Good afternoon.  I am Frank Preli, Vice President of Engineering for UTC Power. I joined United Technologies Corporation in 1978 and have been with UTC Power since 1998.  I am responsible for leading a group of approximately 250 engineers and scientists engaged in research and product development for UTC Power.  Our work includes development of Proton Exchange Membrane (PEM), Phosphoric Acid (PAFC) and Solid Oxide (SOFC) fuel cell technology to serve commercial and transportation markets.  We also develop integrated combined cooling, heating and power systems and organic Rankine cycle-based heat recovery systems for geothermal and waste heat applications. 

 

UTC Power, a business unit of United Technologies Corporation, is a world leader in commercial stationary fuel cell development and deployment. UTC Power also develops other innovative power systems for the distributed energy market.  At the Committee’s request, I will focus my remarks today on the latest addition to our portfolio of clean, efficient, reliable technology solutions – namely, the PureCycle® power system.  This is an innovative low-temperature geothermal energy system that represents the first use of geothermal energy for power production in the state of Alaska and the lowest temperature geothermal resource ever used for commercial power production in the world.  The technology currently is being demonstrated at the Chena Hot Springs resort 60 miles from Fairbanks, Alaska and 35 miles off the power grid.

 

Geothermal energy addresses many of our national concerns, but its potential is largely untapped. UTC Power’s PureCycle® system represents an innovative advancement in geothermal energy production and is operating successfully today in Alaska as part of a demonstration effort.  This geothermal energy breakthrough offers the possibility of tapping into significant U.S. geothermal reserves for a domestic, renewable, continuously available source of power to meet our growing energy demands. Congressional action is needed, however, if the U.S. is to translate this potential into reality.

 

Our nation is faced with air quality and global climate change challenges, ever- increasing fuel costs and a desire to be less dependent on energy sources from politically unstable areas of the world.  The United States is blessed with an abundance of geothermal energy resources that offer a renewable, continuously available, largely untapped domestic resource.  The country generates 2,800 MWe of geothermal energy for power production in California, Nevada, Utah and Hawaii and another 2,400 MWe is under development. While estimates vary, the Geothermal Energy Association indicates that with effective federal and state support, as much as 20 percent of U.S. power needs could be met by geothermal energy sources by 2030. The National Renewable Energy Laboratory’s report “Geothermal: The Energy Under Our Feet” concludes: “Domestic resources are equivalent to a 30,000-year energy supply at our current rate for the United States.”  The study also notes: “New low-temperature electric generation technology may greatly expand the geothermal resources that can be developed economically today.”

Thanks to a partnership between UTC Power, Chena Hot Springs Resort, the U.S. Department of Energy, Alaska Energy Authority, Alaska Industrial Development and Export Authority and the Denali Commission, Alaska was added last year to the list of states using geothermal resources for power production.  The system operates on 165º F (74º C) geothermal water and by varying the refrigerant can use hydro thermal resources up to 300º F (149º C).  This is an exciting breakthrough since previously experts had assumed that geothermal fluids needed to be at least 225º F (107º C) for economic power generation.  It is also significant since a large portion of the estimated known U.S. geothermal resources are expected to be in the low to moderate temperature range, including a large number of deposits associated with oil and gas wells that are currently not economically viable and therefore non-productive.

 

Alaska has some of the highest energy costs in the country for electric grid connected power and even higher costs for those off the grid. The Chena Hot Springs Resort, which operates independent of the grid, pays 30 cents per kilowatt hour (kWh) for electricity.  When fully optimized and fully implemented, we expect the UTC Power PureCycle® system can reduce this cost to 5-7 cents per kWh, thus saving the owners $1,000 per day in fuel costs and eliminating the need for diesel fuel-burning generators and their harmful emissions.

 

The system was commissioned in August 2006 and provides power for the resort’s on-site electrical needs.  Two PureCycle® 225 kW units are operational at Chena today and together have logged 5,400 hours of experience with 100% reliability after the initial 500- hour commissioning shakedown and greater than 99.2% reliability overall.

