:]
         Prepared Statement of Representative Jerry F. Costello
    Good morning. Thank you, Mr. Chairman, for holding today's hearing 
to review two renewable energy bills regarding geothermal and marine 
power technologies.
    First, H.R. 2304 directs the Secretary of Energy to support 
research, development, demonstration, and commercial application of 
advanced technologies to locate and characterize geothermal resources 
and produce geothermal energy. Geothermal energy is heat from the 
Earth's core that is trapped in the Earth's crust. In underground 
fluid-filled reservoirs, hot water or steam can be used either to 
generate electricity or to heat buildings, greenhouses, or aquaculture 
operations. The U.S. has become the world's largest producer of 
electric power from geothermal energy; however, according to the U.S. 
Geological Survey (USGS), a significant number of geothermal resource 
locations remain hidden and unconfirmed. H.R. 2304 contains provisions 
to support research and development (R&D) of advanced technologies to 
assist in locating these hot water resources, and to encourage 
demonstration of advanced exploration technologies by the geothermal 
industry. Funding has gradually declined for geothermal energy R&D, 
with only $5 million appropriated for 2007. Further, the Administration 
requested no funding for the geothermal programs at the Department of 
Energy (DOE) for FY08 because they believe that geothermal technologies 
are mature, although that claim is disputed by geothermal researchers 
and the industry. I look forward to hearing from our distinguished 
witness panel on this point.
    Second, H.R. 2313 directs the Secretary of Energy to support 
research, development, demonstration, and commercial application of 
technologies to produce electric power from renewable marine resources. 
Marine renewable energy refers to energy that can be extracted from 
ocean water. H.R. 2313 would support technology research and 
development to ensure that U.S. companies are competitive in this 
emerging global market, and that emerging technologies are developed in 
an environmentally conscious way. One of the concerns with utilizing 
marine renewable energy is the impact of power generation technologies 
on the marine environment and ecosystems. It is my understanding that 
additional research needs to be completed in this area to ensure that 
these devices do not have significant negative environmental impacts. 
To this end, I would like to know if there are additional environmental 
concerns associated with marine renewable energy development and I look 
forward to hearing the witness panel address my questions.
    With that, I again thank the Chairman for calling this hearing.

    Chairman Lampson. At this I would like to introduce our 
distinguished panel of witnesses starting with Dr. Jefferson 
Tester, who is the H.P. Meissner Professor of Chemical 
Engineering at Massachusetts Institute of Technology. Dr. 
Tester is an internationally recognized expert in enhanced 
geothermal systems and he served as chair of the MIT-led panel 
that produced the recent report, the Future of Geothermal 
Energy.
    Mr. Paul Thomsen is Public Policy Manager for ORMAT 
Technologies Inc., a leading provider of geothermal 
exploration, development and power conversion technologies. Mr. 
Thomsen is responsible for ORMAT's federal, State and local 
legislative programs, and he is testifying today on behalf of 
both ORMAT and the Geothermal Energy Association. At this time 
I would like to recognize Congresswoman Hooley for introduction 
of Dr. von Jouanne.
    Ms. Hooley. Welcome. Dr. Annette von Jouanne has been a 
Professor in the School of Electrical Engineering and Computer 
Science at Oregon State University since 1995. She received her 
Ph.D. degree in electrical engineering from Texas A&M. She 
specializes in energy systems including power electronics and 
power systems. With a passion for renewables, Dr. von Jouanne 
is leading the wave energy program at Oregon State University. 
She is also the Director of Motor Systems Resource Facility, 
the highest power university-based energy systems lab in the 
Nation. Dr. von Jouanne has received national recognition for 
her research and teaching and she is a registered professional 
engineer as well as a National Academy of Engineering 
``Celebrated Woman Engineer.'' Welcome to Washington, D.C., and 
our committee.
    Chairman Lampson. Don't you miss Texas? I am glad you are 
here.
    Mr. Sean O'Neill is Co-founder and President of the Ocean 
Renewable Energy Coalition, OREC, a trade association formed in 
April 2005 to promote and advance commercialization of marine 
renewable energy in the United States. Mr. O'Neill is 
responsible for all federal legislation and regulatory issues 
impacting coalition members.
    And Mr. Nathanael Greene, who is a Senior Energy Policy 
Specialist with the Natural Resources Defense Council. His 
areas of expertise include utility regulation, renewable 
energy, energy taxes and energy efficiency.
    We welcome all of you this morning, and you will each have 
five minutes for your spoken testimony. Your written testimony 
will be included in the record for the hearing. When all five 
of you have completed your testimony, we will then begin with 
questions. Each Member will have five minutes to question the 
panel.
    Dr. Tester, would you begin, please?

   STATEMENT OF DR. JEFFERSON TESTER, MEISSNER PROFESSOR OF 
  CHEMICAL ENGINEERING, MASSACHUSETTS INSTITUTE OF TECHNOLOGY

    Dr. Tester. Mr. Chairman and Members of the Committee, I am 
grateful for the opportunity to speak with you this morning on 
the new bill, H.R. 2304, that deals with geothermal energy 
research and development. Along with my testimony, I have 
included a hard copy of the executive summary of our recently 
completed assessment that you referred to. As you know, I was 
honored to serve as the Chair of the panel that conducted that 
assessment.
    First, I am very pleased to see that the enormous potential 
of geothermal energy is receiving the attention it deserves. 
This committee's attention to, and leadership on, these issues 
is important to the country. As a very large, well-distributed, 
and clean indigenous energy resource, geothermal's widespread 
deployment would have a positive impact on our national energy 
security, on our environment and on our economic health. 
Regrettably, in recent years geothermal has been undervalued by 
many and was often ignored as a portfolio option for widespread 
development in the country. If this bill is enacted and 
supported with a multi-year commitment at the levels 
recommended, it will completely reactivate an important 
national-scale effort that will pay substantial dividends. 
Investing now in geothermal R&D coupled to a program of field 
demonstrations will have far-reaching effects towards ensuring 
a sustainable energy future for the U.S. for the long-term.
    Enactment of this bill will put us on a path to utilize our 
massive geothermal resource to provide dispatchable, baseload 
generating capacity, essentially with no emissions of carbon 
dioxide, and using modular plants that have small environmental 
footprints. These attributes make geothermal an excellent 
option for the United States, complementing interruptible 
renewables such as solar and wind and thus increasing the 
robustness of the national portfolio.
    Although conventional, high-grade hydrothermal resources 
are already being used effectively in the United States, and 
will continue to be developed, they are somewhat limited by 
their locations and ultimate potential. Beyond these 
conventional systems are Enhanced, or Engineered, Geothermal 
Systems (EGS) resources with enormous potential for primary 
energy recovery using heat-mining technology. EGS feasibility 
today is a result of improvements in reservoir characterization 
and stimulation technologies and in deep directional drilling 
that have evolved in the past three decades. It is the EGS 
approach that puts geothermal on the map as a potentially more 
sizable energy resource for the United States.
    In the past few weeks I was fortunate to be able to visit 
several geothermal plants in the American West and in Iceland 
to observe the positive impacts that geothermal technology is 
having firsthand. For example, ORMAT's new plant in Reno, 
Nevada, completely reinjects all produced geothermal fluids, 
produces no carbon dioxide or other emissions, and uses no 
cooling water in a region where water is a limited commodity. 
In Iceland, geothermal has enabled an economic and 
environmental transformation of the country in less than 60 
years. Iceland's extensive geothermal network, developed by 
Reykjavik Energy and other companies, now provides 100 percent 
of Iceland's heating needs and 25 percent of their electric 
power with hydro providing the remainder. Iceland's example of 
geothermal utilization is a model that the United States should 
strive to emulate. Obviously Iceland is a special place 
geologically and only some regions of the United States share 
those features. However, the development of EGS technology puts 
geothermal within reach for a much larger portion of the United 
States.
    Even though the United States is currently the largest 
worldwide producer of electricity from geothermal energy, the 
total capacity is barely 3,000 megawatts, much smaller than our 
total overall generating capacity. Fortunately, the actual 
potential for geothermal is much larger. As you pointed out, 
our analysis suggests that a focused national program could 
enable geothermal capacity to reach 100,000 megawatts in 50 
years, comparable to the current generating capacity of our 
nuclear and hydropower plants. In order to achieve such levels, 
a natural transition from the country's high-grade hydrothermal 
systems in use today in the West to the massive EGS resources 
available over a range of grades across the country would need 
to occur in increasing amounts in the next ten to 15 years. The 
fact that this bill addresses both short- and long-term 
research, development, demonstration and deployment issues and 
needs across this continuum of geothermal grades is 
particularly noteworthy, and from my perspective, essential to 
the success of the national program.
    I have included a few additional comments on some details 
of the bill in my written testimony. Thank you again for giving 
me the opportunity to support this landmark legislation and 
thank you for your leadership on this issue.
    [The prepared statement of Dr. Tester follows:]
                 Prepared Statement of Jefferson Tester

                    The Future of Geothermal Energy

Overview:

    Mr. Chairman and Members of the Committee, I am grateful for the 
opportunity to speak with you this morning on the new bill H.R. 2304 
covering the ``Advanced Geothermal Energy Research and Development Act 
of 2007,'' which was introduced in the House of Representatives on May 
14 to direct the Secretary of Energy to conduct a national program for 
geothermal energy. Along with my testimony, I have included a hard copy 
of the Executive Summary of our recently completed national 
assessment--``The Future of Geothermal Energy.'' I was honored to be 
the Chair of an expert interdisciplinary group that conducted that 
assessment which was released in January.
    First, I am very pleased to see that the enormous potential of 
geothermal energy is receiving the attention it deserves. This 
committee's attention to and leadership on these issues is important to 
the country. As a very large, well-distributed, and clean, indigenous 
energy resource, geothermal's widespread deployment would have a very 
positive impact on our national energy security, on our environment, 
and on our economic health. Regrettably, in recent years geothermal 
energy has been undervalued by many and was often ignored as a 
portfolio option for widespread deployment in the U.S. If this bill is 
enacted and supported with a multi-year commitment at the levels 
recommended, it will completely reactivate an important national-scale 
effort that will pay substantial dividends. Investing now in geothermal 
research and technology development coupled to a program of field 
demonstrations will have far reaching effects towards insuring a 
sustainable energy future for the U.S. for the long-term.
    Enactment of this bill will restore U.S. leadership 
internationally. It will put us on a path to utilize our massive 
geothermal resource to provide dispatchable, baseload capacity 
generating capacity essentially with no emissions of carbon dioxide and 
using modular plants that have small environmental ``footprints.'' 
These attributes make geothermal a very attractive renewable deployment 
option for the U.S.--complementing interruptible renewables such as 
solar and wind, and thus increasing the robustness of a national 
renewable portfolio.
    Let me briefly describe to the committee what geothermal energy is. 
Geothermal resources are usually described in terms of stored thermal 
energy content of the rock and contained fluids underlying land masses 
that are accessible by drilling. The United States Geological Survey 
and other groups have used a maximum accessible depth of 10 km (approx. 
30,000 ft.) to define the U.S. resource. Although conventional 
hydrothermal resources are already being used effectively for both 
electric and non-electric applications in the United States, and will 
continue to be developed, they are somewhat limited by their locations 
and ultimate potential. Beyond these conventional hydrothermal systems 
are Enhanced Geothermal Systems or EGS resources with enormous 
potential for primary energy recovery using heat-mining technology, 
which is designed to extract and utilize the Earth's stored thermal 
energy. EGS feasibility is a result of improvements in reservoir 
characterization and stimulation technologies and in deep, directional 
drilling that have evolved in the last three decades. It is this EGS 
approach that puts geothermal on the map as a potentially much more 
sizable energy resource for the U.S. EGS would operate as a closed 
system with cool water pumped deep into hot fractured rock reservoirs 
where it would be heated and then returned to the surface to be used as 
an energy source to generate electricity or directly for heating 
applications Aside from conventional hydrothermal and EGS, other 
geothermal resources also include co-produced hot water associated with 
oil and gas production, and geo-pressured resources that contain hot 
fluids with dissolved methane.
    In the past few weeks I was fortunate to be able to visit several 
geothermal plants in the American West and in Iceland to observe the 
positive impacts that geothermal technology is having firsthand. For 
example, ORMAT's new plant in Reno, Nevada completely re-injects all 
produced geothermal fluids, produces no carbon dioxide or other 
emissions and uses no cooling water in a region where water is a 
limited commodity. In Iceland, geothermal has enabled an economic and 
environmental transformation of the country in less than 60 years--from 
Iceland's early years as a poor society that was completely dependent 
on imported fossil fuels in the 1940s to an economically rich society 
in 2007 due in large part to developing a more sustainable, renewable 
energy supply. Iceland's extensive geothermal network developed by 
Reykjavik Energy and other companies now provides 100 percent of 
Iceland's heating needs and 25 percent of their electric power with 
hydro providing the remainder. They are now actively pursuing a means 
to eliminate their dependence on imported transportation fuels by 
substituting hydrogen produced by electricity generated from super-
critical geothermal resources. Iceland's example of geothermal 
utilization is a model that the U.S. should strive to emulate. 
Obviously, Iceland is a special place geologically, and only some 
regions of the U.S. share those features. However, the development of 
EGS technology puts geothermal within reach for a much larger portion 
of the U.S.
    Even though the U.S. is the largest worldwide producer of 
electricity from geothermal resources with about 3000 MWe of capacity, 
this is only a small fraction of our country's generating capacity, 
which now exceeds 1,000,000 MWe or one TWe. Fortunately, the actual 
potential for geothermal energy in the U.S. is substantially greater 
than 3000 MWe as pointed out recently by the MIT-led assessment, by the 
Western Governors Association and by the National Renewable Energy 
Laboratory. For example, our analysis suggests that with a focused and 
aggressive national RD&D program, we could enable U.S. geothermal 
capacity to reach 100,000 MWe in 50 years--comparable to the current 
generating capacity of our nuclear and hydropower plants. In order to 
achieve such levels of geothermal capacity, a natural transition from 
the country's high grade hydrothermal systems in use today to the 
massive EGS resource over a range of grades would need to occur in 
increasing amounts in the next 10 to 15 years.
    The fact that this bill addresses both short- and long-term 
research, development, demonstration, and deployment issues is 
particularly noteworthy. Within the geothermal continuum there is a 
range of resource types and grades from high-grade conventional 
hydrothermal systems that are currently in use and being developed in 
the West to lower-grade Enhanced (or Engineered) Geothermal System or 
EGS resources in the East. In order to enable geothermal technology to 
develop to a level where it could provide 10 percent or more of our 
generating capacity by 2050 (that is >100,000 MWe), it is essential 
that a national program address both short and longer term technology 
components simultaneously in a comprehensive and coordinated manner. 
The bill is balanced and effectively structured to support critical 
program elements for both hydrothermal and EGS.
    The proposed national program is appropriately ambitious with a 
multi-year commitment to support both field testing and laboratory work 
in conjunction with analysis, characterization technique development, 
and modeling. Overall, two critical areas would be emphasized--first, 
to enhance the quantitative assessment of U.S. geothermal resource on a 
site-specific basis and second, to demonstrate and validate that 
reservoir stimulation and drilling technologies can repeatedly and 
reliably be implemented in the field to produce commercial-scale 
geothermal systems. Sound geoscience and geoengineering scientific 
approaches would be used that build on current methods for extraction 
of oil and gas and conventional hydrothermal resources worldwide. The 
proposed comprehensive research, development, and demonstration effort 
will lead to both improved and new technologies capable of lowering 
development risks and costs and thereby making investments in 
geothermal development more attractive for the private sector.
    I have included a few additional comments on some details of the 
bill in my written testimony. Thank you again for giving me the 
opportunity to support this important landmark legislation, and thank 
you for your leadership on this issue.

Specific comments on the bill:

        1.  In Sec. 3. (1) Regarding the definition of EGS--As 
        engineered systems, it would be good to point out that 
        intervention is needed to address one or more of the 
        following--1. lack of sufficient permeability or porosity or 
        open fracture connectivity within the reservoir, 2. 
        insufficient contained water and/or steam in the reservoir, 
        and/or 3. lower average geothermal gradients requiring deeper 
        drilling.

        2.  In Sec. 4(b,1)Resource assessment--In order for this task 
        to be achieved effectively it will require proactive 
        coordination and engagement of the DOE and its contractors with 
        the USGS, MMS, BLM and other federal agencies.

        3.  Secs. 4 and 5 Opportunities for direct heat use and co-
        generation of heat and power--Given the large improvement in 
        energy efficiency that occurs in direct or combined heat and 
        power utilization of geothermal, co-generation applications for 
        residential and commercial buildings should be considered for 
        demonstrations along with providing baseload electric power 
        generation.

        4.  Sec. 7 impact on Secs. 6(b)(1) and (2) Co-funding 
        requirements for EGS technology development and early EGS field 
        demonstrations--A 20 percent non-federal cost sharing for EGS 
        technologies development and a 50 percent requirement for field 
        demonstration plants are likely to be excessive at such an 
        early stage of the reactivated geothermal program. In general, 
        it may be difficult for universities to meet these cost sharing 
        levels and some may inadvertently be excluded from 
        participating in the R&D program.

        5.  Importance of international cooperation--Provisions should 
        be included to enable vigorous international collaboration on 
        EGS and hydrothermal technology where appropriate because such 
        collaboration leverages U.S.-based support and will facilitate 
        the incorporation of new scientific and technological 
        developments for geothermal utilization into the U.S. program.

        6.  Sec. 10. (6) Utilization of co-produced fluids--Although 
        not a conventional EGS or hydrothermal resource, co-produced 
        fluids provide a short-term, economically attractive 
        opportunity for utilizing the low grade thermal energy produced 
        during the production of oil and gas. Provision for their 
        consideration should indeed be part of a national effort, but 
        they seem to be misplaced in Sec. 10. as they represent 
        shorter-term opportunities.

        7.  Developing the next generation of U.S. scientists and 
        engineers needed to deploy.

        8.  Geothermal--In order to achieve the high impact goals of 
        geothermal deployment, it will be necessary to increase the 
        number of professionals working on geothermal technology in the 
        U.S.

    This process would be enhanced by connecting the national RD&D 
program to education in science and engineering at the college, 
university and professional levels using internships, graduate 
fellowships, and similar instruments.

Summary of a national-scale assessment of EGS resources--``The Future 
                    of Geothermal Energy'' (portions of a previous 
                    statement provided on April 19, 2007 to Congress)

    For 15 months starting in September of 2005, a comprehensive, 
independent assessment was conducted to evaluate the technical and 
economic feasibility of EGS becoming a major supplier of primary energy 
for U.S. base-load generation capacity by 2050. The assessment was 
commissioned by the U.S. Department of Energy and carried out by an 18-
member, international panel assembled by the Massachusetts Institute of 
Technology (MIT). The remainder of my testimony provides a summary of 
that assessment including the scope and motivation behind the study, as 
well as its major findings and recommendations. Supporting 
documentation is provided in the full report (Tester et al., 2006)--of 
which copies of the Executive Summary have been provided for your 
review. The complete 400+ page report is available on the web at http:/
/geothermal.inel.gov/publications/
future-of-geothermal-energy.pdf
    In simple terms, any geothermal resource can be viewed as a 
continuum in several dimensions. The grade of a specific geothermal 
resource depends on its temperature-depth relationship (i.e., 
geothermal gradient), the reservoir rock's permeability and porosity, 
and the amount of fluid saturation (in the form of liquid water and/or 
steam). High-grade hydrothermal resources have high average thermal 
gradients, high rock permeability and porosity, sufficient fluids in 
place, and an adequate reservoir recharge of fluids; all EGS resources 
lack at least one of these. For example, reservoir rock may be hot 
enough but not produce sufficient fluid for viable heat extraction, 
either because of low formation permeability/connectivity and 
insufficient reservoir volume, or the absence of naturally contained 
fluids.
    A geothermal resource is usually described in terms of stored 
thermal energy content of the rock and contained fluids underlying land 
masses that are accessible by drilling. The United States Geological 
Survey and other groups have used a maximum accessible depth of 10 km 
(approx. 30,000 ft.) to define the resource. Although conventional 
hydrothermal resources are already being used effectively for both 
electric and non-electric applications in the United States, and will 
continue to be developed, they are somewhat limited by their locations 
and ultimate potential. Beyond these conventional resources are EGS 
resources with enormous potential for primary energy recovery using 
heat-mining technology, which is designed to extract and utilize the 
Earth's stored thermal energy. In addition to hydrothermal and EGS, 
other geothermal resources include co-produced hot water associated 
with oil and gas production, and geo-pressured resources that contain 
hot fluids with dissolved methane. Because EGS resources have such a 
large potential for the long-term, the panel focused its efforts on 
evaluating what it would take for EGS and other unconventional 
geothermal resources to provide 100,000 MWe of base-load electric-
generating capacity by 2050.
    Three main components were considered in the analysis:

        1.  Resource--mapping the magnitude and distribution of the 
        U.S. EGS resource.

        2.  Technology--establishing requirements for extracting and 
        utilizing energy from EGS reservoirs, including drilling, 
        reservoir design and stimulation, and thermal energy conversion 
        to electricity. Because EGS stimulation methods have been 
        tested at a number of sites around the world, technology 
        advances, lessons learned and remaining needs were considered.

        3.  Economics--estimating costs for EGS-supplied electricity on 
        a national scale using newly developed methods for mining heat 
        from the Earth, as well as developing levelized energy costs 
        and supply curves as a function of invested R&D and deployment 
        levels in evolving U.S. energy markets.

    Motivation: There are compelling reasons why the United States 
should be concerned about the security of our energy supply for the 
long-term. Key reasons include growth in demand as a result of an 
increasing U.S. population, the increased electrification of our 
society, and concerns about the environment. According to the Energy 
Information Administration (EIA, 2006), U.S. nameplate generating 
capacity has increased more than 40 percent in the past 10 years and is 
now more than one TWe. For the past two decades, most of the increase 
resulted from adding gas-fired, combined-cycle generation plants. In 
the next 15 to 25 years, the electricity supply system is threatened 
with losing capacity as a result of retirement of existing nuclear and 
coal-fired generating plants (EIA, 2006). It is likely that 50 GWe or 
more of coal-fired capacity will need to be retired in the next 15 to 
25 years because of environmental concerns. In addition, during that 
period, 40 GWe or more of nuclear capacity will be beyond even the most 
generous re-licensing accommodations and will have to be 
decommissioned.
    The current nonrenewable options for replacing this anticipated 
loss of U.S. base-load generating capacity are coal-fired thermal, 
nuclear, and combined-cycle gas-combustion turbines. While these are 
clearly practical options, there are some concerns. First, while 
electricity generated using natural gas is cleaner in terms of 
emissions, demand and prices for natural gas will escalate 
substantially during the next 25 years. As a result, large increases in 
imported gas will be needed to meet growing demand--further 
compromising U.S. energy security beyond just importing the majority of 
our oil for meeting transportation needs. Second, local, regional, and 
global environmental impacts associated with increased coal use will 
most likely require a transition to clean-coal power generation, 
possibly with sequestration of carbon dioxide. The costs and 
uncertainties associated with such a transition are daunting. Also, 
adopting this approach would accelerate our consumption of coal 
significantly, compromising its use as a source of liquid 
transportation fuel for the long-term. It is also uncertain whether the 
American public is ready to embrace increasing nuclear power capacity, 
which would require siting and constructing many new reactor systems.
    On the renewable side, there is considerable opportunity for 
capacity expansion of U.S. hydropower potential using existing dams and 
impoundments. But outside of a few pumped storage projects, hydropower 
growth has been hampered by reductions in capacity imposed by the 
Federal Energy Regulatory Commission (FERC) as a result of 
environmental concerns. Concentrating Solar Power (CSP) provides an 
option for increased base-load capacity in the Southwest where demand 
is growing. Although renewable solar and wind energy also have 
significant potential for the United States and are likely to be 
deployed in increasing amounts, it is unlikely that they alone can meet 
the entire demand. Furthermore, solar and wind energy are inherently 
intermittent and cannot provide 24-hour-a-day baseload without mega-
sized energy storage systems, which traditionally have not been easy to 
site and are costly to deploy. Biomass also can be used as a renewable 
fuel to provide electricity using existing heat-to-power technology, 
but its value to the United States as a feedstock for biofuels for 
transportation is much higher, given the current goals of reducing U.S. 
demand for imported oil.
    Clearly, we need to increase energy efficiency in all end-use 
sectors; but even aggressive efforts cannot eliminate the substantial 
replacement and new capacity additions that will be needed to avoid 
severe reductions in the services that energy provides to all 
Americans.

