Italian-Turkish geothermal energy-deal 'risky-business'

The recently negotiated agreement between Italian Enel Green Power and Turkish Uzun Group represents a vital step for Turkish geothermal investment, though pessimists have expressed concerns about “risky licenses.”The agreement covers more than 140 licenses, with critics pointing to risks of “unsubstantiated reserves” found in the absolutely major of the recently purchased geothermal sites.“Over 3,200 geothermal exploration licenses have been delivered, but only about 300 of them are worth something, and the sheer majority of those are low-grade resources that could not be used for power generation,” said Ümran Serpen, professor at Istanbul Technical University.“There are so many of those worthless licenses and you find people who are eager to market them and a few have made handsome profits by simply marketing a few licenses,” he told the Daily News. "I will not say that somebody is cheating Enel, but it's a risky business, and we'll see the results.”The new agreement on the exploration of geothermal sites in western Turkey was confirmed Jan. 24 between Italian energy giant Enel and Turkish Meteor, with support from the government, which plans to increase its geothermal capacity from 86 MW to 600 MW by 2015.The agreement promises the establishment of a research and exploration company in partnership with Meteor, a company that is 70 percent owned by Uzun and 30 percent by the G-Energy consultancy.The main objective will include carrying out surface and deep exploration activities with the aim of finding geothermal resources suitable for the generation of electricity and heat.The deal has promoted both confidence about Turkey’s geothermal potential with academics expressing confidence in Enel’s capabilities, while experts express concerns about extraction possibilities, based on fears of a lack of experience, unreliable consultants and monopolized sites.One of the main problems appears to be that consultants with limited specialization in energy and geothermal business have been consulting companies on sites and viability, according to Serpen.“They are planning a joint venture with some companies that are not known in the geothermal sector and not even in energy sector,” Serpen told the Daily News in an interview. “As for the lucrative licenses, they are already well known and owned by state-actors.”Other actors have expressed more optimism about the agreement, which could provide the foundation for a breakthrough in geothermal energy production across Europe and in Turkey.“Enel has decades of experience and is unlikely to take an interest in a site unless it had strong potential,” said Roland N. Horne, professor of energy resource engineering at Stanford University.“They were the first commercial developers of geothermal electricity in the world and have been generating from sources in Italy for many decades, while also expanding abroad during the past 15 years,” he told the Daily News.With a strong presence in Tuscany, Enel’s geothermal production is considered one of the oldest and largest in the world with 32 plants and a net capacity of 730MW, generating approximately 5 billion KW every year.The company has already successfully operated in the Unites States on geothermal sites, where they operate a 65MW binary cycle plant in Nevada.[HH] New energy laws, limited impactsNew Turkish laws from 2007 and 2010 were an attempt at creating a system of incentives for the production of renewable energy, through methods like a 10-year incentive plan, but have generally attracted little Turkish investment due to “underground risks” and the monopolization by the state of most “profitable licenses.”“The number of interested people in bids has decreased since the first law, because very high prices have been paid for the licenses in the bidding, which may have affected the feasibilities,” said Serpen.“There are also major underground risks and interest seems to be dying as not many seem to be buying,” he told the Daily News.The few positive aspects were tied to the fact that the electric selling tariffs may have increased the interests a bit as a consequence of the 2010 energy law promoted by government, according to experts.“It’s not common that worthless licenses are sold, but it depends on the specific laws and licensing procedures in the country,” said Philippe Dumas, manager of the European Geothermal Energy Council, during an interview with Daily News.