Ormat is Ready: New Law Sets Stage for Development of Alaska's Geothermal Resources

New legislation has Ormat Technologies (NYSE:ORA) excited about exploring Alaska's "substantial" geothermal power potential.

Last week Alaska's Governor, Sean Parnell signed into law a bill which significantly reduces the amount of royalties geothermal developers must pay the government for projects located on federal lands. 

The new law has reduced the royalties from 10-15% of gross revenues to 1.75% during the first 10 years of the project, and 3.75% for the duration of the project.

In 2008 Ormat leased 36,000 acres of state land, but to-date the company has only done limited exploration.  That is about to change -- the company has said it now intends to start drilling core holes as part of the early development of the geothermal site.

Alaska does not have a commercial geothermal power plant yet, but it appears the foundation the industry's growth is being laid.  As Ormat President and COO Yoram Bronick says, "Reducing this rate is an important first step towards developing the state's renewable geothermal resources into utility scale power plants.  [The bill] provides Ormat with the confidence the state supports the development of the geothermal industry in a manner that is financially viable."

Read the full story at BrighterEnergy.org: Ormat in bid to become first geothermal generator in Alaska

Image courtesy of Wonderlane via Flickr