Geodynamics has joined other aspiring Australian geothermal companies in seeking opportunities overseas, announcing it has agreed to buy up to 70 per cent interest in a conventional geothermal power supply project in the Solomon Islands.Under a deal with Kentor Gold, Geodynamics will earn a 25 per cent interest after completing initial geophysical studies at a cost of $350,000, and an additional 45 per cent interest after exploration drilling and a feasibility study is completed at a cost of $4.65 million.
The project, located on the island of Savo, is believed to have a substantial volcanic geothermal reservoir at temperatures of more than 260°C, and depths of 500m to 1500m. This is substantially shallower and easier to extract than Geodynamics' hot dry rock activities in central Australia.
Geodynamics says the Solomon Islands capital of Honiara has current maximum electricity demand of 14MW, but relies on high-cost diesel worth around 80c/kWh - three times the average cost in Australia. Further demand may come from the Gold Ridge gold mine, owned by St Barbara.
Geodynamics CEO Geoff Ward says the company is confident the geothermal resource will be an economically attractive option for Honiara and deliver energy at a cheaper rate than diesel. He says there is potential for a project of about 20MW in size.
"The provision of reliable renewable energy in place of more expensive, unreliable diesel supply will bring many benefits to the Solomon Islands through lowered costs to business and consumers and the opportunity to provide access to power to more people in the Honiara area," Ward said in a statement.
Although Geodynamics is the most advanced in its activities in Australia, and hopes to have a 1MW pilot plant up and running near Innamincka early next year, it is now joining a flood of overseas ventures by Australian geothermal companies.
Ward said the Solomons deal did not mean Geodynamics was abandoning Australia, particularly given the encouraging results from its latest flow test at the Habanero well. But the reality of the Australian market meant it could be several years before its domestic projects could generate significant revenue. The timeline on the Solomon's project would be shorter, and would allow the company to retain its skill-set and reduce its overheads, and generate income.
"We have been working 10 years now (in the Cooper Basin) without generating revenue," Ward said. "It's obvious that cannot go on for ever and we need revenue to support that capital. It's a matter of expanding our options and it's a recognition that we have got excellent skills in our team that can be used. Savo gives us more confidence to keep our team and our capabilities together."