Nevada geothermal project secures DOE-backed $98.5m loan

June 16, 2010

Canadian firm Nevada Geothermal Power has secured a conditional commitment for a $98.5 million loan against its Faulkner 1 goethermal power project in Nevada.

The loan sees John Hancock Financial Services as lead lender, with the US Department of Energy offering to act as guarantor for up to 80% of the amount.

The Faulkner 1 plant is part of NGP’s Blue Mountain project in northwestern Nevada’s Humboldt County, which is capable of generating 49.5 megawatts of renewable electricity.

“The United States leads the world in geothermal electricity production with just over 3,000 megawatts of installed capacity,” said US Energy Secretary Steven Chu.

“Our support of the Blue Mountain project demonstrates our continued commitment to realize the potential in geothermal so that we can achieve our nation’s clean energy goals.”

The project includes a geothermal well field using injection systems to allow water to be pumped into the rock below the earth’s surface, to be heated and extracted for power generation.

NGP, which has its head office in Vancouver, has a 20-year power purchase agreement to sell electricity and renewable energy credits from the Blue Mountain project to the Nevada Power Company.

The company is the first to secure a commercial loan guarantee through the Department of Energy’s Financial Institution Partnership Program, part of the federal stimulus program.

Low-cost

Brian Fairbank, President and CEO of Nevada Geothermal Power said: “The John Hancock senior debt facility and the DOE loan guarantee will provide low cost, long-term financing for our leading Faulkner 1 project and greatly enhance our ability to provide permanent clean energy jobs in northern Nevada.

“We appreciate the continued assistance and cooperation of our partner, the Trust Company of the West, during this process.”

Along with Blue Mountain, NGP has leasehold interests in four properties in Nevada and Oregon, which it believes could provide between 150MW and 300MW of power.

Recep C. Kendircioglu, a Managing Director at John Hancock stated, “John Hancock is very pleased that Blue Mountain is the first project to be offered a conditional commitment for a loan guarantee through FIPP. We are looking forward to a timely closing and to support NGP in its future endeavors.”