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Speaker 1: Hi everyone. Last week on the show, we had to

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Speaker 1: look at the geothermal sector. We did a bit of

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Speaker 1: an update of the status state of the industry, but

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Speaker 1: more importantly, we had to look at some of the

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Speaker 1: technologies or ways of thinking about geothermal that could help

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Speaker 1: it grow and play a bigger role in the energy transition.

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Speaker 1: But here's the thing. Conventional geothermal, for a lot of reasons,

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Speaker 1: is often thought of, even by those doing the projects,

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Speaker 1: as a development effort for emerging markets, financed by development banks,

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Speaker 1: or as a science project. Now don't get me wrong,

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Speaker 1: these are both absolutely worthy objectives and reasons for doing something.

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Speaker 1: But a lot of times you have to listen really

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Speaker 1: carefully to hear the business reasons or market justiplication. So

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Speaker 1: we thought we'd give some more air time to this

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Speaker 1: today in a part two. What's the business case for

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Speaker 1: geothermal and can it be a viable business? It's looking like,

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Speaker 1: at least in one key market, the answer is absolutely yes.

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Speaker 1: Back in June of this year, the California Public Utilities Commission,

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Speaker 1: or CPUC put out a decision requiring an additional eleven thousand,

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Speaker 1: five hundred megawatts of clean energy capacity to be procured

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Speaker 1: by entities supplying the California grid. Now here's a thing

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Speaker 1: the CPUC is saying when thousand megawats of this has

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Speaker 1: to come from zero emitting renewable resources that have at

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Speaker 1: least an eight percent capacity factor. I don't know about you,

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Speaker 1: but I don't know if any other technologies that fit

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Speaker 1: this profile apart from geothermal. The instant demand has set

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Speaker 1: off a wave of activity in this sector from incumbent

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Speaker 1: geothermal developers and those hoping to utilize new geothermal generation technologies.

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Speaker 1: Today on the show, we've got Paul Thompson, vice president

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Speaker 1: of business Development at ormat Technologies, a long time geothermal

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Speaker 1: developer manufacturer with more than three thousand megawatts of installed

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Speaker 1: capacity to its name and more than one thousand megawats

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Speaker 1: developed itself and has recently moved into solar, p V,

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Speaker 1: energy storage and energy management as well. He'll tell us

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Speaker 1: about what's going on in California and how ormatte and

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Speaker 1: others are responding to this demand. As a reminder, being

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Speaker 1: does not provide investment of strategy advice, and you can

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Speaker 1: hear the full disclaimer at the end of the show.

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Speaker 1: I'm Mark Taylor, and you're listening to switch on the

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Speaker 1: being podcast. Paul, Welcome, Thank you for having me. Paul.

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Speaker 1: We've known each other for quite some time now. It's

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Speaker 1: going on what fifteen years or so, and geo, apart

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Speaker 1: from really or Matt, a lot of geo has moved

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Speaker 1: kind of slow in that time period. But there's been

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Speaker 1: a big, big shift recently in the US. Can you

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Speaker 1: tell us what happened? So I think, you know, it's

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Speaker 1: been a really exciting time in the geothermal sector, and

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Speaker 1: as you said, you know, dating back decades, we've really

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Speaker 1: seen this kind of cyclical development slowdown, development slowdown, and

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Speaker 1: in the last decade, you know, we were really focused

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Speaker 1: on what's so unique about geothermal is the ancillary benefits

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Speaker 1: that it provides. So geothermal development is more than just

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Speaker 1: energy and renewable energy credits. It produces this thing called capacity.

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Speaker 1: We're there twenty four hours a day. You know. As

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Speaker 1: an industry and as a policy person looking at this,

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Speaker 1: we always knew that as incremental or intermittent renewables grew,

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Speaker 1: you would need more baseload capacity resources like geothermal. What

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Speaker 1: we didn't know is how fast it would happen. And

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Speaker 1: today we're just seeing a huge demand for geo thermal

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Speaker 1: because it's a emission free capacity resource and that's just exciting.

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Speaker 1: And we're seeing huge developments in California that are going

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Speaker 1: to revolutionize the industry. Can you tell us specifically about that?

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Speaker 1: So what happened in California to make this change, so

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Speaker 1: getting a little wonky, It was, you know, really a

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Speaker 1: regulatory initiative, meaning we were working at the Public Utilities

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Speaker 1: Commission in California and they were doing a lot of

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Speaker 1: modeling to say, how do we achieve a hundred percent

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Speaker 1: renewable future? And they were using a modeling software called Resolve,

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Speaker 1: and we ran that a lot, and what we were

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Speaker 1: seeing is that a mega wott of geothermal replaced about

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Speaker 1: three to four mega wots of solar with integrated storage.

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Speaker 1: And so this really put the price and the value

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Speaker 1: of geothermal into a new discussion, meaning, you know, solar

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Speaker 1: and storage are able to offer a solution at you know,

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Speaker 1: let's call it three to four cents equivalent geothermal would

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Speaker 1: be twelve cents, and we knew that we could develop

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Speaker 1: projects much cheaper than it, and so that discussion was ongoing,

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Speaker 1: and we saw that in the integrated resource planning, which

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Speaker 1: is not trying to be too wonky, but the forward

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Speaker 1: looking drive they only had about two hundred megalots of geothermal,

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Speaker 1: which would kill the industry. As part of our trade

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Speaker 1: association in ORMATT, we commented and we got them to

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Speaker 1: recognize that they needed about hundred megalots of geothermal. More excitingly,

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Speaker 1: and what's just recently happened is there was an interim

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Speaker 1: order that said the load serving entities in California have

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Speaker 1: to procure a thousand megaots by and so this has

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Speaker 1: put everyone on notice that let's go get these capacity resources.

