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SA hot rocks project dumped

Jul 21, 2014

A South Australian “hot rocks” renewable energy project is stone cold after a failure to raise funds and the cancellation of government grants.

The quiet end of Petratherm’s Paralana geothermal energy project is a long way from the media fanfare that accompanied its launch in 2009 by then-premier Mike Rann and Federal Resources Minister Martin Ferguson.

“This gives us an opportunity to be a world leader in totally emissions-free power generation that’s continuous,” Rann said in August 2009.

The Petratherm project had attracted $62.8 million in government funding via the Renewable Energy Demonstration Program on the basis it could generate 30MW of power.

In June last year, InDaily reported that the $62.8 million commitment had been scaled back to $24.5 million, as had the project’s expectations.

Today, the company announced the funding had dried up and the grants had been cancelled.

“Petratherm advises that, despite a seven-month time extension, the company has been unable to secure the additional $5 million in equity required to draw down on the $13 million Emerging Renewables Program (ERP) Grant awarded by the Australian Renewable Energy Agency (ARENA).

“Accordingly, ARENA has advised that no further time extensions will be made to source these funds and the ERP grant will be terminated with no funds having been paid to Petratherm,” the statement said.

“As a consequence of the ERP grant lapse, the company’s $24.5 million Renewable Energy Development Program (REDP) grant conditions cannot be met.

“The REDP grant was designed to assist funding of up to 7MW geothermal power plant at Paralana.

“A formal termination of both grants will be executed shortly with ARENA.”

Petratherm’s managing director, Terry Kallis, said today he was disappointed the project couldn’t attract investors.

“This is disappointing for the company and its shareholders, given the technical success the Paralana Project has achieved.

“Despite our best efforts in Australia and internationally, we have been unable to raise the necessary funds to satisfy the ERP grant conditions.

“However, this is reflective of the difficulty in raising monies in the equity markets for small exploration and development companies.

“The company will continue to investigate new investment opportunities that will reward shareholders.”

Geothermal technology had attracted high levels of government interest in 2007, despite still being in its concept stage.

It was based on international success in tapping into geothermal energy around active volcanic regions.

Australia, however, has no active volcanic sources, so systems being tested were Engineered Geothermal Systems (EGS). These projects required deeper drilling to source high enough rock temperatures and engineering techniques to allow the circulation of water through the hot rock to extract the heat.

Patratherm’s exploration manager, Peter Reid, said in 2012 in an interview with ecogeneration.com.au that EGS projects were “a higher risk to develop and have a higher cost than conventional geothermal systems due to the increased engineering involved”.

“EGS are, however, very large. They could theoretically provide for all of Australia’s energy needs thousands of times over, and they have potential in many areas of Australia where new power generation is required.”

Potential and reality now seem to be poles apart.

 

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