    [Senate Hearing 116-309]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 116-309

                        OPPORTUNITIES AND CHALLENGES FOR
          ADVANCED GEOTHERMAL ENERGY DEVELOPMENT IN THE UNITED STATES

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

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 20, 2019

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                           Printed for the use of the
                   Committee on Energy and Natural Resources

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

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    37-805                       WASHINGTON : 2021

    --------------------------------------------------------------------------------------

                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                        LISA MURKOWSKI, Alaska, Chairman
    JOHN BARRASSO, Wyoming               JOE MANCHIN III, West Virginia
    JAMES E. RISCH, Idaho                RON WYDEN, Oregon
    MIKE LEE, Utah                       MARIA CANTWELL, Washington
    STEVE DAINES, Montana                BERNARD SANDERS, Vermont
    BILL CASSIDY, Louisiana              DEBBIE STABENOW, Michigan
    CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
    CINDY HYDE-SMITH, Mississippi        MAZIE K. HIRONO, Hawaii
    MARTHA McSALLY, Arizona              ANGUS S. KING, JR., Maine
    LAMAR ALEXANDER, Tennessee           CATHERINE CORTEZ MASTO, Nevada
    JOHN HOEVEN, North Dakota

                          Brian Hughes, Staff Director
                         Kellie Donnelly, Chief Counsel
                Chester Carson, Senior Professional Staff Member
                   Spencer Nelson, Professional Staff Member
                    Sarah Venuto, Democratic Staff Director
                    Sam E. Fowler, Democratic Chief Counsel
               Luke Bassett, Democratic Professional Staff Member

                               C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
    Manchin III, Hon. Joe, Ranking Member and a U.S. Senator from
      West Virginia..................................................     3

                                   WITNESSES

    Simmons, Hon. Daniel R., Assistant Secretary, Office of Energy
      Efficiency and Renewable Energy, U.S. Department of Energy.....     5
    Spisak, Tim, State Director for New Mexico, Oklahoma, Texas and
      Kansas, Bureau of Land Management, U.S. Department of the
      Interior.......................................................    42
    Young, Katherine R., Geothermal Program Manager, National
      Renewable Energy Laboratory....................................    47
    Latimer, Tim, CEO, Fervo Energy..................................    70
    Thomsen, Paul A., Vice President, Business Development-Americas,
      Ormat Technologies Inc.........................................    80

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    Latimer, Tim:
        Opening Statement............................................    70
        Written Testimony............................................    72
        Responses to Questions for the Record........................   175
    Manchin III, Hon. Joe:
        Opening Statement............................................     3
    Murkowski, Hon. Lisa:
        Opening Statement............................................     1
    Simmons, Hon. Daniel R.:
        Opening Statement............................................     5
        Written Testimony............................................     8
        Responses to Questions for the Record........................   123
    Spisak, Tim:
        Opening Statement............................................    42
        Written Testimony............................................    44
        Responses to Questions for the Record........................   131
    Thomsen, Paul A.:
        Opening Statement............................................    80
        Written Testimony............................................    82
        Response to Question for the Record..........................   178
    Young, Katherine R.:
        Opening Statement............................................    47
        Written Testimony............................................    49
        Responses to Questions for the Record........................   134

    OPPORTUNITIES AND CHALLENGES FOR ADVANCED GEOTHERMAL ENERGY DEVELOPMENT
                              IN THE UNITED STATES

                                  ----------

                            THURSDAY, JUNE 20, 2019

                                           U.S. Senate,
                     Committee on Energy and Natural Resources,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 9:56 a.m. in Room
    SD-366, Dirksen Senate Office Building, Hon. Lisa Murkowski,
    Chairman of the Committee, presiding.

               OPENING STATEMENT OF HON. LISA MURKOWSKI,
                        U.S. SENATOR FROM ALASKA

        The Chairman. We are going to have an opportunity this
    morning to talk about an area that I have great, great
    enthusiasm for, and my only regret is that we are not seeing
    enough, in my view, focus on the issue of our extraordinary
    assets that are below our Earth's surface--and this is
    geothermal. So as we welcome our panelists to the table here
    this morning, again, I want to thank my colleagues for their
    interest in this.
        We had an opportunity just a few weeks ago to go to the
    Arctic, yet again with several colleagues. We were in Iceland
    and had the opportunity to see the extraordinary potential of a
    nation that has decided that they are going to take advantage
    of their renewable resources with a goal and a vision to be 100
    percent renewable.
        It is not all through geothermal, many of their renewables
    come to them through their hydro resources, but then they
    supplement that with geothermal and the opportunity to not only
    use geothermal for heating, to thaw the ice and the snow off
    their sidewalks, for their public swimming pools, but for
    everything as innovative as drying the bones and skins of cod
    that come from the processing facility so that they can be sent
    over to African nations as a protein base. It is what they are
    able to do when they have this extraordinary resource--a good
    example of the almost limitless power of the Earth's internal
    heat.
        It is countries like Iceland, the Philippines, Kenya, and
    El Salvador that have realized the enormous potential of this
    emissions-free resource. They have made it a majority source in
    their energy supply mix. But unfortunately, outside of several
    states in the West, geothermal has been historically overlooked
    here in this country.
        It is interesting that on this Committee we have so many
    members that actually have geothermal interests in their
    states. Senator Lee from Utah, Senator Risch from Idaho, Nevada
    enjoys the benefits of geothermal. We certainly have it in
    Alaska. We have great opportunities throughout the country, and
    I think being able to identify those opportunities should be a
    priority.
        Whether it is used for heating our homes or keeping the
    lights on, geothermal provides clean and always-on energy that
    requires no external backup. We talk a lot about well, we have
    great potential for the wind but what happens when the wind
    isn't blowing? Great potential for the sun and solar, but what
    happens when it is nighttime and the sun is not out?
        You do not hear that with geothermal. These resources are
    constant. They are reliable. There is no such thing as
    fluctuating, intermittent earth heat. So that is a pretty big
    advantage here.
        A new report from the Department of Energy entitled
    ``GeoVision: Harnessing the Heat Beneath Our Feet,'' calls
    geothermal the untapped energy giant. They have determined in
    this report that geothermal could represent a much, much larger
    percentage of the U.S. energy mix by 2050. We could be looking
    at a 26-fold increase from where we are today. This rivals the
    growth of solar, wind, and hydraulic fracturing. So the
    potential is out there. I think it is pretty extraordinary.
        I was a little disappointed in that report that Alaska was
    not featured in it, but we will keep working on that. Setting
    that aside, I look forward to hearing more about what went into
    the report. I think it is a pretty useful roadmap for what
    could lie ahead.
        GeoVision does a good job of laying out the technical and
    the non-technical barriers that have kept us from realizing
    geothermal's potential. It shows that if we can address them,
    through policy and innovation, this resource can make a huge
    contribution to America's future.
        When I talk to folks about geothermal, one of the things
    they tell me is that, well it is challenging because we are
    viewed as a ``mature'' renewable. If you are mature, there is
    not a lot of interest in doing something new because what is
    new? This is stuff that has been around forever and what more
    can be done to enhance it? I think that is part of the reason
    for the conversation here today.
        Regulatory reforms alone, we understand, could double
    geothermal capacity and technology improvements focused on
    exploration, discovery, development and management of these
    resources could, again, increase geothermal electric power
    generation nearly 26-fold from where we are today. I think that
    is significant.
        In Alaska, we have pretty abundant supplies of geothermal.
    I tell people you have an Aleutian Chain down there that is
    nothing more than a string of volcanoes around the South-
    Central area--great potential for geothermal there that we have
    visited with an estimated 2.4 gigawatts of possible generation
    there. The most current assessment ranks us behind only
    California and Nevada in generation potential. We are starting
    to take advantage of this resource around the state.
        I think you have been to Chena Hot Springs haven't you, Mr.
    Simmons? If you haven't, Dan Brouillette has.
        Mr. Simmons. Yes.
        The Chairman. We have had several others from the
    Department of Energy that have come to our renewable energy
    fair and seen the benefits of low temperature geothermal there
    at Chena that provides for heat and power to this small resort
    far, far below the cost of diesel electricity which is how they
    were generating their power. In Juneau, our state capital,
    geothermal heat pumps support the airport. We also, again, have
    promising regions on the Seward Peninsula, interest in what is
    going on just North of Nome and, of course, I mentioned the
    Aleutian Islands. These are pretty exciting prospects for a
    state where the cost of power generation is a significant
    challenge and where the opportunity for a clean, reliable
    resource like geothermal could go a long way toward easing that
    burden.
        I am looking forward to our panel this morning. This is the
    first hearing that we have had on geothermal since 2006. How
    could that possibly be? It is such an exciting area. Wow. We
    are going to fix that today.
        We have five experts who can tell us more about the
    findings in the new GeoVision report as well as other recent
    developments. We have Mr. Daniel Simmons, who is the Assistant
    Secretary of Energy for the Office of Energy Efficiency and
    Renewable Energy. Mr. Timothy Spisak, who is the State Director
    for New Mexico, Oklahoma, Texas, and Kansas at the Bureal of
    Land Management (BLM). We have Katherine Young, the Geothermal
    Program Manager at the National Renewable Energy Lab (NREL). We
    always love having folks from NREL here. We have Mr. Tim
    Latimer, who is the Founder and CEO of Fervo Energy, and Mr.
    Paul Thomsen, the Vice President of Business Development for
    Ormat. We like what is going on at Ormat.
        Senator Manchin.

