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green creditionals

  1. 2,677 Posts.
    detailed below is an article in todays Australian regarding Wind and hot rock energy. You ask why post here. Having read the article, it mentions methane gas and the need by state governments particluiarly NSW to get their green creditentals in order. Givemn MPO's glouscter leasehold, MPO is one of several companies that will benefit from any moves that the NSW govt does to manadate green energy such as CSG.

    I have elluded in the past the strategic need for CSG as a green gas in the energy supply chain and the reason why MPO will become another AOE or QGC in the next two or three years.

    Enjoy the read

    Wind and hot rock companies pick up steam
    The low emissions energy sector will benefit from changes in the political climate, writes Matthew Wareen
    --------------------------------------------------------------------------------

    July 02, 2007

    FEW sectors are more sensitive to the radical change in the political mood on climate change than energy and in particular the increasingly less speculative low emissions energy sector.
    Last month, the federal Government committed Australia to an emissions trading scheme from 2012. With only minor differences between the major parties, a constraint on greenhouse emissions is now a certainty in Australia. This is, at least for the time being, on top of a suite of different mandatory renewable energy targets set by state governments and a new 18 per cent mandatory gas target in Queensland.

    While the policies may be questionable from a rational perspective, valuing investment in this sector is as much about factoring in political risk alongside more conventional technical and financial criteria.

    Coal-fired electricity will remain the cheapest energy source for the next decade, but will become more expensive with the application of a price on its emissions or the installation of technology to capture and store emissions.

    Gas can provide an important bridge with around half the emissions of coal, with increased demand pushing up price - great news for the sector providing it doesn't price itself out of the market.

    A month ago, the Beattie Government increased its mandatory gas target to 18 per cent by 2020. Companies such as the Queensland Gas Company have been developing coal seam methane technology, which captures the methane embedded inside coal seams.

    It not only is a new source of affordable methane, but can help reduce fugitive emissions of the potent greenhouse gas. In a nearly static market, QGC has almost doubled its value in the past two months.

    Wind energy is the current lowest-cost zero emissions technology in Australia and is likely to be another beneficiary of the price on carbon and the mandatory targets. Virtually all of Australia's current wind generation assets are either part of internationally listed companies, part of larger enterprises or part of government-owned energy companies. BP and Origin Energy have begun to invest in modest-scale solar panel manufacturing, while emerging technology companies such as Solar Systems have welcomed considerable and highly politicised government assistance, but have not needed the market to raise capital.

    Perhaps the most immediate barometer of this market shift is Australia's fledgling geothermal industry, which wants to make electricity by exploiting the massive amounts of energy in hot granite rocks close to the earth's surface.

    These heat assets 4km to 5km underground are found in various locations around the globe, including the Cooper Basin in northeast South Australia.

    Geothermal energy is unproven at the scale being flagged here and the world is watching Australian developments closely to see whether they can actually deliver. An independent report for the Energy Supply in January estimated that hot rocks could reach 7 per cent of national electricity demand by 2030. That's more than a billion dollars worth of electricity a year.

    The technical risks that need to be removed include proving they can reliably drill the deep holes in high temperatures and that they can sustain circulating water through the system to generate steam.

    This work is being pioneered in Australia, with market leader Geodynamics Limited due to start drilling a 5km hole later this month. A result is hoped for by end of the year, possibly sooner. If all succeeds, a trial $225 million 40 megawatt power plant is scheduled for 2009. All going well, a 500 megawatt plant will follow, delivering a $200 million energy business. In the longer term, the energy asset identified in its hot rocks leases is estimated by the company at 10,000 megawatts.

    After raising $32 million to buy the rig that will drill the big hole, shares in Geodynamics have nearly doubled in the past month, as have shares in nearby rival Petratherm, which has a more modest but possibly realisable plan of supplying power to local mining operations, with a 140 per cent increase in their value over the past month.

    Other smaller geothermal companies have been even more successful. Torrens Energy (TEY) has doubled in the past month, as has Green Rock Energy (GHT) while Geothermal Resources Limited (GHT) has increased by 60 per cent in the past month and nearly 400 per cent since February.

    If successful, it's unlikely any of these companies will evolve into power companies. Big energy and resource companies with much deeper pockets are watching closely. Woodside and Origin Energy have an 18 per cent share in Geodynamics. Beach Petroleum is in a joint venture with Petratherm.

    There are likely to be further rewards if they succeed. A new round of low emissions technology development grants is one of a suite of climate change announcements tipped in the pre-election cycle.

    The political cache of this type of technology may help overcome some of its financial constraints. State governments such as South Australia and NSW are looking to both fill their mandatory renewable energy targets and brand themselves with a new green technology. The cost of linking the latest green energy source to their state could trigger a bidding war between the states to help underwrite the otherwise expensive transmission costs.

    And this is just the start of it.

 
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