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McGuire proposes geothermal tax credit Prefiled bill would credit 35 cents per kilowatt hour for 4 years of geothermal generation of at least 400 kilowatts of electricity Kristen Nelson Petroleum News
Is Alaska ready for geothermal-generated electricity? Alaska Sen. Lesil McGuire, R-Anchorage, thinks so and has prefiled legislation proposing a production tax credit for geothermal energy systems that generate at least 400 kilowatts of electricity. She said that over time geothermal-generated electricity would “significantly cut the cost of energy for Alaska households, businesses and industry.”
“The time is right to get serious about geothermal energy as a practical reality,” McGuire said in a Jan. 2 statement. “It’s proven and producing in climates and geology similar to Alaska.”
She led a delegation of western state lawmakers at November conferences in Reykjavik, Iceland, reviewing energy and economic policy opportunities and issues.
“Iceland is lighting and heating homes and industry and growing fresh fruits and vegetables for 5 cents a kilowatt,” McGuire said, calling for that same “vision in Alaska” and “incentives to develop our own geothermal resources.”
McGuire said her bill would defray a portion of state corporate income tax that would be paid by an operating geothermal plant.
Credit for first four years The bill provides that a taxpayer-owned commercial geothermal electric energy system which can produce at least 400 kilowatts of electricity could claim a production tax credit of 35 cents for each kilowatt hour of geothermal electricity produced or sold during the first four years of operation if the system provides energy for commercial units owned or used by the taxpayer or if the taxpayer sells all or part of the energy produced by the system.
McGuire said the best known geothermal development in Alaska is that of Bernie Karl at Chena Hot Springs northeast of Fairbanks, “but that should be the beginning for many geothermal developments in Alaska.”
While the Alaska Energy Authority lists a number of possible geothermal areas — Mount Spurr, Mount Makushin, Manley Hot Springs, Pilgrim Hot Springs, Naknek, Tenakee Hot Springs, Pelican, Hoonah, Akutan, Bell Island in addition to Chena Hot Springs — some of those may only be practical for small-scale geothermal development, the senator said, while the Alaska Energy Authority estimates that Mount Spurr and Mount Makushin could support larger-scale power production.
Recent state sale The State of Alaska received some $3.5 million in apparent high bids on 16 tracts at Mount Spurr in a September lease sale, with three bidders participating and Reno-based Ormat Nevada picking up 15 of the tracts.
Ormat Nevada had approached the Alaska Department of Natural Resources to see if the Mount Spurr area, last leased by the state in the late 1980s, could be made available for geothermal leasing.
Ormat Nevada is a subsidiary of Ormat Technologies which specializes in geothermal power worldwide.
Paul Thomsen, director of policy and business development for Ormat Technologies told Petroleum News in September that the company has been looking at Mount Spurr and Mount Makushin for some 15 years. He said the company has looked at the markets and thinks Alaska “is ripe for developing a base load geothermal resource.”
There is also activity on federal lands in Alaska.
The U.S. Bureau of Land Management approved some 190 million acres of federal land for geothermal leasing Dec. 18 in 12 western states, including Alaska.
The Ring of Fire resource management area in Alaska has 992,785 acres open for geothermal leasing (with 20 megawatts of power possible from geothermal by 2015 and some 150 megawatts by 2025) and more than 3 million acres in the Central Yukon resource management area, although BLM does not project any electric generation from Central Yukon geothermal resources.
There are pending applications for three 2,560-acre federal leases at Bell Island Hot Springs in Southeast Alaska for a 20-megawatt power plant to provide power for Bell Island Hot Springs and possibly for nearby Yes Bay Lodge via an underwater cable.
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