                  STATEMENT OF HON. JOE MANCHIN III,
                    U.S. SENATOR FROM WEST VIRGINIA

        Senator Manchin. Chair Murkowski, thank you for holding
    this hearing today on advanced geothermal technologies. I would
    like to thank each of you for being here and for sharing your
    expertise with all of us today.
        Geothermal has been an exciting resource to follow in West
    Virginia. We have a few hot spots, and we are looking to put in
    a blue lagoon. I want you all to know, if you have not been to
    the Blue Lagoon, we want every state to have one.
        But I want to tell you something. If you see how these two
    beautiful women on my left and right--we were on this trip with
    Chair Murkowski to the Arctic and we all went to the Blue
    Lagoon. The mineral facials, I have found out, only work on
    women.
        [Laughter.]
        Did not do a thing for us, not a thing.
        In the Arctic the climate impacts are so severe and
    immediate that every one we spoke with considers it a matter of
    survival rather than a matter of partisan discord. What I
    walked away from the meetings we had with all the Arctic
    nations was that they do not look at it as a political divide.
    They look at it as something that unites them, because it is a
    matter of survival for them.
        I would encourage all of my colleagues, especially any of
    you all out there, if you get a chance, to go to the Arctic. It
    is something special. When you see the fisheries their
    communities depend on change, or a foreign ship passes through
    those straits that would have been blocked by sea ice, you have
    to face the realities that climate change is the new way.
        Another thing that I could not believe, and we are seeing
    for the first time, cruise ships are building ice cutter cruise
    ships. That tells you the impact that the Arctic is going to
    have to deal with, and they are concerned about that. But when
    cruise ships know that there is a market and they are willing
    to build an ice cutter cruise ship, it tells you that things
    have changed.
        One of the standout climate solutions I saw on the trip was
    the widespread adoption of geothermal energy in Iceland.
    Although I understand Iceland relies on the southern
    conventional geothermal technologies to heat their homes and
    power their grid, it struck me that technology was valuable
    because of its usefulness across the different applications. If
    the people of Iceland can harness their hot springs and
    underground resources to generate clean energy, it makes me
    think there are even more ways to utilize this set of climate
    solutions here in the United States if we support the needed
    research and development. It always goes back to investing in
    things that we need to be investing in.
        The International Energy Agency, the IEA, reports that
    global geothermal power generation stood at an estimated 84.8
    terawatt-hours in 2017. That is about the amount of energy used
    by eight million American homes each year. The IEA expects
    global geothermal power capacity to rise to over 17 gigawatts
    in the next five years with the biggest capacity additions
    expected in Indonesia, Kenya, the Philippines, and Turkey.
    These four countries include markets where China has rapidly
    expanded its trade, exporting coal power technologies,
    financing power plants and other infrastructure, and importing
    raw materials like titanium. Helping American companies capture
    the lion's share of the growing global geothermal market and
    even expand it further is a worthy goal. It would also enable
    the United States to continue our global leadership in clean
    energy innovation and climate solutions. The members in our
    Committee represent some of the states where geothermal energy
    is a significant part of the renewable power in heating and
    cooling. In fact, virtually all of our members' states have a
    stake in enhanced geothermal systems that are within reach.
        A whole host of new technologies and methods are changing
    the outlook for geothermal, from adapting drilling techniques
    from the oil and gas industry to utilizing more accurate
    mapping of the resources.
        In West Virginia, we are also beginning to see
    opportunities. A 2010 Southern Methodist University study found
    that West Virginia is particularly well-suited for geothermal
    development, including exporting geothermal electricity
    generation, and adopting district heating in some cities'
    industrial sites and other university campuses. Perhaps most
    interesting is a proposed geothermal facility in an abandoned
    coal mine in Mingo County which is seeking to use the heat in a
    large aquaponics facility. My understanding is that this is
    only the beginning for the potential resources in my State of
    West Virginia, with up to $27 billion in potential investment
    across enhanced geothermal technologies through 2050.
        So enhanced geothermal presents an opportunity to draw on
    proven technologies, and with a little work on research,
    development, and deployment, make a significant impact on clean
    electricity, heating, and cooling.
        I look forward to hearing from you all, each one of you,
    with your expertise, and we are excited to have a new
    direction, especially in my state.
        Thank you, Madam Chairman.
        The Chairman. Thank you.
        I have given everybody's brief introduction and titles and,
    because we would like to get into the meat of the hearing, we
    will dispense with further background bios and just invite you
    all to provide your testimony to the Committee this morning.
        We would like for you to try to keep your comments to about
    five minutes. Your full statements will be included as part of
    the record. We truly appreciate you being here and helping to
    educate us on where we are with geothermal.
        Mr. Simmons, welcome, and if you would like to begin your
    comments?

       STATEMENT OF HON. DANIEL R. SIMMONS, ASSISTANT SECRETARY,
        OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY, U.S.
                          DEPARTMENT OF ENERGY

        Mr. Simmons. Thank you, Chairman Murkowski, Ranking Member
    Manchin and members of the Committee. Thank you for the
    opportunity to discuss geothermal energy development and
    activities that the United States Department of Energy (DOE) is
    undertaking to help secure America's energy future.
        As an always-on energy source that harnesses Earth's
    natural heat, geothermal energy provides baseload power with
    flexibility to ramp on and off. Geothermal power plants can
    provide essential grid services and operate in a load following
    mode; helping to support reliability and flexibility in the
    U.S. grid and ultimately facilitate a diverse, secure energy
    mix.
        DOE's Geothermal Technologies Office invests in R&D to
    reduce costs and risks associated with geothermal development.
    DOE and the Geothermal Technologies Office recently released
    the GeoVision report which summarizes data confirming that
    there is more that geothermal can do for the country.
        The GeoVision analysis represents a multiyear collaboration
    among industry, academia, national laboratories, and federal
    agencies. The effort assessed opportunities to expand
    nationwide geothermal energy development through 2050. The
    GeoVision analysis explored three electric sector scenarios.
    Under the business as usual scenario, geothermal electricity
    capacity grows to six gigawatts by 2050, about double what it
    is today.
        However, under the improved regulatory timeline scenario,
    project development timelines could be halved leading to
    installed geothermal capacity to more than double that of the
    business as usual scenario up to 13 gigawatts by 2050. These
    results show that reduced timelines from first exploration to
    full power plant operations can strongly impact the amount of
    geothermal energy on the U.S. grid.
        The technology improvement scenario illustrates the
    opportunity for dramatic growth in geothermal energy to
    potentially 60 gigawatts of installed generation capacity by
    2050 which is more than a 26-fold increase over today. For
    context, that would be 8.5 percent of all U.S. electricity
    generation in 2050 compared to less than one percent today.
        The GeoVision analysis also shows how geothermal can
    significantly enhance heating and cooling solutions for
    American residential and commercial customers through direct
    use and heat pump technologies.
        It also examined economic benefits and opportunities for
    desalination, critical minerals recovery and hybrid
    applications.
        Perhaps most critically, the report includes a roadmap of
    actionable items for all geothermal stakeholders. This call to
    action outlines the opportunities and challenges for advancing
    geothermal development in the United States.
        DOE is already addressing many of the action areas in the
    GeoVision roadmap with our current research portfolio. I'd like
    to highlight a few of these activities being spearheaded by the
    Geothermal Technologies Office.
        Our flagship initiative, the Frontier Observatory for
    Research and Geothermal Energy, or FORGE, is a dedicated site
    for scientists and engineers to develop, test and accelerate
    breakthroughs in enhanced geothermal systems, or also called
    EGS. EGS commercialization is required to harness the full
    potential of geothermal energy.
        Last summer, the Geothermal Technologies Office selected
    the final FORGE site at Milford, Utah, with a University of
    Utah-led team. Starting late this summer, FORGE funding will
    support tasks necessary for program management and oversight as
    well as annual competitive R&D solicitations open to the entire
    stakeholder community.
        Drilling can represent up to half the cost of a geothermal
    project. The Geothermal Technologies Office's Efficient
    Drilling for Geothermal Energy Activity is funding 11 projects
    to investigate new, more cost-effective drilling techniques and
    technologies.
        Finding geothermal resources, especially systems with no
    obvious surface expression, remains an expensive challenge to
    geothermal development. The Geothermal Technologies Office's
    Play Fairway Analysis (PFA) initiative uses datasets combined,
    dataset combinations, to pinpoint high potential areas. The
    Geothermal Technologies Office is currently funding validation
    drilling for five Play Fairway projects. Early indications show
    remarkable success at several of these sites.
        As part of the Advanced Energy Storage Initiative in the
    Department of Energy's Grid Modernization Initiative, the
    Geothermal Technologies Office is funding geothermal-related
    projects to analyze power curtailment, enhanced reservoir
    thermal energy storage, and improved dispatchability, along
    with studies to determine the economic feasibility of low
    temperature, deep direct use technologies in regions around the
    country.
        Geothermal research is critical to the Department's all
    technologies energy strategy. We have made great strides in
    adding geothermal as part of a portfolio of affordable energy
    options and will continue to do so with DOE's robust R&D
    portfolio.
        DOE is committed to working in partnership with industry,
    academia, national laboratories, and other federal agencies to
    support the next generation of geothermal R&D while working
    with Congress to ensure appropriate stewardship of taxpayer
    dollars.
        I appreciate the opportunity to appear before the Committee
    today to discuss DOE's work in geothermal research and look
    forward to the questions.
        [The prepared statement of Mr. Simmons follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Simmons.
        Mr. Spisak, welcome.

        STATEMENT OF TIM SPISAK, STATE DIRECTOR FOR NEW MEXICO,
      OKLAHOMA, TEXAS AND KANSAS, BUREAU OF LAND MANAGEMENT, U.S.
                       DEPARTMENT OF THE INTERIOR

        Mr. Spisak. Chairman Murkowski, Ranking Member Manchin and
    members of the Committee, I am pleased to join you today to
    discuss the Bureau of Land Management's role and responsibility
    in developing the nation's geothermal energy resources.
        The Administration is committed to developing a diverse
    portfolio of energy resources, including oil and gas, coal, and
    renewable energy such as geothermal, wind and solar, all of
    which may be developed on America's public lands. This approach
    supports job creation and strengthens American energy security
    and infrastructure. Geothermal is an important piece of this
    strategy.
        In Fiscal Year 2018, BLM Administrative resources provided
    over 40 percent of the nation's total geothermal energy
    capacity.
        The BLM is required to manage the impacts of geothermal
    operations on public lands under the Federal Land Policy and
    Management Act and the National Environmental Policy Act. Also,
    amendments to the Geothermal Steam Act expressly protect
    certain important geothermal features in national parks like
    Yellowstone's Old Faithful.
        Nearly all of the potential for development of federal
    geothermal energy is located in 11 Western states and Alaska.
    The BLM manages more than 240 million acres of public lands
    open to geothermal leasing which includes 104 million acres of
    Forest Service-managed lands. The BLM currently manages over
    800 geothermal leases, 50 of which are in production. Together
    these leases have almost 1,900 megawatts of electrical
    capacity. For comparison, the Hoover Dam provides just over
    2,000 megawatts of capacity.
        California is by far the largest producer of geothermal
    energy on BLM-managed public lands. Ongoing rent and royalties
    from current operations in California generate nearly $8
    million per year. Located in northern California, The Geysers
    is the largest geothermal field in the world hosting 14 power
    plants producing about 800 megawatts of electricity. Overall,
    the BLM in California hosts 11 geothermal facilities, including
    the aforementioned Geysers--Ormesa in Imperial County, Coso in
    Inyo County, and Casa Diablo in Mono County. Public lands in
    California have the potential to generate an estimated 4,000
    megawatts. The BLM is working to produce, provide leasing for
    development and expansion across the state and also processing
    geothermal dominations for leasing in Northwestern California.
        In Nevada there has been a notable expansion of geothermal
    exploration on BLM-managed public lands. Ongoing rent and
    royalties from current operations on public lands within the
    state generated over $5 million in 2018 alone. Within Nevada,
    the BLM hosts 19 geothermal power plants with federal interest,
    totaling over 600 megawatts of installed capacity, and is in
    the planning or permitting process for over 400 megawatts of
    new geothermal power plants. Nevada is also preparing 150
    parcels across the state for a lease sale later this year.
        Currently, each geothermal project requires separate
    environmental review under NEPA at both the exploratory phase,
    as well as when the resource enters the development phase.
    Under Secretarial Order 3355, the BLM has improved the
    environmental review process for all energy development
    projects, including geothermal. Furthermore, the Department of
    Energy's GeoVision report found that improved regulatory
    timelines for the drilling of exploratory wells could reduce
    the administrative costs of geothermal development on public
    lands and spur new development.
        Expanded geothermal energy development carries impressive
    benefits for the nation. It's the renewable resource that is
    always on. It diversifies our portfolio and advances the
    Administration's policy of developing domestic energy resources
    responsibly.
        Thank you for the opportunity to testify, and I'll be happy
    to answer any questions.
        [The prepared statement of Mr. Spisak follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Mr. Spisak, thank you.
        Ms. Young, welcome.