    Pursuing the geothermal option: The main question we address in our 
assessment of EGS is whether U.S.-based geothermal energy can provide a 
viable option for providing large amounts of generating capacity when 
and where it is needed.
    Although geothermal energy has provided commercial base-load 
electricity around the world for more than a century, it is often 
ignored in national projections of evolving U.S. energy supply. Perhaps 
geothermal has been ignored as a result of the widespread perception 
that the total geothermal resource is only associated with identified 
high-grade, hydrothermal systems that are too few and too limited in 
their distribution in the United States to make a long term, major 
impact at a national level. This perception has led to undervaluing the 
long-term potential of geothermal energy by missing a major opportunity 
to develop technologies for sustainable heat mining from large volumes 
of accessible hot rock anywhere in the United States. In fact, many 
attributes of geothermal energy, namely its widespread distribution, 
base-load dispatchability without storage, small footprint, and low 
emissions, are very desirable for reaching a sustainable energy future 
for the United States.
    Expanding our energy supply portfolio to include more indigenous 
and renewable resources is a sound approach that will increase energy 
security in a manner that parallels the diversification ideals that 
have made America strong. Geothermal energy provides a robust, long-
lasting option with attributes that would complement other important 
contributions from clean coal, nuclear, solar, wind, hydropower, and 
biomass.

    Approach: The composition of the panel was designed to provide in-
depth expertise in specific technology areas relevant to EGS 
development, such as resource characterization and assessment, 
drilling, reservoir stimulation, and economic analysis. Recognizing the 
possibility that some bias might emerge from a panel of knowledgeable 
experts who, to varying degrees, are advocates for geothermal energy, 
panel membership was expanded to include other experts on non-
geothermal energy technologies and economics, and environmental 
systems. Overall, the panel took a completely new look at the 
geothermal potential of the United States. This study was partly in 
response to short- and long-term needs for a reliable low-cost electric 
power and heat supply for the Nation. Equally important was a need to 
review and evaluate international progress in the development of EGS 
and related extractive technologies that followed the very active 
period of U.S. fieldwork conducted by Los Alamos National Laboratory 
during the 1970s and 1980s at the Fenton Hill site in New Mexico.
    The assessment team was assembled in August 2005 and began work in 
September, following a series of discussions and workshops sponsored by 
the Department of Energy (DOE) to map out future pathways for 
developing EGS technology. The final report was released in January of 
2007.
    The first phase of the assessment considered our geothermal 
resource in detail. Earlier projections from studies in 1975 and 1978 
by the U.S. Geological Survey (USGS Circulars 726 and 790) were 
amplified by ongoing research and analysis being conducted by U.S. 
heat-flow researchers and were analyzed by David Blackwell's group at 
Southern Methodist University (SMU) and other researchers. In the 
second phase, EGS technology was evaluated in three distinct parts: 
drilling to gain access to the system, reservoir design and 
stimulation, and energy conversion and utilization. Previous and 
current field experiences in the United States, Europe, Japan, and 
Australia were thoroughly reviewed. Finally, the general economic 
picture and anticipated costs for EGS were analyzed in the context of 
projected demand for base-load electric power in the United States.

    Findings: Geothermal energy from EGS represents a large, indigenous 
resource that can provide base-load electric power and heat at a level 
that can have a major impact in the United States, while incurring 
minimal environmental impacts. With a reasonable investment in R&D, EGS 
could provide 100 GWe or more of cost-competitive generating capacity 
in the next 50 years. Further, EGS provides a secure source of power 
for the long-term that would help protect America against economic 
instabilities resulting from fuel price fluctuations or supply 
disruptions. Most of the key technical requirements to make EGS 
economically viable over a wide area of the country are in effect. 
Remaining goals are easily within reach to provide performance 
verification and demonstrate the repeatability of EGS technology at a 
commercial scale within a 10- to 15-year period nationwide.
    In spite of its enormous potential, the geothermal option for the 
United States has been largely ignored. In the short-term, R&D funding 
levels and government policies and incentives have not favored growth 
of U.S. geothermal capacity from conventional, high-grade hydrothermal 
resources. Because of limited R&D support of EGS in the United States, 
field testing and support for applied geosciences and engineering 
research have been lacking for more than a decade. Because of this lack 
of support, EGS technology development and demonstration recently has 
advanced only outside the United States, with limited technology 
transfer, leading to the perception that insurmountable technical 
problems or limitations exist for EGS. However, in our detailed review 
of international field-testing data so far, the panel did not uncover 
any major barriers or limitations to the technology. In fact, we found 
that significant progress has been achieved in recent tests carried out 
at Soultz, France, under European Union (EU) sponsorship; and in 
Australia, under largely private sponsorship. For example, at Soultz, a 
connected reservoir-well system with an active volume of more than two 
km3 at depths from four to five km has been created and 
tested at fluid production rates within a factor of two to three of 
initial commercial goals. Such progress leads us to be optimistic about 
achieving commercial viability in the United States in the next phase 
of testing, if a national-scale program is supported properly. Specific 
findings include:

1. The amount of accessible geothermal energy that is stored in rock is 
immense and well distributed across the U.S. The fraction that can be 
captured and ultimately recovered will not be resource-limited; it will 
depend only on extending existing extractive technologies for 
conventional hydrothermal systems and for oil and gas recovery. The 
U.S. geothermal resource is contained in a continuum of grades ranging 
from today's hydrothermal, convective systems through high- and mid-
grade EGS resources (located primarily in the western United States) to 
the very large, conduction-dominated contributions in the deep basement 
and sedimentary rock formations throughout the country. By evaluating 
an extensive database of bottom-hole temperature and regional geologic 
data (rock types, stress levels, surface temperatures, etc.), we have 
estimated the total U.S. EGS resource base to be about 14 million 
exajoules (EJ). Figure 1 and Table 1 highlight the results of the 
resource assessment portion of the study. Figure 1 shows an average 
geothermal gradient map and temperature distributions at specific 
depths for the contiguous U.S. while Table 1 lists the resource bases 
for different categories of geothermal. Figure 2 compares the total 
resource to what we estimate might be technically recoverable. Using 
conservative assumptions regarding how heat would be mined from 
stimulated EGS reservoirs, we estimate the extractable portion to 
exceed 200,000 EJ or about 2,000 times the annual consumption of 
primary energy in the United States in 2005. With technology 
improvements, the economically extractable amount of useful energy 
could increase by a factor of 10 or more, thus making EGS sustainable 
for centuries.

2. Ongoing work on both hydrothermal and EGS resource development 
complement each other. Improvements to drilling and power conversion 
technologies, as well as better understanding of fractured rock 
structure and flow properties, benefit all geothermal energy 
development scenarios. Geothermal operators now routinely view their 
projects as heat mining and plan for managed injection to ensure long 
reservoir life. While stimulating geothermal wells in hydrothermal 
developments is now routine, understanding why some techniques work on 
some wells and not on others can come only from careful research.

3. EGS technology advances. EGS technology has advanced since its 
infancy in the 1970s at Fenton Hill. Field studies conducted worldwide 
for more than 30 years have shown that EGS is technically feasible in 
terms of producing net thermal energy by circulating water through 
stimulated regions of rock at depths ranging from three to five km. We 
can now stimulate large rock volumes (more than two km3 ), 
drill into these stimulated regions to establish connected reservoirs, 
generate connectivity in a controlled way if needed, circulate fluid 
without large pressure losses at near commercial rates, and generate 
power using the thermal energy produced at the surface from the created 
EGS system. Initial concerns regarding five key issues--flow short 
circuiting, a need for high injection pressures, water losses, 
geochemical impacts, and induced seismicity--appear to be either fully 
resolved or manageable with proper monitoring and operational changes.

4. Remaining EGS technology needs. At this point, the main constraint 
is creating sufficient connectivity within the injection and production 
well system in the stimulated region of the EGS reservoir to allow for 
high per-well production rates without reducing reservoir life by rapid 
cooling (see Figure 3). U.S. field demonstrations have been constrained 
by many external issues, which have limited further stimulation and 
development efforts and circulation testing times--and, as a result, 
risks and uncertainties have not been reduced to a point where private 
investments would completely support the commercial deployment of EGS 
in the United States. In Europe and Australia, where government policy 
creates a more favorable climate, the situation is different for EGS. 
There are now seven companies in Australia actively pursuing EGS 
projects, and two commercial projects in Europe.

5. Impact of Research, Development, and Demonstration (RD&D). Focus on 
critical research needs could greatly enhance the overall 
competitiveness of geothermal in two ways. First, such research would 
lead to generally lower development costs for all grade systems, which 
would increase the attractiveness of EGS projects for private 
investment. Second, research could substantially lower power plant, 
drilling, and stimulation costs, thereby increasing accessibility to 
lower-grade EGS areas at depths of six km or more. In a manner similar 
to the technologies developed for oil and gas and mineral extraction, 
the investments made in research to develop extractive technology for 
EGS would follow a natural learning curve that lowers development costs 
and increases reserves along a continuum of geothermal resource grades.
    Examples of benefits that would result from research-driven 
improvements are presented in three areas:

          Drilling technology--Evolutionary improvements 
        building on conventional approaches to drilling such as more 
        robust drill bits, innovative casing methods, better cementing 
        techniques for high temperatures, improved sensors, and 
        electronics capable of operating at higher temperature in down-
        hole tools will lower production costs. In addition, 
        revolutionary improvements utilizing new methods of rock 
        penetration will also lower costs. These improvements will 
        enable access to deeper, hotter regions in high-grade 
        formations or to economically acceptable temperatures in lower-
        grade formations.

          Power conversion technology--Although commercial 
        technologies are in place for utilizing geothermal energy in 70 
        countries, further improvements to heat-transfer performance 
        for lower-temperature fluids, and to developing plant designs 
        for higher resource temperatures in the super-critical water 
        region will lead to measurable gains. For example, at super-
        critical temperatures about an order of magnitude (or more) 
        increase in both reservoir performance and heat-to-power 
        conversion efficiency would be possible over today's liquid-
        dominated hydrothermal systems.

          Reservoir technology--Increasing production flow 
        rates by targeting specific zones for stimulation and improving 
        down-hole lift systems for higher temperatures, and increasing 
        swept areas and volumes to improve heat-removal efficiencies in 
        fractured rock systems, will lead to immediate cost reductions 
        by increasing output per well and extending reservoir 
        lifetimes. For the longer-term, using CO2 as a 
        reservoir heat-transfer fluid for EGS could lead to improved 
        reservoir performance as a result of its low viscosity and high 
        density at super-critical conditions. In addition, using 
        CO2 in EGS may provide an alternative means to 
        sequester large amounts of carbon in stable formations.

6. EGS systems are versatile, inherently modular, and scalable. 
Individual power plants ranging from one to 50 MWe in capacity are 
possible for distributed applications and can be combined--leading to 
large ``power parks,'' capable of providing thousands of MWe of 
continuous, base-load capacity. Of course, for most direct-heating and 
heat pump applications, effective use of shallow geothermal energy has 
been demonstrated at a scale of a few kilowatts-thermal (kWt) for 
individual buildings or homes and should be continued to be deployed 
aggressively when possible. For these particular applications, 
stimulating deeper reservoirs using EGS technology is not necessary. 
Nonetheless, EGS also can be easily deployed in larger-scale district 
heating and combined heat and power (co-generation) applications to 
service both electric power and heating and cooling for buildings 
without a need for storage on-site. For other renewable options such as 
wind, hydropower, and solar PV, such co-generation applications are not 
possible.

7. A short-term ``win-win'' opportunity. Using co-produced hot water, 
available in large quantities at temperatures up to 100+C or 
more from existing oil and gas operations, makes it possible to 
generate up to 11,000 MWe of new generating capacity with standard 
binary-cycle technology, and to increase hydrocarbon production by 
partially offsetting parasitic losses consumed during production.

8. The long-term goal for EGS is tractable and affordable. Estimated 
supply curves for EGS shown in Figure 4 indicate that a large increase 
in geothermal generating capacity is possible by 2050 if investments 
are made now. A cumulative capacity of more than 100,000 MWe from EGS 
can be achieved in the United States within 50 years with a modest, 
multi-year federal investment for RD&D in several field projects in the 
United States. Because the field-demonstration program involves staged 
developments at different sites, committed support for an extended 
period is needed to demonstrate the viability, robustness, and 
reproducibility of methods for stimulating viable, commercial-sized EGS 
reservoirs at several locations. Based on the economic analysis we 
conducted as part of our study, a $300 million to $400 million 
investment over 15 years will be needed to make early-generation EGS 
power plant installations competitive in evolving U.S. electricity 
supply markets.
    These funds compensate for the higher capital and financing costs 
expected for early-generation EGS plants, which would be expected as a 
result of somewhat higher field development (drilling and stimulation) 
costs per unit of power initially produced. Higher generating costs, in 
turn, lead to higher perceived financial risk for investors with 
corresponding higher-debt interest rates and equity rates of return. In 
effect, the federal investment can be viewed as equivalent to an 
``absorbed cost'' of deployment. In addition, comparable investments in 
R&D will also be needed to develop technology improvements to lower 
costs for future deployment of EGS plants.
    To a great extent, energy markets and government policies will 
influence the private sector's interest in developing EGS technology. 
In today's economic climate, there is reluctance for private industry 
to invest funds without strong guarantees. Thus, initially, it is 
likely that government will have to fully support EGS fieldwork and 
supporting R&D. Later, as field sites are established and proven, the 
private sector will assume a greater role in co-funding projects--
especially with government incentives accelerating the transition to 
independently financed EGS projects in the private sector. Our analysis 
indicates that, after a few EGS plants at several sites are built and 
operating, the technology will improve to a point where development 
costs and risks would diminish significantly, allowing the levelized 
cost of producing EGS electricity in the United States to be at or 
below market prices.
    Given these issues and growing concerns over long-term energy 
security, the Federal Government will need to provide funds directly or 
introduce other incentives in support of EGS as a long-term ``public 
good,'' similar to early federal investments in large hydropower dam 
projects and nuclear power reactors.

9. Geothermal energy complements other renewables such as wind, solar 
and biomass operating in their appropriate domains. Geothermal energy 
provides continuous base-load power with minimal visual and other 
environmental impacts. Geothermal systems have a small footprint and 
virtually no emissions, including no carbon dioxide. Geothermal energy 
has significant base-load potential, requires no storage, and, thus, it 
complements other renewables--solar (CSP and PV), wind, hydropower--in 
a lower-carbon energy future. In the shorter-term, having a significant 
portion of our baseload supplied by geothermal sources would provide a 
buffer against the instabilities of gas price fluctuations and supply 
disruptions, as well as nuclear plant retirements. Estimates of the 
carbon emission reductions possible for different levels of EGS 
capacity are shown in Figure 5.

Recommendations for re-energizing the U.S. geothermal program: Based on 
growing markets in the United States for clean, base-load capacity, the 
panel believes that with a combined public/private investment of about 
$800 million to $1 billion over a 15-year period, EGS technology could 
be deployed commercially on a timescale that would produce more than 
100,000 MWe or 100 GWe of new capacity by 2050. This amount is 
approximately equivalent to the total R&D investment made in the past 
30 years to EGS internationally, which is still less than the cost of a 
single, new-generation, clean-coal power plant. Making such an 
investment now is appropriate and prudent, given the enormous potential 
of EGS and the technical progress that has been achieved so far in the 
field. Having EGS as an option will strengthen America's energy 
security for the long-term in a manner that complements other 
renewables, clean fossil, and next-generation nuclear.
    Because prototype commercial-scale EGS will take a few years to 
develop and field-test, the time for action is now. Supporting the EGS 
program now will move us along the learning curve to a point where the 
design and engineering of well-connected EGS reservoir systems is 
technically reliable and reproducible.
    We believe that the benefit-to-cost ratio is more than sufficient 
to warrant such a modest investment in EGS technology. By enabling 
100,000 MWe of new base-load capacity, the payoff for EGS is large, 
especially in light of how much would have to be spent for deployment 
of conventional gas, nuclear, or coal-fired systems to meet replacement 
of retiring plants and capacity increases, as there are no other 
options with sufficient scale on the horizon.
    Specific recommendations include:

1. There should be a federal commitment to supporting EGS resource 
characterization and assessment. An aggressive, sufficiently supported, 
multi-year national program with USGS and DOE is needed along with 
other agency participation to further quantify and refine the EGS 
resource as extraction and conversion technologies improve.

2. High-grade EGS resources should be developed first as targets of 
opportunity on the margins of existing hydrothermal systems and in 
areas with sufficient natural recharge, or in oil fields with high-
temperature water and abundant data, followed by field efforts at sites 
with above-average temperature gradients. Representative sites in high-
grade areas, where field development and demonstration costs would be 
lower, should be selected initially to prove that EGS technology will 
work at a commercial scale. These near-term targets of opportunity 
include EGS sites that are currently under consideration at Desert Peak 
(Nevada), and Coso and Clear Lake (both in California), as well as 
others that would demonstrate that reservoir-stimulation methods can 
work in other geologic settings, such as the deep, high-temperature 
sedimentary basins in Louisiana, Texas, and Oklahoma. Such efforts 
would provide essential reservoir stimulation and operational 
information and would provide working ``field laboratories'' to train 
the next generation of scientists and engineers who will be needed to 
develop and deploy EGS on a national scale.

3. In the first 15 years of the program, a number of sites in different 
regions of the country should be under development. Demonstration of 
the repeatability and universality of EGS technologies in different 
geologic environments is needed to reduce risk and uncertainties, 
resulting in lower development costs.

4. Like all new energy-supply technologies, for EGS to enter and 
compete in evolving U.S. electricity markets, positive policies at the 
state and federal levels will be required. These policies must be 
similar to those that oil and gas and other mineral-extraction 
operations have received in the past--including provisions for 
accelerated permitting and licensing, loan guarantees, depletion 
allowances, intangible drilling write-offs, and accelerated 
depreciations, as well as those policies associated with cleaner and 
renewable energies such as production tax credits, renewable credits 
and portfolio standards, etc. The success of this approach would 
parallel the development of the U.S. coal-bed methane industry.

5. Given the significant leveraging of supporting research that will 
occur, we recommend that the United States actively participate in 
ongoing international field projects such as the EU project at Soultz, 
France, and the Cooper Basin project in Australia.

6. A commitment should be made to continue to update economic analyses 
as EGS technology improves with field testing, and EGS should be 
included in the National Energy Modeling System (NEMS) portfolio of 
evolving energy options.

References

    The references listed below are part of those cited in the Synopsis 
and Executive Summary of The Future of Geothermal Energy, by Tester, 
J.W., B.J. Anderson, A.S. Batchelor, D.D. Blackwell, R. DiPippo, E. 
Drake, J. Garnish, B. Livesay, M.C. Moore, K. Nichols, S. Petty, M.N. 
Toksoz, R.W. Veatch, R. Baria, C. Augustine, E. Murphy, P. Negraru, and 
M. Richards, MIT report, Cambridge, MA (2006). A list of all the 
literature that was reviewed and evaluated is in the full report which 
is available at
http://geothermal.inel.gov/publications/
future-of-geothermal-energy.pdf

Armstead, H.C.H. and J.W. Tester. 1987. Heat Mining. E. and F.N. Spon, 
        London.

Blackwell, D.D. and M. Richards. 2004. Geothermal Map of North America. 
        Amer. Assoc. Petroleum Geologists, Tulsa, Oklahoma, 1 sheet, 
        scale 1:6,500,000.

Bodvarsson, G. and J.M. Hanson. 1977. ``Forced Geoheat Extraction from 
        Sheet-like Fluid Conductors.'' Proceedings of the Second NATO-
        CCMS Information Meeting on dry hot rock geothermal energy. Los 
        Alamos Scientific Laboratory report, LA-7021:85.

Energy Information Administration (EIA). 2006-2007. Annual Energy 
        Outlook and other EIA documents, U.S. Department of Energy 
        (DOE), web site http://www.eia.doe.gov/

McKenna, J., D. Blackwell, C. Moyes, and P.D. Patterson. 2005. 
        ``Geothermal electric power supply possible from Gulf Coast, 
        Mid-continent oil field waters.'' Oil & Gas Journal, Sept. 5, 
        pp. 34-40.

Sanyal, S.K. and S.J. Butler. 2005. ``An Analysis of Power Generation 
        Prospects From Enhanced Geothermal Systems.'' Geothermal 
        Resources Council Transactions, 29.

U.S. Geological Survey, Circulars 726 and 790, Washington, DC (1975, 
        1979).

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    Chairman Lampson. Thank you, Dr. Tester.
    Mr. Thomsen.

STATEMENT OF MR. PAUL A. THOMSEN, PUBLIC POLICY MANAGER, ORMAT 
                       TECHNOLOGIES, INC.