 

The visionary owners of the resort, Bernie and Connie Karl, are committed to a sustainable community that is entirely self- sufficient in terms of energy, food and fuel.  Their dedication is evidenced by on-site renewable power sources that secure their energy independence while benefiting the environment.

 

We are working closely with Alaskan authorities regarding further development of and enhancements to this technology. There is significant potential to deploy PureCycle® systems at Alaska’s more than 200 rural villages that currently depend on diesel generators with fuel being shipped by air or water.  This results in high costs, logistics issues and dirty, loud power generation that is inconsistent with native cultural values.

 

The PureCycle® system is the product of a UTC brainstorming session in 2000 focused on opportunities for organic growth. It is based on organic Rankine cycle (ORC) technology - a closed loop process that in this case uses geothermal water to generate 225 kW of electrical power. Think of an air conditioner that uses electricity to generate cooling. The PureCycle® system reverses this process and uses heat to produce electricity.  The system is driven by a simple evaporation process and is entirely enclosed, which means it produces no emissions.  The only byproduct is electricity, and the fuel – hot water – is a free renewable resource.  In fact, after the heat is extracted for power, the water is returned to the earth for reheating, resulting in the ultimate recycling loop.

The PureCycle® system reflects a number of key innovations and breakthroughs.  As mentioned previously, the Chena project is the world’s lowest temperature geothermal resource being used for commercial power production and represents the first time geothermal energy has been used to produce electricity in Alaska.

 

On the technical side, the PureCycle® system capitalizes on an advanced aero dynamic design that results in 85 percent efficiency from a radial inflow turbine derived from a Carrier Corp. compressor.  Carrier Corp. is a sister UTC company and a world leader in air conditioning and refrigeration technology. The geothermal system is also unique in its ability to match the turbine design to working fluid properties, thus allowing the equipment to operate on a range of low to moderate temperature energy resources and enhancing its flexibility to meet customer requirements.

 

While the PureCycle® system and its application to the geothermal energy market are new, the product draws upon decades of UTC innovation, operating experience and real-world expertise.  Key components of the system are derived from Carrier Corp. and   90 percent of the PureCycle system is based on UTC high-volume, off-the-shelf components that enhance the value proposition to our customers.

 

The Chena project has attracted world-wide attention and won two awards last year –a U.S. Environmental Protection Agency and Department of Energy 2006 National Green Power Award for on-site generation and Power Engineering magazine named it Renewable/Sustainable Energy Project of the Year.

 

Previously, geothermal energy for power production has been concentrated in only four Western U.S. states. The ability to use small power units at lower temperature geothermal resources will make distributed generation much more viable in many different regions of the country.  Simply put, PureCycle® technology could result in significant new domestic, continuously available renewable energy resources - not just in Alaska, but across the country.   The capability to operate with a low temperature resource allows the UTC PureCycle® System to utilize existing lower temperature wells and to bottom higher temperature geothermal flash plants and many existing ORC binary power plants.

 

In addition, there are more than 500,000 oil and gas wells in the US, many of which are unprofitable.  The use of geothermal hot water, which is abundant at many oil and gas well sites, to produce a renewable source of electrical power could extend the life of many of these assets.  This would result in significant environmental, energy efficiency, climate change, economic and other benefits associated with the development of geothermal oil and gas electrical power.

 

 

It is unfortunate that at this moment in time when there are exciting innovative developments in the world of geothermal technology, the federal government is cutting off research and development funding. The rationale given is that the technology is mature and represents a resource with limited value since it is confined to only a few Western states.

 

My message to you today is that we have only scratched the surface regarding our nation’s geothermal energy potential.  We have not exhausted the R&D possibilities and this is not a resource that is limited to only a few Western states. As I’ve indicated in my testimony, there are advances in low-temperature geothermal energy alone that prove otherwise. 

 

The National Research Council report “Renewable Power Pathways” recognized the importance of geothermal energy and stated: “In light of the significant advantages of geothermal energy as a resource for power generation, it may be undervalued in DOE’s renewable energy portfolio.”

