The government is to auction off geothermal resources in Ngebel, Ponorogo, and Ijen, Banyuwangi, to help defuse the power crisis in Java and Bali, an official says. The total capacity of the two sites is more than 400 Megawatts (MW). ...

Head of the provincial energy and mineral resources agency, Tutut Herawati, said the government was preparing a joint team from the central government, provincial and regency administrations to open a tender for the two geothermal projects.

The geothermal resource in the Blawan-Ijen area, recently declared a mining site, is located on the border of Banyuwangi and Bondowoso and has a capacity of 185 MW. The resource in the Ngebel-Wilis area, on the border of Ponorogo and Madiun, has a capacity of 120 MW and is under regulation in a bylaw issued by the provincial government last month. ...

Tutut said the province had a further nine geothermal deposits that would be offered to investors in the future. The nine, located in Madiun, Mojokerto, Probolinggo, Pacitan, Malang and Sumenep, have a combined potential capacity of 580 MW.

Separately, the director general for coal and geothermal minerals at the Energy and Mineral Resources Ministry, Bambang Setiawan, said the government would continue mining the renewable and environmentally friendly geothermal energy to help defuse the decade-long national power shortage. "The government will not impose taxes on the imports of any materials for geothermal exploration as incentives for investors to produce the energy," he said.

He said Indonesia had 40 percent of the world"s geothermal potentials, which could produce a total of 27,510 MW, equivalent to 219 billion barrels of crude oil.

Ormat Industries said on Thursday its subsidiary Ormat Technologies had completed phase two of construction of a geothermal plant in Kenya.

The Olkaria III plant will add 35 MW of base load capacity to the existing 13 MW plant which has been in operation since 2001, Ormat Industries said in a statement to the Tel Aviv Stock Exchange.

Ormat said the expanded power plant will save 120,000 tons of imported oil, mitigate carbon dioxide emissions and reduce the average production cost of electricity in Kenya while reducing its dependence on imports.

Hot water flowing under the Geelong region had potential to supply 150 times Victoria’s energy requirements, a company announced yesterday. Greenearth Energy said the city was set to become “Victoria’s first renewable energy hub” after new tests confirmed the region as a potential target for geothermal power.

Greenearth Energy wants to drill near Moriac and the new Armstrong Creek growth area for “wet hot rocks” to generate renewable, green energy.

Managing director Mark Miller said early tests had found “significant potential” to produce 150 times Victoria’s energy requirements and more than Australia uses in a year.

“We’ve identified the potential for hot sedimentary aquifers that contain water at depth (which is) super-heated and can be drilled into,” Mr Miller said. “The water is extracted through a binary geothermal power plant that produces geothermal energy. The water is then returned to the aquifer so it’s not depleted. “The potential of the system could literally deliver hundreds of megawatts of power. “This is significant. It has potential for not only Geelong’s and the new Armstrong Creek area’s requirements but the entire state’s.”

On a chilly morning outside the hamlet of Reykjahlid in northern Iceland, Hallgrimur Jonasson lifts the edge of a soggy plank of wood lying in the clay to expose a small hole in the ground. "This is the rye-bread bakery," he says, yanking his hand back from a waft of scalding, sulfurous steam. A chef in a nearby hotel, Jonasson estimates his kitchen staff bake roughly three tons of the sweet, dense rye bread in the hole every summer to meet the growing demand, mostly from tourists, for the exotic carb. The bread"s price tag — up nearly 20% from last year — has led to some clucking from villagers that the young entrepreneur is cashing in on a local tradition. Jonasson is more pragmatic. "Who are we kidding?" he asks. "This is our living here."

Steam has long powered Icelandic dreams. Pockets of underground water heated by the earth"s core may not be particularly glamorous, but tiny Iceland has spent decades figuring out useful ways to harness its heat and power, employing it for everything from baking bread to turning turbines. Geothermal power now provides cheap, clean heat to more than 90% of Icelandic homes, and generates 30% of the nation"s electricity, a slice worth roughly $120 million. In recent years, as Icelanders became smitten with the idea that their ambitious banks could create a global financial center in the far north Atlantic, geothermal power got pushed out of the spotlight. But now, with the krona down 44% against the dollar compared to a year ago and most of Iceland"s banks close to bankruptcy, this nation of 313,000 is taking another look at the incredible resource boiling away underfoot.

