Oz pumps money into geothermal and wave power

The Australian government is to partially fund the development of two flagship geothermal "hot rock" plants and a 19MW wave energy project after announcing long-awaited grants under its Renewable Energy Demonstration Program.

The government awarded A$235m (US$218m, £131m) to four different projects, which were whittled down from an initial application list of 61 projects worth a combined A$16bn.

The largest amounts went to two Australian geothermal companies, Geodynamics and Petratherm, which are both developing energy from experimental enhanced geothermal systems, which aim to fracture super-heated rocks 3,500m to 4,500m below the surface and then generate steam that rises to the surface to drive turbines.

Geodynamics received A$90m to develop a 25MW geothermal energy plant at its remote resource in South Australia's Cooper Basin. However, because the facility will be located hundreds of kilometres from the national grid, the plant may not actually supply any customers until it can demonstrate its commercial viability and justify the cost of new transmission lines and a larger facility.

The company is, however, trying to convince a data storage operator to become its first remote customer, reasoning that a fibre optic cable will be cheaper to install than an electric one. Geodynamics is in a joint venture with energy generator and retailer Origin Energy.

Meanwhile, Petratherm, backed by another energy retailer TRUenergy, received A$64m to partially fund the construction of a 30MW geothermal facility at its resource near the Flinders Ranges, also in South Australia.

The site is located close to several large mining operations, to whom it hopes to sell energy and, through them, connect to the grid. Neither plant is expected to be operating before 2013 because of the large number of deep wells that need to be drilled to bring sufficient steam to the surface.

The biggest surprise in the funding awards was the choice of US-based Ocean Power Technologies (OPT) to receive A$65m to build a 19MW wave energy facility near Portland, on the southern coast of Victoria.

OPT beat more fancied applications from local wave energy developers Carnegie, OceanLinx and BioPower. The company expects to begin installation of its first series of 10 150kW PowerBuoys in 2011, with the remaining 35 500kW PowerBuoys to be installed in the following years.

The Nasdaq-listed OPT saw its share price jump 26 per cent on the news. OPT is based in the US, although its co-founder and executive chairman George Taylor is Australian born and raised, and combined his experience as a former surfer and electrical engineer to develop his system.

A final grant of A$15.5m was awarded to Hydro Tasmania, a state government-owned utility that is seeking to combine wind, solar and energy storage systems on King Island, located between Tasmania and Victoria, which currently relies on diesel for its power.