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IHI sees future for small geothermal projects amid clean energy boom

Bloomberg

IHI Corp. expects the market for small geothermal projects to take off in Japan as it seeks cleaner sources of energy.

The Tokyo-based company has developed a 20-kilowatt generator capable of turning hot water into electricity that can be set up in as little as half a day, said Tomohiko Yamaguchi, an IHI official in charge of marketing the product.

“The government may want to push large-scale geothermal projects, but big ones are having a hard time,” Yamaguchi said in a recent interview. “Small ones are easier to set up. They are faster to expand.”

Smaller geothermal plants may prove popular in Japan because their scale makes them more manageable for operators, offering a quicker way to build out the nation’s rich sources of heat below the Earth’s surface.

The market to utilize heat from hot springs “is becoming active, helped by the government’s focus on clean energy,” Yamaguchi said.

Since IHI’s Heat Recovery generation device went on sale last August, the company has received orders for more than 10 units for hot springs and industrial sites, Yamaguchi said.

IHI, which makes everything from jet engines to gas turbines, was developing the system to initially target waste water from factories. Once the device was ready, half of all inquiries were related to hot springs.

“We realized the use at hot springs has potential,” Yamaguchi said.

Utility-scale geothermal plants in Japan typically take 10 or more years to get up and running. Environmental assessments associated with the projects usual last three years to four years.

IHI’s technology is called binary, meaning it is able to use lower-temperature water to heat a secondary fluid at a much lower boiling point. Hot springs operators are able to run the systems using existing wells, requiring no additional drilling, according to Yamaguchi.

Electricity from geothermal plants can be sold at above-market rates under a government incentive program for clean energy initiated almost two years ago.

Deregulation introduced in 2012 — binary plants are no longer required to submit a project plan — has also reduced the burden on power producers, Yamaguchi said.

Ormat Technologies Inc., based in Reno, Nevada, dominates the market for binary systems, according to a KPMG Iceland report in 2011. IHI is targeting a market segment that uses smaller quantities of water than Ormat’s devices, Yamaguchi said.

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