    Mr. Thomsen. Mr. Chairman, Members of the Committee, it is 
my honor to testify today on behalf of ORMAT Technologies, a 
leading producer of geothermal energy around the world and in 
the United States, and on behalf of the Geothermal Energy 
Association (GEA).
    ORMAT and the GEA applaud Representative McNerney for 
introducing H.R. 2304, which directs the Secretary of Energy to 
conduct a program of research, development, and demonstration 
of commercial applications to expand the use of geothermal 
energy production. This legislation is crucial in directing the 
Department of Energy to implement what we feel was the 
legislative intent of the 2005 Energy Policy Act that was never 
realized due to the immediate reduction and termination of the 
geothermal budget only months after the 2005 Energy Policy Act 
was enacted. This bill, if passed, will seed the basic 
research, provide cost sharing and disseminate the information 
necessary to quickly and efficiently move this country away 
from its dependence on foreign oil.
    I submit to you all that this bill is necessary to push the 
Administration in the direction of funding the research 
necessary to fully develop this country's homegrown, green, 
domestic geothermal energy supply. Geothermal energy currently 
provides this country with 2,800 megawatts of clean, renewable, 
domestic energy which generates on average 16 billion kilowatt-
hours of energy, or enough power to light up two million homes. 
But I would like to point out, however, that in 1979 the U.S. 
Geological Survey estimated a hydrothermal resource base in 
this country between 95,000 and 105,000 megawatts. In 2006, the 
Geothermal Task Force of the Western Governors Association 
identified 5,600 megawatts of geothermal power that could be 
developed with existing incentives. Today the GEA believes that 
74 new geothermal energy projects are under some form of 
development in the United States and can provide an additional 
2,500 megawatts of electrical power capacity. As this new 
capacity comes online, it will represent an investment of 
roughly $8 billion. It will create 10,000 new full-time jobs 
and stimulate over 40,000 person-years of construction and 
manufacturing employment across this country. However, if we 
add the additional 2,500 megawatts coming online to our current 
production, we see that we will produce approximately 5,300 
megawatts from a known hydrothermal resource base that was 
conservatively estimated at 150,000 megawatts in 1979. I ask 
you, is that the best we can do? Is 3.5 percent utilization of 
our clean, domestic, baseload resource acceptable to a country 
that imports 10 million barrels of oil a day and is 60 percent 
dependent on net petroleum imports?
    H.R. 2304 recognizes that the answer is ``no.'' The time to 
take action is now. There are substantial needs for 
improvements in technology, resource information and efficiency 
for which federal research is vital. Join me, please, in 
supporting H.R. 2304 and capitalizing upon one of our greatest 
national assets, human ingenuity. H.R. 2304 will allow the men 
and women of our national laboratories, universities, state 
energy offices and private enterprise to develop cutting-edge 
geothermal projects and technology that will make use of this 
country's vast untapped geothermal potential.
    On behalf of ORMAT, I want to applaud this committee for 
its interest in a secure domestic baseload energy supply that 
is geothermal energy. We humbly realize that the decisions made 
by this committee impact our nation's energy security.
    This concludes my introductory comments and I will be happy 
to respond to any questions this committee might have.
    [The prepared statement of Mr. Thomsen follows:]
                 Prepared Statement of Paul A. Thomsen
    Mr. Chairman, Members of the Committee, it is my honor to testify 
today on behalf of not only ORMAT Technologies, but also on behalf of 
the Geothermal Energy Association whose testimony has been reviewed and 
approved by the entire Board of Directors and will be submitted along 
with my testimony into the record.
    By way of introduction ORMAT Technologies, is a New York Stock 
Exchange registered company (symbol ``ORA''). ORMAT technologies 
develops, owns, and operates geothermal and recovered energy facilities 
throughout the world. ORMAT has supplied 900 MWs of geothermal power 
plants in 21 countries. Here in the United States ORMAT owns and 
operates approximately 300 MWs of geothermal power plants in the states 
of California, Hawaii, Nevada, and we are pleased to be providing U.S. 
Geothermal Company with the technology needed to bring Idaho's first 
geothermal power plant online.
    We applaud Rep. McNerney for introducing H.R. 2304 which would 
direct the Secretary of Energy to conduct a program of research, 
development, demonstration and commercial applications for geothermal 
energy. This legislation would authorize a program that will help 
develop the science and technology needed to utilize the vast untapped 
geothermal resources of our nation.
    ORMAT believes a vast potential exists that could help meet the 
country's growing electricity needs, spur economic growth and help 
reduce emissions of greenhouse gases. The Geothermal Task Force of the 
Western Governors Association's Clean and Diversified Energy Advisory 
Group identified 5,600 MW of geothermal power that could be developed 
with existing incentives, and another 13,000 MW that could be tapped 
with additional time, higher prices, or both. Of course, these 
estimates assume today's level of technology, which is a major variable 
that could change these results.
    H.R. 2304 would authorize and direct DOE to undertake a research 
program that would develop the tools and technology needed to find and 
successfully develop the hydrothermal resource base. Without the 
support of the Federal Government as proposed in H.R. 2304 it is our 
view that most of the hydrothermal resource base will not be developed 
under current conditions. H.R. 2304 would also direct the Department to 
take the steps towards developing full scale enhanced geothermal 
systems (EGS) technology. From ORMAT's experience every MW of clean, 
baseload, geothermal energy we bring on line represents a three million 
capital investment by our company.
    H.R. 2304 also would establish centers of geothermal technology 
transfer. Information is important to improve exploration, application 
of technology, and improved performance of geothermal development and 
production efforts. ORMAT feels that the proposal to establish such 
centers would be an important aid in efforts to tap our nation's 
geothermal resources.
    ORMAT recognizes that H.R. 2304 does list both co-production and 
geo-pressured resources as items to be addressed by the Secretary of 
Energy in a required report to Congress on advanced uses of geothermal 
energy. If additional provisions are not included in the bill, we would 
hope that the Department would take this opportunity to re-examine its 
views of these, and all geothermal technologies, to develop programs 
that would effectively tap this enormous, undeveloped domestic energy 
supply.
    ORMAT believes cost-sharing is an appropriate and necessary 
component of a near-market partnership between the government and a 
for-profit entity. For an example of what can come from this type of 
collaboration I turn to the fact that ORMAT has signed a cost-shared 
Cooperative Research and Development Agreement (CRADA) with DOE to 
validate the feasibility of a proven technology already used in 
geothermal and Recovered Energy Generation (REG).
    The project will be conducted at the DOE Rocky Mountain Oil Test 
Center (RMOTC), near Casper, Wyoming, and will use an ORMAT Organic 
Rankine Cycle (ORC) power generation system to produce commercial 
electricity. ORMAT will supply the ORC power unit at its own expense 
while the DOE will install and operate the facility for a 12-month 
period. ORMAT and the DOE will share the total cost of the test and the 
study, with ORMAT bearing approximately two thirds of the less than $1M 
total investment.
    Presently there are two large unutilized sources of hot water at 
the RMOTC Naval Petroleum Reserve No. 3, which produces water in excess 
of 190 degrees Fahrenheit and at flow rates sufficient for generation 
of approximately 200 kW. This project will consist of the installation, 
testing and evaluation of a binary geothermal power unit in the field 
near these hot water sources. The ORC power unit will be interconnected 
into the field electrical system and the energy produced will be used 
by RMOTC and monitored for reliability quality.
    The information gathered from this project may have implications to 
the some 8,000 similar type wells have been identified in Texas, by 
Professor Richard Erdlac of the University of Texas of the Permian 
Basin, and the U.S. DOE Geothermal Research Project Office. Lyle 
Johnson senior engineer at the RMOTC stated ``The introduction of 
geothermal energy production in the oil field will increase the life of 
the fields and bridge the gap from fossil energy to renewable energy.'' 
Why are we zeroing out a research budget that provides such potential 
for this country.
    ORMAT believes that the full geothermal potential of the western 
United States can be brought online in the near-term with the 
assistance of legislation as proposed by Rep. McNerney.
    On behalf of ORMAT, I want to applaud this committee for its 
interest in the secure domestic baseload energy supply that is 
geothermal energy. We humbly realize that the decisions made by this 
committee impact our nation's energy security. This concludes my 
prepared comments I am happy to respond to any questions the Committee 
might have.
             Statement of the Geothermal Energy Association
    Mr. Chairman and Members of the Subcommittee, we applaud the 
Subcommittee for holding this hearing entitled ``Developing Untapped 
Potential: Geothermal and Ocean Power Technologies.'' We submit this 
statement on behalf of the Board of Directors of the Geothermal Energy 
Association.
    While only a small fraction of the geothermal resource base is 
utilized today, geothermal energy provides significant energy for our 
nation. The United States is the world's largest producer of geothermal 
electricity. The 2,800 MW existing power capacity generates an average 
of 16 billion kilowatt hours of energy per year.
    According to a GEA survey released last week, seventy-four new 
geothermal energy projects are under development in the U.S. that will 
provide an additional 2,900 megawatts of electric power capacity. This 
new capacity will represent an investment of roughly $6 billion, create 
10,000 new full-time jobs, and stimulate over 40,000 person-years of 
construction and manufacturing employment across the Nation.
    While this new development is impressive, much more potential 
exists that could help meet the country's growing electricity needs, 
spur economic growth, and help reduce emissions of greenhouse gases. 
The Geothermal Task Force of the Western Governors' Association's Clean 
and Diversified Energy Advisory Group identified 5,600 MW of geothermal 
power that could be developed with existing incentives, and another 
13,000 MW that could be tapped with additional time, higher prices, or 
both. Of course, these estimates assume today's level of technology, 
which is a major variable that could change these results.
    Yet, even if these resources were developed, they would represent 
only a fraction of the hydrothermal resource base. The U.S. Geological 
Survey (USGS), in its Circular 790, estimates a hydrothermal resource 
base of between 95,000 and 150,000 MW, of which 25,000 are known 
resources. Most of the resources identified in the WGA study were known 
resources in 1979 when the USGS completed its report. In 1979 we lacked 
the technology to find and characterize most of the hydrothermal 
resource base, and unfortunately today we still lack that technical 
capability.
    In addition to significant electric power generation, direct uses 
of geothermal resources by businesses, farms, and communities have 
substantial additional potential for energy, economic, and 
environmental benefits. While geothermal resources have been used in 
communities and homes for decades--for example Boise, Idaho has been 
using geothermal resources for space heating for over 100 years--the 
extensive potential for direct use has been largely ignored and 
underutilized. Direct use resources span the entire country--from New 
York to Hawaii--and their expanded use could displace fossil fuels.
    Beyond the conventional hydrothermal resources powering our 
existing generating plants and providing process heat, new types of 
geothermal resources are emerging. Recent estimates indicate a 
substantial potential for geothermal production from hot water co-
produced in oil and gas fields, and there is renewed interest in geo-
pressured resources in Texas, Louisiana and the Gulf. These hold 
significant future energy potential. Finally, development of the 
techniques for engineering geothermal systems (EGS) holds the promise 
of expanding economic production from known geothermal systems and 
someday allowing production from EGS power systems virtually anywhere 
in the U.S.
    The benefits of expanding new geothermal production will be 
substantial. Geothermal power can be a major contributor to the power 
infrastructure and economic well-being of the United States. Geothermal 
power is a reliable, 24/7 baseload energy source that typically 
operates 90 to 98 percent of the time. Insulated from fuel market price 
volatility, geothermal power supports energy price stability and boosts 
energy security because it is a domestic resource. Geothermal power can 
help diversify the Nation's energy supply and is a clean, renewable 
energy source.
    The surge in geothermal development portrayed in GEA's new survey 
has been stimulated by the federal production tax credit (PTC), which 
was first extended to geothermal power facilities in 2005. The PTC 
provides the incentive needed to encourage investment in new projects, 
and state renewable portfolio standards (RPSs) ensure that there is a 
market for geothermal power. In the near-term, both are essential to 
sustain the momentum we are witnessing in new project development, but 
to develop the full potential of the resource advances in technology 
will be essential.
    There are substantial needs for improvements in technology, 
resource information, and efficiencies for which federal research is 
vital. The range of near-term needs is broad. Our knowledge of the 
geothermal resource base is limited and largely outdated. The 
technology available today to identify and characterize the resource is 
too unreliable to mitigate the high risk of development. Drilling in 
harsh geothermal environments is difficult and expensive. In locations 
where the resource cannot presently support commercial production, we 
need to be able to apply EGS techniques to achieve power generation at 
competitive prices.
    The geothermal industry supports a continued geothermal research 
program to address the near-term need to expand domestic energy 
production and the longer-term need to find the breakthroughs in 
technology that could revolutionize geothermal power production. This 
includes an ongoing R&D program focused on further expanding the 
hydrothermal resource base, developing the technology needed to make 
the EGS concept commercially viable, and taking advantage of the 
substantial deep thermal resources associated with the petroleum 
formations along the Gulf Coast. These programs are critical if we are 
to maintain our national status in cutting-edge geothermal technology, 
which is increasingly in jeopardy.
    The January 2006 report of the WGA Geothermal Task Force Report 
also supports the need for federal research efforts. The Task Force 
Report recommends: ``a strong, continuing geothermal research effort at 
the Department of Energy that addresses the full range of technical 
problems encountered in achieving full production from the identified 
and undiscovered resources in the West.'' The report also supports ``. 
. .continuation of advanced technology programs and outreach through 
GeoPowering the West.'' In addition, the report urges DOE to expand its 
program in critical areas ``particularly the identification and 
development of new resources'' and ``support for exploration and 
exploratory drilling.'' Finally, it asks the Department of Energy (DOE) 
to ``examine whether existing federal loan guarantee authority in law 
can be used to supplement these activities to reduce risk and encourage 
development of new resource areas.'' (http://www.westgov.org/wga/
initiatives/cdeac/geothermal.htm)
    We applaud Rep. McNerney for introducing H.R. 2304 which would 
direct the Secretary of Energy to conduct a program of research, 
development, demonstration and commercial applications for geothermal 
energy. This legislation would authorize a program that will help 
develop the science and technology needed to utilize the vast untapped 
geothermal resources of our nation.
    One of the best overviews of that potential is presented in the 
National Renewable Energy Laboratory's (NREL) Technical Report 
published in November 2006, Geothermal--The Energy Under Our Feet. The 
report examines what it terms the ``enormous potential of geothermal 
resources.'' It estimates what the full range of geothermal energy 
technologies could contribute by 2015, 2025 and 2050. (Geothermal--The 
Energy Under Our Feet is available at http://www.nrel.gov/docs/
fy07osti/40665.pdf) The following chart shows NREL's estimate of this 
potential:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The NREL report points to at least three areas where geothermal 
resources might contribute 100,000 MW of more to domestic energy 
supplies: first, the hydrothermal resource base; second, oil and gas 
co-production and geo-pressured resources; and, third, development of 
``deep geothermal'' (or EGS) production. H.R. 2304 defines specific 
research efforts to address at least two of these three energy 
opportunities.
    H.R. 2304 would authorize and direct DOE to undertake a research 
program that would develop the tools and technology needed to find and 
successfully develop the hydrothermal resource base. While tax 
incentives and State support may be able to double or triple current 
geothermal production, that would still be far short of tapping the 
Nation's hydrothermal potential. Developing 10,000 or even 20,000 MW of 
geothermal energy would be only a fraction of the estimated 
hydrothermal resource. But, without the support of the Federal 
Government as proposed in H.R. 2304, it is our view that most of the 
hydrothermal resource base will not be developed under current 
conditions.
    H.R. 2304 would also direct the Department to take the steps 
towards developing full scale EGS technology. A Massachusetts Institute 
of Technology (MIT)-led study released in January 2007 found ``that 
mining the huge amounts of heat that reside as stored thermal energy in 
the Earth's hard rock crust could supply a substantial portion of the 
electricity the United States will need in the future, probably at 
competitive prices and with minimal environmental impact.'' (An 
Executive Summary and the full MIT report, The Future of Geothermal 
Energy, are available at: http://www1.eere.energy.gov/geothermal/
future-geothermal.html).
    We understand that Professor Jeff Tester of MIT will testify before 
the Subcommittee, so we will defer a lengthy discussion of EGS 
technology and its potential. However, GEA supports development of EGS 
technology as a critical element of DOE's long-term research strategy.
    H.R. 2304 also would establish centers of geothermal technology 
transfer. Access to information can help improve exploration, 
application of technology, and improved performance of geothermal 
development and production efforts. The proposal to establish such 
centers would be an important aid in efforts to tap our nation's 
geothermal resources.
    The one major area of potential identified by NREL that H.R. 2304 
does not address with specific authorizing direction is oil and gas 
field co-production and geo-pressured resources. These resources hold 
substantial energy potential, but serious uncertainties that keep the 
market from moving forward must be addressed by federal efforts.
    For co-production, there are uncertainties about the resource 
information as well as the best fit for power technology. Until there 
is better and more detailed information about the resource potential, 
and companies have experience using small scale power technology in 
these applications, it is unlikely that there will be rapid 
commercialization of geothermal technology in oil field settings. Near-
term cost-shared demonstrations at several sites would be the best 
approach to resolving these issues and accelerating development of the 
energy potential from co-production. We suggest the Committee consider 
adding this directly to the legislation rather than waiting for the 
report from the Secretary of Energy required by Section 10.
    The potential of geo-pressured resources is impressive. They 
contain enormous quantities of hot water and gas. The recoverable gas 
from geo-pressured reservoirs has been estimated to be several hundred 
years supply for the entire Nation. Geo-pressured resources are to 
natural gas what oil shale resources are to liquid fuels--a potentially 
enormous source of energy. Unfortunately, the one demonstration 
conducted by DOE twenty years ago was terminated after a short period 
of operation, it did not seek to optimize for gas production, and it 
was based upon what is now somewhat dated technology. Today, we have 
begun to import greater quantities of natural gas, and projections show 
the U.S. becoming much more dependent upon natural gas imports in the 
future.
    Developing the technology to produce gas from geo-pressured 
geothermal resources could curtail our growing dependence on imports, 
but the cost and extreme risk of geo-pressured development will not be 
undertaken by industry alone. It requires a partnership with the 
government. Given the enormous resource potential, such an effort is 
justified and in the national interest.
    We recognize that H.R. 2304 lists both co-production and geo-
pressured resources as items to be addressed by the Secretary of Energy 
in a required report to Congress on advanced uses of geothermal energy. 
If additional provisions are not included in the bill, we hope the 
Department will take this opportunity to re-examine its views of these, 
and all geothermal technologies, to develop programs that would 
effectively tap this enormous, undeveloped domestic energy supply.
    The cost-sharing requirements of H.R. 2304 raise a number of 
questions. While in principle, GEA believes cost-sharing is an 
appropriate and necessary component of a near-market partnership 
between the government and a for-profit entity, it's not clear that the 
provisions of the legislation recognize appropriately the role of 
contractors and researchers who lack the resources and profit-potential 
motivation to enter into a significant cost-share. In addition, we 
suggest that the Subcommittee consider making all cost-share 
requirements ranges rather than single proposed percentages and 
including in the measure some of the basic criteria DOE should use to 
determine when a cost share is appropriate and at what percentage. This 
might provide better results while maintaining the principle which we 
believe the legislation seeks to affirm.
    Finally, we encourage the Committee to examine whether the update 
of the national geothermal resource assessment being conducted by the 
U.S. Geologic Survey will be adequate and complete. This will be the 
first assessment in over 25 years, and it is critical to the future 
progress in geothermal energy production. Policy-makers at all levels 
need accurate and reliable information about the potential contribution 
of geothermal resources. To be adequate and complete, the USGS 
assessment should examine the full range of geothermal resources 
identified in the NREL Report and include field verification as 
necessary.
    We have attached to this statement a letter from Leland Roy Mink, 
the former Manager of the DOE Geothermal Research Program, who 
expresses his support for the legislation and the Subcommittee's 
initiative.
    We thank the Subcommittee for considering our views, and encourage 
all Members of the Subcommittee to support H.R. 2304. This legislation 
is urgently needed to ensure that federal energy programs work to tap 
the tremendous potential of our nation's geothermal energy resources.

Attachment

Honorable Congressman Lampson, Chairman
Subcommittee on Energy and Environment
Committee on Science and Technology
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman,

    I wish to express strong endorsement for draft legislation the 
Subcommittee is considering for support of DOE Geothermal Research and 
Development. This legislation is critical for continued development of 
the tremendous geothermal energy potential the U.S. possesses and the 
leadership role the U.S. has established in geothermal technology.
    I am writing because of deep concern about the DOE decision to 
terminate the geothermal technology program. I have been active in 
geothermal and other energy development throughout the U.S. and 
internationally for over 35 years and recently retired as the manager 
of the U.S. DOE Geothermal Technologies Program. I feel it is 
definitely not in the best interest of the Nation to terminate a 
viable, domestic, renewable, non-polluting energy resource at this 
time. You, as the Subcommittee, have an opportunity now to make a 
significant contribution to the U.S. energy portfolio.
    Geothermal energy could play a significant role in addressing the 
U.S. need for a clean renewable energy source. Historically electrical 
generation from geothermal has led both wind and solar and supplied 
significant power to several Western states. Geothermal heat pumps for 
heating and cooling of homes, schools and businesses has sizable 
potential throughout the U.S. Recent studies by the Massachusetts 
Institute of Technology and the National Renewable Energy Laboratory 
show significant electrical potential not only in the Western states, 
but indicate a strong potential throughout the U.S.
    The DOE Geothermal Program support has resulted in significant 
technology breakthrough in areas of exploration, drilling, energy 
conversion and Enhanced Geothermal Systems (EGS), which has resulted in 
the U.S. being a leader in development of geothermal energy. Cost 
shared programs with industry have stimulated development of this 
important and valuable domestic resource and without this support, 
industry will not be able to maintain its technological lead. DOE 
support to our national laboratories and universities has resulted in 
the advances in technology and the training of scientists and 
professionals for the future. Support to State energy office also has 
resulted in effective technology transfer to stimulate and expedite 
geothermal development.
    In conclusion, the Subcommittee is at a critical stage in deciding 
the Nation's energy future and I feel geothermal energy can play an 
important role in addressing the needs of the U.S. energy future. We 
need all of the domestic possibilities for the U.S. and geothermal is 
one of the only baseload, non-polluting, renewable energy sources we 
have available to us. It could play a significant role in reducing our 
dependence on fossil fuel and the addressing the issue of climate 
change as a result of CO2 emissions.
    I urge you to support legislation to direct DOE to conduct the best 
possible geothermal research program to tap the potential of this 
resource. Our nation needs it. It would also be a tragedy to see the 
U.S. lose its status as a world leader in geothermal technology 
development and the resultant decline in the U.S. Geothermal industry.

Respectfully submitted,

Leland Roy Mink
Past Geothermal Program Manager
22088 S Cave Bay
Worley, Idaho 83876
    Chairman Lampson. Thank you very much, Mr. Thomsen.
    Dr. von Jouanne.

   STATEMENT OF DR. ANNETTE VON JOUANNE, PROFESSOR OF POWER 
    ELECTRONICS AND ENERGY SYSTEMS, OREGON STATE UNIVERSITY

    Dr. von Jouanne. Thank you. I have a PowerPoint 
presentation. It turns out they don't have it set up so no 
problem.
    Mr. Chairman, Members of the Committee and in particular 
Congresswoman Hooley, thank you very much for this opportunity 
to present to you on wave energy opportunities and 
developments, and we are strongly in support of this marine 
bill which we think is imperative for the United States to lead 
the world in wave energy research, development and production.
    So first off, I would like to state that I am Annette von 
Jouanne and I am a Professor of Power Electronics and Energy 
Systems. I have been leading our wave energy program at Oregon 
State University for the past several years and we have a 
terrific group of multi-disciplinary faculty including an 
excellent group of multi-disciplinary undergraduate and 
graduate students who are graduating with a keen understanding 
of the importance of renewables for our country, and with a 
real enthusiasm to make a strong impact on our energy future. 
At Oregon State, we have strong outreach efforts to the ocean 
community, which are coordinated by Oregon Sea Grant. We have 
been moving forward in four thrust areas: number one, to 
advance research on wave energy devices where we are designing 
devices to respond directly to the heaving motion of the ocean 
waves and convert that motion into electrical energy. We are 
proposing a national wave energy research and demonstration 
center and we are encouraging Federal Government investment 
dollars to further this research.
    Wave energy is really in the preliminary stages of 
development with several topologies emerging and no clearly 
superior engineering solutions yet established, and so research 
and development dollars are essential for the Federal 
Government to really zero in on these optimum topologies, and 
you will see those topologies in the PowerPoint presentation 
which I had submitted to you. We also at Oregon State have been 
promoting the Oregon coast as an optimal place for commercial 
wave parks. Off the West Coast of the United States we now have 
12 Federal Energy Regulatory Commission preliminary 
applications for wave parks and of those 12, seven are off the 
Oregon coast. Also, we are looking to examine the environmental 
and ecological impacts and we have a workshop planned on the 
Oregon coast this summer.
    So the reason for all the excitement in wave energy is the 
tremendous opportunities that we see when compared to other 
renewables. When you look at the amount of energy that is 
available in the world's oceans, it is estimated that if just 
0.2 percent of that unharnessed energy could be tapped, we 
could power the entire world, and of those forms of ocean 
energy, wave energy has been identified to have significant 
potential and significant advantages regarding energy density, 
availability, and predictability, and I am happy to answer 
further questions on those details during the question session.
    So at Oregon State University, we have strategic facilities 
to advance this research. Our energy systems lab, also a wave 
research lab, has North America's largest system of wave basins 
and we have plans for our first ocean testing this summer. 
Again I want to emphasize that these technologies are in the 
preliminary stages and federal dollars are really necessary in 
order to zero in on optimal topologies to help the U.S. 
Government really lead the world in research and production. To 
give you an idea, we have done resource assessments off the 
Oregon coast, and we have found that during the winter months 
we see wave energy potentials in the range of 50 to 60 kilowatt 
per meter of crest length. Considering that an average coastal 
home uses about 1.3 kilowatts, there is substantial raw energy 
available in our waves.
    We have substantial collaboration in Oregon with our 
universities, with the industry, with the utilities, and we 
therefore would like to encourage a national wave energy 
research and demonstration center to be located in Oregon in 
order to advance the research and the technologies. We are very 
pleased that the State of Oregon has recognized the need for 
public dollar investment in wave energy and we encourage the 
Federal Government to invest in this emerging renewable 
technology so that wave energy can be a strong component of our 
country's renewable energy portfolio.
    Thank you very much for your time and this opportunity to 
testify.
    [The prepared statement of Dr. von Jouanne follows:]
               Prepared Statement of Annette von Jouanne

I.  Introduction to Wave Energy Opportunities and Developments

    Mr. Chairman, Members of the Committee, and Congresswoman Hooley in 
particular, thank you for inviting me to testify today before this 
Subcommittee. I am Annette von Jouanne and I am a Professor of Power 
Electronics and Energy Systems at Oregon State University. I am honored 
to testify before you today on the subject of Ocean Wave Energy.
    Ocean energy exists in the forms of wave, tidal, marine currents 
(from tidal flow streams), thermal (temperature gradient) and salinity. 
Among these forms, significant opportunities and benefits have been 
identified in the area of wave energy extraction, which will be the 
focus of this testimony.
    When we discuss Wave Energy, we are talking about harnessing the 
linear motion of the ocean waves, and converting that motion into 
electrical energy. Waves have several advantages over other forms of 
renewable energy, in that the waves are more available (seasonal, but 
more constant) and more predictable with better demand matching. Wave 
energy also offers higher energy densities, enabling devices to extract 
more power from a smaller volume at consequent lower costs and reduced 
visual impact.
    Oregon State University (OSU) has a multi-disciplinary Wave Energy 
Team pursuing developments in four thrust areas: 1) researching novel 
direct-drive wave energy generators (we are on our fifth and sixth 
prototypes, with further wave lab and ocean testing planned this 
summer), 2) developing an action plan for a National Wave Energy 
Research and Demonstration Center in Oregon, 3) working closely with 
the Oregon Department of Energy (ODOE) and a variety of stakeholders to 
promote Oregon as the optimal location for the Nation's first 
commercial wave parks, and 4) examining the biological and ecosystem 
effects of wave energy systems.

II.  Current Ocean Wave Energy Research, Development and Investment 
                    Activities

    OSU's direct-drive wave energy buoy research focuses on a 
simplification of processes, i.e., replacing systems employing 
intermediate hydraulics or pneumatics with direct-drive approaches to 
allow generators to respond directly to the movement of the ocean by 
employing magnetic fields for contact-less mechanical energy 
transmission, and power electronics for efficient electrical energy 
extraction. The term ``direct'' drive describes the direct coupling of 
the buoy's velocity and force to the generator without the use of 
hydraulic fluid or air.
    Leading Wave Energy companies, such as Ocean Power Technologies 
(OPT), Finavera Renewables, Ocean Power Delivery (OPD) and Oceanlinx, 
are using hydraulic and pneumatic technologies, because it makes sense 
for a company trying to accelerate their time to a commercial market to 
use more mature technologies. In the university environment, as we are 
working with students on advanced degrees, we endeavor to explore 
innovative and advanced technologies.
    Wave energy developments in the United States are moving forward 
rapidly, with twelve (12) preliminary permits filed with FERC (Federal 
Energy Regulatory Commission) for off the West Coast (see Attachment 
1). The first commercial wave energy device deployments are planned by 
the summer of 2008. Remaining obstacles include issues of 
survivability, reliability, maintainability, cost reduction, better 
understanding of potential environmental/marine impacts and synergistic 
ocean community interaction with wave parks. OSU has made great efforts 
over the past nine (9) years to develop a leading Wave Energy program, 
including building strong support at the state and federal levels, in 
addition to building essential collaborations with industries, 
utilities and the communities along with outreach to the ocean 
community of fishermen and crabbers, etc.