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Speaker 1: And we are seeing request for proposals, and we're seeing

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Speaker 1: this demand for a capacity resource that has zero emissions,

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Speaker 1: which is geothermal. And the unique thing about it was

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Speaker 1: when they wrote this order, they said geothermal, but then

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Speaker 1: they actually changed it to say, to be a little

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Speaker 1: more agnostic, we want resources that have a capacity factor

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Speaker 1: our weather invariant, produce electricity and have zero on site emissions,

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Speaker 1: which geo thermal qualified for. And it's really one of

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Speaker 1: the only resources that can do that. And that's what's

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Speaker 1: so exciting right now. Dumb question, are there any others?

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Speaker 1: You know, I think there could be if you look

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Speaker 1: at hydro, you know, large scale hydro kind of fifth

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Speaker 1: that bill. It's hard to do, maybe some biomass. But

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Speaker 1: I think when it looks at responsive geothermal and I

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Speaker 1: want to take a moment because I think, what's you know,

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Speaker 1: when people think about geo thermal, they maybe think about

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Speaker 1: that middle school class they took and you know this concept.

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Speaker 1: But geo thermo has been around since the nineteen fifties,

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Speaker 1: and geo thermal today is so different than geothermal projects

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Speaker 1: even twenty fifteen years ago. You know, it's kind of

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Speaker 1: like looking at a Tesla and a nineteen fifty Chevy.

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Speaker 1: So new geo thermal projects have been being developed, and

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Speaker 1: what we're realizing is they're incredibly flexible. We can ramp

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Speaker 1: them up and down. The California Air Resources Board CARB

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Speaker 1: has recognized that they have zero emissions, and so they're

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Speaker 1: incredibly valuable assets for investor own utilities, community choice aggregators

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Speaker 1: and others trying to balance a grid with solar and

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Speaker 1: storage and wind and so forth. And so there's just

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Speaker 1: this huge demand now to develop these projects. So explain

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Speaker 1: that to our listeners who might not know the size

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Speaker 1: of the geo thermal sector in the US and what

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Speaker 1: this actually means for this industry. How will this impact

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Speaker 1: this industry? I think we have about three thousand megawatts

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Speaker 1: today operating in the United States, so this would increase

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Speaker 1: it by a third another thousand megal wots. It's really

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Speaker 1: brought new life to the sector. So or Matt has

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Speaker 1: been looking at this and has had a pipeline of

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Speaker 1: projects for the last decade and is ready to go

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Speaker 1: after this. But we're seeing large loads serving entities or

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Speaker 1: investor own utilities who have geo thermal who are now

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Speaker 1: looking at hey, can we expand our geo thermal assets.

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Speaker 1: We know there's going to be a market, Let's go

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Speaker 1: after this. We're seeing the oil and gas industry in

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Speaker 1: California is saying, we're not drilling as many oil and

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Speaker 1: gas wells, let's look at geo thermal and so some

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Speaker 1: of these huge companies, you know, like Haliburton and others

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Speaker 1: are saying, let's get into this sector. Can we drive

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Speaker 1: down prices, can we bring new innovation? And so all

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Speaker 1: of this is really culminating in a very exciting time.

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Speaker 1: It's going to be a pivot point for the sector

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Speaker 1: in America moving forward, or at those business around the world.

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Speaker 1: We have equipment in thirty one countries around the world.

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Speaker 1: We own and operate just over a giggle lot of generation.

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Speaker 1: When business slows down in Kenya or Indonesia, you know,

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Speaker 1: we've been able to bounce around to Turkey or Central America.

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Speaker 1: And right now, you know, our full attention is on

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Speaker 1: domestic u S geo thermal development, which is really unparalleled

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Speaker 1: because we see this market being a very fast mover.

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Speaker 1: So can you move fast enough to meet the demand. Well,

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Speaker 1: that's a great question mark, and I think as the

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Speaker 1: initial demand in California will be about a thousand megawatts

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Speaker 1: by six Now, you know, your typical politician says I'm

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Speaker 1: gonna not worry about geo thermal for the last decade

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Speaker 1: and then say I need a thousand megawatts. It's gonna

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Speaker 1: take time for the industry to ramp up or matt

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Speaker 1: we will be able to deliver. We believe about three

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Speaker 1: hundred and fifty megawatts of that. So there's still a

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Speaker 1: huge need to meet that interim goal, and I would

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Speaker 1: just focus that the interim goal is a mandate for

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Speaker 1: these utilities by In addition to that, the Larger Public

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Speaker 1: Utilities Commission has said we need to continue to look

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Speaker 1: at geo thermal beyond and are looking at eleven hundred

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Speaker 1: megawatts in their next planning cycle. So as people ramp up,

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Speaker 1: can we meet it? The answer is absolutely yes. The

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Speaker 1: question will be on timing, permitting, and transmission and interconnection.

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Speaker 1: Let's come back to those issues separately. But what does

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Speaker 1: that mean for m MAATT If you're able to fill

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Speaker 1: some od or thereabouts mega wats of it right now,

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Speaker 1: does that mean there's room for other players to come in?

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Speaker 1: Are there other players that can meet that demand? Or

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Speaker 1: does it mean or Matt's going to double down and

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Speaker 1: go crazy on exploration in the next few years to

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Speaker 1: try to meet it themselves. I would say all of

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Speaker 1: the above. Geothermal development is tricky, and we typically give

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Speaker 1: a short forecast because when we talk about the mega

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Speaker 1: watts were a publicly traded company on the New York

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Speaker 1: Stock Exchange, and when we talk about what we're gonna

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Speaker 1: bring online, we want to have our permits in place,

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Speaker 1: our inter connection, we want to have drilled on the resource,

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Speaker 1: and the incredibly confident that when we say we're adding

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Speaker 1: thirty or fifty megawatts, it's real, it's not prospective of

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Speaker 1: if we get out there, we think this and that

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Speaker 1: that kind of sets us apart. But we will try

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Speaker 1: to get more drilling rigs, use more third party rigs,

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Speaker 1: look at more leases, you know, more opportunities. Format is

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Speaker 1: a vertically integrated company, so we design and manufacture our equipment.