     STATEMENT OF KATHERINE R. YOUNG, GEOTHERMAL PROGRAM MANAGER,
                  NATIONAL RENEWABLE ENERGY LABORATORY

        Ms. Young. Thank you.
        Chairman Murkowski, Ranking Member Manchin, members of the
    Subcommittee, thank you for the invitation to discuss the
    benefits of geothermal that can offer our nation the
    opportunities to advance technologies for accessing this
    incredible resource.
        My name is Katherine Young. I am the Geothermal Program
    Manager at the National Renewable Energy Lab, and I'm also a
    Director on the Geothermal Resources Council. I've spent more
    than a decade at NREL focused on the advancement of geothermal
    technologies.
        Geothermal is good for the environment. It is renewable,
    has no emissions, and uses significantly less land than other
    power technologies. It's good for the grid as Senator Murkowski
    mentioned, it's always available, and provides much needed
    reliability, flexibility, resiliency and security.
        Geothermal is good for the economy. It creates long-term,
    wage-earning jobs, provides royalties, creates local spending
    and delivers stable, affordable consumer energy prices.
    Additionally, geothermal brines carry valuable minerals like
    lithium that can provide a reliable domestic supply for our
    nation. Despite these remarkable characteristics, there is
    still much that remains to be done.
        The U.S. is a global leader in geothermal deployment and is
    also home to the world's largest geothermal power plant. But
    the resource remains underutilized.
        The recent GeoVision study outlined scenarios that could
    increase geothermal nearly 26 times by 2050.
        Three key improvements that could revolutionize the
    industry are research that lowers the cost of wells,
    technologies that enable geothermal anywhere, and the
    streamlining of geothermal permitting.
        First, about half the cost of geothermal development is in
    drilling and well construction. But reducing these costs is
    feasible with research investment. Target research areas
    include drilling efficiency, including development of low-cost,
    high-temperature power electronics, technologies that reduce
    drilling rates, such as energy drilling technologies, and low-
    cost materials for well construction.
        The second area of research is focused on accessing
    geothermal anywhere. Heat exists everywhere below the surface
    of the earth, even below where you're sitting right now. Today
    geothermal projects are developed at locations where a natural
    heat exchanger exists, including both fractures and fluid to
    transport that heat to the surface. There are two challenges to
    this model, however. First, the systems exist in a limited
    number of places and in the U.S., mostly in the West. Second,
    finding these sites requires sophisticated exploration
    techniques which are sometimes still unsuccessful.
        GeoVision suggests that shifting this paradigm is the key
    to unlocking vast geothermal potential. If, instead of looking
    for natural heat exchangers, new technologies instead allow us
    to create our own, we remove not only the limited nature of the
    resource, but also, many of the challenges associated with
    exploration. EGS research, such as that being conducted by DOE
    at their Utah FORGE site, focuses on stimulating the subsurface
    to open the natural fractures in the rock. Other technologies
    use horizontal drilling techniques to drill boreholes between
    wells and circulate fluid. Advancing these technologies to
    commercial feasibility, understanding their scalability, and
    reducing deployment costs are critical to advancing the
    geothermal anywhere goal.
        And finally, the DOE and BLM contracted NREL for technical
    environmental analysis related to geothermal permitting. These
    analyses show first, that geothermal has protracted regulatory
    timelines, and second, that reducing these timelines alone can
    double geothermal deployment. One way to reduce both project
    risk and timeframes is through the use of categorical
    exclusions for resource confirmation.
        Our technical analysis showed that confirming a geothermal
    resource requires drilling at least two wells. Currently, this
    requires an environmental assessment which can cost hundreds of
    thousands of dollars and 6 to 12 months of time prior to permit
    authorization.
        Our environmental analysis showed that geothermal resource
    confirmation drilling has not had a significant impact on the
    environment. Furthermore, under EPACT 2005 oil and gas, using
    similar rigs and drilling to similar depths, received a
    legislative categorical exclusion from Congress for similar
    activities.
        In conclusion, the U.S. has some of the best geothermal
    resources in the world, but they remain underutilized. To
    realize this potential, investment in new technologies to lower
    cost and allow for geothermal anywhere are required.
    Streamlining of permitting would also be immediately impactful.
        Today we sit at a critical juncture. If we appropriately
    invest in new, early-stage research and in-depth analysis and
    partner with industry to commercialize these new technologies,
    American businesses and consumers will benefit significantly
    from these advancements improving our country's energy
    security, economic prosperity, and scientific leadership.
        Thank you for your interest in advancing geothermal in the
    U.S., and I look forward to your questions.
        [The prepared statement of Ms. Young follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Ms. Young.
        Mr. Latimer, welcome.

              STATEMENT OF TIM LATIMER, CEO, FERVO ENERGY

        Mr. Latimer. Thank you.
        Chairman Murkowski, Ranking Member Manchin and members of
    the Committee, thank you for this opportunity to join the
    important discussion on advanced geothermal energy development.
        This is an important time for geothermal energy. The DOE
    just released the landmark GeoVision study which outlined the
    opportunity for geothermal to power up to 16 percent of the
    U.S. electric grid and heat up to 45 million homes by 2050.
        Geothermal is a unique energy resource. It's versatile,
    renewable, and has 24/7 reliability. So this is a major prize
    worth pursuing. Currently, geothermal makes up only 0.4 percent
    of U.S. electricity, its growth lagging significantly behind
    both wind and solar.
        My testimony today is about this gap between our current
    state and the potential future in the GeoVision study and what
    I believe it will take to get there.
        First, let me introduce myself. I am the co-founder and CEO
    of Fervo Energy where our mission is to leverage innovation in
    geoscience to advance the clean energy future. Five years ago,
    I was a well site supervisor in the heart of the oil boom in
    the Permian Basin. I was able to witness firsthand one of the
    fastest paced and most innovative energy booms ever. But like
    many people my age, the more I learned about climate change,
    the more I felt a sense of urgency to change my career to
    address its looming threats. Since my primary experience
    involved drilling deep wells, geothermal seemed like a natural
    place to apply my skills and I saw a major opportunity for
    technology transfer from oil and gas.
        I left my oil job to study energy in the environment at
    Stanford University where I met Dr. Jack Norbeck. At the time,
    he was using advanced computational models to research
    fundamentally new ways of producing geothermal energy. Together
    we launched Fervo Energy in 2017. Fervo's vision is to use
    novel horizontal drilling and production techniques to unlock
    the 120-gigawatt potential for geothermal outlined in the
    GeoVision study. To date we have benefited tremendously from
    the early stage, public-private innovation ecosystem this
    Committee has been instrumental in creating. We are supported
    through grant awards from both the Geothermal Technologies
    Office and ARPA-E. We are embedded with world-class, geoscience
    researchers at the Lawrence Berkeley National Lab through the
    Cyclotron Road Entrepreneurial Fellowship program. We've also
    obtained venture capital investment including from Breakthrough
    Energy Ventures, a billion-dollar clean energy fund backed by
    Bill Gates and others dedicated to tackling climate change.
        I'm encouraged by our progress so far, but the most
    challenging point for any geothermal technology occurs at the
    scale-up from the lab to the field. And I'd like to offer a few
    thoughts on how we can accelerate this transition.
        Although geothermal is quite different from oil and gas, it
    can serve as a useful analog on how new subsurface technologies
    can be deployed. Part of my confidence in the ability of
    technology and innovation to drastically improve productivity
    in geothermal comes from my firsthand experience in the oil
    industry. I have personally witnessed my team's learning,
    tweaking, developing new methods, and driving productivity at a
    rapid pace, month after month. This innovation led to dramatic
    results.
        In every major shale basin in the U.S. productivity has
    increased by a factor of ten in the last decade alone. It's
    clear that subsurface industries exhibit rapid learning at
    scale, but getting to scale is very challenging.
        For oil and gas, launching the shale revolution took years
    of fundamental research support from the Department of Energy
    helping to develop vital technologies like seismic mapping and
    the PDC drilling bit. It also took a private sector leader,
    Mitchell Energy, to pick up these technologies and lead the
    field level testing to make them commercially viable.
        It's fascinating to consider in hindsight the shale
    revolution, which has led the U.S. to become the largest oil
    producer in the world, may never have happened if Mitchell
    Energy hadn't been willing to try all new technology on a
    couple dozen wells in the late '90s.
        Geothermal has similar potential for both innovation and
    scale but will require the same kind of early support. We face
    a major challenge in crossing the so-called ``valley of death''
    from the lab-scale to the field-scale where investment costs
    are much higher and you must deal with the complexity and harsh
    conditions of the subsurface.
        A few actions could provide that early support and greatly
    accelerate development of geothermal technology. These include
    potentially restoration of the investment tax credit to be on
    par with other renewable energy resources, use of appropriate
    categorical exclusions to accelerate permitting, and increasing
    funding to the Geothermal Technologies Office.
        The Geothermal Technologies Office is currently leading the
    Field Observatory for Research in Geothermal Energy, or the
    FORGE project, an unprecedented and promising geothermal energy
    test bed. Increased funding to ensure technologies developed
    there have a roadmap to commercialization and a focus on
    public-private partnership to identify wells of opportunity
    from new technology deployment could have a transformative
    impact on crossing the innovation ``valley of death.''
        This is a critical time for geothermal energy. The FORGE
    project is a unique and exciting research effort. The urgency
    of climate change is both rapidly changing electricity markets
    and driving interest from the oil and gas industry to look at
    alternatives. Geothermal energy can be a critical part of the
    clean energy future in the United States with the right
    technology, policy, and markets, and is a prize worth pursuing.
        I want to thank the Committee for your time, and I look
    forward to a lively discussion.
        [The prepared statement of Mr. Latimer follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Latimer.
        Okay, we have had four in a row say that this is a critical
    time for geothermal.
        We will now hear from you, Mr. Thomsen, and I am reminded
    that you were actually before this Committee the last time we
    had a hearing on geothermal which was in 2006. So welcome back.

        STATEMENT OF PAUL A. THOMSEN, VICE PRESIDENT, BUSINESS
             DEVELOPMENT-AMERICAS, ORMAT TECHNOLOGIES INC.