III.  The Federal Role in Ocean Wave Energy Research and Development

    Currently there has been very little investment by the Federal 
Government compared to the rest of the world, and thus as occurred 
similarly in the wind industry, the United States is lagging behind 
other countries in the development of wave energy technologies. For the 
United States to become a wave energy leader in what is projected to 
become a rapidly developing new set of industries, the Federal 
Government needs to significantly increase their investment in wave 
energy research and development.
    It has been reported that since 1999, the British government has 
committed more than 25 million, or approximately $46.7 
million, to research and development and 50 million to 
commercialize that research, and additional money to bring the energy 
into the electrical grid. In August of 2004, a 5.5 million 
($10.72 million) European Marine Energy Center opened in Scotland. To 
date, the United State has no comparable facility.
    Ideally, we believe the U.S. Department of Energy, the Office of 
Naval Research, and the National Oceanographic and Atmospheric 
Administration (NOAA) should all begin investing in Ocean Wave Energy 
research. However, we believe it is imperative for the U.S. Department 
of Energy to become the leader in this field and to begin making a 
robust investment in Wave Energy research. As DOE's National Renewable 
Energy Laboratory (NREL) is charged with leading the Nation in 
renewable energy and energy efficiency research and development, it is 
our belief that NREL should establish a unit dedicated to ocean wave 
energy research.
    Along these lines, the combination of key facilities at OSU, 
ongoing successful wave energy research and collaboration, and a 
tremendous wave climate off the Oregon coast has led to the proposal of 
a National Wave Energy Research and Development Center. In order to 
ensure U.S. leadership in what will become a multi-million dollar 
industry worldwide (multi-``billion'' dollar as the wind industry is 
tracked), the Center could advance wave energy developments through a 
number of initiatives including: explore and compare existing ocean 
energy extraction technologies, research and develop advanced systems, 
investigate efficient and reliable integration with the utility grid 
and intermittency issues, advancement of wave forecasting technologies, 
conduct experimental and numerical modeling for device and wave park 
array optimization, develop a framework for understanding and 
evaluating potential environmental and ecosystem impacts of wave 
energy, establish protocols for how the ocean community best interacts 
with wave energy devices/parks, develop wave energy power measurement 
standards, determine wave energy device identification/navigation 
standards, etc.
    The Oregon Coast has an excellent Wave Energy climate, and combined 
with our strategic facilities at Oregon State University, Oregon is in 
an excellent position to advance Wave Energy research, development and 
production. For example, at OSU, we have the highest power Energy 
Systems lab in any university in the Nation, where we have conducted 
significant work in renewables, and where we can fully regenerate back 
on to the grid to comprehensively research and test renewable energy 
technologies. In addition, at OSU we have the O.H. Hinsdale Wave 
Research Lab, which has the largest system of wave basins in North 
America. At the coast in Newport, Oregon, we have the OSU Hatfield 
Marine Science Center, where land-based facilities for a National Wave 
Energy Research and Demonstration Center could be integrated. The OSU 
Hatfield Marine Science Center campus is already home to satellite labs 
and offices for a number of federal agencies--the U.S. Fish and 
Wildlife Service, NOAA, EPA, and USDA-ARS.
    To properly explore these Wave Energy opportunities, we have been 
working closely with Oregon Department of Energy (ODOE) and about 40 
other agencies, including the Oregon fishing and crabbing industries, 
to enable the Nation's first Commercial Wave Parks to be developed off 
the Oregon Coast.

IV.  Other Issues and Conclusion

    As mentioned above, a significant barrier to wave energy 
development is the above-market cost of the electricity. Due to the 
early stage of this industry, the current cost of electricity 
production from waves is estimated to be several times the market 
price, similar to wind when it was emerging 20 years ago. To ensure the 
success of wave energy as a promising renewable contribution to the 
Nation's energy portfolio, the production incentive is very important 
to offset the above-market costs of producing `wave' generated 
electricity. At the federal level, it is critical that wave energy 
receive a similar incentive mechanism to the production tax credits 
that the wind industry receives.
    As the Nation tries to meet its renewable energy goals, ocean wave 
energy must be a part of the portfolio. Given that approximately fifty 
percent of the U.S. population lives within fifty miles of the U.S. 
coastline, we must invest in making ocean energy viable--this cannot be 
done without the robust support of the Federal Government's research 
agencies.
    In the State of Oregon we are very excited to be a leader in wave 
energy development. We have the wave resource, the expertise through 
collaboration including tremendous industry, utility and community 
support, and the utility infrastructure along the coast to deliver this 
clean, renewable power into the grid.
    Thank you for the opportunity to testify before this esteemed 
Subcommittee.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                   Biography for Annette von Jouanne
    Dr. Annette von Jouanne has been a Professor in the School of 
Electrical Engineering and Computer Science at Oregon State University 
since 1995.
    She received her Ph.D. degree in Electrical Engineering from Texas 
A&M University where she also worked with Toshiba International 
Industrial Division. Professor von Jouanne specializes in Energy 
Systems, including power electronics and power systems. With a passion 
for renewables, she is leading the Wave Energy program at OSU. She is 
also the Director of the Motor Systems Resource Facility, the highest 
power university-based Energy Systems Lab in the Nation. Dr. von 
Jouanne has received national recognition for her research and 
teaching, and she is a Registered Professional Engineer as well as a 
National Academy of Engineering ``Celebrated Woman Engineer.''

    Chairman Lampson. Thank you very much.
    Mr. O'Neill.

   STATEMENT OF MR. SEAN O'NEILL, PRESIDENT, OCEAN RENEWABLE 
                        ENERGY COALITION

    Mr. O'Neill. Thank you, Mr. Chairman. I thank you and your 
colleagues for devoting your time and resources to the 
important topic of Congresswoman Hooley's Marine and--is my mic 
not working? I can normally fill up a room with my voice. Thank 
you. How is that? I think I was at the point of Congresswoman 
Hooley's Marine and Hydrokinetic Energy Research and 
Development Act.
    The Ocean Renewable Energy Coalition is the national trade 
association for marine and hydrokinetic renewables including 
wave, tidal, ocean thermal and offshore wind. We are made up of 
32 members including investment firms, investor-owned 
utilities, publicly owned utilities, consulting and law firms 
in countries including the United States, Canada, Scotland, 
Denmark and Ireland. The Electric Power Research Institute 
recently estimated the wave and tidal energy resource potential 
that could be commercially harnessed, not the total potential, 
in the United States as about 400 million megawatt-hours per 
year. That is about 10 percent of the national energy supply in 
2004.
    Projects underway in the United States include Finavera 
Renewables' Makah Bay project in Washington State, Verdant 
Power's Roosevelt Island project with six units that are 
installed and operating in the East River of New York City. New 
Jersey-based Ocean Power Technologies has projects in Hawaii, 
New Jersey and Reedsport, Oregon, with clients including the 
U.S. Navy and the New Jersey Board of Public Utilities. 
Multiple permits for sites in Maine, California, Oregon, Alaska 
and Florida have been filed with the Federal Energy Regulatory 
Commission including companies like Ocean Renewable Power 
Company, Tacoma Power and Snohomish PUD in Washington State, 
Pacific Gas and Electric in California, and Long Island Power 
Authority in New York. Europe has already installed 587 
megawatts of offshore wind. Ocean Power Delivery of Scotland is 
presently developing the first commercial offshore wave farm 
off the coast of Portugal.
    We are also finding new technologies emerging. University 
of Michigan has developed technology using free-flowing water 
and what they call vortex-induced vibrations which is being 
further developed by the company Vortex Hydro Energy. Offshore 
biomass using kelp and seaweed is also being looked at.
    Dr. Robert Cohen, the former manager of Ocean System 
Division at DOE and member of the Ocean Energy Council, is in 
the audience today. He came out from Colorado, and I am 
confident that Dr. Cohen would agree when I say that 
encouraging innovation and supporting those technologies with 
commercial potential is vital to U.S. interests.
    Naturally, costs vary with the type of technology. The 
Minerals Management Service's Whitepaper on Offshore Wind 
states that, where once the cost of offshore wind was about 40 
cents a kilowatt-hour, over the past 20 years these costs have 
dropped to between four and six cents. For wave, costs have 
been estimated at nine to 16 cents a kilowatt-hour, far more 
favorable than the 40 cents a kilowatt-hour of the early 
offshore wind experience. For instream tidal, EPRI has 
predicted costs as low as six to nine cents per kilowatt-hour. 
Since the costs for all renewable resources is free from the 
fluctuating cost of fuel, the cost of energy to consumers from 
renewable sources functions like a fixed-rate mortgage as 
opposed to a variable-rate mortgage that resources that carry 
the burden of fuel cost have. In addition, non-technology costs 
are expected to drop as this industry matures. These include 
insurance and financing costs as well as much needed and 
anticipated regulatory and permitting reform.
    Yes, the United States has fallen a bit behind other 
countries, but we are on track to quickly regain a competitive 
position. Portugal offers nearly 32 cents a kilowatt-hour in a 
feed-in tariff. Compare this to 1.9 cents per kilowatt-hour 
that wind gets in the United States. Britain offers 25 percent 
of capital cost reimbursement for wave and tidal projects.
    We need to step up to the plate if we are going to compete. 
What the industry needs is more R&D funding and technology 
development including programs like the one at Oregon State 
University, resource assessment, environmental studies, 
incentives for private investment, reduced regulatory barriers. 
Development of a robust offshore renewables industry can do 
this. It can reduce our reliance on foreign oil and other 
carbon-emitting energy sources. It can reduce the demand for 
onshore land resources for power generation. We can revitalize 
shipyards, coastal industrial parks and shuttered naval bases; 
create jobs in coastal communities; allow the United States to 
export technology to other countries; provide low-cost power 
for niche and distributed uses like desalination plants, 
aquaculture, naval and military bases, powering stations for 
hybrid vehicles and for offshore oil and gas platforms. We 
could also provide a use for decommissioned oil platforms, 
using a rigs-to-renewables program. And last but not least, we 
could promote coastal planning that reflects the goals of 
biodiversity that maximize the best comprehensive use of 
resources and capitalizes on synergies between offshore 
industries. With the proper support, ocean renewable resources 
can become a robust part of a reliable, affordable, clean 
electric supply portfolio.
    Thank you.
    [The prepared statement of Mr. O'Neill follows:]
                   Prepared Statement of Sean O'Neill

Introduction

    Ocean Renewable Energy Coalition is the national trade association 
for marine and hydrokinetic renewable energy dedicated to promoting 
energy technologies from clean, renewable ocean resources. The 
coalition is working with industry leaders, academic scholars, and 
other interested NGO's to encourage ocean renewable technologies and 
raise awareness of their vast potential to help secure an affordable, 
reliable, environmentally friendly energy future.
    We seek a legislative and regulatory regime in the United States 
that will accelerate the development of ocean renewable technologies 
and their commercial deployment. While other countries have already 
deployed viable, operating, power generating projects using the 
emission-free power of ocean waves, currents, and tidal forces, the 
U.S. is only beginning to acknowledge the importance these 
technologies.
    Ocean energy can play a significant role in our nation's renewable 
energy portfolio. With the right support, the United States ocean 
energy industry can be competitive internationally. With the right 
encouragement, ocean renewable energy technologies can help us reduce 
our reliance on foreign oil--fossil fuels, in general--and provide 
clean energy alternatives to conventional power generating systems. And 
with the right public awareness, our coastline communities can use 
ocean renewables as a springboard for coastal planning that reflects 
the principles of marine biodiversity. Today, OREC will address the 
steps that we must take to realize the promise and potential of ocean 
renewables.
    Is the resource there? Yes, and the resource is located near highly 
populated areas on the coast, placing fewer demands on already taxed 
transmission infrastructure.
    Is the resource cost competitive? Not yet, but indications suggest 
a much shorter time to commercial viability than experienced by many 
other renewable technologies.
    Is the resource environmentally friendly? Preliminarily yes. We 
already know that ocean renewables present some of the most potentially 
environmentally benign energy technologies available today--no air 
emissions, no fuel costs or associated mining or drilling effects, no 
fuel transportation costs. We are still learning about the effects of 
siting ocean renewable projects, though initial studies are showing 
minimal impacts. A Draft Environmental Impact Statement prepared by 
Finavera Renewables for its one MW Makah Bay project found no 
significant impacts; Ocean Power Technologies has received a ``Finding 
of No Significant Impact'' or FONSI from the U.S. Department of the 
Navy for its project in Hawaii; and most recently, Verdant Power, Inc. 
has been monitoring fish behavior at its Roosevelt Island Tidal Energy 
(RITE) facility in New York City since December of 2006 with no 
observations of fish strikes on their turbines. Verdant Power's 
experience began with two underwater turbines being installed and 
monitored by more than $2 million of fish monitoring equipment 
including a Didson sonar device that allows scientists and engineers to 
observe fish as they interact with turbines in the river. They have 
since installed six (6) turbines and continued monitoring. There are 
twenty-seven (27) different species of fish including herring and 
striped bass in this section of the East River. The project is 
presently producing one Mw/hr/day and scientists are watching the fish 
swim around the turbines with no fish striking any of the equipment.
    As these are only early indications of how these technologies 
interact with the marine environment continued diligence is necessary 
to establish a thorough baseline of information.

Types of Technology

    Ocean energy refers to a range of technologies that utilize the 
oceans or ocean resources to generate electricity. Many ocean 
technologies are also adaptable to non-impoundment uses in other water 
bodies such as lakes or rivers. These technologies can be separated 
into three main categories:

Wave Energy Converters: These systems extract the power of ocean waves 
and convert it into electricity. Typically, these systems use either a 
water column or some type of surface or just-below-surface buoy to 
capture the wave power. In addition to oceans, some lakes may offer 
sufficient wave activity to support wave energy converter technology.

Tidal/Current: These systems capture the energy of ocean currents below 
the wave surface and convert them into electricity. Typically, these 
systems rely on underwater turbines, either horizontal or vertical, 
which rotate in either the ocean current or changing tide (either one 
way or bi-directionally), almost like an underwater windmill or paddle 
wheel. These technologies can be sized or adapted for ocean or for use 
in lakes or non-impounded river sites.

Ocean Thermal Energy Conversion (OTEC): OTEC generates electricity 
through the temperature differential in warmer surface water and colder 
deep water. Of ocean technologies, OTEC has the most limited 
applicability in the United States because it requires a 40-degree 
temperature differential that is typically available in locations like 
Hawaii and other more tropical climates.

Offshore Wind: Offshore wind projects take advantage of the vast wind 
resources available across oceans and large water bodies. Out at sea, 
winds blow freely, unobstructed by any buildings or other structures. 
Moreover, winds over oceans are stronger than most onshore, thus 
allowing for wind projects with capacity factors of as much as 65 
percent, in contrast to the 35-40 percent achieved onshore.

Other: Marine biomass to generate fuel from marine plants or other 
organic materials, hydrogen generated from a variety of ocean 
renewables and marine geothermal power. There are also opportunities 
for hybrid projects, such as combination offshore wind and wave or even 
wind and natural gas.

Q1.  Please describe the potential for electric power generation from 
ocean renewables. How much energy could the ocean supply?

    The U.S. wave and current energy resource potential that could be 
credibly harnessed is about 400 TWh/yr or about 10 percent of 2004 
national energy demand.
    EPRI has studied the U.S. wave energy resource and found it to be 
about 2,100 TWh/yr divided regionally as shown in the figure below. 
Assuming an extraction of 15 percent wave to mechanical energy (which 
is limited by device spacing, device absorption, and sea space 
constraints), typical power train efficiencies of 90 percent and a 
plant availability of 90 percent, the electricity produced is about 260 
TWh/yr or equal to an average power of 30,000 MW (or a rated capacity 
of about 90,000 MW). This amount is approximately equal to the total 
2004 energy generation from conventional hydro power (which is about 
6.5 percent of total 2004 U.S. electricity supply).
    EPRI has studied the North America tidal energy potential at fewer 
than a dozen selected sites. The tidal energy resource at those U.S. 
tidal sites alone is 19.6 TWh/yr. Assuming an extraction of 15 percent 
tidal kinetic energy to mechanical energy, typical power train 
efficiencies of 90 percent and a plant availability of 90 percent, the 
yearly electricity produced at the U.S. sites studied is about 270 MW 
(average power, rated capacity is about 700 MW). EPRI estimates that 
the total tidal and river in stream potential is on the order of 140 
tWh/yr or about 3.5 percent of 2004 national electricity supply.

Q2.  Please describe the current state of ocean power technologies in 
the United States and around the world.

The status of U.S. wave, current and tidal projects

    At present, prototype offshore renewable projects are moving 
forward in the United States. These include the following:

          Finavera Renewables, Inc., has proposed a one MW 
        pilot project for the Makah Bay off the coast of Washington 
        State. The project is currently poised to complete a four-year 
        permitting process at the Federal Energy Regulatory Commission 
        (FERC).

          New York based Verdant Power is undergoing licensing 
        at FERC and deployed two of six units of a tidal/current 
        project located in the East River of New York in December 2006. 
        Verdant Power, Inc. is in the process of deploying four more 
        turbines scheduled for completion early May of 2007. These 
        units will supply power to two commercial customers on 
        Roosevelt Island imminently, once all regulatory clearances 
        have been obtained.

          New Jersey based Ocean Power Technologies (OPT) has 
        operated a test wave energy buoy off the coast of Hawaii for 
        the U.S. Navy. It has also operated a buoy off the coast of New 
        Jersey funded by Board of Public Utilities since 2005 and in 
        July 2006, filed a preliminary permit for a commercial wave 
        farm at Reedsport, off the coast of Oregon.

          ORPC Alaska, owned by Ocean Renewable Power Company 
        (ORPC) of North Miami, Florida, recently secured Preliminary 
        FERC permits for two sites in Alaska. ORPC Maine, also owned by 
        ORPC, has applied for, and anticipates receiving very soon 
        Preliminary FERC Permits for two sites in Maine. ORPC also has 
        six Preliminary FERC Permits for sites off the east coast of 
        Florida.

          Australian based Energetech, recently renamed to 
        Oceanlinx Ltd, has formed a subsidiary in Rhode Island which 
        has received funding from the Massachusetts Trust Collaborative 
        and has planned a 750 kW project for Port Judith Rhode Island. 
        Permitting has not yet commenced.

          Multiple permits for sites in Maine, California, 
        Oregon, Alaska and Florida have been filed with the Federal 
        Energy Regulatory Commission.

          The Mineral Management Service (MMS) now has 
        authority to lease lands for offshore wind projects on the 
        Outer Continental Shelf. MMS has conducted environmental review 
        of the proposed 420 MW Cape Wind Farm off the coast of 
        Nantucket, MA and LIPA/FPL 100 MW project off the coast of Long 
        Island, NY.

Status of Ocean Renewable Projects Overseas

    In Europe, projects are moving ahead. Europe has already installed 
587 MW of offshore wind in Denmark, Holland, Scotland, England and UK. 
See http://www.bwea.com/offshore/worldwide.html
    Two near-shore wave projects, are operating in Scotland and Isle of 
Azores. Pelamis of OPD in Scotland is deploying the world's first 
commercial wind farm off the coast of Portugal and Marine Current 
Turbines has operated a prototype tidal project for two years.

Q3.  What is the consumer price, per kWh, of ocean generated 
electricity. What are the projections for reduction in that price.

    Naturally, costs vary with the type of technology. The MMS 
Whitepaper on Offshore Wind states that where once the cost of offshore 
wind was around forty cents/kWH, over the past twenty years, costs have 
dropped to between four and six cents/kwh. By 2012 and beyond, DOE 
envisions five MW and larger machines generating power for five cents/
kWh.
    Cost estimates are more difficult for wave and tidal, which in 
contrast to offshore wind, lack operational history. For wave, costs 
have been estimated as between nine and 16 cents/kWh, far more 
favorable than the 40 cents/kWH that offshore wind cost ``out of the 
box.'' For in-stream tidal, the EPRI reports predicted costs as low as 
six to nine cents/kWH because tidal power's similarities to wind allow 
it to benefit from the advancements already made by wind and 
potentially share economies of scale.
    And, the costs of offshore wind or wave are stable. Whereas natural 
gas and oil have fluctuated over the years (with natural gas now higher 
than ever), offshore wind and wave energy costs are stable, since the 
cost of renewable power sources like wind or wave are free. The analogy 
here is that the cost to consumers for renewable energy, free from the 
fluctuating costs of fuel, functions like a fixed-rate mortgage as 
opposed to a variable rate mortgage associated with the use of finite 
fossil fuel resources.
    Also, costs are expected to decline as the industry matures and as 
economies of scale make ocean projects less costly. As the offshore 
wind industry makes advancements on mooring systems, turbine durability 
and other issues that bear on the cost of marine projects, these 
advancements will help bring down the cost of other ocean energy 
technologies. In addition, if we can gain a better assessment of our 
resources, we can target the most powerful sites first and learn from 
our experience in these locations to bring costs down further.
    It is important to note that non-technology costs associated with 
these types of projects will also be reduced as the industry matures. 
These include insurance and financing, as well as much needed and 
anticipated regulatory and permitting reform.

Q4.  Is the United States behind other countries in the development of 
the technology? Is this a result of a lack of federal investment?

    Yes, the United States has fallen behind countries like Scotland, 
Portugal, Norway, and others; however, we are on a track to quickly 
regain a leading position. Portugal offers a =.235/kWH [equivalent to 
nearly $.32 (U.S.) ] feed-in tariff. Compare this to the U.S., where 
the wind industry receives approximately $.019/kWH. and ocean 
renewables receive nothing. Britain pays substantial incentives 
including capital cost reimbursements of 25 percent. The United States 
needs to match these foreign incentives in order to attract and retain 
world class technology developers.
    Permitting and regulatory obstacles are tremendous disincentives to 
companies developing ocean renewable projects in the United States, as 
well. While other countries have adopted permitting and regulatory 
regimes that appear to be more efficient, the United States is still 
struggling with exactly how to permit and regulate these technologies.

Q5.  What kind of technological obstacles remain to the commercial 
viability of ocean power?

    Advances in a number of other sectors have benefited the marine 
renewable industry sector including advanced materials, turbine design, 
and offshore construction. Listed below are the present day R&D 
requirements to support the development of marine and hydrokinetic 
technologies in the United States.

R&D Needs for the Ocean Renewable Energy Sector

(1)  developing and demonstrating marine and hydrokinetic renewable 
energy technologies;

(2)  reducing the manufacturing and operation costs of marine and 
hydrokinetic renewable energy technologies;

(3)  increasing the reliability and survivability of marine and 
hydrokinetic renewable energy facilities;

(4)  integrating marine and hydrokinetic renewable energy into electric 
grids;

(5)  identifying opportunities for cross fertilization and development 
of economies of scale between offshore wind and marine and hydrokinetic 
renewable energy sources;

(6)  identifying the environmental impacts of marine and hydrokinetic 
renewable energy technologies and ways to address adverse impacts, and 
providing public information concerning technologies and other means 
available for monitoring and determining environmental impacts; and

(7)  standards development, demonstration, and technology transfer for 
advanced systems engineering and system integration methods to identify 
critical interfaces.

Specific R&D tasks

Wave Power

 1.  Technology road mapping

 2.  Resource characterization--Data and models to identify ``hot 
spots''

 3.  Hydrodynamics--mathematical and physical modeling including arrays 
(especially non-linear and real fluid effects)

 4.  Control systems and methods for optimum performance (while 
ensuring survivability)

 5.  Power take off systems/smoothing especially direct drive

 6.  Materials--low cost

 7.  Materials, corrosion and biofouling

 8.  Construction methods--low cost

 9.  Performance specification standardization and test verification

10.  Low cost moorings/deployment/installation/recovery methods

11.  Ultra high reliability components (for minimum maintenance cost)

12.  Electrical grid connection

13.  System configuration evaluations (which are best under what 
circumstances)

14.  Module size versus cost of electricity sensitivity

15.  Results from pilot tests (especially to reduce cost and 
environmental impacts uncertainty).

Tidal Power

 1.  Technology road mapping

 2.  Resource characterization - Data and models to identify ``hot 
spots'' given complex bathymetry and turbulence

 3.  Hydrodynamics--mathematical and physical modeling including arrays 
(especially non linear and real fluid effects) and an evaluation of the 
efficacy of diffusers (i.e., ducted water turbine)

 4.  Control systems and methods for optimum performance

 5.  Power take off systems/smoothing especially direct drive

 6.  Materials--low cost

 7.  Materials, corrosion and biofouling

 8.  Construction methods--low cost

 9.  Performance specification standardization and test verification

10.  Low cost moorings/deployment/installation/recovery methods

11.  Ultra high reliability components (for minimum maintenance cost)

12.  Electrical grid connection

13.  System configuration evaluations (which are best under what 
circumstances)

14.  Module size versus cost of electricity sensitivity

15.  Results from pilot tests (especially to reduce cost and 
environmental impacts uncertainty).

Q6.  What can Congress and/or the Federal Government do to help move 
the technology forward? Is there a role for federal support for R&D? 
Why is federal spending necessary?