 

My testimony has focused on only one element of the geothermal opportunity – low- temperature resources.  There are a variety of other research needs, including cost- shared partnerships to enhance the performance of existing successful systems, increase the size of the units and demonstrate benefits for the oil and gas market.  We also need continued federal funding for public/private partnerships for exploration, resource identification and drilling.  We need more up-to-date survey information.  The most recent U.S. Geological Survey for geothermal energy was conducted in 1979.  This survey used techniques that are outdated today and was based on technology available 30 years ago.  It did not consider low to moderate temperature resources since there was no technology available at the time that could utilize these resources in a cost-effective manner.

 

As our Chena project demonstrates, far from being a mature technology with limited geographic reach, geothermal energy has the potential to satisfy a significant portion of our growing energy needs with a renewable, continuously available domestic resource.  But appropriate government policies must be adopted and implemented to make this a reality.   Congress can help to ensure we realize the full potential of geothermal energy.  Attached to my testimony is a position paper by the Geothermal Energy Association that outlines key industry recommendations and action items including:

·         Extension of the geothermal production tax credit and revised “placed in service” rules.

·         Robust funding for DOE’s Geothermal Research Program

·         Incentives for geothermal exploration

·         Comprehensive nationwide geothermal resources assessment.

 

Thank you for the opportunity to testify and I would be pleased to answer your questions.

 

 

The United States, as the world's largest producer of geothermal electricity, generates an average of 16 billion kilowatt hours of energy per year.  While substantial, U.S. geothermal power is still only a fraction of the known potential.  Today, roughly sixty new geothermal energy projects are under development in over a dozen states that will double current geothermal power production.  With effective federal and state support, recent reports indicate that as much as 20% of US power needs could be met by geothermal energy sources by 2030.

To achieve this, the Administration and Congress should adopt the following National Geothermal Goals for federal agencies: Characterize the entire hydrothermal resource base by 2010; sustain double digit annual growth in geothermal power, direct use and heat pump applications; demonstrate state-of-the-art energy production from the full range of geothermal resources; achieve new power or commercial heat production in at least 25 states; and, develop the tools and techniques to build an engineered geothermal system (EGS) power plant by 2015.

To support these goals and accelerate the production and development of energy from our geothermal resources, the following priority actions are needed:

Revise the Section 45 Production Tax Credit (PTC) to support sustained geothermal power development. The PTC timeframe is too short for most geothermal projects to be completed by the current placed in service deadline.  To achieve sustained geothermal development, Congress should immediately amend the law to allow facilities under construction by the placed in service date of the law to qualify, and extend the placed in service deadline by at least 5 years, to January 1, 2014, before its expiration.

Fund a strong and effective DOE Geothermal Research Program that prioritizes the discovery and definition of geothermal resources; expands GRED funding; develops new exploration technologies; supports state-based programs to expand knowledge of the resource base and its potential applications; improves drilling technology; demonstrates geothermal applications in presently non-commercial settings; and develops and demonstrates of Enhanced Geothermal Systems techniques.  DOE’s geothermal program should be expanded to meet today’s challenges and funded at $75 million annually.

Provide incentives for geothermal exploration through renewed DOE cost-shared funding and other measures.  Ninety percent of geothermal resources are hidden, having no surface manifestations.  Exploration is therefore essential to expand production, but exploration is expensive and risky. Cost-shared support for exploration drilling has been provided through DOE’s Geothermal Resource Exploration and Definition (GRED) program.  GRED should be continued and expanded, with at least one-half of DOE’s effort supporting exploration, and an exploration tax credit should be established.

Expand and accelerate geothermal initiatives on the public lands.  USGS should conduct a comprehensive nationwide geothermal resource assessment that examines the full range of geothermal resources and technologies; USGS should collect and make available to the public geologic and geophysical data to support exploration activities; BLM’s Programmatic Environmental Impact Statement (PEIS) should be completed as a top priority; planning, leasing and permitting activities on BLM and National Forest lands should be adequately funded and conducted promptly.  Appropriations (and dedicated funding) of $25 million annually should be provided for these agency efforts.