What is competitive geothermal leasing?

What is competitive geothermal leasing?

It’s no surprise that the federal government owns quite a bit of land, especially in the western and midwest portions of the nation. However, it may surprise some to learn that federal lands are sitting on an abundance of geothermal energy capacity. According to the National Renewable Energy Laboratory, of the 3,100 megawatts of geothermal capacity currently installed in the U.S., about 41 percent of this is on public lands. Federal lands contribute about 192 million of the estimated 530 million acres of potential geothermal zones.

The advancement of lease programs 
To provide utility providers access to this renewable energy resource, the U.S. Bureau of Land Management has been delegated the authority to provide leases to federal lands. This process is either through a competitive auction of lands nominated by leasing by the public or through a non-competitive leasing process for lands subject to other ownership or deemed less valuable. For the competitive lands, auctioneers are charged a set dollar amount per acre of land and these properties are considered highly valuable because of the geothermal capacity potential they hold.

According to the U.S. Bureau of Land Management, geothermal leases have generated over $12 million in federal royalties each year, with 50 percent shared with the states and 25 percent shared with local counties. Competitive lease sales that have happened since 2007 have generated over $76 million for geothermal lease agreements in Colorado, Idaho, Oregon, Utah, Nevada and California. According to the federal agency, one competitive auction in Nevada held in August 2008 was the largest geothermal sale ever. The sale, in terms of dollars bid,brought in a record $28.2 million for just 105,211 acres of public land.

Geothermal leasing is providing the industry with greater access to energy capacity. Unlike other energy production techniques, geothermal is clean, renewable and does not create a long-term disturbance to the environment and natural landscape. As a result, the Bureau of Land Management will continue to hold competitive lease auctions for geothermal energy productive.

Leasing agreements in the news
For example, the Associated Press reported that the U.S. Bureau of Land Management generated $13,888 with a competitive geothermal lease sale held in Reno, Nevada. Four parcels of land were individually auctioned off, three of them were located in Churchill County and one in Pershing County. The highest bid was $2 per acre. A few other leasing agreements were also made during the auction for other counties in Nevada. The lease agreement periods were for a 10-year period with an annual rental agreement of $2 per acre the first year and then $3 an acre for each year following the first 12 months.

As geothermal energy gains ground and takes over a larger portion of the energy capacity in the nation, leasing programs may continue to grow as a key source of revenue for the federal government, states and counties.