        Mr. Thomsen. Thank you, Chairman and Ranking Member.
        I was also going to point out that I was at Chena Hot
    Springs for the first renewable energy summit with then-
    Governor Murkowski and Senator Stevens. So it's an honor and a
    privilege to be back here.
        And it is a timely point. I would steal a line from Malcolm
    Gladwell and say, I think there's a tipping point and we're
    seeing that in the marketplace.
        By way of introduction, Ormat Technologies is a geothermal
    energy developer, owner, operator and that sets us apart
    because we manufacture the equipment and we are responsible for
    over three gigawatts of geothermal generation around the world
    in over 30 countries.
        We own and operate just under a gigawatt of geothermal
    development in the United States and six other countries with
    the vast majority of that geothermal generation right here in
    the United States and in the great states of Nevada and
    California, but we are branching out throughout the West.
        Owning all of that generation has let us see that the
    electric power system is undergoing massive changes. We are
    seeing massive operational reliability and market changes due
    to shifting economics, the rapid penetration of intermittent
    resources and the prevailing climate goals in many states.
        When I testified in front of this Committee 13 years ago,
    it was a very different situation. The fracking boom was
    nascent, solar was about $9.00 a watt, and the very first
    geothermal project in the country received the then new,
    production tax credit and that was Ormat's Richard Burdett
    power plant. Today I'm proud to say that we've developed
    hundreds of megawatts but, as you've heard from this panel, I
    think there are thousands more that we can do.
        And we developed the hundred megawatts that we did and it's
    not just geothermal, it's recovered energy generation, it's low
    temperature generation, as the Chairman pointed out, it's co-
    production with oil and gas, and we did that using innovative
    technologies, by pioneering new power purchase agreements and
    responding to a market that demands a resource that can be
    flexible, absorb intermittency, all while reducing greenhouse
    gases. And geothermal can do that and not many technologies can
    say that today.
        I also am happy that this Committee is going to talk about
    geothermal, not just from the typical hydrothermal standpoint
    but also, we've heard about enhanced geothermal systems and
    we've heard about district heating. And I'm also going to talk
    about recovered energy generation because all of these
    technologies and their ability to convert thermal heat to
    energy without the combustion of a new fossil fuel is what sets
    apart geothermal and lets it impact almost every member of this
    Committee moving forward.
        To say a minute about district heating. The carbon
    footprint from heating can be two to three times greater than
    that of electricity production, so by using geothermal for
    district heating in places like Maine and Vermont, we can
    reduce the carbon footprint massively.
        As Chairman of the Public Policy Committee for the
    Geothermal Resource Council, I often am asked to give an
    elevator pitch and I was really proud of Ms. Young because she
    hit most of them.
        And I would be remiss if I didn't give it here today which
    is that geothermal is valuable. We see that in states that are
    trying to have high penetrations of renewables, the energy and
    capacity value of geothermal is exceeding that of intermittent
    resources. Number two, it's cost-effective. When I was here a
    decade ago, the cost of geothermal was probably about $0.09.
    Today we're seeing prices in the $0.06 to $0.07 range for the
    energy, capacity and all of the environmental attributes and
    ancillary benefits that geothermal provides.
        As the Chairman pointed out, it works well with others.
    When the sun goes down, geothermal is still there. If you want
    to have high penetration of renewable resources moving forward,
    you have to have geothermal. It has no emissions and a small
    footprint. Geothermal can do it all.
        In my written testimony before you today we highlight what
    needs to be done to rapidly expand geothermal development and
    you heard most of it from my colleagues here.
        We need to, as the report says, increase our access to
    geothermal resources. Most of them are on public lands. We need
    to streamline permitting, and we need to evaluate transmission
    and interconnection delays and also look at wilderness study
    areas that are close to these geothermal resources at our
    ability to look underneath those areas to fully, to get the
    full potential of our geothermal development.
        We need to reduce the costs and improve the economics of
    geothermal projects. You heard about the fact that geothermal
    was orphaned. It needs to receive the production tax credit. We
    need to reform the DOE loan guarantee program, and we need to
    support projects that highlight the district heating capability
    of geothermal moving forward.
        So, with that, I look forward to your questions, and I'm
    honored to be here.
        [The prepared statement of Mr. Thomsen follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Well, thank you.
        Listening to all of you, I think okay, geothermal is like
    the little engine that could. It is just, kind of, really good
    and solid. We need to take advantage of this moment in time,
    this critical juncture, this tipping point, whatever it is that
    you want to call it. I have a whole bunch of questions here, so
    let's get going.
        I want to start by asking about what may be happening in
    the research space at DOE and within our national labs with
    regards to low temperature geothermal.
        We have talked about Chena Hot Springs. I cannot remember
    whether it is 165 degrees. This is not hot, hot. Everybody said
    you cannot do it with low temperature geothermal, and what
    Bernie Karl and the others at Chena are doing is demonstrating
    what you can do with low temperature geothermal.
        As we think about the technologies that are in place to
    find that national heat exchanger, somebody used the
    terminology here, to find just that hottest of hot water, we
    are realizing that it does not have to be as hot as we may have
    in certain other areas.
        Can either one of you share with me to what extent we are
    doing the research in our national labs or within the
    Department on low temperature energy systems?
        Mr. Simmons. I'll start and then hand it off. How's that?
        The Chairman. Okay.
        Mr. Simmons. So low temperature is a very important area of
    research for us just because so much of the country has low
    temperature geothermal resources.
        The Chairman. Right.
        Mr. Simmons. All of the eastern United States is
    essentially low temperature geothermal resources.
        The Chairman. So if he wants to put in his blue lagoon, he
    is probably going to have a lower temperature than you might
    have otherwise, like in Nevada?
        Mr. Simmons. Correct, correct--than the West where you have
    much, much warmer geothermal resources.
        So one of the most important things is improving the
    science of heat exchange and that is both in the earth itself,
    but also in once that water comes to the surface to make sure
    that is as efficient as possible just because the difference in
    temperature is not as great.
        And also, one of the opportunities for low temperature heat
    is for use as a thermal storage, as in to add heat during
    periods of low electricity rates and then to be able to
    withdraw that heat to help geothermal have new opportunities in
    a world where we need more flexibility on the electric grid.
        So those and, most importantly, we need to advance enhanced
    geothermal systems to do a better job of adding fractures and
    also to understand in the areas where we don't have enough
    fluid, how we do a better job with that.
        The Chairman. And you are doing that R&D within the
    Department?
        Mr. Simmons. Yes.
        The Chairman. Ms. Young?
        Ms. Young. Yes, I think, when you talk about power
    conversion, certainly, the greater temperature differences have
    a bigger impact. And so, that's why it's working so well in
    Alaska.
        And I think that even in other places in the U.S. you don't
    need a lot of temperature to be able to use it for direct
    heating. So for heating homes and schools and offices, for
    industrial purposes, for paper drying, for laundries, beer
    brewing, and so, it really is something that can be done
    anywhere.
        A lot of what we're doing right now in this area is trying
    to incorporate geothermal into these techno economic models
    that model for municipalities, for communities, for campuses,
    what the potential is for reducing their carbon footprint, to
    make sure that geothermal is part of the conversation and part
    of the options that are being considered.
        The Chairman. So for Senator King or Senator Manchin on the
    East Coast, where you do not think about geothermal potential
    as much, are you doing that kind of mapping that would help
    them in their states to try to advance something that might be
    viewed as more low temperature?
        Ms. Young. Yeah, DOE's portfolio actually looks at--Deep
    Direct-Use is what they're calling it. And they have a Deep
    Direct-Use portfolio that spans the entire U.S. where they're
    doing demonstration projects looking at techno economics for
    projects throughout the U.S. So that's certainly an area where
    they're trying to demonstrate the versatility and the
    geographic availability of this resource.
        We're also, you know, as we mentioned, the cost of drilling
    is applicable, regardless of the temperature. And so, lowering
    the cost of drilling certainly would help benefit these low
    temperature resources as well.
        The Chairman. Yes, we saw that with one of our projects in
    Alaska where after many years and lots of money, they were
    disappointed with the temperature.
        Let me turn to my colleague from West Virginia.
        Senator Manchin. Thank you. Thank you, Madam Chair.
        I live on a boat that has geothermal. Basically my boat
    takes the water and extracts it through my keel with a glycol
    tubing and takes whatever is in the water. The water goes down
    to 40 or the water is up to 80. I use it differently that way.
    It is really unbelievable. So I have a little bit of an idea of
    how this is supposed to work when everything is working on the
    boat.
        With that being said, we have done an awful lot of drilling
    in West Virginia for the fracking. We are in the Marcellus-
    Utica Shale. We will be going down into Rogersville Shale which
    is much deeper. That technology that we have been able to
    develop with horizontal drilling--can that be used, Mr.
    Simmons, and any of you all who have that knowledge? Can that
    be used and be helpful because so much has been done already in
    that arena as far as maybe extracting for geothermal?
        Mr. Simmons. Sir, well----
        Senator Manchin. Whoever.
        Mr. Simmons. I'll start with one quick note about this,
    about the relationship between geothermal and the Fossil Energy
    Office on drilling.
        The most commonly used drill bit for drilling for oil and
    gas today is the PDC, the polycrystalline diamond compact,
    drill bit which was developed from geothermal research because
    of the need to be able to drill for geothermal technologies. It
    is critical because it's that we improve those drilling
    technologies to really drive down the cost of geothermal, and
    it can definitely be used to, those technologies. And with
    that, I'll pass it off to the experts who actually are out
    there doing this.
        Senator Manchin. That is what I was going to ask, Mr.
    Latimer. Where are you right now on the commercial development?
    Because we saw this firsthand, in Iceland. I mean, it is a
    mammoth operation. I forget the wattage on that, but I think
    they are taking the water out at 180 degrees.
        The Chairman. It is hotter----
        Senator Manchin. Was it hotter than that?
        The Chairman. ----400.
        Senator Manchin. Oh, okay. I am not sure. You would know.
        How far are we behind or do you think we are progressing,
    and when can we get into commercial?
        Mr. Latimer. Yeah, that's a great question.
        And I think one thing to talk about is that it's not--one
    thing I'd like to get across is that there's not two different,
    really, categories of geothermal energy. I think that's a
    convenient way to talk about it sometimes where there's this
    hydrothermal resource that we can produce today and then this
    far off in the future, enhanced geothermal system resource
    that's in the future.
        What you really have is a spectrum, and there's a lot of in
    between. And I think that where we are, both Fervo Energy as a
    company and also the geothermal industry. I think we have the
    right technology, that we've developed the right things on the
    drilling side that we can start accessing that next, more
    challenging tier of resource.
        In the GeoVision study they refer to this as the ``In-
    Field'' resource and the ``Near-Field'' resource where these
    are not quite the, you know, very large numbers of gigawatts
    that are outlined in the report, but these are opportunities
    that are hundreds of megawatts or a few gigawatts that could
    probably be commercially viable on a very short timeframe. And
    so, these are opportunities.
        I don't think we're behind Iceland. I think we're
    definitely the leader in drilling, and we're at a great point
    to attack these resources.
        Senator Manchin. Also, in Michigan and Germany, they
