The U.S. Department of Energy has offered a $102.2 million loan guarantee, its first for geothermal energy, to U.S. Geothermal, based in Boise, ID. The guarantee is designed to support construction of a 22-megawatt plant at Neal Hot Springs, near Vale, OR.

U.S. Geothermal will use a technology called supercritical binary cycle to convert geothermal heat into electric power. The technology has been around since the 1980s but hasn’t been commercialized. The DOE’s loan guarantee, which serves as a promise to back a loan in case the company defaults, could give venture capitalists and private investors confidence in investing in the geothermal technology.

Daniel Kunz, CEO of U.S. Geothermal, says the supercritical binary plant could be 10 to 20 percent more efficient than geothermal plants operating now. The plant, which is in three modules, will be built by Houston-based TAS Energy and transported to the geothermal site on flatbed trucks and strung together, Kunz says. “This modularity should allow us to compress the timetable and cost of deployment. The risks of construction should be lower.”

The power plant is expected to be online in 2012. All of its power output will be sold to Idaho Power Company, the largest utility in Idaho, as part of a 25-year agreement.

Conventional binary geothermal power plants are a well-established technology to produce electricity from moderate-temperature resources between 93 ºC and 149 ºC. Hot water drawn up from underground reservoirs cycles through a heat exchanger, where it heats a working fluid that is kept physically separate. The working fluid, typically an organic chemical such as isopentane, boils at a lower temperature than water. As it vaporizes, the force of the expanding vapor spins a turbine that generates electricity.

Supercritical binary plants use a similar setup. The only difference is that the working fluid is pumped up to a pressure above the fluid’s “critical pressure” before it flows into the heat exchanger. At this supercritical pressure, the fluid does not vaporize at a specific temperature. Instead, it gradually transitions from a liquid to a high-density vapor that gets lighter and lighter as it heats up. This lets the working fluid extract more heat from the hot water, increasing the power plant’s efficiency.

Building costs for a supercritical plant can be higher than traditional binary plants because the heat exchangers and pipes have to be stronger to handle the higher pressure. But the federal loan guarantees will help U.S. Geothermal get access to the necessary capital.

A few small test plants (less than 100-kilowatt) using supercritical binary geothermal technology have been built and run without any difficulty, says Gregory Mines, a geothermal energy researcher at the Idaho National Laboratory. In the 1980s, the DOE and Electric Power Research Institute built a 50-megawatt supercritical binary plant in Heber, CA, that ran for about three years. U.S. Geothermal’s plant “should hopefully provide financial people an assurance that it’s not an off-the-wall technology, it’s proven and viable,” says Mines.