Elimination of Federal Funds for the Heber Project Will Impede Full Development and Use of Hydrothermal Resources

GAO examined the performance by the Department of Energy (DOE) in demonstrating the feasibility of geothermal electric powerplants. The work focused on addressing the Administration's proposal to eliminate funds for the Heber binary cycle geothermal demonstration project and the effects this funding elimination will have on the further development and use of hydrothermal resources for generating electricity. GAO also examined the status of and potential for developing hydrothermal resources, the use of binary cycle technology on these resources, the purposes and objectives of the project, and the rationale for eliminating funding for the project.

The GAO review showed that the Heber project offers an opportunity which can lead to making optimum use of a substantial energy resource. However, without continued Federal funding for the project, there is little likelihood that the project will proceed. The opportunity may be lost, thereby delaying the widespread use of binary cycle geothermal technology on hydrothermal resources, the only technology with the potential to efficiently use most of the Nation's high-temperature hydrothermal resources. The utility industry has indicated that it needs a demonstration plant to reduce the risks and to show the viability of the commercial use of binary cycle geothermal powerplants. The satisfactory operation of the Heber plant will provide the information needed to stimulate the use of binary cycle powerplants. However, the private industry participants in the project do not have the funds to complete the project and are not willing to undertake the project on their own. Because of technical and economic uncertainties, continued Federal participation appears necessary for the project to proceed and to act as a catalyst in reducing the risks and stimulating the use of binary cycle geothermal powerplants. If the project is successful, the majority of Federal funds in the project could be recovered from plant operations.