    The first thing Congress can do is pass designed to accomplish the 
following:

    --More funding for R&D and technology development: Wind energy has 
benefited from substantial government investment. Thirty years ago, 
wind cost 30 cents/kWH to generate; today, that cost stands at three to 
seven cents/kWH. And even today, DOE continues to invest in wind. Just 
a few months ago, DOE announced a $27 million partnership with GE to 
develop large-scale turbines and also issued a $750,000 SBIR to 
Northern Power for offshore wind technology development.
    Private developers have borne the costs of bringing the ocean 
energy technology forward for the past thirty years, but they need 
government support. Government funding will also give confidence to 
private investors and help attract private capital.
    --Resource Assessment: At present, we do not even know the full 
potential of offshore renewables, because no agency has ever mapped the 
resource comprehensively. The Energy Policy Act of 2005 directed the 
Secretary of DOE to inventory our renewable resources but that work has 
never been funded. And even as MMS moves forward with a rule-making for 
offshore renewables on the OCS, it has not received appropriations to 
map the resource.
    Preliminary studies done by EPRI and private companies show that we 
have substantial ocean resources. But we will not know the full scope 
without further mapping and study.
    --Incentives for Private Investment: Offshore renewables are 
compatible with other large industries in our country, such as oil and 
maritime industry. These industries, with the right tax incentives, can 
provide substantial support to offshore renewable development. 
Incentives could include investment tax credits for investment in 
offshore renewables and incentive to use abandoned shipyards and 
decommissioned platforms for prototypes and demonstration projects.
    --Incentives for coastal communities: Coastal municipalities stand 
to gain tremendously from installation of offshore renewables. They 
need to be stakeholders in the process with a voice in development that 
takes place off their shores. Congress can support this by continuing 
to authorize Clean Renewable Energy Bonds (CREBS) and the Renewable 
Energy Portfolio Incentives (REPI) for coastal projects.
    --Reduced regulatory barriers: Until companies get projects in the 
water, we will not learn about the environmental impacts or true costs 
of offshore renewables. Unfortunately, developers face onerous barriers 
to siting small, experimental projects. We should establish streamlined 
regulation and permitting for offshore renewables, with maximum 
cooperation between State and federal agencies.

Conclusion

    Development of a robust offshore renewables industry can:

          Reduce reliance on foreign oil

          Rely upon ocean terrain for power generation as 
        opposed to onshore land resources

          Revitalize shipyards, coastal industrial parks and 
        shuttered naval bases

          Create jobs in coastal communities

          Allow the U.S. to transfer technology to other 
        countries, just as a country like Scotland is exporting its 
        marine renewables know-how

          Provide low cost power for niche or distributed uses 
        like desalination plants, aquaculture, naval and military 
        bases, powering stations for hybrid vehicles and for offshore 
        oil and gas platforms

          Provide use for decommissioned oil platforms through 
        ``rigs to reefs program''

          Promote coastal planning that reflects the goals of 
        biodiversity, that maximize best comprehensive use of resources 
        and capitalizes on synergies between offshore industries.

    Is the resource there? Yes, and the resource is located near highly 
populated areas on the coast, placing fewer demands on already taxed 
transmission infrastructure. The United States cannot afford to ignore
    Ocean renewables can help diversify our energy portfolio and 
improve our environment. With the proper support, these resources will 
become a robust part of a reliable, affordable, clean electric supply 
portfolio.

                       Biography for Sean O'Neill
    Sean O'Neill is co-founder and President of the Ocean Renewable 
Energy Coalition where he serves in a leadership role for all 
activities and is responsible for all federal legislative and 
regulatory issues impacting OREC members. He is also founder and 
principal of Symmetrix Public Relations & Communication Strategies 
where he serves the non-profit, energy, and human resources industries. 
Prior to founding Symmetrix, Mr. O'Neill served as Director of Public 
Affairs for U.S. Generating Company from 1993 to 2001. He has directed 
communications and public affairs programs in eighteen states 
supporting the development of over 8,000 megawatts of electric power 
generation. He has served numerous non-profit and non-governmental 
organizations in developing programs to encourage the development of 
ocean renewable technologies, electric industry deregulation, water 
conservation, municipal solid waste management and public safety 
contributing to broad public policy changes at State and federal 
levels, increased water and energy conservation, recycling, and seat 
belt use.
    He has a Masters in Public Communications from American University 
where he has served on the adjunct faculty and holds an A.B. degree in 
English from Columbia College in New York.

    Chairman Lampson. Thank you, Mr. O'Neill.
    Mr. Greene.

   STATEMENT OF MR. NATHANAEL GREENE, SENIOR POLICY ANALYST, 
               NATURAL RESOURCES DEFENSE COUNCIL

    Mr. Greene. Mr. Chairman, esteemed Members of the 
Committee, thank you very much for having me here today. My 
name is Nathanael Greene. I am a senior policy analyst with the 
Natural Resources Defense Council. I spent a lot of time trying 
to think of a good joke that bridges geothermal and ocean 
energy but I just couldn't come up with one. So I will just 
leap right in here.
    I think it is very appropriate that Congressman McNerney 
raised the history of the wind energy industry, onshore wind 
energy industry association. I think if we look at that, we can 
see one of the main points that I would like to talk about 
today, which is why when we do research and development, it is 
important to include the environmental impacts and study the 
baseline environmental conditions, the ecosystem conditions, 
the environmental interactions of the technologies that we are 
looking at. We are now at the fortunate stage in the onshore 
energy industry that we are seeing a lot of concentration of 
projects in certain parts of the country and so states have 
started to come together individually and as groups to really 
try to understand what the cumulative impacts of large-scale 
development will be, and I think as we look forward to 
expanding these technologies and NRDC certainly comes at these 
two technologies in reviewing these two bills with the hope 
that we can make these technologies large-scale contributors to 
our energy mix. But as we come at them, we need to think not 
just about what one project will look like, or what one pilot 
installation will look like, but what many projects will look 
like. Particularly in the ocean technologies, which are tapping 
an energy source that is generally less dense than, say, a 
fossil fuel or even some of the other renewable energy 
resources, the individual installation may just be one of 
hundreds of individual pieces of equipment that make up a 
single project. When you are looking at multiple projects in 
some areas, you may be looking at many, many pieces of 
equipment. So thinking about cumulative impact from the get-go 
is absolutely critical.
    Similarly, in the wind energy industry association and the 
history, we can see the really significant impacts of an early 
black eye in the development of the industry. If you look out 
in California with the Altamont Pass project and the history of 
that project and its impacts particularly on endangered bird 
species, they have created at least two decades of slowdown in 
the development of that industry and questions around the 
development of that industry that could have been avoided if we 
had done more research and development, understood better what 
the interactions of wildlife and technology were from the get-
go, and instead of developing some of our first projects in 
very sensitive areas, found better places where there were 
still good resources but fewer potential impacts, we might have 
been able to avoid that whole diversion and unfortunate 
slowdown in the industry.
    And the last point I would like to make is really about the 
permitting. Building this baseline of information, the 
consensus between regulators, the public, and the industry 
about what are the real, valid environmental concerns and what 
are the red herrings--the issues that are just distracting us 
in the permitting process--can really help an open and 
transparent regulatory process and speed up permitting without 
giving up the important aspects of permitting to really guide 
the industry towards responsible development.
    So building on that basic recommendation, particularly in 
the geothermal research and development act that we are looking 
at today, I think it is very important that we call out looking 
at environmental studies and environmental impacts. The ocean 
thermal energy act has a particular section on that. I think it 
is something I would recommend the Committee consider adding to 
the geothermal act. A lot of making sure that that sort of 
research done unfortunately is going to fall back on you in 
your oversight as the research and development actually occurs 
because you can't micromanage that from this stage, so I would 
encourage you particularly to look, and encourage the 
implementing agencies to look, at high-resources areas. Let us 
really focus our dollars, build baselines so we can really 
understand not just what the actual potential is but in these 
high-resource areas, what is the baseline ecosystem, and it 
helps us not just site an individual project, which will need 
to have that information as they go through the siting process, 
but also start to allow us to think about what the cumulative 
impacts will be of multiple projects, and similarly, to 
recognize that because these technologies are basically in 
their nascency right now, there are a lot of unknowns around 
how these technologies will interact with the environment. I am 
sure there is a known unknown joke here but I am not going to 
make that one.
    We need to through the environmental research and 
development and really try to narrow the questions that we 
cannot answer at this point, characterize those issues as 
close, as specifically as we can so that they don't act as 
bottlenecks in the permitting process, and then study them 
extensively in the lesson-learned stage after we build the 
first projects. Particularly I would call out the need and the 
role that this research and development plays in a critical 
permitting tool which we need to develop much more extensively 
now and especially for these new technologies, which is 
adaptive management. If we can't figure out a way to permit 
projects without perfect information, we are going to see a 
real resistance on the part of the public to seeing these 
technologies go forward, but if we can figure out a way to 
allow the projects to go forward but also change the management 
if unanticipated impacts start to develop, we can speed the 
process up.
    On the specific technologies, the enhanced geothermal 
systems, very exciting but also very much unknown. I don't 
think that there are likely to be huge impacts there. I am not 
anticipating that but again, if we don't study it, that 
uncertainty will act as a break and so focusing research and 
development dollars there to build that consensus is absolutely 
critical.
    Another point I would draw just between the environmental 
impacts and the technology research and development around 
geothermal is the critical need to improve the efficiency of 
those systems, the total thermal efficiency. The more we can 
actually capture of the geothermal energy, the fewer projects 
we ultimately need to build to develop any certain amount of 
energy.
    On the ocean side, again to recognize that we are dealing 
with a relatively unique environment, thinking now about the 
cumulative impacts and the consensus is absolutely critical.
    Thank you for your time.
    [The prepared statement of Mr. Greene follows:]
                 Prepared Statement of Nathanael Greene

Summary

General

          Carve out federal research and development (R&D) 
        dollars for independent studies of environmental impacts to 1) 
        understand the cumulative impacts of large scale deployment of 
        these ocean and geothermal energy technologies, 2) avoid early 
        public black-eyes that will set the industry back years, and 3) 
        support an open and transparent permitting and regulatory 
        process by building consensus among regulators, the public, and 
        industry around the environmental benefits and impacts of real 
        concern.

          Look at regions with resources that have high energy 
        production potential and build baseline data on the nature of 
        the resource and the ecosystems in place that surround the 
        resources.

          Use the baseline data and analogous technologies to 
        narrow and bound unknowable potential environmental impacts.

          Focus ``lessons learned'' studies on the areas of 
        greatest environmental uncertainty.

          Use these studies to inform adaptive management 
        strategies so that projects can proceed in the face of the real 
        uncertainty surrounding some impacts and also still be eligible 
        for private sector financing.

          Consider a federal fund to support the more extensive 
        potential adaptive management options including removal for the 
        first few projects.

          Utilize early successes in this approach as test 
        cases for future, more large-scale deployment initiatives.

Geothermal Energy

          Include independent R&D on the environmental impacts 
        of geothermal technologies in the Advanced Geothermal Energy 
        Research and Development Act of 2007.

          Build consensus among regulators, the public, and 
        industry around the real environmental impacts and ways to 
        avoid, manage, and mitigate these impacts so that the 
        technologies can be deployed as quickly as possible.

          Ensure that studies cover the environmental impacts 
        of enhanced geothermal systems and of the cumulative effects of 
        multiple large-scale projects in the same region.

          Ensure that technology R&D covers improving the 
        thermal efficiency of geothermal systems to maximize the 
        potential energy that can be captured and minimize the number 
        of projects that need to be developed.

Ocean and Hydrokinetic Energy

          Focus federal R&D dollars on studies of a few regions 
        with high resource potential, study other manmade installations 
        in oceans, rivers, and lakes in order to anticipate impacts of 
        ocean and hydrokinetic technologies, and prioritize post-
        installation lessons' learned studies.

          Require access for independent pre- and post-
        installation environmental studies as part of eligibility for 
        any federal subsidies.

          Ensure that studies address the cumulative impact of 
        multiple projects and of multiple installations within one 
        project.

          Exclude offshore wind from the Marine Renewable 
        Energy Research and Development Act of 2007 except to study 
        offshore wind projects to learn lessons that may inform other 
        projects and as part of regional cumulative impact analyses.

          FERC should work with State and federal natural 
        resource management agencies to do a programmatic environmental 
        impact statement for the licensing of new hydrokinetic 
        technologies.

          Regional studies should help build consensus around 
        areas that are best suited for early development and those that 
        should be avoided at least until the potential impacts of the 
        technologies are much better understood.

Introduction

    Thank you for the opportunity to share my views on geothermal, 
ocean, and hydrokinetic energy technologies, the environmental pros and 
cons of these important sources of renewable energy, and the 
environmental issues related to these technologies that should be 
addressed in the context of federally supported research and 
development. My name is Nathanael Greene. I'm a senior policy analyst 
for the Natural Resources Defense Council (NRDC) and one of our main 
experts on renewable energy technologies. NRDC is a national, nonprofit 
organization of scientists, lawyers and environmental specialists 
dedicated to protecting public health and the environment. Founded in 
1970, NRDC has more than 1.2 million members and online activists 
nationwide, served from offices in New York, Washington, Los Angeles 
and San Francisco.
    Mr. Chairman and esteemed Members of this committee, as you know, 
U.S. energy policy needs to address three major challenges: reducing 
global warming pollution, providing affordable energy services that 
sustain a robust economy, and increasing our energy security. Renewable 
energy technologies including geothermal, ocean, and hydrokinetic 
energy can play a critical role in meeting these goals, and these 
technologies have the potential for dramatically increased deployment 
over the coming decades. These sources of energy can be used to produce 
electricity and thermal energy with little or no global warming 
pollution or local or regional air pollution, and they draw on domestic 
energy sources that are naturally replenished and do not vary in cost. 
By using these technologies we avoid burning fossil fuels, particularly 
coal and natural gas and to a lesser degree oil. The heat-trapping 
gases released when we burn these fuels make the power sector the 
largest single source of global warming pollution. These fuels are also 
responsible for other significant environmental and public health 
impacts during mining, drilling, processing, and combustion, and they 
expose our economy to price volatility and energy insecurity.
    All energy technologies cause some environmental damage. Being 
better than fossil fuels is a necessary condition, but hardly 
sufficient. Independent research and development focused on the 
environmental characteristics of these technologies is critical to 
maximizing their positive impacts and to avoiding, managing, and 
mitigating their negative ones. Good R&D on the environmental impacts 
is also critical to an open and transparent permitting process and in 
building a constructive relationship between regulators, the public, 
and the industry so that these technologies can be deployed in a manner 
that is quick, efficient and responsible.

General Comments Relevant to Both Families of Technologies

    The environmental impacts of renewable technologies such as 
geothermal, ocean and hydrokinetic energy must be considered in the 
context of the detrimental alternative outcomes if we choose to not 
actively deploy these technologies. Most of the traditional energy 
sources (e.g., coal, natural gas, oil) ensure a far different and 
potentially much more devastating environmental future. Meeting our 
energy service needs through improved energy efficiency is the fastest, 
cleanest, cheapest option, but even the most efficient technologies 
require some energy to operate. Outside of the transportation sector, 
if we're not using renewable energy then chances are we're using coal, 
natural gas, and nuclear power and some oil primarily for heating.
    The consequences of not moving away from these traditional fuels to 
energy efficiency and renewable energy are severe, and impact almost 
every aspect of the environment and public health. None of these 
consequences are ultimately more urgent than reducing global warming. 
The recent Intergovernmental Panel on Climate Change report concluded 
that there was at least a 90 percent chance that heat-trapping 
pollution was the main cause of warming since 1950. The science is 
clear: global warming is real, it's already occurring, and we're 
responsible for it. We can avoid catastrophic damage, but only if we 
start reducing our rate of pollution seriously within the next 10 years 
and achieve 60 to 80 percent reductions by 2050.
    This is where renewable energy technologies such as geothermal, 
ocean, and hydrokinetic energy can be so beneficial. The heat-trapping 
gases emitted during combustion of fossil fuels make the power sector 
the largest single source of global warming pollution. Developing 
geothermal, ocean, and hydrokinetic energy, as part of a renewable 
energy portfolio, is a vital step towards replacing a significant 
amount of the fossil fuel-generated power. Moreover, there is a 
domestic argument as well. The United States is the largest emitter of 
heat-trapping gases, causing 25 percent of global warming despite 
having just four percent of the world population. Geothermal, ocean, 
and hydrokinetic energy are domestic renewable energy sources that can 
reduce our carbon footprint globally, and encourage other countries to 
do the same.
    Of course, no energy technology is without environmental impacts, 
and simply being better than fossil fuels is a little like being better 
than a poke in the eye--it's a necessary but not sufficient aspect of a 
truly sustainable energy mix. Studying the environmental 
characteristics of renewables serves two critical purposes: 1) it 
allows us to identify, avoid, manage, and mitigate the real 
environmental impacts of renewable energy technologies; and 2) it 
builds a constructive relationship between regulators, the public, and 
industry that focuses on the real impacts and not ``red herring'' 
issues that have limited impact and can obstruct the deployment of 
strong projects. Taken together these outcomes are needed to allow for 
the best public review and permitting process.
    Ocean energy is currently used to produce just a few megawatts and 
geothermal just a few thousand megawatts of energy, in spite of the 
fact that both families of technologies could easily be scaled up to 
produce tens of gigawatts within the next few decades. However, the 
relative infancy of these technologies presents two important 
challenges. First to understand the real sustainability of the 
technologies, it is insufficient to look at the impacts from a single 
project. We must also study the cumulative impact of these technologies 
brought fully to scale, and lay out our vision of what we want these 
industries to ultimately become. Second, both families of technologies 
are particularly vulnerable to major setbacks that could stifle growth 
if early projects become notorious environmental failures.
    In the context of federal research and development legislation, we 
should focus on two types of environmental risks to understand the 
cumulative impacts and avoid early public black-eyes. The first type of 
risk involves impacts that we can predict with increasing accuracy with 
greater experience and data collection. An example of this type of risk 
would be determining the chance of whales being hurt by the sounds of 
construction. The more we learn about whales' habits in the region of 
the project, and what effective mitigation measures we can take to 
avoid and minimize impacts on whales, the more we can quantify the 
probability of whales being affected by project construction.
    The second type of risk involves impacts that we cannot predict 
because they result from new types of interaction that simply have 
never occurred before. An example of this type of risk would be how a 
geofluid would spread when introduced into a hot-dry rock geothermal 
heat source to create an engineered aquifer. Another example would be 
how fish might adapt to underwater turbines in a river. These would be 
first-of-a-kind interactions and the probability of the possible 
impacts is fundamentally unknowable.
    We can address the first kind of risk by building a detailed 
understanding of the baseline conditions in the area of a potential 
project. Unfortunately, given that many species may pass through a 
given part of the ocean or land only during certain seasons, developing 
this database may significantly slow a proposed project. If, instead of 
studying the baselines on a project-by-project basis, we identified a 
few regions with high resource potential, and focused federal R&D 
dollars on building the necessary baseline data in those areas, we 
could facilitate the permitting of individual projects. This would help 
us develop a better understanding of what the cumulative impacts might 
be in a region where multiple projects are likely.
    Research and development dollars can also help narrow and bound the 
uncertainty associated with unknowable risks. For instance, if we were 
considering a certain type of ocean thermal technology, previously 
collected baseline data would allow us to conclude that a project in 
that region of the ocean would have a very low chance of interacting 
with endangered or at-risk fish populations. Further study of similar 
equipment coupled with modeling the worst-case scenarios might allow us 
to conclude that even the development of multiple projects would be 
very unlikely to have any significant impacts of the fish populations. 
In other words, even for unknowable risks associated with putting new 
technologies into new conditions, federal R&D can help build consensus 
around the issues of greatest potential concern and those that are very 
unlikely to impose significant restraints.
    Of course this type of work should be followed with ``lessons 
learned'' studies to help avoid, manage, and mitigate future impacts 
and provide more information to help narrow and bound other unknowable 
risks. Indeed, given the much higher level of uncertainty surrounding 
these technologies, the lessons learned from each project during 
operation should be used to update the management of future projects, 
and the conditions of future permits, especially during the early 
development stage of each industry. In particular these studies should 
be used to inform adaptive management requirements in permits. Adaptive 
management requirements establish a process for changing a project 
operations and equipment configuration to avoid or reduce environmental 
impacts that are larger than anticipated. This is a critical tool for 
allowing projects proceed when there is a level of uncertainty around 
impacts that would be unacceptable if the projects' management 
strategies are fixed over time.
    Further research on the potential environmental impacts associated 
with these nascent renewable technologies is needed to support adaptive 
management permitting requirements. Given the limits on our ability to 
establish baseline data and the unknowable risks associated with new 
technologies in new conditions, regulators must be able to require 
projects to adapt their management to address unacceptable levels of 
impacts (that may not appear at present). The baseline data and studies 
to narrow and bound unknowable risks will be critical to identifying 
unacceptable levels of impacts (e.g., is the line crossed at one bird 
or fish or caribou or one hundred?) and what alternative management 
options are possible.
    Making adaptive management work is not only important from the 
environmental perspective; it is also critical to making projects 
acceptable for private sector financing. Lenders and investors will not 
support projects that face potentially significant costs or lost 
capacity as a result of management being forced to avoid or manage an 
unforeseen impact. Developing a clear, transparent permitting process, 
that includes State and federal agency input in developing adaptive 
management requirements, will also help attract private funding.
    Indeed, given the importance of adaptive management to making some 
first-of-a-kind projects acceptable from an ecological and public 
health risk perspective, and the challenge that some adaptive 
management options might pose to a project's financing, the Federal 
Government could play an important facilitating role in ensuring 
geothermal, ocean, and hydrokinetic energy deployment. The government 
could create a fund that covers a portion of the costs associated with 
the most extreme and expensive changes in management that might be 
necessary for early projects. For example, if there is a very small 
chance that geofluid could leak from an engineered aquifer into ground 
water or to the surface, but such a leak would require the project to 
immediately cease operations, the Federal Government could help insure 
against such a risk for the first few projects. I recognize that this 
specific recommendation is beyond the scope of R&D legislation, but the 
types of studies I have discussed above would help identify and limit 
the conditions where this type of fund would be necessary.

Recommendations

          Carve out federal research and development (R&D) 
        dollars for independent studies of environmental impacts to 1) 
        understand the cumulative impacts of large scale deployment of 
        these ocean and geothermal energy technologies, 2) avoid early 
        public black-eyes that will set the industry back years, and 3) 
        support an open and transparent permitting and regulatory 
        process by building consensus among regulators, the public, and 
        industry around the environmental benefits and impacts of real 
        concern.

          Look at regions with resources that have high energy 
        production potential and build baseline data on nature of the 
        resource and the ecosystems in place that surround the 
        resources.

          Use the baseline data and analogous technologies to 
        narrow and bound unknowable potential environmental impacts.

          Focus ``lessons learned'' studies on the areas of 
        greatest environmental uncertainty.

          Use these studies to inform adaptive management 
        strategies so that projects can proceed in the face of the real 
        uncertainty surrounding some impacts and also still be eligible 
        for private sector financing.

          Consider a federal fund to support the more extensive 
        potential adaptive management options including removal for the 
        first few projects.

          Utilize early successes in this approach as test 
        cases for future, more large-scale deployment initiatives.

Geothermal

    Geothermal energy is a particularly attractive source of renewable 
energy because it can serve as baseload power (e.g., provide steady 
electricity on a consistent and predictable basis). This gives it the 
potential to displace some of the dirtiest power generation--coal-fired 
baseload power. Direct use of geothermal heat and geothermal heat-pump 
technology also allows industry, commercial, and residential buildings 
to avoid natural gas and oil that are currently used for heating and 
cooling needs.
    There are already an important number of geothermal projects in 
operation today, but the next 10 to 15 years could easily see a ten-
fold increase in deployment. In addition, enhanced geothermal systems 
represent a new technology and an area of significant potential growth. 
As a result, it is important that the R&D bills under consideration by 
the Subcommittee be amended to explicitly require research and 
development related to the potential environmental impacts of 
geothermal development along the lines discussed above.
    For the traditional geothermal technologies, R&D would help 
especially in terms of building consensus among regulators, the public, 
and industry around the most significant environmental impacts. It 
could also prove useful in determining which impacts are ``red 
herrings'' that might need to be monitored, but don't need to be a 
focus of concern. However, it is important to recognize that many 
geothermal resources are remote from demand centers and thus land-use 
impacts will grow considerably with cumulative development of multiple 
projects in the same region.
    Beyond the traditional geothermal technology, the enhanced 
geothermal systems are an entirely new area for development and thus 
even more in need of R&D on their potential environmental impacts. 
Particular care must be taken that the geofluids injected to bring the 
geothermal energy to the surface do not escape the targeted heat 
reservoir and contaminate drinking water or reach the surface in an 
uncontrolled manner. Research into the steps necessary to avoid this 
and to understand the potential impacts of such an escape if it 
occurred would increase the comfort-level with this new technology.
    For all classes of geothermal technologies, a key area of 
technology R&D that overlaps with siting-related environmental impacts 
is work to improve the thermal efficiency of the technologies. The 
efficiency of current projects is unfortunately low. Doubling this 
would cut in half the number of projects necessary to achieve a given 
level of energy production.