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Speaker 1: We own and operate our own drill rigs, We own

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Speaker 1: and operate our own power plants. We have our own

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Speaker 1: b D group and this has worked really well for us.

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Speaker 1: As we try to grow, you know, we may look

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Speaker 1: to expand outside of that. But in addition to that,

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Speaker 1: we need all these other developers and or mass. It's

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Speaker 1: in a unique position because we also sell equipment to

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Speaker 1: third parties. So if large developers like Sirgue or startups

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Speaker 1: like Fervo or a, now we're thrilled because that could

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Speaker 1: be more third party sales equipment for us to help

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Speaker 1: m deliver these zero emission power plants of the future

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Speaker 1: and meet these targets and help electrify America and reduce

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Speaker 1: carbon That list was really interesting to me, circue. I know,

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Speaker 1: you know, they've got some plans online. Fervo not quite

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Speaker 1: yet producing megalats to the grid or telling megas to

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Speaker 1: the grid, and now active in many other places in

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Speaker 1: the world. So are you seeing more companies come back

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Speaker 1: to the US market for GEO. I know that Turkey

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Speaker 1: is active, I know Indonesia, Kenya, you know, all these

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Speaker 1: different places are quite active for GEO. But our companies

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Speaker 1: actively coming back to the US that you can see,

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Speaker 1: you know, I don't want to speak for them directly,

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Speaker 1: and I hope they are. I think we have had

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Speaker 1: some kind of you know, initial conversations with some folks

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Speaker 1: to say, could we expand these projects, could we meet

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Speaker 1: some of these interim targets, and want to kind of

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Speaker 1: kick off those discussions. So I would say those discussions

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Speaker 1: are starting. I hope they increase, and I would imagine,

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Speaker 1: you know, with these orders in California, I think it

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Speaker 1: would be hard for companies not to seriously start looking

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Speaker 1: at domestic US GEO thermal development again and the pricing

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Speaker 1: and bringing it to fruition. All of those companies, you know,

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Speaker 1: we're pioneers in the sector and said we're gonna do it,

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Speaker 1: you know, including some of the first CHEO thermal projects

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Speaker 1: were brought on by oil and gas companies in southern

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Speaker 1: California during the oil embargo. So this kind of a

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Speaker 1: reawakening of that what's different is it's not trying to

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Speaker 1: prove a new resource or you know, take advantage of

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Speaker 1: attacked credit or something to that effect. It is if

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Speaker 1: as a country we are trying to reduce our carbon

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Speaker 1: footprint and achieve higher penetrations of renewable energy, geothermal has

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Speaker 1: to be there because it's you hit the nail on

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Speaker 1: the head earlier. Try to name another resource that has

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Speaker 1: a hundred percent capacity factor. Zero emissions can provide power

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Speaker 1: when the sun is not shining, when the wind's not blowing,

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Speaker 1: and you need this to back it up. I don't

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Speaker 1: think it's gonna be a blip on the market map.

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Speaker 1: It's going to be, you know, something that's just required

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Speaker 1: moving forward. To comment on that capacity factor, I know

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Speaker 1: we're gonna have people listening that are gonna say, we'll

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Speaker 1: come month. All right, I round it up. It's it's

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Speaker 1: about to be honest. Yeah, okay, okay. I was. I

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Speaker 1: was at a plant once though in Java and Indonesia,

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Speaker 1: and there was a monitor that was constantly looking at

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Speaker 1: the capacity factor of the plant, and on the day

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Speaker 1: I was there, it was measuring a hundred and eighteen percent,

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Speaker 1: so it was overproducing that day. So I mean it

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Speaker 1: is it is possible, right, you know, without getting two

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Speaker 1: technical I mean I think if you have a good

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Speaker 1: wonky listeners who want to focus on that. So we

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Speaker 1: typically set our capacity on the output of the facility

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Speaker 1: for the first couple of months of operation. So what

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Speaker 1: sets geothermal again is a little bit of a unique animal.

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Speaker 1: Meaning we have rotating equipment, and so when we designed

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Speaker 1: a turban like the engine in your car, we designed

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Speaker 1: it to engineering spects that are about a hundred and

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Speaker 1: fifty percent of what we expect. Meaning if we expect

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Speaker 1: the power plant to produce dirty megawatts, you know, we

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Speaker 1: may have a turban there that could do forty five.

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Speaker 1: Does that mean our capacity factor is that we can

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Speaker 1: argue at it? We say no. We set that capacity

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Speaker 1: to say, we're going to produce dirty megawots, you know,

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Speaker 1: on average annually eight thousand, seven sixty hours a year,

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Speaker 1: and we're gonna meet that within ten to fift and

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Speaker 1: all of our power purchase agreements do that. And that's

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Speaker 1: just because we have to get to the power point

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Speaker 1: up and operating the turbine doesn't determine the output. It's

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Speaker 1: the flow of the geo thermal wells. It's the size

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Speaker 1: of the heat exchangers, whether they're air cooled or water cooled.