    proposed tapping abandoned underground mines as a source for
    geothermal. How far are they along with that? We have had some
    hot spots in the northern part of our State of West Virginia.
        Mr. Latimer. Yeah.
        Senator Manchin. And of course, you know, we have a lot of
    mines everywhere. So how promising is that? Have you heard much
    about that?
        Mr. Latimer. About abandoned mines, specifically?
        Senator Manchin. Yes.
        Mr. Latimer. I'm not too familiar. I visited a few
    geothermal plants in Germany where they, much like Chena Hot
    Springs, do a great job of using not just the electricity but
    power nearby industry in district heating. So there's several
    pilot plants in Germany and many being built right now. But I'm
    not too certain on the mining.
        Senator Manchin. Mr. Thomsen?
        Mr. Thomsen. Sure, thank you, through the Chairman to the
    Ranking Member, if I can go back.
        Senator Manchin. Sure, go wherever you want to go.
        Mr. Thomsen. A couple questions, and I'll try to hit all of
    them.
        So I want to get to the low temperature question, because
    the role that DOE has played in bringing on the innovation in
    geothermal is pivotal.
        Senator Manchin. What do you consider low temperature?
        Mr. Thomsen. It can't be overlooked. 165 degrees is pretty
    low. When Ormat started looking at 350 degrees Fahrenheit, that
    was considered really low. The Geysers in California are about
    500 to 600 degrees Fahrenheit, and the wells in Alaska at 500
    bars of pressure and, you know, upwards of 650 degrees
    Fahrenheit are very, very hot.
        Ormat's story behind this is that they used a DOE loan to
    build the very first project in Ormesa in California, and they
    chased a binary technology which is the most prevalent
    geothermal technology today. What we do is we bring up hot
    water to heat a secondary working fluid which vaporizes, builds
    pressure and spins a turbine. At the time, it was thought to be
    too complex and the DOE sponsored that project. It was
    successful, and Ormat was able to pay back that loan in a year.
        Moving on to Chena Hot Springs, they received a federal
    grant from DOE to look at pioneering the 165 degrees F. And so
    the story there is we can chase these low temperatures.
    Sometimes we need assistance, and that's where I would----
        Senator Manchin. Has that been successful at Chena?
        Mr. Thomsen. Absolutely, yes, it was very successful.
        Senator Manchin. How come they got a grant and not a loan?
        Mr. Thomsen. That's a good question for Mr. Bernie Karl,
    who is not here today.
        Senator Manchin. If it is that good at paying back, they
    should have paid it back.
        Mr. Thomsen. And this leads me to, you know, I think when
    we look at, kind of, refining the loan guarantee program, this
    money is needed because there are large, upfront capital
    expenditures.
        Senator Manchin. Sure.
        Mr. Thomsen. But once a project is successful, we should be
    able to pay it back very quickly.
        Ormat is the recipient of a large era loan, and we are
    realizing it is really hard to pay it back because it's not
    only are we paying back the base rate, but the marginal rate.
    And so, we've locked up about $300 million in financing from
    the Federal Government through the ARRA loan program that we
    want to pay back early, and we're unable to do that.
        And so, I think one of the areas that we should look at is
    how do we make it easier for companies to prepay that loan, pay
    back the base rate so the government is held harmless and that
    that money can be used by other innovative developers like
    Fervo or Chena Hot Springs and get that money moving quicker
    because if in our current state, you know, we would have to pay
    about $35 million to be kept whole and, or we keep that loan
    for the next 30 or 40 years. So those are great success
    stories, and the DOE has been pivotal in both of those.
        To enhance geothermal systems, that you talked about. Ormat
    participated in a co-production well. So at the Rocky Mountain
    Oilfield Testing Center in Wyoming, they were producing oil and
    had a water break. And the water break was--and I'm not an oil
    and gas guy, so please correct me if I speak incorrectly on
    it--was about 250 degrees of water that they were producing
    from this oil well. And instead of just wasting that water,
    they ran it through a geothermal heat exchanger, were able to
    produce electricity and use that electricity to help power the
    well field operations making it incredibly more efficient and
    reducing their cost from having to purchase that power from the
    nearby utility.
        And so that's a source of innovation that can be applied to
    West Virginia and what you're doing in mining and so forth.
    Anywhere that we have heat and water, we can run that through a
    heat exchanger and start producing power.
        That was also, that cost share drilling program was a DOE-
    funded project. I had the pleasure of working on it. And I'll
    tell you, nothing has been harder than getting DOE renewable
    and DOE fossil to work together and share the cost of that
    project, but they did and it really created some innovative
    technology there.
        Finally, to your question on enhanced geothermal systems,
    again using DOE money, Ormat brought online the first
    commercial EGS project, I would argue, in the United States.
        We looked at a well that had heat and water but poor
    permeability. We built up the pressure of water in that well.
    We created greater permeability and we were able to then use
    the geothermal fluid from that well through an existing power
    plant and prove the viability of that. Ormat has done this
    project in Germany and in the United States, and so we are at
    the cutting edge of this technology. And I think what it's
    going to take to move it forward is an investment in the DOE
    programs and the continued focus and hearings like this where
    we can explain the incredible things that this industry has
    done with the help of DOE moving forward.
        Thank you.
        The Chairman. And just for the record, I want to let you
    know that Bernie Karl, through Chena Hot Springs, received a $1
    million grant from DOE. They put in $400,000.
        With that $1.4 million they have not only turned themselves
    into 100 percent renewable at their little resort area but they
    are this center of innovation and he calls it, imagineering,
    that goes on.
        I would invite any of my colleagues and all the folks from
    DOE to come out to Chena to see what is possible when you have
    a vision, a lot of imagination, a few bucks and a really sassy
    attitude. It has been extraordinary what they have been able to
    do out there.
        Mr. Thomsen, if you have not been out since you visited
    with Senator Stevens and my father, you are in for a good trip
    too.
        Let's go to Senator Heinrich.
        Senator Heinrich. I want to say a word or two about the DOE
    loan program because, as one of you mentioned, back in 2006
    solar was at $9.00 and now it is at well below $1.00, right?
        There is a tendency in this town to focus on something that
    grabs headlines, like a Solyndra, but if you don't take risks,
    you don't drive innovation. And what we have done well,
    historically as a country, is taken the risks to drive that
    innovation.
        We need things like the DOE loan program, even if there are
    a handful of Solyndras along the way. The truth is, we won that
    battle. We drove those costs down, and we have changed the
    entire energy industry globally as a result.
        Mr. Thomsen, when you say reform the DOE loan program, what
    are some of the things that we can be doing to make that
    program work better?
        Mr. Thomsen. Thank you very much, through the Chairman to
    Senator Heinrich.
        So, I think, when that loan program was created, we were in
    a recession and money, you know, was incredibly tight for these
    projects. And I want to caveat my comments as kind of a double-
    edged sword.
        So Ormat received a $300 million loan which helped us move
    forward three projects in the State of Nevada. And you know, at
    a low interest rate of about four percent, it really moved the
    needle for us on those projects. What has happened, I guess,
    the commercial lending appetite has gotten better.
        Senator Heinrich. Sure.
        Mr. Thomsen. And we are now able to get commercial lending
    at better rates.
        Senator Heinrich. At better rates under that.
        Mr. Thomsen. Better terms that are more flexible.
        And so, I just have a couple of examples. So that project
    that was funded almost ten years ago has been successful. We
    have three great operating facilities. Anytime we try to expand
    one of those facilities, we get to talk to DOE and DOE's lawyer
    and their lender's lawyer at John Hancock. We pay two sets of
    lawyers on the same side of the discussion, you know, $1,000 an
    hour. These aren't the good local lawyers in Nevada rates.
        And so one recommendation would be that DOE and the lenders
    should be represented by the same counsel as a first, quick 50
    percent cut on the costs of maintaining those loans.
        Number two, the terms need to be the same as, you know,
    commercial lenders or I would even argue, the Overseas Private
    Investment Corporation, or OPIC. One example for that is we are
    building the McGinness Hills 3 power plant in Nevada. It's in
    the same reservoir as the McGinness Hills 1 plant built a
    decade ago, and the lenders want us to put up that facility and
    any future facility as collateral in case that reservoir has an
    issue. And it seems somewhat absurd to be leveraging now
    another 150 megawatts of power plants off that first DOE loan
    project. And we go round and round and have this discussion.
        The third issue that I'll just point out, that I brought up
    earlier is we would prepay that loan to get out from underneath
    it. I think it's about $240 million today. But because of the
    margin basis, we would be upside down by about $35 million on
    that loan and that, you know, is untenable for a publicly-
    traded company. If we could just pay the base rate of that
    loan, keep the government whole, as I said, and free up that
    money so that it can be used for other projects, we would love
    to do that. I'm not really familiar with the first, or Mesa-DOE
    project I discussed in the 1980s, but we were able to repay
    that loan in a year. And so, working on those terms to help us
    repay that money and get it moving and useful again would be
    incredibly helpful.
        Senator Heinrich. Ms. Young, I want to ask you if we should
    be thinking about this from the spectrum of projects that are
    electrical generation projects. At a time when, you know, air
    source heat pumps now, I mean, we have gotten so much better at
    heat transfer that if we can make air source heat pumps work as
    widely as they do today, when they were a joke 20 years ago,
    what about the commercial applications for, literally, just
    heat transfer as opposed to electric generation? And what are
    some of the examples of how we should be moving those toward
    commercial application today?
        Ms. Young. So I think a lot of it comes from economies of
    scale and just public awareness of some of the resources. And
    so, you know, when you're driving down the road and you see
    people have solar panels on their roof, it starts driving
    conversation and it drives deployment really.
        Senator Heinrich. No question, there have been many studies
    that have shown that if you have solar panels in your
    neighborhood, you are dramatically more likely to get solar
    panels.
        Ms. Young. And I think a lot of people today just aren't as
    aware that geothermal heat pumps are an option. You know, when
    I talk to people about installing them, they say, well I don't
    want some new technology. But it's not. And when they realize,
    when they start to see that their neighbors have it, their
    local school has it, the state capital has it. When all these,
    when it becomes more visible it changes the conversation.
        And so, I think certainly making it more visible, talking
    to developers who are building new subdivisions and making them
    more aware of it. You know, when people pick out their, build
    their homes, they're picking out their tiles, they're picking
    the colors of their cabinets, but they're not picking out their
    heating unit. It's really the developers that are doing that.
    So working on the conversation with them.
        And then additionally, working with the appraisers and the
    real estate industry to make sure that there's value added to
    the real estate properties when they're being sold, when
    they're pulling comps on a property that you can get extra
    value from having renewables such as geothermal heat pumps.
        Senator Heinrich. Thanks.
        The Chairman. Senator Cortez Masto.
        Senator Cortez Masto. Thank you. Thank you, Madam Chair and
    to our Ranking Member, first of all, for holding this hearing.
    This is an incredible opportunity for us to take advantage of
    geothermal as well as utilize new technologies that are out
    there. I say that because after California, Nevada is the
    second most heavily geothermal-installed state in the nation
    and has the greatest untapped geothermal potential of any
    state. In fact, a 2008 U.S. Geological Survey report suggested
    that Nevada alone, by the most conservative estimate, had
    nearly 996 megawatts of undiscovered geothermal resources,
    roughly enough to cover the electricity demands of 747,000
    homes. So we are excited to have this hearing today.
        For that reason, because it is an untapped resource and
    what we are hearing today with the opportunities to enhance
