US Geothermal breaks ground on $129MM Neal Hot Spring project

Source: US Geothermal Inc.

US Geothermal Inc., a leading renewable energy company focused on the development, production and sale of electricity from geothermal energy, announced the receipt of a key reservoir certificate by the US Department of Energy’s (DOE) independent reservoir engineer. The certificate is a technical condition required under the DOE’s $96.7 million loan guarantee to construct the planned net 23 megawatt (MW) power plant at Neal Hot Springs in Eastern Oregon.

USG Oregon LLC, a subsidiary of US Geothermal Inc., has now provided TAS Energy, Inc., Idaho Power Company and Industrial Builders Inc., with notices to proceed with the manufacture of the power plant, construction of a 10-mile transmission line and the site construction and development services, respectively. USG Oregon LLC also has initiated the final stage of drilling activities to drill the remaining required injection wells for the project.

“We are moving quickly to bring the Neal Hot Springs project online,” said Daniel Kunz, President and Chief Executive Officer of US Geothermal. “The Department of Energy’s renewable-energy loan programs are helping to grow America’s green economy by adding new jobs and putting renewable energy on a more level playing field with fossil fuel energy sources.”

Idaho’s largest utility, Idaho Power Company, has signed a 25-year power purchase agreement with USG Oregon LLC for up to 25 MW of electrical power per year. Beginning in 2012, the base energy price is $96 per MW hour and escalates annually. The calculated 25-year levelized price is $117.65 per MW hour.

The Neal Hot Springs project is the first geothermal project to complete the closing of a loan guarantee under DOE’s Title XVII Section 1703 loan guarantee program, which was created by the Energy Policy Act of 2005 to support the deployment of innovative clean energy technologies. Based on the DOE loan guarantee, the US Treasury’s Federal Financing Bank is providing a $96.7 million low-cost, long-term loan to the Neal Hot Springs project. Enbridge (US) Inc. is acquiring a 20% direct ownership interest in the $129 million Neal Hot Springs project by funding the remaining equity share of the construction costs, with the balance of the construction costs being funded by the project loan.

The Neal Hot Springs project is expected to create or retain more than 50 permanent jobs in the Pacific Northwest. Approximately 400 jobs through the equipment supply chain, plant manufacturing and site construction activities will be created or retained during the project’s 18- month construction phase.

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