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Speaker 1: So all of this goes into that design point. But

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Speaker 1: we've been really successful, and I think if you look

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Speaker 1: in the US at the format, specifically our compliance with

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Speaker 1: power purchase agreements, when we tell a company we're going

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Speaker 1: to provide thirty or fifty megawots, we hit that number

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Speaker 1: on the head. And when you talk about overproducing, you

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Speaker 1: could do that in the winter, for example, because we

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Speaker 1: air cool the facility, so the delta te goes way

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Speaker 1: up in the winter, goes down in the summer. We

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Speaker 1: try to hit that annual average exactly. So we've talked

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Speaker 1: a bit about demand, We've talked a bit about supply.

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Speaker 1: We've talked about partnering and others companies getting involved. Let's

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Speaker 1: shift to pricing for a second. So I heard recently

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Speaker 1: that you guys did kind of a reverse reverse auction

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Speaker 1: where utilities were bidding into you because they needed to

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Speaker 1: meet some of this target in California. Is that right?

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Speaker 1: It is? It was something we just did for the

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Speaker 1: first time in Ormat's history. Very exciting. So maybe I'll

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Speaker 1: take a step back and just explain, you know, the

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Speaker 1: typical growth for geothermal has been we look to develop

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Speaker 1: a power plant, we know we're going to need an

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Speaker 1: off taker, so then we start to bid geothermal into

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Speaker 1: request for proposals with utilities, and that has been you know,

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Speaker 1: complicated because we're not quite a solar power plant. So

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Speaker 1: when we're competing just on the price of energy, we

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Speaker 1: tend to be more expensive because there's more value to

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Speaker 1: having capacity and rex when we compete against fossil resources

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Speaker 1: were kind of unique because it's renewable and we're having

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Speaker 1: to drill wells, and so we were always kind of

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Speaker 1: in this unique area. But we've been successful and we

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Speaker 1: would bid one plant and we would win a power

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Speaker 1: purchase agreement and that would free up funding go to

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Speaker 1: develop that project. And so we had a very incremental approach.

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Speaker 1: About five years ago. What our Matt did was say

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Speaker 1: we're gonna bid a portfolio of projects. So we went

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Speaker 1: to the Los Angeles Division of Water and Power through

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Speaker 1: SKAPA and said, we're gonna offer you a hundred and

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Speaker 1: fifty mega loots. It's gonna come from some combination of

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Speaker 1: these power plants. We're guaranteeing that, you know, it allows

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Speaker 1: us flexibility on permitting and we signed that p p

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Speaker 1: A and that was really a paradigm shift for the

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Speaker 1: sector because we weren't beholden to one plant. If one

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Speaker 1: power project got slowed down by permitting our stage grouse,

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Speaker 1: we could speed up another one. And it released the

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Speaker 1: full power of our resource team to say we're not

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Speaker 1: just working on one project and then another and serial progression.

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Speaker 1: We said it's time to go and start developing all

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Speaker 1: of these simultaneously. Take a step forward to today is

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Speaker 1: we have projects that are coming online and instead of

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Speaker 1: trying to bid into these r fps are hoping one

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Speaker 1: will come out in February, we said we're gonna put

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Speaker 1: this out the market that we have thirty mega lots

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Speaker 1: that meets the center amortar. It's capacity factors zero on

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Speaker 1: side emissions, here's its interconnection points. We have transmission in capacity.

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Speaker 1: It can deliver power by two who's interested, And we

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Speaker 1: got you know, lots and lots of proposals and it

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Speaker 1: was exciting to see those come in and the pricing,

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Speaker 1: you know, it was kind of in mind with what

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Speaker 1: we thought, but we saw this kind of upward push

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Speaker 1: to say this is a unique asset. We are in

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Speaker 1: need of these things and that's a game changer for

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Speaker 1: someone who's worked in a sector for over a decade,

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Speaker 1: always trying to fight and guessing at what we should

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Speaker 1: bid blindly and maybe under pricing ourselves. And so that

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Speaker 1: kind of intel is going to be great, and I

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Speaker 1: think that, coupled with portfolios moving forward, is what will

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Speaker 1: let the geo thermal industry meet some of these aggressive goals.

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Speaker 1: Is to say we're gonna offer you hundreds of mega watts,

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Speaker 1: it's going to come from multiple plants. We're gonna have

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Speaker 1: as many drillers and resource guys working as fast as

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Speaker 1: possible and deliver a quality product. And so that's it's

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Speaker 1: a very fascinating time, and I think we're seeing an

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Speaker 1: upward on the pricing for capacity. I was telling someone

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Speaker 1: the other day geothermal might be a unique word, and

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Speaker 1: I'm trying to always kind of play around with a lexicon,

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Speaker 1: but we are really an emission free capacity resource, and

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Speaker 1: if you think of it that way, it really changes

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Speaker 1: the discussion in my mind, because everyone's talking about batteries, batteries, batteries, batteries,

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Speaker 1: and they're brilliant, and batteries, can you know supply two

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Speaker 1: hours or four hours or six hours. We're talking long

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Speaker 1: term duration batteries at eight hours. Well, geothermal is really

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Speaker 1: a long term duration battery. We can supply twenty four

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Speaker 1: hours of storage if you want, because we can cycle

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Speaker 1: and with new technology, we can run the plant just

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Speaker 1: on parasitic load. We can ramp up faster than a

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Speaker 1: combined cycle natural gas plant. We can provide bars and

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Speaker 1: ancillary benefits. And so that's the new world. And I

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Speaker 1: think if you value capacity through storage or batteries, you

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Speaker 1: should really take a fresh look at geothermal and say

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Speaker 1: this is a capacity resource. I was saying, or Matt

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Speaker 1: is really positioned as just an emission free capacity company.

