Geothermal Energy May Supply 5% of Australian Power, Group Says

By Angela Macdonald-Smith

Aug. 20 (Bloomberg) -- Geothermal energy could supply as much as 5 percent of Australia's electricity requirements by 2020 with an investment of about A$12 billion ($10.4 billion), helping reduce greenhouse gas emissions, an industry group said.

Producing power from underground heat could provide as much as 2,200 megawatts of continuous generating capacity by 2020, the Australian Geothermal Energy Association said today in an e- mailed statement, citing a study by economic modeling firm McLennan Magasanik Associates. That would be as much as 40 percent of the nation's 2020 target for renewable energy use.

Geodynamics Ltd. and Petratherm Ltd. are among companies seeking to tap super-hot granites lying as deep as 5 kilometers (3.1 miles) underground in South Australia state to produce low- emissions electricity. Twenty-three companies will invest more than A$701 million in geothermal exploration in the state in 2002-2013, the South Australian government said this month.

``This report highlights that the Australian geothermal energy industry has a potentially significant contribution to solving Australia's long-term climate change challenges,'' Gerry Grove White, chairman of the group, said in the statement.

The cost of generating energy from geothermal sources is expected to decline to become the cheapest form of renewable energy by 2020, the study found. The report is to be released today at a conference in Melbourne. The government has a target to get 45,000 gigawatt-hours of electricity from renewable sources by 2020.

Origin Energy Ltd., Australia's second-biggest electricity and gas retailer, Woodside Petroleum Ltd., Beach Petroleum Ltd. and CLP Holdings Ltd.'s TRUenergy Pty unit are among companies backing geothermal energy ventures in Australia.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net