Recommendations

          Include independent R&D on the environmental impacts 
        of geothermal technologies in the Advanced Geothermal Energy 
        Research and Development Act of 2007.

          Build consensus among regulators, the public, and 
        industry around the real environmental impacts and ways to 
        avoid, manage, and mitigate these impacts so that the 
        technologies can be deployed as quickly as possible.

          Ensure that studies cover the environmental impacts 
        of enhanced geothermal systems and of the cumulative effects of 
        multiple large-scale projects in the same region.

          Ensure that technology R&D covers improving the 
        thermal efficiency of geothermal systems to maximize the 
        potential energy that can be captured and minimize the number 
        of projects that need to be developed.

Ocean and hydrokinetic energy

    There are three reasons that study of the environmental impacts of 
ocean and hydrokinetic energy is particularly important: 1) the 
technology is in a nascent stage of development with only a few pilot 
scale projects in operation around the world; 2) due to the diffuse 
nature of the energy resource in the ocean and moving water, this 
family of technologies necessarily requires many pieces of equipment 
spread out over great distances to capture traditional electric 
utility-scale amounts of electricity; and 3) the oceans are prized for 
their open vistas, importance in the global ecosystem, and are 
particularly vulnerable to global warming.
    As recommended above, R&D looking at the environmental impacts of 
this family of technologies should focus on a few regions with 
especially high resource potential, ideally for multiple technologies. 
Studying the ecosystems of oceans, rivers, and lakes is obviously a 
complicated and time-consuming process. Furthermore because so much is 
unknown about the interaction of wildlife with the various technologies 
being developed to capture ocean and hydrokinetic energy, special 
effort should be made to find other man-made infrastructure that can 
give us insights into the potential impacts. The novelty of the 
technologies makes post-installation studies of impacts and adaptive 
management even more important.
    Of course the novelty of the technologies also creates 
understandable concerns from project developers about allowing 
scientists access to proprietary information regarding system design. 
However, these concerns should not be allowed to hinder pre- and post-
installation studies. Access for independent environmental research and 
development should be a prerequisite for any federal support.
    The idea of cumulative impacts takes on even greater importance in 
the context of ocean and hydrokinetic technologies. Not only should 
studies consider the impacts associated with multiple projects, 
initially, they should develop an understanding of the cumulative 
impacts of the multiple pieces of equipment being installed within the 
bounds of one project. Utility scale projects are likely to require 
more than one hundred individual generators. In a river, lake, or in 
certain parts of the ocean, the cumulative impacts of this many pieces 
of equipment could be dramatically different than the impacts of just 
one or two generators.
    The only exception to the newness of this family of technologies is 
offshore wind energy. Given the more mature nature of this technology 
it is appropriate that offshore wind be generally not included in the 
Marine Renewable Energy Research and Development Act of 2007. The only 
area where offshore wind should be explicitly included is in lessons' 
learned studies and studies that build baseline data on regions with 
high ocean energy resources. Offshore wind energy projects could be an 
important source of information about energy project development and 
thus should be considered as part of post-construction studies of 
impacts. Also to the extent that regions are picked due to their having 
high resource value, the environmental effects of wind power should be 
considered in impact studies, as wind projects could contribute to the 
cumulative impacts concept described above.
    Lastly, federal R&D should recognize the unique nature of our 
oceans, rivers, and lakes. They provide unique ecosystem services, they 
are used differently than land from both a commercial and recreational 
perspective, and they are extremely vulnerable to global warming. As a 
result of these differences, the policies and procedures for access for 
renewable energy projects are still being developed. The Minerals 
Management Service has taken the important step of conducting a 
programmatic environmental impact statement on its offshore energy 
permitting process. The Federal Energy Regulatory Commission should 
work with state and federal natural resource management agencies to do 
the same with new hydrokinetic technologies. On land, many individual 
states and some collections of states, which are anticipating 
significant wind power development, have taken the valuable step of 
conducting resource mapping to identify both productive sites and 
places that projects simply should not be developed. Ocean and 
hydrokinetic energy may be too new for studies to offer anything other 
than preliminary guidance, but that is an important first step and only 
highlights the need to get started with environmental impact R&D now.

Recommendations

          Focus federal R&D dollars on studies of a few regions 
        with high resource potential, study other manmade installations 
        in oceans, rivers, and lakes in order to anticipate impacts of 
        ocean and hydrokinetic technologies, and prioritize post-
        installation lessons' learned studies.

          Require access for independent pre- and post-
        installation environmental studies as part of eligibility for 
        any federal subsidies.

          Ensure that studies address the cumulative impact of 
        multiple projects and of multiple installations within one 
        project.

          Exclude offshore wind from the Marine Renewable 
        Energy Research and Development Act of 2007 except to study 
        offshore wind projects to learn lessons that may inform other 
        projects and as part of regional cumulative impact analyses.

          FERC should work with State and federal natural 
        resource management agencies to do a programmatic environmental 
        impact statement for the licensing of new hydrokinetic 
        technologies.

          Regional studies should help build consensus around 
        areas that are best suited for early development and those that 
        should be avoided at least until the potential impacts of the 
        technologies are much better understood.

                     Biography for Nathanael Greene
    Nathanael Greene is a senior energy policy specialist working on 
issues including utility regulation, renewables, energy taxes and 
energy efficiency. He has particular expertise in biofuels, biopower, 
wind and small, clean-generating technologies such as fuel cells, as 
well as the State and federal regulations and policies to promote these 
technologies. Nathanael received a Bachelor's degree in public policy 
from Brown University and a Master's in energy and resources from the 
University of California at Berkeley.

                               Discussion

    Chairman Lampson. Thank you for your explanation.

            Past Funding Cuts to Geothermal Energy Research

    At this point we will start the first round of questions, 
and the Chairman will recognize himself for five minutes. I 
want to start with Dr. Tester and Mr. Thomsen.
    The Administration, through the Office of Management and 
Budget, has attempted to justify terminating DOE's geothermal 
technology program by saying research supported by the 
geotechnology program has contributed to reduced costs of 
geothermal power to the point that it is now a mature 
technology. Can you respond to that statement, both of you, and 
is geothermal power a ``mature technology''?
    Dr. Tester. Let me try to begin. In this, I think it is 
necessary to separate substance from semantics in the OMB 
decision. I have been having a lot of trouble understanding 
their rationale for the decision that they made in calling 
geothermal technology mature. If I assume that they are 
thinking of geothermal as a single technology, then I think 
they are flawed in their analysis. Geothermal is a resource. 
Like other mineral resources such as oil and gas, it has a 
variety of grades and there is always room and important room 
for improvement. As we just heard this morning and I think we 
pointed out in our assessment, we are using such a small 
fraction of the available geothermal resource right now that it 
would be--can hardly be regarded as a mature technology.
    Mr. Thomsen. Mr. Chairman, I would like to add to that. The 
first point I would like to add or make is that we have never 
seen an analysis for that recommendation, that this technology 
has become mature. Being unable to define what mature is, it 
makes it a bit of an ambiguous mark to find and describe. I 
would like to echo what Dr. Tester said and say that geothermal 
is a resource. It is utilized and captured by a suite of 
technologies and we have hydrothermal technologies which are 
slightly more mature, we have technologies like EGS that 
haven't been commercialized. H.R. 2304 looks at specifically 
those heat-capturing technologies that haven't been 
commercialized and are not mature and says what we can do to 
better capture this resource, and so I think if I were to come 
to the defense of OMB I would say that they mischaracterized 
geothermal as a single technology and not a resource and we 
need to do everything we can to utilize all of the technologies 
in our suite to capture this great domestic resource.
    Chairman Lampson. Thanks.

                        Geo-pressured Resources

    Dr. Tester, can you please describe geo-pressured resources 
and their potential? I understand they are particularly 
prevalent in my corner of the world, the Gulf Coast of Texas. 
Should this geothermal legislation contain a provision to 
specifically address that resource?
    Mr. Tester. Geo-pressured resources are, as you have 
pointed out, largely in the Gulf Coast area of the United 
States. They have three features to them that make them 
attractive: high temperatures, the presence of dissolved 
methane and also relatively high pressures. I would classify 
them in this continuum of geothermal resources as we have 
talked about from today's very high-grade systems that we 
utilize in the West that are liquid- or vapor-dominated systems 
across the full spectrum to very low-grade systems in the East. 
So geo-pressured is in there. There are others as well that 
also would be relevant to discuss today including co-produced 
fluids and things like that. Whether they should be explicitly 
pointed out in the bill I think is a matter for consideration 
but if the bill is written generally enough, and I think it is 
now, they would be considered part of that continuum, in my 
view.
    Chairman Lampson. Thank you.

       U.S. Army Corps of Engineers and Ocean Power Technologies

    Dr. von Jouanne, is the Corps of Engineers involved at all 
in any of your research?
    Dr. von Jouanne. The U.S. Army Corps of Engineers is key in 
the regulatory process and so we have filed permits for ocean 
demonstration with the Corps as well as with our Oregon 
Department of State Lands and Department of State Lands and 
Conservation Development and the Ocean Coastal Zone Management, 
so----
    Chairman Lampson. As far as their participating in research 
with as much material as they move and the impact that it can 
have on so much of what is happening on our coastline, it seems 
to me that that would be something that they would be 
interested in.
    Dr. von Jouanne. Absolutely, and I think that will come. 
You know, with them now being an integral part of that 
permitting process, I think they will see the opportunities 
that they would have to contribute because there are a lot of 
other research issues that need to be looked at, such as sand 
transport, when wave energy devices are deployed, and that is 
another big area that the Corps of Engineers could provide 
input on.

                       H.R. 2313 Recommendations

    Chairman Lampson. Mr. O'Neill, since you strongly advocate 
for increased federal research and development funding for 
marine renewable energy technologies, may I infer that you 
support H.R. 2313, and are there specific changes to the 
legislation that you would recommend?
    Mr. O'Neill. Well, in terms of the bill itself, we support 
the bill absolutely and we support all efforts in this area. 
Any specific changes--we actually worked with staff on the bill 
a bit and they were very receptive. There are so many 
technologies. Mr. Thomsen mentioned the suite of technologies 
within geothermal. We have got a lot of technologies and the 
newer emerging, like the vortex-induced vibrations, et cetera, 
aren't covered. I would encourage this particular committee 
going forward that developing ways to really foster 
innovation--right now the regulatory process as Mr. Greene 
mentioned, we should have an adaptive management program and we 
wholeheartedly endorse something like that. On the R&D side of 
it though, I think that Congresswoman Hooley's bill is great.
    Chairman Lampson. Thank you very much.
    The Chair now recognizes Ranking Member Mr. Inglis.
    Mr. Inglis. I thank the Chair.

                     Geothermal Generating Capacity

    Dr. Tester, you testified I believe that 100,000 megawatts 
is available from geothermal. Is that correct?
    Dr. Tester. Well, let me clarify my remarks. When we 
started our assessment, we undertook the idea that in order to 
have geothermal be an important player in the United States, 
that it would have to get to a point where it would be roughly 
10 percent of the generating capacity that we have now. That 
would correspond to, in today's figures, 100,000 megawatts. 
However, if you look carefully at the analysis that we made of 
the regional U.S. resource, including Alaska and Hawaii, but 
just looking at it state by state, we are really talking about 
an enormously large stored amount of thermal energy, and if you 
were to envision a future where you might want to develop it 
beyond this 10 percent level, there would not be an issue with 
having enough energy in place to do it, and although geothermal 
is clearly different than other renewables such as solar and 
wind, the sustainability of it is clear, given the massive 
amount of stored thermal energy that we have access to at, let 
us say, to depths from the surface to 30,000 feet or to 10 
kilometers. And I think it is important to keep this in mind, 
that the heat-mining idea has to be modular and scaleable so 
you start out small and you develop these connected reservoir 
systems in much the way that you would want to emulate what 
nature has given us in other parts of the world where we 
utilize geothermal today, but it will never be limited, and I 
think we make this statement clear in the report, by the 
acceptability or the magnitude of the resource. It is clearly 
going to be technology and economics which will determine how 
much of this we can utilize. So it could way beyond 100,000 
megawatts, to finalize that, if you wanted to go to that 
regime, but it will be a matter of technology and cost.

               Locations for Geothermal Energy Production

    Mr. Inglis. Generally speaking, where is it available in 
the United States? What are the best locations?
    Dr. Tester. Well, if you use one metric as best, which 
would be the average gradient, the geothermal gradient, you 
could largely think of the western part of the United States as 
having the highest gradients in general. I am speaking almost 
from west of the Mississippi all the way to the California 
coast. What makes it special though is that there are other 
ingredients that you want besides just high temperature and 
shallow depths. In the conventional system, you are looking for 
permeability and porosity, connectivity, if you will, and the 
presence of fluids. In the case of EGS, we are missing one of 
those, and we are trying to develop technologies that would 
stimulate the system to a point where we could emulate these 
hydrothermal conditions. So if you wanted to envision a program 
as we tried to put it together in our thinking that this would 
start out something where you would work from the western part 
of the United States where the resources are of higher grade, 
shallower, less costly to develop and to demonstrate, and then 
move east, so reversing the migration we had to the country. So 
the high-grade resources I would say would be generally the 
western part but they are in Texas, they are in Colorado, they 
are in Montana. They are equally through the Pacific Northwest 
and in California, not just where we are producing geothermal 
energy right now.

                    Geothermal Technology Readiness

    Mr. Inglis. The Chairman's helpful question about the OMB's 
statement that it is a mature technology, could they really be 
saying that it is economics that will make this work? In other 
words, the technology is there----
    Dr. Tester. Well, I think----
    Mr. Inglis.--it is just a matter of economics?
    Dr. Tester.--eventually everything in the alternative 
energy field gets down to a question of economics but I think 
what they seem to be missing is that this is not just one 
number fits all geothermal systems. Very high-grade systems 
such as we have in parts of California and Nevada and Utah are 
already producing commercially competitive power right now. 
What we would like to do is to improve the technology to the 
point through this vigorous R&D program where we would bring 
down those costs, where we would reduce risks and encourage 
investment so that we could bring a larger portion of it 
online. So if you will, go to the lower grades, not necessarily 
what we might want to do in the very eastern part of the 
country where the gradients are very near normal but certainly 
to open up the west soon for a massive development of 
geothermal expansion.
    Mr. Inglis. Mr. Thomsen.
    Mr. Thomsen. Mr. Chairman and Mr. Inglis, you know, I think 
your question is a very good one in the fact that my company 
focuses on your typical hydrothermal applications, and those 
applications have been prevalent in the western United States 
due to the drilling depth and cost and economics of those 
projects. What this bill is looking at and what Mr. Greene 
touched on is the fact that if we can make these technologies 
more efficient, we can go capture this geothermal throughout 
the country, and I think when we look at this, if we say what 
we have now is good enough, then the idea of maturity can be 
acceptable. My company doesn't feel that that is the case. We 
want to continue moving eastward, going to greater depths and, 
you know, to break it down to its most simple point, if we can 
become more efficient and reduce the risk in drilling by 10 
percent, 20 percent, you will see companies like ORMAT and 
other start-up companies going after these resources that might 
be slightly deeper, harder to penetrate and go find. When we 
drill for geothermal resources in our standard hydrothermal 
applications, we are drilling through the most--the hardest 
rock, the hottest temperatures and looking for these resources 
that are difficult to find. We have done that well on the West 
Coast due to geology and the thickness of the Earth's crust and 
things. We know the resources eastward and that is what we are 
looking to find. The 100,000-megawatt number that we talked 
about was from a report done in 1979. We haven't had a new 
report since that time. And at that time they were looking for 
temperatures in standard geothermal applications that were well 
above 300 degrees Fahrenheit. Technology has come a little ways 
in being able to capture lower temperatures and turn that into 
viable technology projects. We want to continue looking at that 
throughout the country.
    Mr. Inglis. Mr. Chairman, time must be up, isn't it? Thank 
you.
    Chairman Lampson. Thank you, Mr. Inglis, and I apologize 
for our clocks not working at all. If you will glance my way 
every now and then, when you hit five minutes, or four and a 
half minutes, I will at least hold this thing up and if you get 
to five I will start tapping it a little bit.
    I would recognize Mr. McNerney now for five minutes.
    Mr. McNerney. Thank you, Mr. Chairman.
    I do want to thank Dr. Tester for the excellent detail and 
comprehensive report that was produced and for the executive 
summary that was actually readable, and Mr. Thomsen for your 
fine work with ORMAT.

                     Geothermal Generating Capacity

    Dr. Tester, you mentioned that there were three gigawatts 
being produced now and that we have a potential for 100 
gigawatts in 10 years. Is that what I understood you to say?
    Dr. Tester. If we proceed on the path that we proposed in 
our scenario, the path was to get to 100,000 megawatts in 50 
years to take us from where we are now. So three gigawatts now 
to 100,000 megawatts in 50 years or 100 gigawatts, that is 
still quite an ambitious set of developments. Each geothermal 
site would have to be identified and developed, exploratory 
drilling and verification, so we are already a few years into 
that, as you know. But after you get to that point, 
particularly as you get out along the 10- to 15-year period, we 
feel that this will be essentially self-sustaining because you 
will have enough of these modular plants in place, you will 
have worked on both ends of the continuum, as I call it, 
improving the high-grade and hydrothermal technologies, and 
using where you can those technologies to work on EGS, and so 
our feeling was that the economic analysis would say that a lot 
of learning would go on during that period, demonstration, 
multiple demonstrations, improving the modularity, being able 
to show we can do it not only in California but in Idaho or 
further east if we wanted to demonstrate the ability to make 
reservoirs and stimulate them. So I am encouraged that you have 
to get on that path and what I think is particularly laudable 
about this bill is that it realizes that you can't just stay 
with the short-term aspect of geothermal. You really should be 
investing in both simultaneously and I think it is very 
balanced with respect to that.
    Mr. McNerney. Thank you.

                   Geothermal's Impact on the Economy

    Mr. Thomsen, you represent industry and I am very intrigued 
by your comment about jobs and the impact on the economy. Of 
course, we are all worried about global warming and our 
dependence on oil and the peak oil and so on but the actual 
impact on the economy is where it really is going to come--that 
is where the pedal is going to hit the metal. For some fixed 
quantity of electrical production, how does job creation 
compare both in the construction part and in the production 
part to oil or natural gas, which is our leading form of 
electrical production today?
    Mr. Thomsen. Mr. McNerney, geothermal production is an 
incredibly capital-intensive project up front. My company 
recognizes that for each megawatt of energy we bring online, it 
requires a capital investment of ours of $3 million, so if we 
bring on 100 megawatts, that is a $300 million investment. When 
we go to construct a project, 40 percent of our construction 
costs come from the local economy. We utilize local contractors 
for the small electric motors and things we use. We contract 
all that out to the local economy. So we have a very large 
impact. When it comes to jobs during the construction phase, I 
think the Geothermal Energy Association (GEA) can better speak 
to those exact numbers but I believe it is approximately 10 to 
one in the amount of jobs required during the construction 
phase compared to combined cycle gas, but we can be sure to get 
you those numbers. And the point that we would like to point 
out there is because this is a domestic resource, that money 
stays within the state that our project is being built and 
within this country, and that is hugely important for us.
    Mr. McNerney. You said $3 million per megawatt. Do you see 
that number going down?
    Mr. Thomsen. Three million dollars per megawatt. That is 
correct.
    Mr. McNerney. Do you see that number going down as the 
technology improves? I mean, it seems like when you go to EGS 
you are going deeper, you are going to have to do reservoir 
stimulation, rock stimulation and so on, so it doesn't seem 
like it is going to go down with time.
    Mr. Thomsen. It is--you have asked kind of a twofold 
question and I would like to answer that. As we look--if we use 
the technology that we are currently using today to look for 
harder, more difficult resources at greater depth, that cost 
will not go down. If we go to look for that resource using the 
same drilling techniques, the same efficiency and production 
techniques that we use today, you are absolutely correct. If we 
can make the technology on the surface, this suite of 
technologies that can take that heat and produce electricity 
more efficiently, that cost might come down. But without a 
robust R&D budget and the use of our great men and women at our 
national laboratories and universities to develop that, I think 
you are absolutely right. We don't foresee the cost of that 
coming down greatly any time soon.
    Dr. Tester. I could make one other small addendum to that. 
In our analysis, if you look at the supply curves that we 
developed in there, you will see that the early development of 
EGS, which is what Paul was referring to, would be much higher 
cost. It would be somewhere in the vicinity of perhaps twice 
the current energy cost we have now for electricity. But as you 
move out this yearly development and get out to the point where 
you have incorporated technology improvements, learning by 
drilling and improving the drilling technology, our estimates 
would be that after about 12 to 15 years you would reach this 
break-even condition where EGS, which requires these additional 
attributes, as you have mentioned, would be competitive. But 
you can't just assume that will happen. I think it really takes 
engagement now in terms of getting the demonstrations out 
there.
    Mr. McNerney. Thank you.
    Chairman Lampson. Thank you, Mr. McNerney.
    The Chair now recognizes Mr. Diaz-Balart.
    Mr. Diaz-Balart. Thank you very much, Mr. Chairman. I have 
two brief questions.

      Not in My BackYard (NIMBY) and Cost Concerns for Renewables

    One is to Mr. O'Neill. You mentioned the cost per kilowatt-
hour for wind and wave and tidal, and just for, you know, 
laypeople like us, for comparison sake, how does that compare 
to the cost of kilowatt-hour for electricity from, you know, 
coal, natural gas and nuclear, which is what we currently have, 
number one.
    For Mr. Greene, this weekend, by the way--last weekend I 
was at the NOAA's Southeast Fishery Science Center, which is 
located in Miami, and I think some of the research that you 
recommend, for example, understanding fish populations, would 
probably be more appropriately performed by an agency like NOAA 
that is doing that right now, rather than DOE. Now, my 
understanding is that currently these bills include only the 
Department of Energy. Don't you believe that adequately 
incorporating--would it not be better to expand to other 
agencies like NOAA and others who may be doing it and not just 
limiting it to DOE?
    And lastly, I don't know who this question is to, Mr. 
Chairman, but we saw last year a very good example of NIMBY, 
Not In My BackYard, in the Northeast. I am not going to mention 
who or what but, you know, people who are seen as real forceful 
advocates of renewable energy, when it blocked their nice view 
of the ocean, all said, you know, damn these resources, you 
know, we don't need them in front of my yard, in front of my 
view, in this case. It was just because it was blocking the 
view a few miles out in the ocean. Have you all looked at that 
and figured out how to deal with that because, you know, when 
the rubber meets the road and reality is that, you know, this 
is all great but nobody wants it in their backyard or in this 
case, in the front of their ocean view, and I don't know, it is 
not really a question. It is kind of just throwing out there 
and you all have a thought about that.
    So Mr. Chairman, those three questions and I will shut up. 
Thank you, sir.
    Mr. O'Neill. If I can start with your last question first 
because I have spent over 20 years studying the NIMBY 
phenomenon and worked for U.S. generating companies siting 
plants in 17 different states where we ran into NIMBYism in all 
its many forms. Very often NIMBYism comes from not a real 
substantive issue with a plant. You can be in a community for a 
year and have the town fathers telling you boy, this is the 
best thing since sliced bread. Then it is time to pull papers 
and run for office and you are the only issue in town. Very 
oftentimes NIMBYism comes from disenfranchisement, and with 
projects like ocean energy projects or even traditional power 
projects, the important way to approach a project, any kind of 
very large-scale change is going to scare people, so what you 
need to do is, you need to go in, you need to talk to the 
environmental community, you need to talk to the NRDC, you need 
to talk to the Sierra Club, you need to talk to the local folks 
and you need to listen to them, having a two-way dialog. In 
some cases project developers have actually made changes in the 
design of their projects, say, changed the coal train coming 
into a town to using a barge to bring coal in so that people 
don't have the same kind of impacts that the train would have. 
So making a change, actually listening to the people in the 
community. There have been lots of wonderful changes made to 
traditional power plants. In Florida they found that 
agricultural nutrients were going into Lake Okeechobee. The 
project developer built a 29-mile pipeline around the lake and 
took those nutrients, used them in their process water instead 
of letting the nutrients go in. They got that information by 
working with the local community and the county. So reaching 
out and dealing with stakeholders early in the process is the 
answer to your first question. Sorry for such a long answer.
    To your first question in terms of the cost, traditionally, 
to be competitive, you want to be about three to four cents a 
kilowatt-hour. The cost to the consumer is actually about 
eight-plus cents. I think it is 8.6 cents a kilowatt-hour and 
that--excuse me? Oh, yeah, and it varies from region to region. 
But that includes the transmission and distribution costs that 
the utilities incur, et cetera. When you look at a 32-cent-per-
kilowatt-hour feed-in tariff in Portugal compared to our 1.9, 
that 1.9 is probably appropriate right now for wind because of 
the scale that we have onshore wind projects. That brings them 
right into the hunt to be commercial. With ocean technologies, 
as I mentioned, the offshore wind was 40 cents a kilowatt-hour 
when it started. We are down getting into the single digits 
already right out of the box.
    Chairman Lampson. Thank you very much. Your time is expired 
and I turn now and recognize Ms. Giffords for five minutes.
    Ms. Giffords. Mr. Chairman, because I know we are going to 
have votes called in just about five minutes, five, ten minutes 
actually, I was hoping to hear from the sponsor of the bill.
    Chairman Lampson. You may yield to her if you care to.
    Ms. Giffords. I would yield to Representative Hooley.
    Ms. Hooley. Thank you very much for yielding.