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Speaker 1: We are very focused on battery storage and geothermal and

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Speaker 1: those two together act very similar when utilities are trying

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Speaker 1: to put together solutions to supplying carbon free power to

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Speaker 1: rate payers. So I was two thousand seven. I went

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Speaker 1: on this trip out to Nevada and I met a

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Speaker 1: contractor that was working for ORMAT at the time actually,

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Speaker 1: who was out going to do an exploration of a site.

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Speaker 1: And so I met up with him in this place

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Speaker 1: called I think Hawthorne, Nevada, out in the middle of nowhere.

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Speaker 1: We drove in his truck for like it felt like

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Speaker 1: a year. Then we crossed some fence. We crawled in

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Speaker 1: his truck for another ten miles, and then we got

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Speaker 1: to this place and he's like, you know what, I

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Speaker 1: genuinely would say, in all honesty, were the first people

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Speaker 1: here in fifty years, you know, to this site. I

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Speaker 1: was like, okay, cool, Well that begs the question, you know.

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Speaker 1: And there was hot springs all around, you know, and

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Speaker 1: there was this old rusted truck from the thirties, But

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Speaker 1: that begs the question. Look, okay, so how do you

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Speaker 1: connect the power from these sites to the grid? Tell

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Speaker 1: me a bit about transmission and how you guys think

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Speaker 1: of that and how you solve for that. I won't

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Speaker 1: condone your trespassing of hopping over fences, but I'll be

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Speaker 1: happy to discuss fair enough. Good look, transmission and capacity

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Speaker 1: are going to be the next discussion for geothermal, for energy,

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Speaker 1: and probably for electrification in the nation big picture. You know,

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Speaker 1: I'm thrilled that the Build Back Better Plan past and

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Speaker 1: has a huge focus on transmission and interconnection, and that

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Speaker 1: is going to again help, you know, be a tailwind

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Speaker 1: for the geothermal industry because everything I've talked about up

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Speaker 1: until now is happening regardless of federal support. So now

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Speaker 1: let's talk about the kind of transmission. So, you know,

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Speaker 1: I think there's no quicker way to stifle electrification or

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Speaker 1: moving to a percent renewables than not having transmission capacity

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Speaker 1: for that. So we need to build it out. For

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Speaker 1: geothermal specifically, we have been able to pay for and

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Speaker 1: finance transmission because of our high capacity factor, meaning when

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Speaker 1: we want to use that transmission line, we're not using

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Speaker 1: it a third of the time or two th of

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Speaker 1: the time. We're going to use it, you know, of

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Speaker 1: the time, and so we are able to finance it,

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Speaker 1: and we've been successful in building it. Now huge transmission lines.

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Speaker 1: If we want to start moving hundreds or thousands of

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Speaker 1: megawots from Nevada to California, or from California to Arizona,

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Speaker 1: we need to look at some of these larger transmission

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Speaker 1: lines and buildouts. And I think the California Independent System

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Speaker 1: oper in California is starting to figure that out. They

401
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Speaker 1: are realizing that as they build out the Western interconnect

402
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Speaker 1: or wet transmission has been you know, the forgotten child,

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Speaker 1: if you will, And so we are looking at that seriously.

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Speaker 1: One thing I'll bring up for your listeners. And as

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Speaker 1: I think we can also be smarter about our existing

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Speaker 1: transmission and so I think a thoughtful allocation of our

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Speaker 1: existing transmission isn't important. What do I mean by that?

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Speaker 1: As we are seeing coal plants retired or natural gas

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Speaker 1: plants retired, they use transmission with a very high capacity factor,

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Speaker 1: meaning they use that power all the time. If we

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Speaker 1: quickly take that transmission and then give it to an

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Speaker 1: intermittent resource that consumes it but only uses it a

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Speaker 1: third of the time, we can inefficiently you know, consume

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Speaker 1: or reserve a lot of transmission. And so what the

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Speaker 1: geothermal industry has been advocating for is to say, if

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Speaker 1: you're replacing a ninety or eighty five percent capacity coal plant,

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Speaker 1: you should look at high capacity resources to replace that

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Speaker 1: that have zero emissions, so that we are using our

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Speaker 1: current infrastructure as efficiently as possible, and then build out

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Speaker 1: to the intermittent stuff or even look at and without

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Speaker 1: getting too into details, you know, how we reserve transmission

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Speaker 1: capacity today is a bit antiquated. And you know, we said,

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Speaker 1: what are you gonna do? We block this for you

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Speaker 1: on the line, regardless of whether you use it or not.

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Speaker 1: And that is inefficient and if we can have smart

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Speaker 1: people looking at this and making it more efficient, I think,

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Speaker 1: A we can use our existing infrastructure much better while

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Speaker 1: we are building out new infrastructure to a leave at

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Speaker 1: any transmission or interconnection roadblocks. You said that's in the

430
00:22:04,400 --> 00:22:08,040
Speaker 1: Build Back Better bill or law. I guess now, is

431
00:22:08,040 --> 00:22:10,160
Speaker 1: that the most impactful part of it for you or

432
00:22:10,359 --> 00:22:12,200
Speaker 1: is there something else. I think there are three big

433
00:22:12,240 --> 00:22:14,160
Speaker 1: parts that I would focus on and build that better. One.

434
00:22:14,280 --> 00:22:16,720
Speaker 1: You know, the Investment tax credit has been huge and

435
00:22:17,040 --> 00:22:20,000
Speaker 1: leveling the playing field for geothermal with all renewable industries.

