Vulcan Power Co. said today it has secured a $108 million investment from Denham Capital to develop 300 megawatts of geothermal power in Nevada.
The investment, in the form of preferred and common stock, is Denham's second in Vulcan. The Boston-based investment firm, which focuses on energy and commodities, has staked a total of $166 million in Vulcan; other shareholders include a principal investing division of Bank of America Corp.
Vulcan, based in Bend, Ore., has geothermal leases and applications across more than 170,000 acres in Arizona, California, Nevada and Oregon. The privately held company will use Denham's latest investment to develop five 60-megawatt geothermal projects across more than 80,000 acres in northeastern Nevada.
Vulcan aims to begin generating electricity from the projects by the end of 2013, pending permit approvals, said Bob Warburton, Vulcan's acting chief executive officer.
Vulcan has signed power-purchase agreements with Southern California Edison Co. (120 MW) and NV Energy Inc. (60 MW). Vulcan is negotiating another 120 MW power-purchase agreement with an undisclosed California utility, Warburton said.
He estimated that Vulcan could generate as much as 750 MW from its Western landholdings. Geothermal energy is produced by drilling for underground reservoirs of superheated water. The steam that rises to the surface is then used to power electric turbines.
"Geothermal development requires greater capital investment up front compared to other renewable power projects," Warburton explained. "But once built, geothermal has significantly lower all-in costs, making it very competitive with traditional, nonrenewable generation sources."
Nearly 150 geothermal power plants are under development in the United States, according to the Geothermal Energy Association, an industry trade group. The group projects that the geothermal projects could bring the nation 7,000 MW of baseload power in the next few years.