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U.S. Geothermal enters into finance, construction pact

Boise-based U.S. Geothermal Inc. has entered into a financing agreement that it says will enable construction to start this year on its San Emidio power plant replacement in northern Nevada.

The agreement with TAS Energy Inc., of Houston, calls for TAS to provide a non-recourse project loan for the $30 million of construction capital, and to provide engineering, procurement and construction services for the first phase. U.S. Geothermal said in a release that the construction loan is expected to be repaid with long-term financing from available sources such as the Section 1705 loan guarantee program from the U.S. Department of Energy, which U.S. Geothermal expects to apply for soon.

The $200 million San Emidio project is a planned two-phase development. The $30 million first phase is planned at 8.6 net megawatts. The $170 million second phase is planned at 26.4 net megawatts.

The first phase calls for construction of a new water-cooled binary cycle power plant with an estimated output of 8.6 net megawatts of renewable baseload electricity. No well drilling is required for the first phase since production and injection wells are currently in use by the existing San Emidio power plant, which will be replaced with the new plant, U.S. Geothermal said. The anticipated commercial operations date for the first phase is the fourth quarter of 2011.

The second phase is expected to be completed in late 2013, subject to satisfactory completion of new well drilling, a transmission upgrade and obtaining the required permits. Phase 2 reservoir resource expansion efforts are already under way using funding assistance from a $3.77 million Department of Energy Innovative Exploration Grant awarded to U.S. Geothermal in 2009.

Approximately 3 megawatts of the first phase’s output is sold through 2017 under the terms of an existing power purchase agreement with Sierra Pacific, a subsidiary of NV Energy. U.S. Geothermal Inc. is currently negotiating with a number of interested parties for a new 35-megawatt PPA for the project.

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