436
00:22:20,040 --> 00:22:22,560
Speaker 1: So having the i t C in the Build Back

437
00:22:22,600 --> 00:22:26,560
Speaker 1: Better plan is fantastic. Having it refundable has made it

438
00:22:27,240 --> 00:22:31,960
Speaker 1: much more meaningful to developers. Again, the previous tax credit

439
00:22:32,040 --> 00:22:33,440
Speaker 1: you had to have a you know, a very large

440
00:22:33,480 --> 00:22:35,800
Speaker 1: tax APPLCA type to recognize it, or you had to

441
00:22:35,840 --> 00:22:37,919
Speaker 1: go to banks to monetize it, and you lost some

442
00:22:38,000 --> 00:22:40,440
Speaker 1: value and it was difficult and if you were startup

443
00:22:40,560 --> 00:22:43,280
Speaker 1: on and on and on. Turning that into a cash

444
00:22:43,359 --> 00:22:46,640
Speaker 1: option or refundable will be huge. I think it can

445
00:22:46,680 --> 00:22:50,000
Speaker 1: lower the cost for geothermal development significantly. I think it

446
00:22:50,040 --> 00:22:52,879
Speaker 1: will put more money in the pocket of developers to

447
00:22:53,200 --> 00:22:56,159
Speaker 1: quickly turn around and reinvest that money in what we

448
00:22:56,200 --> 00:22:59,960
Speaker 1: talked about earlier, more drilling, more projects, instead of waiting

449
00:23:00,040 --> 00:23:02,080
Speaker 1: two years to negotiate and try to get that money

450
00:23:02,080 --> 00:23:04,240
Speaker 1: back from a third party and go from there. The

451
00:23:04,280 --> 00:23:08,840
Speaker 1: next one is maybe a little less direct, but it's

452
00:23:08,880 --> 00:23:12,879
Speaker 1: the focus of the administration on renewable projects and permitting.

453
00:23:13,240 --> 00:23:15,320
Speaker 1: So the other issue, a lot of our projects are

454
00:23:15,359 --> 00:23:18,600
Speaker 1: on public lands in the West, and I think prioritizing

455
00:23:18,640 --> 00:23:22,359
Speaker 1: renewable development over oil and gas, and you know, seeing

456
00:23:22,400 --> 00:23:25,480
Speaker 1: the priorities of this bill and then saying we need

457
00:23:25,520 --> 00:23:27,639
Speaker 1: to move these projects to the top of the to

458
00:23:27,720 --> 00:23:30,480
Speaker 1: do list for our friends at the Bureau of Land Management,

459
00:23:30,880 --> 00:23:34,640
Speaker 1: US Fish and Wildlife Service, US for Service on and on.

460
00:23:35,200 --> 00:23:39,439
Speaker 1: Those three things are what's really going to unlock massive

461
00:23:39,480 --> 00:23:42,600
Speaker 1: geothermal potential in the Western United States, which is the

462
00:23:42,640 --> 00:23:46,920
Speaker 1: I t C transmission and streamlining of permitting. You know,

463
00:23:46,960 --> 00:23:49,720
Speaker 1: there are some other bills pending, you know, to enhance

464
00:23:49,760 --> 00:23:53,240
Speaker 1: the categorical exclusion. There's a representative rich and fulture looking

465
00:23:53,240 --> 00:23:55,840
Speaker 1: at this to allow us to go explore kind of

466
00:23:55,880 --> 00:23:58,240
Speaker 1: like oil and gas. I was reading a report that

467
00:23:58,320 --> 00:24:00,520
Speaker 1: oil and gas wells tend to get permitted with ninety

468
00:24:00,600 --> 00:24:05,159
Speaker 1: two hundred days. It takes us about twelve to twenty

469
00:24:05,160 --> 00:24:08,439
Speaker 1: four months to get an exploration permit currently from some

470
00:24:08,520 --> 00:24:11,199
Speaker 1: of these folks. So if we could cut that that

471
00:24:11,359 --> 00:24:14,960
Speaker 1: timing down, you unleash the full geothermal potential. And I

472
00:24:14,960 --> 00:24:18,240
Speaker 1: think the Department of Energy geo Thermal program had a

473
00:24:18,280 --> 00:24:21,239
Speaker 1: study called Geovision and it talks about if you can

474
00:24:21,280 --> 00:24:24,600
Speaker 1: reduce this permitting timeline, the amount of geo thermal you

475
00:24:24,640 --> 00:24:27,440
Speaker 1: can do just grows exponentially and gets into the giggle

476
00:24:27,480 --> 00:24:32,440
Speaker 1: watts very very fast. What's a bigger challenge? Is it technical?

477
00:24:32,560 --> 00:24:35,720
Speaker 1: Is it exploration and drilling and all that, or is

478
00:24:35,760 --> 00:24:38,600
Speaker 1: it simply permitting? You know, it's a good it's a

479
00:24:38,640 --> 00:24:40,720
Speaker 1: great question, and it's a bit chicken and egg. I

480
00:24:40,760 --> 00:24:42,520
Speaker 1: would say, you know, if you ask me what the

481
00:24:42,520 --> 00:24:46,400
Speaker 1: biggest hurdle today would I would say bringing the capital

482
00:24:46,840 --> 00:24:49,680
Speaker 1: to the industry to see, you know, kind of a

483
00:24:49,760 --> 00:24:55,320
Speaker 1: quantum change in interest. Once that occurs and we see projects,

484
00:24:55,600 --> 00:24:57,399
Speaker 1: you know, in many many states in the West, we

485
00:24:57,480 --> 00:25:02,119
Speaker 1: see more representatives calling the Bureau of Land Management, and

486
00:25:02,160 --> 00:25:05,159
Speaker 1: I think we start to see a greater emphasis on

487
00:25:05,359 --> 00:25:09,280
Speaker 1: streamlining these projects and getting them permitted and moving the

488
00:25:09,280 --> 00:25:11,720
Speaker 1: needle that way. That's why I'm so excited to talk

489
00:25:11,720 --> 00:25:15,040
Speaker 1: to you today, really, which is that has changed with