    this resource, Senator Wyden and I just recently introduced the
    Geothermal Energy Opportunities Act. Many of you are already
    familiar with it, but it sets the national geothermal energy
    generation goals over a ten-year period and directs the
    Department of the Interior to identify high priority areas on
    our public lands most apt for future development. It reduces
    the barriers to obtaining leases, allowing co-production on
    areas already developed for other energy development, it
    promotes geothermal heat pump research and development for
    large-scale applications, and it sets up public-private
    partnerships to improve geothermal data collection in order to
    reduce risk and help advance potential projects.
        Paul and everyone on the panel, thank you so much. Paul, it
    is great to see you. We have had the opportunity to talk in
    Nevada on several occasions. I also want to congratulate Ormat,
    who just began construction this Monday on a new geothermal
    facility in Reno, which is going to provide electricity for
    22,000 homes, right, while offsetting four million tons of
    CO2. So congratulations on that. This is a great
    conversation, I appreciate that.
        One of the things that I want to talk about in the bill--
    and you mentioned the efforts taken by the Federal Government
    to expand opportunities to site renewable energy projects. The
    bill that Senator Wyden and I have introduced requires that
    data from all exploratory wells carried out on federal lands be
    made public for the purpose of mapping national geothermal
    resources. And we have talked a little bit about that.
        Paul, can you talk a little bit about how Ormat has
    utilized public data and how it can be best put to use by the
    geothermal industry?
        Mr. Thomsen. Absolutely, through the Chair to Senator
    Cortez Masto, first and foremost, thank you for introducing
    this bill. That is fantastic news. And thank you for coming out
    and visiting a geothermal power plant.
        As you mentioned, the Steam Boat complex in Reno, we just
    heard, can be seen by everybody driving from the Reno Airport
    to the capital in Carson City, and it produces enough
    electricity to supply the entire residential load of the City
    of Reno.
        If I go back to those original projects that Ormat took DOE
    funding on, I believe all of the data that we collected was
    shared with the Department of Energy and I think that's
    critical for future developers because we're not always going
    to be successful in developing a project as we heard about the
    innovation on temperature.
        And so, a lot of resources that maybe were looked at 20
    years ago weren't feasible based on the technology of that day
    because they weren't hot enough. And so, being able to go back
    to DOE or going back to NREL or to our University of Nevada,
    Reno, Great Basin Geothermal Center and getting some of that
    data has allowed us to reevaluate it decades later and say,
    actually that resource might be developable today with our new
    innovative technology.
        And so, Ormat absolutely looks at all the institutions
    where this data is collected and mined and I think it's a
    brilliant idea to, you know, especially if you're getting
    federal funds, to share that information and use it to expand
    the industry as quickly as possible.
        Senator Cortez Masto. Great.
        Can you talk a little bit about the investment tax credits
    (ITC)? I've heard this conversation as well, that to continue
    to promote this investment, ITC is helpful with the upfront
    costs. What else can we be doing?
        Mr. Thomsen. Sure. So geothermal is a little unique in the
    fact that it's eligible for both the kind of a base rate ITC
    and used to be eligible for the production tax credit. And that
    really put geothermal on a level playing field with the other
    renewable technologies that got this. In the last extension of
    the production tax credit, geothermal was not included in that
    and so it fell back to, kind of reverted back to, a ten percent
    investment tax credit. And that has put geothermal at a
    disadvantage from a developer's standpoint of competing with
    those other technologies that get the 30 percent investment tax
    credit.
        I think I misspoke earlier, in production, they get a 30
    percent investment tax credit, we get a 10 percent.
        By including geothermal and putting it on that level
    playing field we will expedite its deployment, especially in
    states that are trying to mitigate climate and find resources
    that can, you know, be flexible and firm and meet their climate
    goals moving forward.
        And so, as, you know, I think the industry and on behalf of
    the Geothermal Resources Council, we are ready to, kind of,
    have that discussion should a tax bill come forward. It's
    pivotal moving forward.
        Senator Cortez Masto. Thank you.
        I notice my time is up. Thank you all for being here.
        The Chairman. Thank you.
        Let's go to Senator Cantwell.
        Senator Cantwell. Thank you, Madam Chair.
        Continuing on that thought, I know we are not the Finance
    Committee, but you are in front of us as industry experts and
    we want to explore what we think that potential really looks
    like.
        One, do you think the cost of geothermal-generated
    electricity, once it is scaled up, can be competitive, and
    where do you think that falls? And what do you think we get out
    of another six to eight years of an ITC?
        Mr. Thomsen. Through the Chairman to Senator Cantwell, the
    answer is yes.
        What I mean by that is, we are already seeing in
    California, for example, utilities procuring geothermal at
    about seven and a half cents. They've recognized that when they
    take the energy value of geothermal and its capacity benefits,
    meaning that it's there at night or when the intermittent
    resources aren't there, that it's of value to them. With
    geothermal prices, you know, going below seven and a half
    cents, it's absolutely commercially viable today in states that
    are looking for high renewable penetration rates.
        Turning back to the tax credit question.
        Senator Cantwell. Well, what do you think about it when it
    is scaled up? Where do you think that falls? Do you think that
    would drop further?
        Mr. Thomsen. Absolutely.
        Senator Cantwell. Okay.
        Mr. Thomsen. I mean, I think if you look at, like I said
    earlier, ten years ago we were probably at nine, nine and a
    half cents per kilowatt for geothermal developed. And today,
    publicly available information, the last publicly available
    Ormat contract is at seven and a half cents. And I'll tell you
    we're having negotiations and discussions of prices lower than
    that and that is, you know, without a lot of the innovation and
    continued development here.
        So I think you will see those prices come down. And you
    know, when you look, I use California as an example, when you
    look at a resource that can ramp up or down to meet the loads,
    it can provide grid support, far support, droop response and
    things and doesn't have emissions, you run out of technologies
    to turn to.
        You look at hydro or geothermal. And that's why, frankly,
    we're seeing a resurgence in the Western markets for
    geothermal. People are procuring it again.
        And the simple evolution of that is California built ten
    gigawatts of intermittent resources in the last decade. They
    had built, you know, it's been an absolute success story for
    solar and wind projects. What they are realizing now is that
    they need that backbone to their renewable development, and
    that's geothermal moving forward.
        Senator Cantwell. Right.
        And so, having been involved in those tax credit bills as
    it relates to renewables writ large, it is very unfortunate
    that geothermal dropped out in 2017. But what do you think that
    structure should look like in six years, eight years?
        Again, I know we are not the Finance Committee, but
    nonetheless, you are the industry experts sitting before us on
    one of the best opportunities in the renewable area. So I'm
    just trying to think about what you think the industry
    structure needs for certainty. Six years? Eight years? What?
        Mr. Thomsen. If I put on my hat from the Geothermal
    Resources Council Policy Committee, our simple ask there is to
    be treated the same as the wind and solar tax credit as it
    steps down.
        I do think, you know, if we want to be aggressive and look
    at creating parity and helping the grid moving forward, you
    know, and I want to be somewhat technology neutral when I say
    this, but technologies that can provide ancillary benefits to
    the grid to make our transmission and infrastructure better,
    maybe should get an incentive moving forward.
        I served as the Energy Advisor to the Governor of Nevada
    and we had a tax, a state tax credit system. And it was amazing
    to me that we had about a ten to one return on our investment
    for projects that we gave a state tax incentive to that came to
    the State of Nevada and then built these projects, put people
    to work and they are long-term investments, you know, for 20 or
    30 years under our power purchase agreements.
        Senator Cantwell. Well, if we were neutral you would have
    been in the tax bill. You would have stayed in the tax bill.
        All we are doing today is trying to breathe more life into
    the understanding of geothermal so that our colleagues will
    understand, at least people on this Committee will be
    supportive of it as the opportunity presents itself this year.
        Mr. Thomsen. Absolutely.
        Senator Cantwell. Thank you, Madam Chair.
        The Chairman. Thank you.
        Senator King.
        Senator King. Thank you, Madam Chair. This is a great
    hearing on a really important topic, I think.
        I asked a geologist friend once when I looked at the map, I
    said why is all the hot water out West? And he said, well, it's
    obvious, those states are closer to hell.
        [Laughter.]
        You can tell I am not running for President, Madam.
        [Laughter.]
        But I do want to focus on geothermal resources in the non-
    Western states where the temperature may only be 45 degrees,
    but we have a well-developing geothermal heat pump market in
    New England. But the issue is installation costs: $40,000 for a
    2,000 square foot home. How do we drive those costs down?
        And you talked about drilling technologies because you have
    to drill deep wells. Are there other ways and what are the
    answers that will improve the ability of these kind of more
    localized projects in areas of the country that do not have
    180-degree water under the surface?
        Ms. Young. Yeah, and I think a lot of that comes from
    scale. Certainly, if you're doing a one-off project and you
    have to mobilize your rig and you have to mobilize the heat
    pump unit and you're deploying all of this.
        Senator King. So that gets to the district heating solution
    you were talking about. Is that part of a solution,
    particularly if you are in an urban area?
        Ms. Young. Yes, district heating is very popular, in fact,
    in Europe for this reason. And it's because they have a much
    higher population density than a lot of the places here in the
    U.S.
        But when you do have densely populated areas, a lot of the
    cost of these district heating systems is in the surface
    piping. So the district heating become viable in larger cities
    and in densely populated areas.
        Senator King. The economics in Maine are quite good. It
    works out to about $0.85 a gallon of oil, a comparable heating
    value, and that oil is now about $2.75. The economics are good,
    but still the upfront cost is a significant barrier. And there
    are tax benefits and incentives, but I think that is something
    we really need to think about.
        I am very interested in what you were talking about, about
    permitting. It has always struck me that environmentally strong
    projects like solar, wind, or geothermal, have to pass the same
    exact permitting requirements as if they were strip malls. In
    other words, there is no, sort of, net environmental benefit
    analysis done.
        What about permit by rule, which we have been very
    successful with in Maine, where if you have great experience
    with this technology, you know what the impacts are and the
    agency says, if you do it this way and meet these standards,
    you have your permits. We don't have to do 100 environmental
    studies of each individual site. Is that a possibility in this
    area?
        Ms. Young. So I don't know a lot about Maine's permit by
    rule, but it does, the way you've described it sounds a lot
    like what a categorical exclusion is.
        Senator King. Same idea.
        Ms. Young. Yeah, that you have this category of activities
    that you've reviewed the environmental impacts.
        Senator King. Now, my question is, is it federal
    permitting? Is that the issue? Or is it local and state
    permitting?
        Several of you mentioned permitting as a barrier. What is
    the barrier? Is it the State of Nevada or the State of
    California or is it NEPA? Where do we need to focus here?
        Ms. Young. Well, for the first part of the development
    project where they're drilling for the wells and don't, haven't
    yet accessed the resource, that's where the risk is the highest
    and that's where we focused on these federal categorical
    exclusions. So the ability to drill and access the resource as
    quickly as possible and inexpensively as possible in order to
    get financing for the rest of the project.
        It depends, obviously, on the location of the project, if
    it's on federal lands and also in which state you're in and how
    well the different states work together in aligning their
