(Yicai) June 8 -- Zhejiang Kaishan Compressor, a Chinese geothermal developer with operations across the globe, is joining forces with US partner Power Planet to test a new geothermal development technology at its Star Peak project in Nevada. If the small-scale trial is successful, the two parties plan to move forward with large-scale commercial geothermal development.

Kaishan’s wholly-owned unit Open Mountain Energy will team up with Power Planet to develop and apply Enhanced Geothermal System technology at the Star Peak geothermal project in Pershing county, Nevada, where OME holds the development rights, the Chinese project developer and leading geothermal equipment supplier said, citing the deal recently signed by the two parties.

Under the agreement, Power Planet will be responsible for overall project design, well drilling modifications, construction, operations, financing and subsequent commercial development, while Reno-based OME will provide accessible geothermal resources, water supply, supporting geothermal power generation facilities and grid connection infrastructure.

EGS is a new geothermal development technology. Unlike conventional geothermal projects that rely on naturally occurring underground hot water and rock fractures, EGS creates artificial fracture networks in deep hot dry rock formations using hydraulic stimulation. Cold water is injected into the fractures, heated by the underground thermal energy and brought back to the surface for power generation.

The technology requires very little water, provides a stable heat source and offers significant development potential, even in water-scarce regions. EGS is currently transitioning from the demonstration phase to early commercial deployment.

Multi-Phase Expansion

The cooperation will be implemented in phases, Quzhou-based Kaishan said. In the first phase, Power Planet will start drilling the first geothermal well within 12 months after the agreement takes effect. It will build an enhanced geothermal circulation system and connect it to OME’s existing geothermal power plant. The objective is to supply enough high-enthalpy geothermal fluid to generate around 8 megawatts of power.

During Phase One, Power Planet will pay OME various fees including resource exploration rights fees. Payments will average USD10,000 per month during the first year after the agreement is signed, rise to USD20,000 per month for the following three months and then increase to USD40,000 per month thereafter. Once the first phase enters commercial operation, OME will purchase EGS geothermal fluid produced by the project from Power Planet at a base price of USD40 per megawatt hour.

If the first phase is successful, Power Planet plans to construct and own a new geothermal power plant with an installed capacity of approximately 19.8 MW at the Star Peak site. The new plant will use OME’s existing infrastructure and available grid connection capacity for commercial operations.

For this second phase, Power Planet will pay OME an annual water supply fee of USD1 million, plus 11 percent of the net profit generated by the new geothermal plant, Kaishan said.

Following the successful operation of Phase Two, Power Planet also plans to invest in well drilling and to develop an EGS geothermal power plant with an installed capacity of between 50 MW and 100 MW within a one-square-mile area of the project site in Phase Three A. Kaishan or its affiliates will provide geothermal power generation equipment and related technical support, it said.

Afterwards, Power Planet plans to develop geothermal resources in another one-square-mile block and supply geothermal fluid to an ESG power plant owned by Kaishan with a capacity of 50 MW to 100 MW in Phase Three B. The agreement also sets out preliminary financial arrangements for transactions for the third phase of cooperation.

Future Opportunities

Based on the positive progress achieved in the first three phases, the two parties will continue discussions and explore additional EGS development opportunities at the Star Peak project and in other parts of the United States, Kaishan said.

Kaishan has built a complete industrial chain covering geothermal well drilling, resource development, power generation equipment manufacturing and power plant operations. The collaboration will help the company participate in technical verification and commercial practice of international EGS projects, accumulate project development experience, elevate its core capabilities in geothermal resource development into more advanced technologies and expand its reach to more resource areas.

EGS is widely regarded as a technology that can break the reliance of conventional geothermal development on naturally permeable underground reservoirs and greatly expand the scope of exploitable geothermal resources. The US government has identified EGS as one of its key advanced clean energy technologies for support.

Kaishan obtained the development rights for the Star Peak geothermal project in Nevada in 2017. The project achieved grid connection in August 2022, and the conventional geothermal facility currently has a net installed capacity of 12.5 MW.

Kaishan’s share price [SHE: 300257] closed down 3 percent at CNY27.81 (USD4.10), after climbing more than 2 percent during morning trading. China’s benchmark stock indexes also tumbled, following the sharp decline in US markets on Friday. The Shenzhen ChiNext Price Index ended the day down 3.6 percent.

Editor: Kim Taylor