490
00:25:15,240 --> 00:25:18,040
Speaker 1: a demand for a thousand mega wots in the near term,

491
00:25:18,080 --> 00:25:21,840
Speaker 1: thousands of megawatts in planning cycles moving forward, I think

492
00:25:21,840 --> 00:25:24,160
Speaker 1: the more players we get, the more projects we see

493
00:25:24,160 --> 00:25:30,600
Speaker 1: in Utah, Idaho, Alaska, Hawaii, the federal government representatives will

494
00:25:30,640 --> 00:25:35,399
Speaker 1: take notice. They'll start, you know, paying attention, working harder

495
00:25:35,400 --> 00:25:39,000
Speaker 1: on this. We'll see those streamlined projects, and I think, frankly,

496
00:25:39,040 --> 00:25:41,680
Speaker 1: the market will drive it. When we see geo thermal

497
00:25:41,720 --> 00:25:46,760
Speaker 1: projects applying this unbelievable needed zero emission capacity being part

498
00:25:46,800 --> 00:25:49,640
Speaker 1: of the solution, the rest of it starts to fall inline.

499
00:25:50,040 --> 00:25:52,440
Speaker 1: You mentioned the oil and gas firms you know, calling

500
00:25:52,440 --> 00:25:53,919
Speaker 1: you up and all that stuff. You know, I've been

501
00:25:53,960 --> 00:25:57,200
Speaker 1: reading that you see interests from tech companies like Google

502
00:25:57,280 --> 00:26:00,560
Speaker 1: and etcetera leader interested in in geo thermal development, but

503
00:26:00,640 --> 00:26:02,520
Speaker 1: has the money caught up? Have you been getting calls

504
00:26:02,520 --> 00:26:05,480
Speaker 1: from banks as well, say hey, here's your portfolio projects.

505
00:26:05,520 --> 00:26:07,480
Speaker 1: Can I fund it? Or has it gone the other way?

506
00:26:07,760 --> 00:26:10,040
Speaker 1: So I'll try to hit all three of those. So yes,

507
00:26:10,119 --> 00:26:13,760
Speaker 1: you know, I think Baker Hughes and Haliburton and big

508
00:26:13,800 --> 00:26:16,399
Speaker 1: oil and gas majors have said, look, there's a future

509
00:26:16,440 --> 00:26:18,919
Speaker 1: here if you think they're good at what they do

510
00:26:18,960 --> 00:26:22,080
Speaker 1: and identifying kind of early movers. They've joined the Geo

511
00:26:22,160 --> 00:26:26,679
Speaker 1: Thermal Trade Association. They're helping these startup firms drill these wells.

512
00:26:27,240 --> 00:26:30,119
Speaker 1: They want to shift their business into that sector. I

513
00:26:30,160 --> 00:26:32,840
Speaker 1: think both from a kind of a redistribution of work

514
00:26:32,920 --> 00:26:34,320
Speaker 1: so they don't have to just shut down all their

515
00:26:34,320 --> 00:26:37,520
Speaker 1: own gas stuff in California or move it all to Texas,

516
00:26:37,680 --> 00:26:40,240
Speaker 1: and also a true interest in there's a high, you know,

517
00:26:40,320 --> 00:26:42,320
Speaker 1: return on this for them if they can get into

518
00:26:42,400 --> 00:26:45,920
Speaker 1: doing this business to support third party work. Number two.

519
00:26:46,200 --> 00:26:48,520
Speaker 1: For a long time, we've kind of seen seeing commercial

520
00:26:48,520 --> 00:26:53,120
Speaker 1: and industrial customers interested in baseload power, meaning we want

521
00:26:53,119 --> 00:26:56,600
Speaker 1: to run our server farms off of a capacity free resource.

522
00:26:56,640 --> 00:26:58,800
Speaker 1: And they've been doing that with a mix of buying

523
00:26:58,840 --> 00:27:01,840
Speaker 1: solar credits and looking at natural gas and kind of

524
00:27:01,840 --> 00:27:04,919
Speaker 1: offsetting each other. And I think board members and firms

525
00:27:04,920 --> 00:27:07,880
Speaker 1: are becoming more sophisticated and saying no, we truly want

526
00:27:07,880 --> 00:27:11,240
Speaker 1: to be zero carbon, not just find the res today,

527
00:27:11,600 --> 00:27:14,720
Speaker 1: and that is making geothermal more enticing to them. So

528
00:27:15,240 --> 00:27:16,760
Speaker 1: we have seen a lot of interest from C and

529
00:27:16,800 --> 00:27:22,160
Speaker 1: I customers both you know, large mining firms, data server farms, etcetera,

530
00:27:22,280 --> 00:27:26,120
Speaker 1: saying this is compelling the prices you know in the wheelhouse.

531
00:27:26,560 --> 00:27:30,120
Speaker 1: Let's have those discussions. The good problem today is that

532
00:27:30,359 --> 00:27:33,560
Speaker 1: invest your own utilities are huge users of electricity, are

533
00:27:33,560 --> 00:27:37,280
Speaker 1: going to put upward pricing pressure. So that will be

534
00:27:37,320 --> 00:27:39,439
Speaker 1: interesting to see that. But it's a good problem to have.

535
00:27:40,240 --> 00:27:41,800
Speaker 1: I think, I know this, But what are you most

536
00:27:41,800 --> 00:27:45,879
Speaker 1: excited about? What am I most excited about? Um? You know,

537
00:27:46,520 --> 00:27:52,400
Speaker 1: I think what am I most excited about? I mean,

538
00:27:52,440 --> 00:27:54,240
Speaker 1: is it just having a big pipeline, you know, to

539
00:27:54,280 --> 00:27:56,520
Speaker 1: fill this thousand doesn't make what you know in order?

