Profits elude geothermal companies

WASHINGTON -- Two U.S. taxpayer-backed clean energy companies that specialize in capturing heat from the earth and turning it into electricity are facing deep financial difficulties, according to an analysis of financial records.

The companies, based in the West, have received $195 million in partial federal loan guarantees and grants aimed at promoting clean energy. While the companies have agreements with utilities to buy their energy, they have not operated at a profit. They face questions similar to those of Solyndra, the now bankrupt solar manufacturer that received a $535 million federal loan in 2009.

Raser Technologies, a Utah company, filed for Chapter 11 bankruptcy protection earlier this year after burning through hundreds of millions of investor financing and a $33 million Treasury Department grant that was awarded to the company in 2010. Nevada Geothermal Power said in their financial filings that they have never operated profitably and that the company is at risk of failing as a going concern.

A third company, U.S. Geothermal, received a $97 million Energy Department loan in February. Its filings with the U.S. Securities and Exchange Commission show it has not made a profit in the last four years.

Raser never produced more than five megawatts of power at its Beaver County, Utah plant, Thermo No. 1. In a lawsuit filed by Raser last month, the company said the plant was never able to generate enough electricity, because of problems with generators for the plant developed by a subsidiary of Pratt & Whitney. P&W spokesman Matthew Bates said that "the equipment we provided has performed at or above promised levels."

Officials with Raser and U.S. Geothermal did not respond to requests for comment.

NGP received a $98.5 million loan guarantee under the same program that awarded Solyndra a loan guarantee. President Obama has come under withering attack from Republicans for backing the Solyndra loan.

But NGP, which also received an additional $66 million in government grants, and Raser received support from both sides of the aisle. Senate Majority Leader Harry Reid, D-Nevada, has cheered NGP, while Sen. Orrin Hatch, R-Utah, has long backed Raser.

NGP operates a geothermal plant called Blue Mountain that was forecast to produce about 45 megawatts, but has only reached 35 megawatts of power—not enough production to cover the company's loans and overhead.

DOE spokesman Dan Leistikow said in a blog posting this week that Nevada Geothermal's debt won't affect the power plant to repay its taxpayer-backed loan. The power plant cannot be used as collateral for any other debt, and will be a source of revenue even if NGP defaults.

Adam Jentleson, a spokesman for Reid, said the company is "experiencing some of the normal risk associated with … geothermal power."

"We're like an oil company," said Paul Mitchell, who heads investor communications for Nevada Geothermal. "You have to drill. It's not unexpected that you can get these lag periods where our productivity and our monetary targets lag behind as we develop the resource."

John McIlveen, a geothermal analyst at Jacob Securities Research, noted that whole industry has had volatile year. Publicly traded geothermal stocks, including DOE loan guarantee winners Ormat Technologies and U.S. Geothermal — are down 60% to 80%.

"Geothermal is not like wind, solar in terms of its risk in the long term," McIlveen said. "It's the only renewable that you can count on 24/7."