Global Geothermal Summit, Oct. 12, 2011

RAISING THE BAR POSITION OF GEOTHERMAL ENERGY TODAY

Alexander Richter Canadian Geothermal Energy Association (CanGEA) ThinkGeoEnergy.com @thinkgeoenergy 12 October 2012

•  Collective voice of Canada's geothermal energy industry

•  Non-profit industry association •  Industry promotion & promotion

of potential •  Outreach events •  Geothermal Reporting Code •  International representation

(IEA-GIA)

THE ROLE OF GEOTHERMAL TODAY

GEOTHERMAL UTILIZATION

Current & Planned Capacity

611

204

167

536

575

843

958

628

1,970

1,197

3,093

674

86

363

0

225

77

182

612

530

2,303

2,307

Other El Salvador

Kenya Japan

Iceland Italy

Mexico New Zealand

Philippines Indonesia

United States

2010 Additional capacity planned till 2015

GEOTHERMAL ELECTRICTY in TWh, IEA 2008

Coal Gas Hydro

Nuclear Oil Wind

Biomass

Waste

PERCEPTION AND POSITION OF THE INDUSTRY

“Geothermal energy, potentially the largest – and presently most misunderstood - source of energy” Al Gore, Our Choice

“The amount of geothermal energy potentially available is effectively unlimited” Steven Chu, U.S. Secretary of Energy

PERCEPTION

PERCEPTION

Bathing monkeys in Jigokudani hot springs, Japan

PERCEPTION

PERCEPTION

Geothermal Energy Geo(thermal) Power, Geothermal Heat, Geo-Exchange

REPRESENTATION

Government Industry Industry Associations IEA

POSITIONING

Marketing Representation Advertisement Visibility

POSITIONING

OUTLOOK FOR THE INDUSTRY

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

MW

High Case

Base Case

Installed 2008

US carbon legislation and National RPS drives sustained growth in the US. This is complemented

by significant growth in Indonesia and the Philippines. Niche low-temperature and EGS activity

picks up momentum in Australia, and to a lesser extent in Central Europe

Near-term growth driven by the US, New Zealand, and

increased activity in Indonesia and Turkey

Increased growth internationally, with Southeast Asia, Latin America, Chile,

Mexico, and East Africa complementing steady growth in the US. Mega-scale projects in New Zealand also brought

online, with potential for additional growth in Iceland

Transmission, Permitting, Supply Chain Scaling, and Natural Gas Volatility

Source: Emerging Energy Research

Source: Islandsbanki – Presentation GRC 2010

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year …

Exploration Phase

Pre-Feasibility

Feasibility

Detailed Design & Construction

Operation & Maintenance

PROJECT TIMELINE

Explorat.

Detailed Design & Construction

Pre-Feas.

Operation & Maintenance

Feasibility

Comment: Permitting for exploration and development can – in some cases – add up to one additional year to this time frame.

Source: Glitnir

VALUE CHAIN Start-up Exploration/

Pre-Feasibility Feasibility

Detailed Design & Construction

Start of Operation

Venture Capital

Development Equity

Drilling Equity

Project Equity

Tax Equity

Mezz./ Bridge Debt, Const. Financing

Project Financing

• Drilling of first successful, full-sized production well.

• Confirmation Wells, • Reserve Estimates • Preliminary Design

• Drilling & testing of remaining production and injection wells

• Civil works required • Final design & testing

• Running & maintaining power plant

• Possible Extension of Plant

• Geophysical surveys • Geochemical and geological data collection & analysis

• Temperature gradient drilling • Focused Exploration on most favorable resource area

• Sufficient Exploration data collected & analyzed

• Legal Work • Concession/ Lease • Permits

Source: Islandsbanki

BUSINESS MODEL

MARKET STIMULATION

Driving demand

Supporting development

Financing stimulation

•  Feed-in-tariffs •  Renewable Portfolio Standards

•  Drilling grants & loan programs •  Insurance tools

•  Loan guarantees •  Production/ Investment tax credits

•  Carbon credits, IFC, World Bank •  GeoFund, Development Banks.

Other drivers

SUMMARY

•  Marginal role of geothermal in global picture •  Important role for many countries •  Lack of political support •  Lack of visibility •  Concerted efforts in promotion to public and

politics necessary