540
00:27:56,680 --> 00:27:58,960
Speaker 1: Or is it new tech? I'll give you a long

541
00:27:58,960 --> 00:28:02,399
Speaker 1: winded answer. You can tell us what I do. UM,

542
00:28:02,440 --> 00:28:05,760
Speaker 1: I think I'm excited to see geothermal or let's call it,

543
00:28:05,800 --> 00:28:10,600
Speaker 1: you know, capacity emission free capacity resources get the recognition.

544
00:28:10,960 --> 00:28:13,000
Speaker 1: You know that I've thought it deserved for a long time.

545
00:28:13,119 --> 00:28:15,440
Speaker 1: As you started this, uh you know, Pod you said,

546
00:28:15,440 --> 00:28:18,360
Speaker 1: we've been doing this for over a decade almost two

547
00:28:18,720 --> 00:28:23,040
Speaker 1: These technologies to me have always been incredibly compelling and

548
00:28:23,280 --> 00:28:25,960
Speaker 1: a solution. And to see that being recognized on a

549
00:28:26,000 --> 00:28:29,199
Speaker 1: broad scale at the investor own utility level and at

550
00:28:29,240 --> 00:28:31,280
Speaker 1: the finance level, and then getting to work for a

551
00:28:31,320 --> 00:28:33,880
Speaker 1: company that recognized that when we were founded in nine

552
00:28:35,440 --> 00:28:38,960
Speaker 1: to today is the most exciting part. Part two is

553
00:28:39,000 --> 00:28:41,920
Speaker 1: to see all of the innovation coming in, you know,

554
00:28:41,960 --> 00:28:45,720
Speaker 1: to see the firms like green Fire and Fervo and

555
00:28:45,840 --> 00:28:49,800
Speaker 1: Evor and all these people looking at exciting subsurface resource work.

556
00:28:50,080 --> 00:28:53,480
Speaker 1: I'll tell you, you know, or Maatt has for decades said,

557
00:28:53,520 --> 00:28:57,040
Speaker 1: you know, the game changing moment, the paradigm shift, whatever

558
00:28:57,080 --> 00:28:58,880
Speaker 1: you want to call it, is going to be in

559
00:28:58,920 --> 00:29:02,520
Speaker 1: the subsurface. Meaning we know how to make steam turbines,

560
00:29:02,560 --> 00:29:05,560
Speaker 1: we know how to make binary turbines. People like ge

561
00:29:05,640 --> 00:29:07,200
Speaker 1: and Or might have been doing that a long time,

562
00:29:07,240 --> 00:29:09,920
Speaker 1: and we've made them about as efficient as humanly possible.

563
00:29:10,760 --> 00:29:14,080
Speaker 1: The shift will come when something exciting happens subsurface. And

564
00:29:14,120 --> 00:29:19,120
Speaker 1: to see those smaller innovative firms, the large Haliburton's and

565
00:29:19,360 --> 00:29:23,320
Speaker 1: Baker Hughes coming back. I'm excited to see something subsurface

566
00:29:23,640 --> 00:29:28,280
Speaker 1: shift that really unleashes a potential of these capacity emission

567
00:29:28,280 --> 00:29:31,880
Speaker 1: free resources or geo thermal moving forward that we never

568
00:29:31,920 --> 00:29:34,960
Speaker 1: thought And I think that time could be now, which

569
00:29:35,000 --> 00:29:38,040
Speaker 1: is you know, format is going to continue chasing these

570
00:29:38,040 --> 00:29:43,040
Speaker 1: typical hydrothermal reservoirs and resources. But boy, I could see

571
00:29:43,040 --> 00:29:45,480
Speaker 1: in the next couple of years that all being completely

572
00:29:45,520 --> 00:29:48,800
Speaker 1: different and the power plants being completely different and creating

573
00:29:48,800 --> 00:29:51,640
Speaker 1: a carbon free solution to really meet the goals at

574
00:29:51,640 --> 00:29:54,640
Speaker 1: COP twenty six and at the World Geo Thermal Congress.

575
00:29:54,840 --> 00:29:57,239
Speaker 1: And couldn't be more thrilled to be where I am

576
00:29:57,240 --> 00:30:00,640
Speaker 1: today working in this industry. Sounds great, Paul. It sounds

577
00:30:00,680 --> 00:30:11,520
Speaker 1: like US geo Thermal is open for business. Today's episode

578
00:30:11,560 --> 00:30:13,800
Speaker 1: of Switched On was edited by Rex Warner of gray

579
00:30:13,800 --> 00:30:16,920
Speaker 1: Stoke Media. Bloomberginny app is a service provided by Bloomberg

580
00:30:16,960 --> 00:30:20,000
Speaker 1: Finance LP and its affiliates. This recording does not constitute,

581
00:30:20,080 --> 00:30:23,600
Speaker 1: nor should it be construed as investment advice, investment recommendations,

582
00:30:23,760 --> 00:30:26,560
Speaker 1: or a recommendation as to an investment or other strategy.

583
00:30:26,600 --> 00:30:29,040
Speaker 1: Bloomberg an e F should not be considered as information

584
00:30:29,080 --> 00:30:32,360
Speaker 1: sufficient upon which to base an investment decision. Neither Bloomberg

585
00:30:32,360 --> 00:30:35,920
Speaker 1: Finance LP nor any of its affiliates makes any representation

586
00:30:36,040 --> 00:30:38,440
Speaker 1: or warranty as to the accuracy or completeness of the

587
00:30:38,480 --> 00:30:41,480
Speaker 1: information contained in this recording, and any liability as a

588
00:30:41,520 --> 00:30:43,480
Speaker 1: result of this recording is expressly disclaimed