    processes.
        Senator King. And I want to be clear, I am not talking
    about waiving environmental requirements or ignoring
    environmental impacts.
        Ms. Young. We agree.
        Senator King. But if you have done the same project 100
    times and you know exactly what the impacts are and what they
    will be and what to look for and how to mitigate, it seems to
    me there is an opportunity there for dealing with this.
        And as you point out, these are upfront costs. These are
    high test dollars. There is no tax subsidy. If the project does
    not go, you have lost that money.
        Ms. Young. That's correct.
        Senator King. Other comments?
        Yes, sir.
        Mr. Thomsen. If I can, through the Chair to Senator King, I
    like the analogy of the strip mall except a strip mall doesn't
    have to get the permit three times and that's the case for
    geothermal projects on federal lands.
        You know, unlike a wind or solar project where you can put
    up an anemometer or look at the solar radiation without
    disturbing the land. To find the geothermal resource below the
    surface, we have to go out and do some preliminary exploration
    or resource confirmation. And what's different in the United
    States than in the rest of the world is to go out and drill
    those slim holes and start to do exploration which sounds like
    the rule by law.
        Senator King. It is a--tower--down instead of up.
        Mr. Thomsen. Exactly.
        But in order to drill those wells, we have to go through
    NEPA and get an environmental assessment on each one of those
    exploration wells. And that is what has just incredibly slowed
    down the industry because you are now getting a delay and a
    cost before you even know if there's a resource there or you
    want to pursue it.
        And so, what is in most of our written testimony here is
    the concept of, like you said, every exploration well looks
    very similar, the surface disturbance is minimal and they can
    be reclaimed, you know, very, very quickly. It's to treat all
    of those the same and give a categorical exclusion in NEPA.
        Senator King. With certain requirements, if you follow
    these requirements.
        Mr. Thomsen. With certain requirements.
        And then, once we, you know, qualify a resource and say,
    this is something we want to build, then we go through NEPA
    again for an environmental assessment on a production well
    which is treated in code much differently than an exploration
    well. And then we get to do one for the actual siting of the
    power plant as well.
        And so, that is, you know, those three things are what we
    are trying to streamline to say, give us the categorical
    exclusion through exploration or resource confirmation. We're
    not skirting any environmental concerns. And once we decide to
    drill a full-size production well, start moving, you know,
    thousands of gallons of geothermal fluid through a power plant,
    we will go through the full EA and EIS project.
        We operate about 400----
        Senator King. Bearing in mind that we are building a
    project that is a net positive for the environment in terms of
    carbon, which is the goal, our universal goal here.
        Mr. Thomsen. 100 percent.
        And a project with a smaller surface footprint for the
    amount of megawatt-hours it reduces than any technology outside
    of nuclear.
        Senator King. Thank you.
        Thank you, Madam Chair.
        The Chairman. Senator Hirono.
        Senator Hirono. Thank you, Madam Chair.
        Mr. Thomsen, Ormat owns the Puna Geothermal Venture Plant
    on the Big Island of Hawaii. That plant provided about 30
    percent of the power for that island until the lava from
    Kilauea Volcano caused the plant to have to be closed in May
    2018.
        As you proceed to reopen the plant, I would like your
    commitment that your company will engage with the local
    community and other interested people on the Big Island to hear
    their views and concerns.
        Mr. Thomsen. Through the Chairman to Senator Hirono, you
    absolutely have my commitment to do that.
        Ormat has been proud to operate that facility for some
    time. And you know, it's a compelling story because we often
    talk about energy security.
        Senator Hirono. Yes.
        Mr. Thomsen. And it's going to be an incredible success
    story to say that a geothermal facility surrounded by lava was
    able to, you know, weather the storm, come back online and
    whether those geothermal projects are located in the Caribbean
    and hit by hurricanes, tropical storms or sit through this,
    geothermal power plants are incredibly resilient.
        And so, you have my full commitment as we go through the
    re-permitting process, as we build the new transmission lines,
    this is really going to be a story of rebirth and I'm thrilled.
    I want to take a moment and thank our Power Plant Manager,
    Jordon Herrera, and our Senior Hawaiian Affairs, Michael
    Kaleikini, for working with the community to bring the roads
    back, bring the power back up and bring new life to the, kind
    of, Eastern Pahoa area. Additionally, what's amazing about that
    story is that when that power plant went down, Hawaii had to
    replace 30 percent of its load and it did that through the use
    of bunker fuel. And so, the emissions went up and, as the
    Chairman pointed out earlier, the price of oil at that point
    was quite high. And so, I was shocked to hear the other day,
    HELCO say, the price on ratepayers went up by $2 or $3. Well,
    that can be a stunning amount if you consume a lot of power.
        Senator Hirono. Of course.
        Mr. Thomsen. And so, we are doing everything in our power
    to get that facility back up and operating and, frankly, hope
    that the geological activity that occurred will make those
    wells hotter, more productive and maybe we'll see a greater
    product out of the Puna Geothermal Venture moving forward.
        Thank you.
        Senator Hirono. Yes.
        I would like to thank your company for your sensitivity to
    the views of the community as well as your commitment to the
    community.
        And I would also like to join with Chair Murkowski in
    asking the Department of Energy to include all 50 states in its
    research, like the recent GeoVision report, especially as both
    Hawaii and Alaska have very significant geothermal sources. Can
    you nod your head?
        Mr. Simmons. Sure, yes.
        And the challenge there in GeoVision is that we were
    looking at three electric sector scenarios and the model that
    we use for that is, unfortunately a model of the continental 48
    states. It is a modeling impediment, let's say.
        Senator Hirono. Well, can you fix that then going forward?
        Mr. Simmons. Yeah, we can look into fixing that because----
        Senator Hirono. Yes, please do because our two states have
    significant volcanic activity and, as you well know, the entire
    Hawaiian chain is as a result of volcanic activity. Even as we
    speak there is a new island being formed off the Big Island,
    not during our lifetime, that is going to pop up.
        So I have another question for you, Mr. Simmons. You
    testified to the DOE's expanding support for enhanced
    geothermal systems that require engineering to allow for the
    movement of heat and water that happened naturally in more
    traditional hydrothermal resources found in Hawaii. What are
    the costs of development of a traditional hydrothermal resource
    compared to an enhanced or engineered geothermal system, and
    what share of DOE's geothermal budget is spent on hydrothermal
    versus enhanced geothermal research and development?
        Mr. Simmons. So, there are, as Paul mentioned earlier,
    there is maybe, there is hardly any enhanced geothermal systems
    in the world today. Arguably, they have one of the first and
    only, so it's difficult to really be able to compare costs
    because the costs are much greater for the enhanced geothermal
    systems. And that's the reason that we are working on with
    FORGE to really, hopefully, drive down those costs of enhanced
    geothermal systems and make them cost competitive with
    electricity generally.
        The breakdown is----
        Senator Hirono. So yes, give me the breakdown.
        Mr. Simmons. Do we have a breakdown? What is it? Okay, so
    slightly over half is for enhanced geothermal systems versus
    the rest of our portfolio.
        It is a critical area for the future because enhanced
    geothermal systems expand the opportunity away from only the
    places with really excellent geothermal resources currently to
    expand to many other areas.
        Senator Hirono. So do you think that kind of distribution
    of funding, considering that enhanced geothermal systems cost
    so much more, do you think that is appropriate rather than
    continuing to make sure that we are doing whatever we can to do
    enough research on the hydrothermal side to make hydrothermal
    cheaper?
        Mr. Simmons. Well, currently I think that this is a good
    division of resources. If the Senate thinks otherwise, I'd very
    much like to hear that. If the industry thinks otherwise, I'd
    very much like to hear that.
        One of the important parts of my job is to make sure to
    talk to stakeholders and to hear their perspectives on how we
    are spending our research dollars. The money spent on enhanced
    geothermal systems is really a play for the longer-term future.
        Senator Hirono. I understand.
        Mr. Simmons. That's a key area, but also it is critical
    that we are working on driving down the costs of what is
    available today to, you know, to continue to make incremental
    improvements there as well.
        Senator Hirono. Madam Chair, may I ask, as long as we have
    the panel here, if any of our panelists would like to weigh in
    on the 50/50 distribution?
        Yes, please?
        Mr. Latimer. Thank you, Senator.
        I would just like to make a couple points.
        One is that there's a significant amount of overlap in the
    type of research done for the hydrothermal and what the EGS
    does. So it's not like that money that is spent on EGS does not
    have crossover benefits to hydrothermal and vice versa.
        So I think in that sense, when you're dealing with anything
    in the subsurface, whatever we learn about these specific
    geologic systems that are good for geothermal energy is going
    to be able to be applicable across both.
        The other is to get at the specific cost question. And I
    think it's important to understand that there's the Ormat
    project and a couple other examples around the world of
    commercial EGS, but we just don't have that many data points
    right now. And it's a very early technology, but it has a lot
    of potential, both in terms of its scale and in its cost
    reductions.
        And so, if we look at the project like FORGE, that the
    Department of Energy is leading, there's technologies that we
    just have not tried yet for enhanced geothermal systems. And
    so, it's a little unknown what the true potential could be. And
    there's a possibility that the cost could be far lower than
    what we think if these research programs are successful.
        Senator Hirono. I take it you agree, Mr. Thomsen, you are
    nodding your head.
        Mr. Thomsen. Through the Chair to Senator Hirono, I do.
        I think, you know, for years we have asked the Department
    of Energy to look at the subsurface research and that's, and
    what I mean by that is the drilling of the wells, you know, can
    we do it more cost-effectively? Can we do it quicker? Are there
    new innovative technologies?
        I often tell people, I'm proud to work for the largest
    geothermal developer in the United States. We have a market cap
    of $3 billion. That is smaller than the R&D budget of any major
    oil company out there.
        And so, we can't do a ton of that subsurface R&D which
    actually brings me back to a project in Alaska at Mount Spurr.
    We spent $10 million drilling and looking for that project
    before we had to say we can't spend any more in the exploration
    phase.
        So for DOE to spend a considerable amount of their funds to
    look at how to, and the FORGE site, the Frontier Observatory
    for Geothermal Energy, is going to be their playground to look
    at how do we drill wells differently? How do we deploy new
    technologies? Anything that the industry can take from that and
    reduce our costs will be hugely helpful.
        To give you just a basic breakdown. We typically say one
    megawatt of geothermal energy costs us $5 million, and half of
    that is subsurface drilling. If we can reduce that cost, that
    would be huge to the industry.
        Senator Hirono. I understand. Thank you for the
    clarification.
        Thank you, Madam Chair.
        I would just like to note that for Hawaii, while we do have
    large geothermal sources, that there are cultural concerns
    relating to the use of geothermal in Hawaii and I want to note
    that because I certainly do not want to make light of those
    concerns in Hawaii.
        Thank you, Madam Chair.
        The Chairman. Thank you, Senator Hirono. I appreciate you
    bringing up the absence of Alaska and Hawaii from the GeoVision
    report. It is my understanding that this is an old survey, USGS
    survey, from 2008. The resource assessment indicates that
    Alaska has a mean conventional hydrothermal resource potential
    of about 6.3 percent of the total identified U.S. hydrothermal,
    and that Hawaii has about 14 percent of the total identified
    U.S. hydrothermal resource potential.
        There is no doubt that the potential is there. The fact
    that we are not included as part of the model of the
    continental United States is a reality, unfortunately, that
    oftentimes we are excluded from a level of analysis. Then,
    because we have been excluded from the modeling, when it comes
