Imperial Valley Press, 3-16-16
The Imperial Irrigation District on Tuesday approved a lease agreement with Controlled Thermal Resources, for the company to begin development of Salton Sea land to build a new geothermal power plant.
The board approved it with a 4-0 vote with Division 2 Director Bruce Kuhn recusing.
With the approval of the lease Controlled Thermal Resources the company is hoping to build its 12th plant at the Salton Sea Known Geothermal Area and just the second since the year 2000. Hudson Ranch from Energy Source opened in 2012.
“This is very important, it’s something that we have negotiated for the last three years in order to locate a good resource,” said Controlled Thermal Resources Chief Executive Official Rob Colwell.
Under the agreement, Controlled Thermal Resources will lease approximately 1,880 acres of IID owned land north of Red Hill Bay for as many as 50 years, assuming specific development milestones are met. In return, the district will receive rent and generation royalties.
For the first three years of the lease is when exploration and well drilling are expected to happen, followed by five years of power plant development. Controlled Thermal Resources is expected to operate for 42 years. It is also stipulated in the agreement that the lessee has a 12-month period at the end of the term to fully restore the site to its current status.
Colwell said that the plans for the planned geothermal power plant will generate around 250 megawatts a year and further expand to 375 megawatts. The challenge of aiming for that production is that power plants that generate more than 50 megawatts have to be permitted by the California Energy Commission, something that other developers have avoided by generating 49.9 megawatts a year.
“We found the Salton Sea area to be the most desirable and best geothermal field in California and maybe the US, it’s just a great proven resource,” Cowell said. “Our goal is to deliver cost competitive geothermal power that will benefit not only ourselves but the Salton Sea area, IID and the Valley.”
The company will pay $21 an acre per year during the exploration period, which will go up to $100 an acre for the rest of the tenure. For surface rent of well sites and power plants Controlled Thermal Resources will pay $600 an acre per year.
IID will also receive payment through royalties of the electricity generated by the lessee which will vary from 3.2 to 4 percent. If the power plant generates as much electricity as intended the lessee will pay the 3.2 percent rate.
Salton Sea Program Manager for IID Graeme Donaldson told the board during the meeting that the utility with this agreement could generate a revenue of $421 million for the entire duration of the lease. Donaldson said those were “practical conservative numbers.”
“The Salton Sea represents one of the most abundant and underutilized sources of renewable energy in the state, including one of the most prolific geothermal areas of the world,” said IID General Manager Kevin Kelley in a statement.
A request to IID for further comment was not returned before press time.
The lease agreement also states that the “Lessee shall reasonably cooperate with the Salton Sea Restoration and Renewable Energy Initiative and the Species Conservation act provided cooperation will not substantially interfere or impair geothermal operations or incur commercially unreasonable cost or expense.”
John Hernandez, a member of the IID Energy Consumers Advisory Committee, said he was concerned with the ambiguity of how cooperation was defined in the agreement.
“I just hope that this empty clause is not misinterpreted or leads us to litigation in order to adequately address the restoration and mitigation of this project on the exposed playa,” he said.