                    Wave Energy Technology Readiness

    Dr. von Jouanne, talk to me a little bit about with wave 
energy where we are compared to some of the other renewable 
energy sources.
    Dr. von Jouanne. Very good. In wave energy, we are about 20 
years behind wind energy and that is because we have just 
started to see dollars invested in wave energy and what we saw 
in wind energy is that those investment dollars enabled an 
acceleration toward the optimum topology that we see now. We 
see this horizontal axis three-blade turbine. What we are 
seeing in wave energy right now is several topologies being 
considered in very preliminary stages of development and so 
while companies are planning to deploy and preparing to deploy 
their first topologies, a great deal of research and 
development still needs to take place in order to really 
optimize those topologies to make them cost competitive, and 
because of the advantages of wave energy over other forms of 
strong renewables such as wind and solar, we really feel that 
the catch-up time can be accelerated with the proper research 
and development dollars invested, and that the cost can be very 
competitive with other strong technologies such as wind, and, 
as I emphasized, we have this issue of energy density. If we 
look at the density of water compared to air, the density of 
water is about 832 times greater, which means we can extract 
more power from a smaller volume at subsequent lower costs and 
smaller visual impact with the whole NIMBY issue being 
critical. We also have greater availability, that is, how often 
are the waves rolling, and we have greater predictability that 
enables a utility to determine how much power a wave park 
equivalent to a wind farm, a wave park would be putting onto 
the grid, so some substantial advantages there.
    Ms. Hooley. Mr. O'Neill, at what point do you think that 
wave energy in some form would be available for to be used in 
this country, and what happens if we don't have the research 
and development dollars available?
    Mr. O'Neill. Well, if you look at Alaska right now where 
they are paying up to 80 cents a kilowatt-hour for diesel-
generated electricity, we could go commercial and be profitable 
in Alaska right now. The problem is that we don't have projects 
in the water. We need to have actual operating projects. We 
need to embrace the concept of adaptive management so that we 
are looking at the environmental effects as well as the 
efficiencies of these technologies to improve them. So getting 
them in the water--and Dr. von Jouanne accurately portrayed the 
fact that wave technology is about 20 years behind wind but I 
see us ramping up to commercial viability within the next five 
to eight years, and maybe even sooner. Advances not only in 
wind technology but in composite materials design, looking at 
other offshore construction techniques, our companies--if you 
look at Verdant Power, which has six turbines in the East River 
of New York, they have been operating. They have got $2 million 
of sonar equipment to watch the fish and the fish are swimming 
around the turbines. They are not running into the turbines, 
just as expected. But the tips of the turbine blades go around 
slowly just like with wind turbines, because of the lessons 
from Altamont Pass. We use a monopole, another lesson from 
Altamont Pass. We are learning from--so it is like the 
technology cycle time in computers where it used to be a new 
computer would come out every two or three years, then it was 
every year and now it is every six months and three months. You 
can't buy a cell phone now and think that is going to be new 
and sexy for more than three months, and that is what is 
happening. It is a robust, vibrant area and we are going to get 
there.
    Ms. Hooley. Thank you.
    Chairman Lampson. I thank the gentlelady, and now we 
recognize Mr. Bartlett for five minutes--Dr. Bartlett.

                Solar Augmented Geothermal Energy (SAGE)

    Mr. Bartlett. Thank you very much. My wife suggests that a 
better acronym for those who are opposed to development that 
they are a BANANA, Build Absolutely Nothing Anywhere Near 
Anyone. That is where some of our people are coming from. I 
wonder if Dr. Tester or others might comment on a concept 
called SAGE, which is Solar Augmented Geothermal Energy. One of 
the big problems of course with solar and wind is that they are 
intermittent and you have got to store the energy and they have 
what I think is a very clever approach to doing that. They are 
using the excess energy at the moment of production to heat 
brine, which is then pumped down into exhausted oil fields. 
Using all the techniques you use in geothermal, they are then 
extracting the energy from that hot brine. But a side benefit 
from this is that they are loosening up some of the oil that is 
there and we are now able to pump additional oil from these 
fields. We would just like your observation on the utility of 
SAGE as a potential for being a bridge between fossil and 
renewable energy.
    Dr. Tester. Let me comment first. I am sure Mr. Thomsen 
will want to add something to it. One good thing about 
geothermal is that it is continuous, dispatchable power, having 
very high capacity factors that are typically now in excess of 
90 percent in terms of their availability capacity factor. So 
to go to a hybrid concept would take--using solar would take 
some redesign and rethinking of how you would handle the power 
conversion end of it but certainly could be done. There are 
good examples of this across the spectrum of renewables in 
general where we are dealing with interruptible renewables with 
respect to solar. If we look at the Kramer Junction plant in 
California where it uses gas when the sun is not shining, that 
is a hybrid concept as well. So I would be very positive about 
considering all ways in which you could utilize a higher 
fraction of renewable resources if it made sense technically 
and economically. The idea of injecting hot water and 
increasing production of fluids is something that we address 
sort of in the inverse way, namely that through the production 
of oil and gas we also produce a lot of hot water, warm water 
just as a consequence of that, and that water, at least the 
thermal energy content goes largely unutilized. This is what is 
referred to as co-produced fluids, and I think that too could 
increase the effectiveness or efficiency of a utilization 
effort. So all of the things you are suggesting I think are 
appropriate to be examined and analyzed. I don't think there 
are any picking winners and losers at this stage. It is perhaps 
a little premature.
    Mr. Thomsen. If I could, Mr. Chairman to Mr. Bartlett, you 
have touched on some very good points, one being is the 
bridging of renewable to fossil fuels. I think the SAGE idea 
that you proposed is great and I think we should look at it. We 
are also looking at, like Dr. Tester said, the co-production of 
hot water from existing oil and gas wells which research has 
shown to us might increase the longevity of our existing oil 
fields. We also have technology very similar to geothermal, 
which captures waste heat from gas compression stations using 
the exact same geothermal technology and producing additional 
electricity with no new emissions. The solar concept has been 
used. ORMAT was responsible for a test project in Arizona using 
solar troughs that heated a working oil, kind of a solar trough 
collecting the sun's heat centered on a working oil that we 
pumped through our system and produced electricity. So the idea 
there is a fantastic one. What all of those projects have in 
common is they can all be added to the suite of technologies 
for geothermal and renewables but none of those yet are 
commercially viable, and that is what we think this bill, 2304, 
will help us do, take all that science and technology that 
isn't quite yet commercially viable and help us learn from that 
so we can make it commercially viable, bring down those cost 
points, look at the problems with interfacing a geothermal 
power plant with a well with a solar--you know, solar field, et 
cetera. So I think--I mean, that is a fantastic suggestion.

                    Geothermal Energy Transportation

    Mr. Bartlett. If we can do this of course we have another 
challenge and that is how to get the energy from the site of 
production to the user. With oil, it is easy. You put it in a 
pipe. You put a gallon in the pipe; 1,000 miles away you still 
got a gallon. What we are producing with electricity we put on 
a wire and 1,000 miles away you may have nothing. So we have 
the challenge of how we get the energy that we produce to the 
ultimate user because most of these abandoned fields are not 
near big population densities.
    Mr. Thomsen. And one of the interesting and great 
attributes of geothermal energy is its ancillary services, and 
because it is a baseload energy source, when we produce 
electricity--I am not an electrician and I am sure someone on 
the panel can probably explain it to you better. We can 
actually change the oscillation of that energy from AC current 
to DC current, so when we put it on a line, we can actually 
change the characteristics of that electricity so that it can 
go farther and farther away. Some of our power plants in Nevada 
are hundreds of miles away from the residential base. We are 
close to transmission but far away from that residential base 
and we can actually change the characteristics so that we can 
get more power there.
    Mr. Bartlett. Thank you, Mr. Chairman.
    Chairman Lampson. Thank you, Mr. Bartlett.
    I will now recognize Ms. Woolsey for five minutes.

                    Geothermal Production Tax Credit

    Ms. Woolsey. Hello, and just outside of my district, Santa 
Rosa, California, we have some of the largest reserves of 
geothermal energy in the entire country, and to make this 
renewable energy source even more renewable, Santa Rosa, which 
is the largest city in my district, pumps wastewater up the 
geysers to keep them generating electricity for a large part of 
Santa Rosa. So it is a wonderful partnership and Santa Rosa 
does away with a lot of their wastewater while they receive 
electricity.
    What I want to know is, are the current production tax 
credits adequate to stimulate exploration and development, and 
I also want to know, are there any offsetting problems with the 
natural resources that need to be mitigated or do we come up 
``A+'' because we are actually helping the environment while we 
do this?
    Mr. Thomsen. Thank you, Mr. Chairman to Ms. Woolsey. 
Regarding the production tax credit, the geothermal industry 
was thrilled to finally be included in the production tax 
credit. The problem we have with the production tax credit is 
that it only tends to be renewed every two to four years. The 
average geothermal project takes three to five years to come 
online from a Greenfield project, and so we are really asking 
the industry sometimes to take a very short market signal from 
the government and make a 20-, 30-year commitment because that 
is how long our power plants operate. When it comes to getting 
financial institutions to help you with the huge upfront 
capital costs, the production tax credit, its amount is great 
but its length is not so great and we have been unable to make 
good use of that. There have been two projects that have 
qualified for the production tax credit since it was passed. 
They happen to both be ORMAT projects and the projects were 
started long before we knew the production tax credit was going 
to be there. We just happened to kind of fall into that later 
on and so what we are looking for and what would really help 
industry is a credible commitment for a longer period of time 
so that we knew when we went to investors and we went to the 
banks to say we are going to have this tax credit when this 
project comes online. Without that, it hasn't been that 
beneficial to the geothermal industry as of yet. The second 
part of your question I think Dr. Tester can answer.

                     Geothermal Resource Assessment

    Dr. Tester. Thank you for pointing out that lovely example 
of what goes on at the geyser field. In fact, you are doing 
what we would want to do in normal geothermal practice, which 
is to continually reinject and resupply the system so you can 
more effectively mine heat, and you might note in our 
assessment of the enhanced geothermal system side of the story 
that we did talk about the need and recommended that resource 
assessment in general needs to be looked at much more 
quantitatively and in a much more specific way across the 
country. The last time a serious study was done was almost 30 
years ago right now, a published study by the U.S. Geologic 
Survey. The bill addresses that but I think the importance of 
that and how that will affect where you go to the next 
generation of sites is incredibly important. We picked a few 
targets of opportunity, as we called them, in our study, one of 
which was the Clear Lake area right near the geyser site. That 
has been well characterized and obviously is a high-grade area 
but there are many others in the country that haven't had that 
degree of drilling and exploration that also need to be looked 
at in California as well as many other states. So this is a 
good part of the bill and I think needs to be sustained. It is 
something that I think nationally is important for us to do. 
Thank you.

                 Environmental Benefits From Geothermal

    Mr. Greene. Congresswoman, I think, without a doubt, that 
geothermal can play a large role in a very environmentally 
positive way. Every energy technology though has some 
environmental impact and I think the important thing that I 
talked about earlier is thinking about this technology in a 
long-term way. We need to go from one, two, three projects to 
having lots of these projects if they are going to contribute 
in a large way. That means we need to think about their impacts 
cumulatively over all of those projects. I think to do that, 
that is an environmental challenge and issue in and of itself. 
The other part of getting there is addressing the sort of 
uncertainty that communities feel when a project comes to them 
and they are trying to figure out, all right, well, what does 
this geothermal project in our backyard mean, and so getting 
consensus around what the real environmental impacts are going 
to be is critical and I think the research and development that 
we are talking about here today can play a huge role in 
building that consensus.
    Ms. Woolsey. Thank you.
    Chairman Lampson. Thank you, Ms. Woolsey.
    I want to thank this panel. I think that we can adjourn at 
this point in time. We have had everyone who wanted to ask 
questions, and I have a few more questions but we will do that 
differently.
    I really appreciate all of you for appearing before the 
Subcommittee. We all do. Your testimony has been very helpful 
and I think fascinating. I believe that the legislation that we 
have discussed today moves us forward in our effort to develop 
a more diverse supply of energy.
    Under the rules of our committee, the record will be held 
open for two weeks for Members to submit additional statements 
and any additional questions, as I have, that they might have 
for the witnesses.
    Thank you all for coming. This hearing is now adjourned.
    [Whereupon, at 11:25 a.m., the Subcommittee was adjourned.]
                              Appendix 1:

                              ----------                              


                   Answers to Post-Hearing Questions




                   Answers to Post-Hearing Questions
Responses by Jefferson Tester, Meissner Professor of Chemical 
        Engineering, Massachusetts Institute of Technology

Questions submitted by Chairman Nick Lampson

Q1.  What is the smallest scale plant for electric power conversion 
that is both technologically feasible and also makes commercial sense? 
What is the largest? How modular or centralized can geothermal energy 
production be?

A1. About one to two MWe would be the smallest output for geothermal 
electric plant that would be practical today. There have been smaller 
ones in operation in the past by they have been mostly demonstrations 
and not in commercial service. For non-electric applications such as 
geothermal heat pumps much smaller outputs (e.g., 5-10 kW thermal) are 
commercially feasible today. Economies of scale are reached for single 
modular generating plants supplied by one set of production wells 
somewhere in the 50 to 100 MWe range. These modules can be linked 
together to provide central station generation capacity to meet demands 
for large load centers--such as mega cities or densely populated 
regions. A good example of this approach is The Geysers field in 
Northern California near Santa Rosa which is the largest geothermal 
plant in operation in the world. It actually has a nameplate capacity 
in excess of 2,000 MWe and consists of many modular plants in the size 
range of 50 to 100 MWe.

Q2.  Can you please comment on workforce training issues relevant to 
geothermal energy development. Is our country currently producing 
technically competent workers in sufficient numbers to significantly 
expand work in all aspects of geothermal development?

A2. Our country is not currently producing enough engineers and 
scientists with specific geothermal knowledge to develop and deploy 
geothermal technologies at a much increased rate. Fortunately in the 
U.S., student interest in alternative energy careers is growing and we 
have the capacity in our universities in engineering and Earth sciences 
to teach most of the core skills and fundamentals needed. With a 
national R&D program in place it would not take much to redirect 
colleges and universities to actively engage in creating programs to 
educate and train the next generation of scientists and engineers 
needed for large scale geothermal energy system deployment and 
operation. It would be good to involve students and faculty with actual 
operating geothermal plants and field demonstrations by way of 
internships or co-ops when possible.

Q3.  Can individual geothermal reservoirs be depleted of heat or fluid 
over time? If so, how long does a reservoir last? If the heat in a 
reservoir can be depleted, can it be recharged by allowing it to lie 
``fallow'' for a period of time? How long? Must the power plant on the 
surface lie dormant during this time, or can it tap into other 
reservoirs?

A3. As thermal energy or heat is mined from specific reservoirs they 
are ``locally'' depleted or cooled. An important feature is that the 
extent of the depletion is very limited--well within the active 
reservoir dimensions as only a portion of a rock volume near the 
injection wells would be cooled. Furthermore, in contrast to other 
mineral or fossil resources, once a particular geothermal reservoir 
ceases to operate it will ``regenerate'' on its own with heat being 
conducted from hotter regions of rock that surround the cooled parts 
and by energy being generated by radiogenic decay of contained 
minerals. After a period of roughly two to four times the energy 
extraction period rock temperatures will be restored to their initial 
condition. In a typical commercial operation any depleted wells could 
be redrilled or re-stimulated or replaced with new wells to restore 
fluid production temperatures. The power plant would continue to 
operate with high availability and capacity factors using the newly 
drilled, re-drilled or restimulated wells as their source of energy.

Q4.  Given the enormous potential for geothermal energy development 
that you highlight in the MIT report, how do you explain the relative 
lack of interest in this resource? Why hasn't it attracted more 
attention in recent years?

A4. There are several reasons why I feel the potential of geothermal 
energy has been grossly undervalued in the U.S. (1) The 
``constituency'' of advocated for geothermal energy is much smaller 
than for other renewables such as solar and wind that compete for 
resources and funds within the DOE. (2) There is widespread perception 
that geothermal is ``too small and too localized'' resource with only a 
few regions capable of providing power. This perception is based on the 
idea that only natural high-grade hydrothermal systems are viable, it 
completely ignores the idea of EGS--with human intervention to engineer 
systems to emulate the properties of high-grade hydrothermal 
reservoirs. (3) Federal R&D for geothermal has been inconsistent and to 
small for the last 15 years in the U.S. to mount sufficiently large 
field demonstrations of EGS technology.

Q5.  What other countries are supporting EGS research and what are they 
doing? Have they made any significant advances?

A5. There are several EGS programs underway at the present time in 
Europe and Australia. The largest of these are at the Cooper Basin site 
in South Australia operated by Geodynamics with federal, State and 
private support and the Soultz site in France operated with the EU R&D 
program and at the Landau site in Germany, and the Basel site in 
Switzerland under private and federal sponsorship. Each of these tests 
has advanced EGS technology building on earlier U.S. experience.

Q6.  In your written testimony you comment on the importance of 
international cooperation in geothermal R&D. Can you comment on what a 
specific provision to support such international cooperation might look 
like? What specific activities should it support, and with whom?

A6. Provisions for extended international travel support for our 
scientists and engineers to participate in ongoing field testing and 
evaluation of EGS systems in other countries would provide significant 
leveraging of our own efforts and avoid duplication. Also in some 
cases, it may be appropriate to have jointly funded research projects 
particularly on technique or instrumentation development for evaluating 
reservoirs and for drilling. To start, we should be collaborating with 
the Australians, with the Europeans involved in projects at the Soultz, 
Landau, and Basel sites, with the Italians at sites in northern Italy 
and elsewhere, and with the Icelandic researchers dealing with 
geothermal developments in Iceland and in other countries.
                   Answers to Post-Hearing Questions
Responses by Paul A. Thomsen, Public Policy Manager, ORMAT 
        Technologies, Inc.

Questions submitted by Chairman Nick Lampson

Q1.  What is the smallest scale plant for electric power conversion 
that is both technologically feasible and also makes commercial sense? 
What is the largest? How modular or centralized can geothermal energy 
production be?

A1. ORMAT recognizes that there are many technologies that can be used 
to commercially convert typical hydrothermal resources into 
electricity. ORMAT utilizes the ORMAT ENERGY CONVERTER (``OEC ''), a 
power generation unit, which converts low, medium and high temperature 
heat into electrical energy, and therefore can only comment on this 
technology utilized by ORMAT.
    The OECs are designed for the specific conditions of a wide variety 
of heat sources. Its main components include a vaporizer/preheater, 
turbo-generator, air-cooled or water-cooled condenser, feed pump and 
controls. The OEC is a field-proven, mature commercial product used in 
71 countries worldwide. ORMAT has successfully manufactured and 
supplied more than 800 MW of geothermal power plants, based on its 
proprietary technology, logging millions of hours of operating 
experience.
    The OEC enables geothermal developers to efficiently and 
economically use the full range of naturally occurring geothermal 
resources found throughout the world--from low temperature geothermal 
water to high-pressure steam.

          Full Range of Geothermal Conditions:

                -  The OECs can accommodate a wide range of geothermal 
                fluid temperatures and chemistries:

                -  Steam pressure: from 1.5 bar (21.8 psig) up to 25.0 
                bar (362 psig)

                -  Brine temperature: from 100+C to 
                224+C

                -  Silica content: up to 1.95 silica index

                -  NCG content: up to 15 percent

          Full Range of Site Specific Plant Scale:

                -  Available in sizes and configurations cost-
                effectively matched to specific resource and project 
                requirement, rather than imposing standardized plant 
                sizes

          Capacity range:

                -  from 250 kW to 130 MW

          Enabling 100 percent re-injection of the geothermal 
        fluid serves to maintain reservoir pressure and sustain the 
        life of the aquifer.

          Air-Condensers for Sustainability and Environmental 
        Benefits

                -  In addition of enabling 100 percent re-injection, 
                air-cooled condensers minimize the environmentally 
                negative impact of emissions and acid rain from cooling 
                towers and eliminate the use of chemicals for water 
                treatment

          High Availability

                -  ORMAT binary cycle plants have demonstrated average 
                plant availability of over 97 percent, with typical 
                individual OECs demonstrating generally over 95 percent 
                availability

          Modularity:

                -  The modular approach leads to flexibility, high 
                average plant availability, faster delivery time and 
                the capability of incremental development of projects

          Incremental Development:

                -  Use of the modular concept and cost-effective plants 
                at modest capacities makes it feasible to develop 
                projects in an incremental manner, which is a more 
                economically viable and a less risky approach

          Repowering Existing Plants:

                -  The use of OECs for re powering existing power 
                plants produces more power without additional resources 
                by:

                          Utilizing excess inlet steam pressure 
                        through unique ``topping'' turbines

                          Utilizing unused heat of brine 
                        discharged from a separator

          Small/Medium Scale Projects:

                -  OEC technology is also commercially applicable for 
                small-scale projects where the resources are limited, 
                the power demand small and/or where the conventional 
                technology is not economically viable

                -  The OEC's high reliability, pre-assembled units, 
                ease of operation and maintenance, and convenience in 
                transportation and installation are expanding the use 
                of small scale projects

Q2.  Can you please comment on workforce training issues relevant to 
geothermal energy development? Is our country currently producing 
technically competent workers in sufficient numbers to significantly 
expand work in all aspects of geothermal development?

A2. Currently, ORMAT sees a lack of engineers and personnel with 
applicable vocational skills in this county. With the expanded growth 
of the industry coupled with a lack of confidence in the continuation 
of DOE funding the geothermal industry is bracing for a substantial 
dearth of qualified and interested individuals.
    In the GEA's Handbook on the Externalities, Employment, and 
Economics of Geothermal Energy Alyssa Kagel points out that a 
geothermal power plant provides significantly more jobs than a 
comparative natural gas fired power plant, according to the Department 
of Energy (DOE).\1\ Geothermal jobs are quality, long-term, and 
diverse. According to the Environmental Impact Statement/Environmental 
Impact Report (EIS/EIR) for the proposed Telephone Flat geothermal 
development project located in the Glass Mountain Known Geothermal 
Resource Area (KGRA) in California, the average wage at the facility 
will be more than double the average wage in the surrounding counties. 
GEA's employment survey found that the overwhelming majority of 
geothermal jobs (95 percent) are permanent, and most are also full-
time. In 2004 the geothermal industry supplied about 4,583 direct power 
plant related jobs.
---------------------------------------------------------------------------
    \1\ U.S. DOE (Jan. 2006). Employment Benefits of Using Geothermal 
Energy, Geothermal Technologies Program. Retrieved March 17, 2006 from 
http://www1.eere.energy.gov/geothermal/employ-benefits.html
---------------------------------------------------------------------------
    The total direct, indirect, and induced employment impact of the 
industry in 2004 was 11,460 full-time jobs.\2\ Looking to the future, 
geothermal employment should expand significantly. In 2005 alone, GEA 
has verified over 2,000 MW of geothermal projects under development, 
which would increase geothermal capacity, and subsequently geothermal 
employment, by over 70 percent. Within the next ten years, the Western 
Governors' Association (WGA) estimates that over 5,600 MW could be 
produced in eleven U.S. states, the economic effect of which is 
detailed in the table below.
---------------------------------------------------------------------------
    \2\ Geothermal Energy Association (GEA) (September 7, 2005). 
Expanding Geothermal Power Could Create 100,000 New Jobs. Press 
Release. Retrieved June 16, 2006 from www.geo-energy.org

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


Q3.  Can individual geothermal reservoirs be depleted of heat or fluid 
over time? If so, how long does a reservoir last? If the heat in a 
reservoir can be depleted, can it be recharged by allowing it to lie 
``fallow'' for a period of time? How long? Must the power plant on the 
surface lie dormant during this time, or can it tap into other 
---------------------------------------------------------------------------
reservoirs.

