[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

                               __________
                               
                               
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               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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