Executives of Ormat Technologies Inc. earlier this month said the company plans to add 8 megawatts of generating capacity to the existing 30-megawatt capacity at the Big Island facility by the end of the year.
Puna Geothermal has long talked about expanding its plant on a volcanic hot spot in Kilauea volcano's East Rift Zone, but has held back as it discusses a contract with the Hawaii Electric Light Co., which would buy the power. The contract has yet to be completed, but Ormat Technologies executives said they are optimistic that negotiations will be concluded successfully.
"There is very little drilling that needs to be done, and we don't see that as being contingent upon the negotiation with HELCO," said Ormat President Yoram Bronicki, answering a question about the project on a conference call with analysts.
"So the answer is we're ¬ó we feel that this is excellent reason to think that this will get built in 2009."
Bronicki explained to analysts that the project is in keeping with a push by Gov. Linda Lingle's administration to wean the state off oil by greatly expanding use of renewable energy. The state relies on oil for more than three quarters of its electricity production and wants to get 70 percent of its energy from renewable resources by the year 2030.
Puna Geothermal currently provides 20 percent of Hawai'i County's electricity with its 15-year-old, 30-megawatt plant. The Big Island leads the state when it comes to electricity generated from renewable sources, with almost 40 percent coming from geothermal, wind, hydroelectric and other sources.
Among geothermal's appeals for Hawaii Electric Light Co. is its reliability. The plant draws steam and hot water from beneath the Earth's surface to generate electricity before the fluid is injected back into the ground. Puna Geothermal says the plan has zero emissions because none of the gas or liquid is exposed to the air.
This "firm" power source is more predictable than wind or solar energy and operates 24 hours a day.
Mike Kaleikini, Puna Geothermal plant manager, said it's been estimated that the land the company leases in the Kapoho-Pohoiki area of the Big Island is capable of generating about 200 megawatts of electricity.
But he said the area also has a risk for lava flows, making it imprudent to build out a big plant there.
He said the company has begun preliminary exploration of geothermal potential on the slopes of Hualalai in North Kona, but that it has no leases in the area as yet.
Any plant developed on Hualalai would also be closer to population areas in West Hawai'i.
Hawaiian Electric Co., HELCO's O'ahu sister utility, also confirmed it hopes to finish negotiations on a purchase-power agreement with Puna Geothermal.
"We are looking forward to their expansion," said HECO spokesman Peter Rosegg. "They're good partners for us and we're working very closely."
Negotiations on a new purchase-power agreement for the 8 megawatts has taken a long time because the new contract will be a departure from the current contract with Puna Geothermal, which is tied to the cost of oil HELCO avoids when it uses the renewable energy.
As such, Ormat, a Reno, Nev., operator and maker of geothermal power plants, had record revenue from the Puna operations last year.
Rosegg said the new contract most likely will be based on business costs, plus a reasonable profit and other factors.