A3. The geothermal reservoir is the entire system of fractured and 
permeable rocks and the hot water or steam trapped in that volume of 
rock. Geothermal reservoir engineering is the application of the basic 
principles of physics and chemistry to the engineering problems 
associated with the production of hot water (``brine') or steam from 
permeable rocks within the Earth. The rock contains most of the heat 
energy, but the brine or steam is necessary to carry the thermal energy 
to the surface for economic use. The long term success and 
profitability of an electricity producing geothermal project depends on 
how well the geothermal resource is managed. Like oil and gas 
reservoirs, geothermal reservoirs can be overproduced if not properly 
managed. Overproduction of a reservoir leads to a significant 
shortening of its productive lifetime and a loss of income. Almost all 
geothermal fields require injection of the produced brine back into the 
reservoir to maintain pressure and productivity.
    ORMAT's closed loop binary process re-injects 100 percent of all 
brine used in its process creating a preferable reservoir management 
program, allowing ORMAT to predict future changes in pressure, 
temperature, production rates, and chemistry of the produced geothermal 
fluids.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Such information is crucial for designing power plants and other 
facilities required for the most economic use of the resource. 
Reservoir engineering is of major importance in geothermal development. 
Any unexpected change in the characteristics of the wells or produced 
fluids can dramatically affect the profitability of the project. The 
application of reservoir engineering begins during the exploration 
phase of the project with the analysis of the initial geophysical 
measurement data that indicates a promising geothermal system, and it 
continues throughout the operational life of the geothermal resource. 
It is the reservoir engineer's task to test wells, monitor their 
output, design new wells, and predict the long-term performance of the 
reservoir and wells. This design and prediction is accomplished by 
studying field and operational measurement data and using computer 
models to project the field operation into the future. During operation 
of a geothermal field, the reservoir engineer will be able to compare 
the actual performance to the predicted performance. If necessary, the 
engineer can modify the management plan for the geothermal field to 
obtain more efficient operation. ORMAT's steamboat facility has been 
operating since 1985 with minimal variation to the resource 
temperature. Because 90 percent of the heat utilized in the geothermal 
process is transferred from the surrounding rock to the brine, ORMAT is 
unaware of any geothermal reservoir that has completely depleted its 
heat source. While water management can be difficult in non-closed loop 
systems, EGS systems may prove pivotal in assisting in reservoir 
management.

Q4.  Does your company see major export opportunities for geothermal 
energy technologies?

A4. Yes, ORMAT is a vertically-integrated company whose primary 
business is to develop, build, own and operate geothermal and recovered 
energy power plants utilizing in-house designed and manufactured 
equipment selling the electricity to utilities under long-term power 
purchase agreement. Power generation resulted in 73 percent of 2006 
total revenues.
    ORMAT also supplies its power generating equipment or complete 
power plants on a turnkey--EPC (Engineering, Procurement and 
Construction) basis to developers, utilities and industrial users. 
ORMAT has installed its equipment in 71 countries on six continents. 
Products resulted in 27 percent of 2006 revenues.

Q5.  What are the specific technological hurdles that stand in the way 
or geothermal power being used as a significant source of energy in the 
United States?

A5. ORMAT sees technological hurdles and substantial needs for 
improvement in technology, resource information, and efficiencies for 
which federal research is vital. The range of near-term needs is broad. 
Our knowledge and understanding of the geothermal resource base is 
limited and largely outdated. The technology available today to 
identify and characterize the resource often does not mitigate the high 
risk of development. Drilling in harsh geothermal environments is 
difficult and expensive. In locations where the resource cannot 
presently support commercial production, we need to evaluate the 
applicability of EGS techniques to achieve power generation at 
competitive prices.
    ORMAT supports a continued geothermal research program to address 
these near-term needs to expand domestic energy production and the 
long-term need to find the additional breakthroughs in technology that 
could revolutionize geothermal power production and reduce this 
countries dependence on foreign energy sources. ORMAT believes this to 
include an ongoing R&D program focused on further expanding the 
hydrothermal resource base, developing the technologies needed to make 
the EGS concept commercially viable, and taking advantage of the 
substantial deep thermal resources associated with the petroleum 
formations along the Gulf Coast.
    ORMAT believes cost-sharing is an appropriate and necessary 
component of a near-market partnership between the government and a for 
profit entity. For an example of what can come from this type of 
collaboration I turn to the fact that ORMAT has signed a cost-shared 
Cooperative Research and Development Agreement (CRADA) with DOE to 
validate the feasibility of a proven technology already used in 
geothermal and Recovered Energy Generation (REG).
    The project will be conducted at the DOE Rocky Mountain Oil Test 
Center (RMOTC), near Casper, Wyoming, and will use an ORMAT Organic 
Rankine Cycle (ORC) power generation system to produce commercial 
electricity. ORMAT will supply the ORC power unit at its own expense 
while the DOE will install and operate the facility for a 12-month 
period. ORMAT and the DOE will share the total cost of the test and the 
study, with ORMAT bearing approximately two thirds of the less than $1M 
total investment. The information gathered from this project may have 
implications to the some 8,000 similar type wells have been identified 
in Texas.

Questions submitted by Representative Gabrielle Giffords

Q1.  Can you comment on the use of water resources in geothermal power 
plants? Is a source of water essential, either for cooling or other 
purposes? Is geothermal technology applicable in regions, like the 
southwestern U.S., where water is scarce?

A1. Water use: Water cooling is not always required for geothermal 
power plants. Binary power plants (which will be the most commonly 
installed for most new geothermal facilities) can be air-cooled. 
However, in locations with high average ambient temperatures, water-
cooling is a preferred method, even for binary plants. The water-use 
for these power plants is relatively low compared to fossil fuel 
technologies.
    According to the Geothermal Energy Association, ``Geothermal 
plants* use five gallons of freshwater per megawatt hour, while binary 
air-cooled plants use no fresh water. This compares with 361 gallons 
per megawatt hour used by natural gas facilities.'' \3\
---------------------------------------------------------------------------
    \3\ A Guide to Geothermal Energy and the Environment. Geothermal 
Energy Association (2007) (page ii).

---------------------------------------------------------------------------
    * This includes binary plants and flash or steam plants.

    Because geothermal plants use significantly less water than fossil 
fuel plants, the scarcity of water is not a concern, nor a obstacle to 
development. Geothermal plants currently operate in the Southwest in 
Southern California, Central Nevada, and Southwestern Utah. A 
geothermal power plant has operated in Southwestern New Mexico.
    Outside of Southern California, and Central and Northern Nevada, 
other areas in the Southwest have been noted as containing geothermal 
prospects sufficient for electric production.
This includes areas in Arizona (including Southeastern Arizona)

This includes areas in Colorado (particularly Southwestern/South 
central Colorado)

This includes areas in New Mexico (particularly Southwestern/South 
central New Mexico)

This includes areas in Utah (including Southwestern Utah)
























                              Appendix 2:

                              ----------                              


                   Additional Material for the Record




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                     Section-by-Section Analysis of
               H.R. 2304, the Advanced Geothermal Energy
                  Research and Development Act of 2007

                       Rep. Jerry McNerney (D-CA)
                        Introduced May 14, 2007

Summary

    H.R. 2304 directs the Secretary of Energy to support programs of 
research, development, demonstration, and commercial application in 
advanced geothermal energy technologies. It also establishes or expands 
several programs for technology transfer and information sharing on 
geothermal energy.

Section-by-Section

Section 1. Short Title

    Act may be cited as the ``Advanced Geothermal Energy Research and 
Development Act of 2007''

Section 2. Findings

    Geothermal energy is a renewable resource capable of providing 
baseload power generation (and other applications) with minimal 
environmental impact. The geothermal energy potential in the United 
States is widely distributed and vast in size, yet it remains barely 
tapped. Sustained and expanded funding for research, development, 
demonstration, and commercial application programs is needed to improve 
the technologies to locate, characterize, and develop geothermal 
resources.

Section 3. Definitions

    Provides definitions for the following terms used in the Act: 
`Enhanced Geothermal Systems,' `Geofluid,' `Geothermal,' 
`Hydrothermal,' `Secretary,' and `Systems Approach.'

Section. 4. Hydrothermal Research and Development

    Instructs the Secretary to support research, development, 
demonstration, and commercial application of technologies designed to 
assist in locating and characterizing undiscovered hydrothermal 
resources. Establishes an ``industry-coupled exploratory drilling'' 
program, which is a cost-shared program with industry partners to 
demonstrate and apply advanced exploration technologies.

Section 5. General Geothermal Systems Research and Development

    Establishes a program of research, development, demonstration, and 
commercial application of system components and materials capable of 
withstanding the extreme environment (high temperatures and 
corrosiveness) in geothermal wells. Also establishes a program of 
RDD&CA of improved models of geothermal reservoir performance.

Section 6. Enhanced Geothermal Systems (EGS) Research and Development

    Instructs the Secretary to support a program of RDD&CA of 
technologies necessary to advance EGS to a state of commercial 
readiness. Also establishes a cost-shared, field based program of 
research, development, and demonstration of technologies to create and 
stimulate EGS reservoirs.

Section 7. Cost Sharing

    Establishes guidelines for the ratio of federal/non-federal 
contributions to cost-shared programs established under this Act. Also 
describes certain organizational and administrative elements to be 
integrated into the structure of cost-shared programs.

Section 8. Centers for Geothermal Technology Transfer

    Provides for the creation of two Centers of technology transfer to 
function as information clearinghouses for the geothermal industry, 
dedicated to collecting and sharing industry-relevant information. One 
Center, to be located in the western U.S., shall be dedicated to 
hydrothermal-specific development information; the other Center, 
located in the eastern U.S., shall be dedicated to EGS-specific 
development information.

Section 9. Study on Advanced Uses of Geothermal Energy

    Requires the Secretary to track technological advances impacting 
geothermal energy development and advanced uses of geothermal energy 
and fluids, and report back to the Committee every other year for the 
next five years (a total of three times).

Section 10. Authorization of Appropriations

    Authorizes appropriations of $80,000,000 for each of the fiscal 
years 2008 through 2012.

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                     Section-by-Section Analysis of
                 H.R. 2313, the Marine Renewable Energy
                  Research and Development Act of 2007

                       Rep. Darlene Hooley (D-OR)
                        Introduced May 15, 2007

Summary

    H.R. 2313 directs the Secretary of Energy to support programs of 
research, development, demonstration, and commercial application in 
marine renewable energy technologies. It also establishes National 
Centers for the testing of marine renewable energy technologies.

Section-by-Section

Section 1. Short Title

    Act may be cited as the ``Marine Renewable Energy Research and 
Development Act of 2007''

Section 2. Findings

    Marine energy sources--including waves, tidal flows, ocean 
currents, and thermal gradients--are clean, renewable, domestic sources 
of energy that have the potential to provide significant amounts of 
electricity to the Nation's power grid. Technologies designed to 
harness marine energy sources are already providing grid power in 
Europe. Recent studies have identified an abundance of viable sites for 
marine energy production in coastal areas of the United States, but 
expanded R&D is necessary to further develop the related technologies 
and hasten their commercial application. Federal support can be 
instrumental in hastening the development of marine renewable energy 
technologies and reducing the risk of investing in these areas.

Section 3. Definitions

    Provides definitions for the following terms used in the Act: 
`Marine Renewable Energy' (includes usable energy derived from waves, 
tidal flows, ocean currents, and thermal gradients), and `Secretary.'

Section. 4. Marine Renewable Energy Research and Development

    Instructs the Secretary to support programs of research, 
development, demonstration, and commercial application of marine 
renewable energy technologies. Areas of activity shall include: 
studying and comparing existing technologies, developing improved 
technologies, reducing costs of manufacture and operation, 
investigating integration with power grid, improving wave forecasting 
technologies, optimizing placement of devices, increasing reliability 
and survivability, studying technology compatibility with the 
environment, protocols for interacting with devices, and developing 
power measurement standards.

Section 5. Marine Renewable Energy Research and Demonstration Centers

    Calls for the establishment of one or more Centers for the 
research, development, and demonstration of marine renewable 
technologies. Such centers shall serve as permanent installations in 
environmentally approved areas where prototype technologies can be 
tested in connection with the power grid. Centers shall also serve as 
clearinghouses of industry relevant information. Sites for Centers 
shall be chosen on the basis of accessibility to appropriate marine 
energy resources and proximity to an existing marine renewable energy 
research and development program.

Section 6. Authorization of Appropriations

    Authorizes appropriations of $50,000,000 for each of the fiscal 
years 2008 through 2012.
                         Statement of UTC Power
    UTC Power appreciates the opportunity to submit the following 
statement for the record for the House Committee on Science and 
Technology, Energy and Environment Subcommittee hearing on ``Developing 
Untapped Potential: Geothermal and Ocean Power Technologies.''

Company Background

    UTC Power, a business unit of United Technologies Corporation, is a 
world leader in commercial stationary fuel cell development and 
deployment. UTC Power also develops other innovative power systems for 
the distributed energy market. This document focuses on issues related 
to the latest addition to our portfolio of clean, efficient, reliable 
technology solutions--namely, PureCycle power system. This is an 
innovative low-temperature geothermal energy system that represents the 
first use of geothermal energy for power production in the State of 
Alaska and the lowest temperature geothermal resource ever used for 
commercial power production in the world. The technology currently is 
being demonstrated at the Chena Hot Springs resort 60 miles from 
Fairbanks, Alaska and 35 miles off the power grid. UTC Power recently 
announced an agreement with Raser Technologies to provide up to 135 
PureCycle geothermal power systems totaling approximately 30 megawatts 
of renewable power for three Raser power plants.

Summary

    Geothermal energy addresses many of our national concerns, but its 
potential is largely untapped. UTC Power's PureCycle system represents 
an innovative advancement in geothermal energy production and is 
operating successfully today in Alaska as part of a demonstration 
effort. This geothermal energy breakthrough offers the possibility of 
tapping into significant U.S. geothermal reserves for a domestic, 
renewable, continuously available source of power to meet our growing 
energy demands. Congressional action is needed, however, if the United 
States is to translate this potential into reality. We welcome the 
introduction of the ``Advanced Geothermal Energy Research and 
Development Act of 2007'' (H.R. 2304) as a key element of the 
comprehensive policy framework that is necessary to advance our 
nation's use of geothermal energy.

Geothermal Energy Addresses Many National Concerns, But Huge Potential 
                    is Largely Untapped

    Our nation is faced with air quality and global climate change 
challenges, ever-increasing fuel costs and a desire to be less 
dependent on energy sources from politically unstable areas of the 
world. The United States is blessed with an abundance of geothermal 
energy resources that offer a renewable, continuously available, 
largely untapped domestic resource. The country generates 2,800 MWe of 
geothermal energy for power production in California, Nevada, Utah and 
Hawaii and another 2,400 MWe is under development. While estimates 
vary, the Geothermal Energy Association indicates that with effective 
federal and State support, as much as 20 percent of U.S. power needs 
could be met by geothermal energy sources by 2030. The National 
Renewable Energy Laboratory's report ``Geothermal: The Energy Under Our 
Feet'' concludes: ``Domestic resources are equivalent to a 30,000-year 
energy supply at our current rate for the United States.'' The study 
also notes: ``New low-temperature electric generation technology may 
greatly expand the geothermal resources that can be developed 
economically today.''

Chena Hot Springs Resort Puts Geothermal on the Map in Alaska

    Thanks to a partnership between UTC Power, Chena Hot Springs 
Resort, the U.S. Department of Energy, Alaska Energy Authority, Alaska 
Industrial Development and Export Authority and the Denali Commission, 
Alaska was added last year to the list of states using geothermal 
resources for power production. The system operates on 165+F 
(74+C) geothermal water and by varying the refrigerant can 
use hydrothermal resources up to 300+F (149+C). 
This is an exciting breakthrough since previously experts had assumed 
that geothermal fluids needed to be at least 225+F 
(107+C) for economic power generation. It is also 
significant since a large portion of the estimated known U.S. 
geothermal resources are expected to be in the low to moderate 
temperature range, including a large number of deposits associated with 
oil and gas wells that are currently not economically viable and 
therefore non-productive.
    The system was commissioned in August 2006 and provides power for 
the resort's on-site electrical needs. Our two PureCycle 225 kW Chena 
units have logged 5,400 hours of experience with 98 percent 
availability.
    The visionary owners of the resort, Bernie and Connie Karl, are 
committed to a sustainable community that is entirely self-sufficient 
in terms of energy, food and fuel. Their dedication is evidenced by on-
site renewable power sources that secure their energy independence 
while benefiting the environment.
    We are working closely with Alaskan authorities regarding further 
development of and enhancements to this technology. There is 
significant potential to deploy PureCycle systems for biomass 
applications at Alaska's more than 200 rural villages that currently 
depend on diesel generators with fuel being shipped by air or water. 
The present approach results in high costs, logistics issues, and 
dirty, loud power generation that is inconsistent with native cultural 
values.

Description of PureCycle Technology

    The PureCycle system is the product of a UTC brainstorming session 
in 2000 focused on opportunities for organic growth. It is based on 
organic Rankine cycle (ORC) technology--a closed loop process that in 
this case uses geothermal water to generate 225 kW of electrical power. 
Think of an air conditioner that uses electricity to generate cooling. 
The PureCycle system reverses this process and uses heat to produce 
electricity. The system is driven by a simple evaporation process and 
is entirely enclosed, which means it produces no emissions. The only 
byproduct is electricity, and the fuel--hot water--is a free renewable 
resource. In fact, after the heat is extracted for power, the water is 
returned to the Earth for reheating, resulting in the ultimate 
recycling loop.

Innovative Features and Awards

    The PureCycle system reflects a number of key innovations and 
breakthroughs. As mentioned previously, the Chena project is the 
world's lowest temperature geothermal resource being used for 
commercial power production and represents the first time geothermal 
energy has been used to produce electricity in Alaska.
    On the technical side, the PureCycle system capitalizes on an 
advanced aerodynamic design that results in 85 percent efficiency from 
a radial inflow turbine derived from a Carrier Corp. compressor. 
Carrier Corp. is a sister UTC company and a world leader in air 
conditioning and refrigeration technology. The geothermal system is 
also unique in its ability to match the turbine design to working fluid 
properties, thus allowing the equipment to operate on a range of low to 
moderate temperature energy resources and enhancing its flexibility to 
meet customer requirements.
    While the PureCycle system and its application to the geothermal 
energy market are new, the product draws upon decades of UTC 
innovation, operating experience and real-world expertise. Key 
components of the system are derived from Carrier Corp. and 90 percent 
of the PureCycle system is based on UTC high-volume, off-the-shelf 
components that enhance the value proposition to our customers.
    The Chena project has attracted world-wide attention and won two 
awards in 2006--a U.S. Environmental Protection Agency and Department 
of Energy 2006 National Green Power Award for on-site generation and 
Power Engineering magazine named it Renewable/Sustainable Energy 
Project of the Year.

What Is the Significance of Low Temperature Geothermal Energy?

    Previously, geothermal energy for power production has been 
concentrated in only four Western U.S. states. The ability to use small 
power units at lower temperature geothermal resources will make 
distributed generation much more viable in many different regions of 
the country. Simply put, PureCycle technology could result in 
significant new domestic, continuously available renewable energy 
resources--not just in Alaska, but across the country. The capability 
to operate with a low temperature resource allows the UTC PureCycle 
System to utilize existing lower temperature wells and to bottom higher 
temperature geothermal flash plants and many existing ORC binary power 
plants.
    In addition, there are more than 500,000 oil and gas wells in the 
U.S., many of which are unprofitable. The use of geothermal hot water, 
which is abundant at many oil and gas well sites, to produce a 
renewable source of electrical power could extend the life of many of 
these assets. This would result in significant environmental, energy 
efficiency, climate change, economic and other benefits associated with 
the development of geothermal oil and gas electrical power.

Recommended Actions

    It is unfortunate that at this moment in time when there are 
exciting innovative developments in the world of geothermal technology, 
the Federal Government is cutting off research and development funding. 
The rationale given is that the technology is mature and represents a 
resource with limited value since it is confined to only a few Western 
states.
    We have only scratched the surface regarding our nation's 
geothermal energy potential. The R&D possibilities have not been 
exhausted and this is NOT a resource that is limited to only a few 
Western states. There are advances in low-temperature geothermal energy 
alone that prove otherwise.
    The National Research Council report ``Renewable Power Pathways'' 
recognized the importance of geothermal energy and stated: ``In light 
of the significant advantages of geothermal energy as a resource for 
power generation, it may be undervalued in DOE's renewable energy 
portfolio.''
    Government action is needed on a variety of fronts to fully realize 
the potential of our nation's significant geothermal resources. UTC 
Power recommends:

1.  Extension of the geothermal production tax credit and revised 
``placed in service'' rules.

    The 2005 Energy Policy Act made geothermal energy production 
eligible for the Sec. 45 federal Renewable Electricity Production Tax 
Credit (PTC). This incentive is adjusted for inflation and currently 
provides 2.0 cents per kWh for energy produced from geothermal 
resources. A taxpayer may claim credit for the 10-year period 
commencing with the date the qualified facility is placed in service.

    Many geothermal projects take years to develop. The PTC timeframe 
is too short for most geothermal projects to be completed by the 
current placed in service deadline. We support the Geothermal Energy 
Association's position that ``To achieve sustained geothermal 
development, Congress should immediately amend the law to allow 
facilities under construction by the placed in service date of the law 
to qualify, and extend the placed in service deadline by at least five 
years, to January 1, 2014, before its expiration.''

    Since our PureCycle system is just now entering the marketplace, 
we need certainty and stability with regard to this important incentive 
to maximize market penetration and capitalize on the many societal 
benefits of geothermal power production.

2.  Robust funding for DOE's Geothermal Research Program.

    There are a variety of geothermal research, development and 
demonstration needs, including cost-shared partnerships to:

        -  enhance the performance of existing successful geothermal 
        power production systems;

        -  improve the efficiency of geothermal capture rates;

        -  increase the size of low temperature systems to one 
        megawatt;

        -  develop systems that can operate at even lower temperatures 
        than today; and

        -  demonstrate the benefits for other applications including 
        the oil and gas market as well as industrial reciprocating 
        engines (jacket water and exhaust heat).

3.  Comprehensive nationwide geothermal resources assessment.

    The most recent U.S. Geological Survey for geothermal energy was 
conducted in 1979. This survey used techniques that are outdated today 
and was based on technology available 30 years ago. It did not consider 
low to moderate temperature resources since there was no technology 
available at the time that could utilize these resources in a cost-
effective manner.

4.  Incentives for geothermal exploration and drilling.

    According to the Geothermal Energy Association, 90 percent of 
geothermal resources are hidden with no surface manifestations. 
Exploration is essential to expand production, but exploration is 
expensive and risky. Cost-shared support for exploration and drilling 
should be continued and expanded.

Comments on H.R. 2304

    We applaud the leadership of Reps. McNerney (D-CA), Gordon (D-TN) 
and Lampson (D-TX) in introducing the ``Advanced Geothermal Energy 
Research and Development Act of 2007'' (H.R. 2304). This legislation 
addresses many of the pressing research, development, demonstration and 
commercial application needs related to geothermal energy. UTC Power 
offers the following suggestions to clarify the Congressional intent 
and enhance the legislation's effectiveness.

Section 4--Hydrothermal Research and Development--As noted above, there 
are significant opportunities for research, development and 
demonstration activities related to low temperature geothermal power 
production. We recommend that a third category of programs be included 
in this section that addresses the opportunities related to enhanced 
performance, higher efficiency, greater size, lower temperature, 
biomass, reciprocating engines (jacket water and exhaust heat), and oil 
and gas applications.
    In addition, to ensure the required site characterization 
activities include examination of low, moderate and high temperature 
resources, language should be added to make this explicit. As noted 
above, previous assessments have not focused on low temperature 
geothermal resources based on the assumption that technology was not 
available to economically utilize these resources. As our Chena Alaska 
project has demonstrated, low temperature geothermal resources can be 
tapped for power generation and therefore it is essential that resource 
assessments include information on their location and key 
characteristics.

Section 8--Centers for Geothermal Technology Transfer--The list of 
subjects being addressed by these information clearinghouses should be 
expanded to include advances in geothermal power production technology 
so state of the art developments can be disseminated to interested 
parties.

Section 10--Study on Advanced Uses of Geothermal Energy--H.R. 2304 
calls for a series of reports not later than one year, three years and 
five years after enactment on advanced concepts and technologies to 
maximize the geothermal resource potential of the United States 
including the co-production of geofluids for direct use or electric 
power generation in conjunction with existing oil and gas extraction 
operations. We believe the Nation could speed up its use of these 
strategically important resources by beginning a demonstration program 
at the earliest possible date to validate the technology. By supporting 
a demonstration effort in parallel with a more extensive and rigorous 
examination of the characteristics of these sites and their location, 
we could expedite the technical learning process and accelerate the 
timeframe in which we could maximize the many benefits of these 
resources. UTC Power would therefore recommend that in addition to the 
study mandated in Section 10, language be added in Section 4 
authorizing a demonstration program for co-production of geofluids for 
direct use or electric power generation in conjunction with existing 
oil and gas extraction operations.

Conclusion

    As UTC Power's Chena project demonstrates, far from being a mature 
technology with limited geographic reach, geothermal energy has the 
potential to satisfy a significant portion of our growing energy needs 
with a renewable, continuously available domestic resource. But 
appropriate government policies must be adopted and implemented to make 
this a reality. We welcome the opportunity to work with Members of the 
Committee and other stakeholders to refine and enhance H.R. 2304 and 
ensure its enactment and implementation as part of a comprehensive 
package of initiatives that support geothermal energy production.

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