    time to access opportunities, we are not included or we are
    omitted or it is viewed as well, we just don't know enough
    about it. So we are happy to have our own modeling and I think
    we certainly demonstrate that we have good, strong potential
    out there and know that Hawaii does as well. So we want to work
    with the folks at DOE on that.
        I want to ask a couple questions in, just exactly, this
    vein with regards to the potential.
        I recognize, Mr. Thomsen, the effort that Ormat made some
    years ago at Mount Spurr. I know that you have had folks within
    your company that continue to look at Alaska.
        I am curious to know from you, Mr. Latimer, with your very
    impressive story about how you got into geothermal in the first
    place, what it would take for a company like yours to consider
    the opportunities for Alaska.
        And Mr. Spisak, we have not brought you into the
    conversation a lot today, but in my state it is my
    understanding that with the potential that we have in the
    state, BLM has areas that, they too, could prove to be highly
    potential with regards to the resource. What is BLM doing to
    accelerate the opportunity for potential geothermal
    opportunities within the State of Alaska? I throw it out to all
    of you for a little bit of discussion about what would it take
    to come back and look at the production possibilities in terms
    of bringing more geothermal into the market. You all can jump
    in, because you have all got your question here.
        Mr. Thomsen. Chairman, if I can maybe just set the stage?
        From our experience a couple of ideas, one, you know, in
    places that geothermal is very difficult to develop, you know,
    the prices go up very quickly. And so, our experience with
    Mount Spurr was quite unique in the fact that it was across the
    Cook Inlet. There weren't very good roads. We had to build ice
    roads to get drill rigs there. We had a very consolidated
    drilling season. That project, you know, from the big scheme of
    things was quite complicated. We invested about $10 million to
    procure the land and do the initial drilling of that project
    with zero federal help. We did receive some money from the
    State of Alaska to do that and then had to make the tough
    decision.
        So, going back to, you know, what really put Ormat on the
    map in the '80s was a DOE cost share program. When they look at
    states with great geothermal potential but that are very
    difficult to develop projects in, maybe due to a short drilling
    season or due to having to construct roads and things that can
    be very costly that, you know, geothermal developers from
    Nevada are, kind of, triaging the first time, that would be
    hugely helpful.
        The other one I think is transmission. And I mentioned it
    earlier that transmission and interconnection is a huge issue
    and not just in Alaska or Hawaii but in the U.S. with the, kind
    of, antiquated transmission system. When we build these power
    plants, the geothermal resource is where it is and we have to
    get that transmission, you know, that power to the transmission
    system. We can build the distribution lines, but
    interconnecting to transmission is becoming an issue. We're
    getting five- to seven-year delays and when we look at places
    like Hawaii, we would absolutely love to move power from the
    Big Island of Hawaii to the other islands and, you know, maybe
    looking forward and if I come back to this Committee in another
    decade, what we should be looking at now is how do we move that
    power and our undersea cables and so forth, a reality. What are
    the costs of those today and if those can move power, it
    unleashes the geothermal potential?
        We looked at other resources in Alaska along the Aleutian
    Island chain and they're phenomenal resources. They just don't
    have a market nearby. They have a fishing market that's maybe
    there for a couple months but for a private sector company to,
    you know, look at a payback of 60 years is untenable.
        So how do we connect those resources to the rail belt and
    transmission and infrastructure is going to be a huge part of
    that as we look to the next, as we look forward.
        I think many companies would go back and look at Alaska if
    they could share those costs and burdens or get some innovative
    help from the Department of Energy and, you know, that's my
    quick and dirty pitch for giving them more funding to do that.
        The Chairman. Well, I hope your pitch does not discourage
    Mr. Latimer.
        What would it take?
        Mr. Latimer. Yes, thank you for the question, Senator.
        I think Alaska is a fantastic market for geothermal, and
    we've talked at length about the Chena Hot Springs and that's
    just a great example. It's highly efficient because the ambient
    temperatures are cooler. It's the same reason it works so well
    in Iceland. And there's all kinds of additional benefits from
    the heat resource.
        The biggest constraint I see in Alaska is the lack of data.
    We spoke earlier about the public datasets of bottom well
    temperatures and how that informs. It's a low-cost way to
    really narrow down your resources.
        And when you think about where it's difficult to do private
    capital on projects, it's the gap between that low-cost data
    and when you have a confirmed project because doing surface
    studies and your confirmation drilling is extremely costly and
    challenging to do if you don't have confidence of some publicly
    available data to lower the cost of the early studies.
        Examples of places that have done a great job of spurring
    an industry in light of low data, I think one of the best
    success cases you could say from a policy and market innovation
    standpoint would be Kenya over the last decade. Kenya is at a
    point now where 50 percent of their electricity comes from
    geothermal energy, and it's increased by a factor of ten since
    they passed the new Reform Act of 2007.
        And they did many things there, but one of the most
    interesting ones was they worked with KfW, the Development Bank
    of Germany, to install a facility they called the East African
    Risk Mitigation Facility where private partners can apply and
    get competitively accepted for matching funds for that pre-
    exploration, exploration and confirmation drilling work which
    really cuts down on the risk of the point where private capital
    is the hardest to do.
        So imagining looking at the success of how that instrument
    kick-started the industry in Kenya, I think there's many
    geographies in the United States that could benefit from a
    similar type structure to attack the highest risk part of the
    project.
        Thank you.
        The Chairman. Mr. Spisak, what is BLM doing to help
    facilitate, whether it is on the mapping side or just, you
    know, we have heard the issues with the permitting and how that
    adds to the cost. The fact that it is six to ten years on
    public lands to advance a project and that does nothing to
    enhance the interest from the investor's perspective.
        Mr. Spisak. I appreciate the question, Senator.
        Basically, we react to interest by industry and where they
    put in expressions of interest and then we process those
    through sale. And Alaska, as has been mentioned, there hasn't,
    we have not gotten any expressions of interest to the point
    where we would go through the NEPA analysis and identify and
    put parcels up for sale like we've done in California and
    Nevada.
        The Chairman. Do you think, though, that fact that you have
    to go through, what did you say, six different NEPA steps
    there? Do you think that that discourages just from the get-go
    anybody looking to a prospect that might be on public lands?
        Mr. Spisak. Certainly, the discussion here would convey
    that and I don't doubt that at all.
        We're looking at and with this report we reviewed it, the
    Geo report that's been discussed about streamlining NEPA,
    Secretarial Order 3355 which came out here this last year
    regarding NEPA analysis.
        So we're implementing and that's improving the NEPA process
    for energy projects, including geothermal.
        The Chairman. I think we have heard a clear message here
    that there can be much that can be taken or learned from what
    has happened within the oil and gas industry and how we can use
    some of those lessons learned to either help facilitate a
    better process or the technologies themselves.
        Mr. Spisak. Absolutely.
        The Chairman. Ms. Young, you had called for a dedicated
    geothermal team at BLM and, you know, I think maybe it is ideas
    like that that can help us focus on this as an opportunity.
    What do you think about that as a suggestion? Is there anything
    else that BLM might be able to do to improve the processing
    time for the geothermal leasing?
        Mr. Spisak. Yes, certainly.
        As you've mentioned, we experienced different teams on the
    oil and gas side and have lessons learned in that. As
    geothermal ramps up we would very likely look at pulling people
    together to focus on that, tiger team or strike team, what have
    you, as expressions of interest come to us for processing.
        The Chairman. And then my last question, and Senator Hirono
    has additional so we will turn to her.
        But we have heard from you all that there is a hurdle there
    when it comes to the permitting, and the time that is required,
    the development timelines here in the United States on our
    public lands.
        Ormat operates a lot of facilities around the world. How
    does the timeline, say for instance, a year, you have a project
    in the Philippines. How does that compare to what we see here
    and what can we be learning from how they are operating in
    other nations?
        You also mentioned Kenya. Share with me a little bit of the
    international perspective versus where we are in the United
    States.
        Mr. Thomsen. Thank you, Chairman.
        To boil it down, you know, in other countries we do not
    have to go through the rigorous permitting for exploration. We
    typically get a tender for an area that's been designated to
    look at for geothermal development. We can then go do, you
    know, this resource confirmation incredibly quickly, refine and
    define where the resource is and then proceed with the
    permitting once we are ready to, you know, build a facility and
    move forward.
        And so, that is the, you know, the single biggest
    difference in the United States than in the rest of the world
    is that exploration delay, requiring NEPA. Simply put.
        The Chairman. Easy as that.
        Senator Hirono.
        Senator Hirono. I have just one question for Mr. Simmons.
        The DOE's Geothermal Technologies Office Play Fairway
    Analysis program was successful in identifying a variety of
    prospective resources in Hawaii and elsewhere, and Hawaii has
    one of the deepest geothermal resources and highest
    mobilization costs in the country--Alaska and other Western
    states also have higher than average exploration costs.
        Do you think the Department's Geothermal awards should
    reflect that higher levels of funding will be needed to conduct
    exploration activities in places with higher exploration costs
    due to different geologies?
        Ms. Simmons. Yes, and along those lines, one of the things
    that we're looking at next year is to look at a sub to do, to
    focus on, have a focus, a focus on, subsurface R&D that
    includes volcanic terrains which obviously includes both Alaska
    and Hawaii, but also those are higher costs but then again,
    with those higher costs you also have incredible resource
    potential because of the high temperatures.
        Senator Hirono. Thank you.
        Thank you, Madam Chair.
        The Chairman. Thank you, Senator Hirono.
        Thank you all. We really appreciate the conversation.
        I cannot believe that with my enthusiasm for geothermal we
    really have not had a hearing since 2006. I am so glad we
    remedied that today. Mr. Thomsen, it is not going to be another
    decade before that happens around here.
        I think one of the things that we heard today is there is a
    lot, there is a lot out there. Several of you have used the
    term ``advanced geothermal.'' I think when we recognize where
    we are as a country, where we are globally with energy
    portfolios out there, instead of talking about nuclear
    nowadays, we talk about advanced nuclear. Instead of just plain
    old yesterday's geothermal, there is a heck of a lot more out
    there.
        And so how we work to develop some of the technologies, how
    we allow for our processes to keep up with the potential and
    the new technologies the way that we are accessing them, the
    way that we can be doing more.
        I think it is an exciting time. I think that our failure to
    harness the potential is on us. We have to figure out where we
    are, where we have barriers in place and why we have barriers
    in place and how we can move around them, set those aside and
    really start harnessing this potential.
        We have heard from each and every one of you that there is
    just such a bonus when it comes to geothermal whether your
    focus is on reduced emissions or how we avoid intermittency,
    the potential is really, really something that we should all
    get very energized about and that is, no pun intended, it is
    really sincere.
        I look forward to talking with you all more about some of
    these developments and what we can be doing from a policy
    perspective here on this Committee and in the Congress to help
    advance some of what we have heard discussed today.
        Thank you for your leadership, and we will be working on
    these things.
        The Committee is adjourned.
        [Whereupon, at 11:38 a.m. the hearing was adjourned.]

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