It helps that global investment in renewable energy was up 60% last year. The number of projects using geothermal power has lagged behind wind, solar and biofuels for many years. However, since 2004, projects in the U.S. have doubled, and countries such as Indonesia have set ambitious goals for geothermal generation. The financial crisis has hit the renewables sector, to be sure, but analysts say that thanks to U.S. President-elect Barack Obama"s green-energy agenda, and recent G-8 goals to cut carbon emissions by 50% by 2050, the industry will come back strong. "I have people calling me asking, "Where should I put my money? Who do I invest in?" " says Mark Taylor, a geothermal analyst with renewable-energy-research firm New Energy Finance. "I"m still pretty optimistic about everything."

So is Iceland. Though they expect credit-crunch delays, the nation"s domestic power firms are sticking with plans to nearly treble the geothermal power Iceland produces in a bid to woo companies like aluminum giant Alcoa and tech heavyweight Google. Internationally, a new crop of Icelandic investment firms have started pumping money into projects, offering partners from Djibouti to the Philippines capital, skills and — perhaps most importantly — a sense that this also-ran of renewable energy is really viable. "I think [geothermal power] is the paramount moral obligation of Iceland in the modern world," President Olafur Grimsson told TIME. "There are over 100 countries that could do the same thing we have with their resources. This is the area in which we can really contribute."

Ten minutes up the road from Jonasson"s bread ovens, over some low hills, a series of dense white steam plumes rise into the cloudy sky. In a flannel shirt and hard hat, Birkir Fanndal maneuvers his truck over one of the dirt roads that crisscross Iceland"s first major geothermal power station, Krafla. Soon after the inaugural borehole was drilled here 34 years ago, the first in a series of volcanic eruptions rocked the area. The eruptions, nine in all, went on for nearly a decade, sending engineers scrambling to keep up with the shifting earth. Fanndal, the plant"s manager, stops his truck in front of a crater where, without warning, one early drill hole imploded into a cauldron of boiling water that took half a year to settle down. "There were a lot of people who said we should leave this place," Fanndal recalls.

They didn"t, and their tenacity is paying off. Krafla recently became the site of a pilot project to drill extremely deep boreholes (classified as three miles or more), a frontier technology that could yield five to 10 times more energy per borehole than any similar project in the world. Landsvirkjun, the state utility that owns Krafla, has also been in talks to supply power to an aluminum smelter that Alcoa plans to build nearby. The financial downturn has put that project on hold for now, but Alcoa, which already has one smelter in Iceland, still sees the country as a site for cheap, power-intensive smelters. By going geothermal, which has less impact on the environment, Alcoa believes it can mitigate the hundreds of thousands of tons of carbon dioxide a smelter emits every year. "If you compare the offset, it"s six to eight times cleaner to produce here" than in a location where a smelter would get electricity from a coal- or oil-based source, says Tomas Mar Sigurdsson, general manager of Alcoa Iceland.

Iceland knows a bit about kicking the fossil-fuel habit. At the turn of the last century, life on the isolated island was bleak. It had been among the poorest nations in Europe for centuries, and a smoky haze choked Reykjavik, thanks to the coal inhabitants burned during the interminable winters. In the 1930s, Icelandic engineers successfully diverted underground water to heat an elementary school, and the rest of the capital slowly followed suit. When the global oil crisis hit in the 1970s, efforts to turn this local resource into electricity — by drilling holes into underground heat pockets and reservoirs to release pressurized steam that then runs turbines — moved into high gear. Today, if it"s not raining or snowing (or both), views from Reykjavik"s harbor are relatively clear. Icelanders hope steam can pull them through tough times again. "The Icelandic power industry will be one of the pillars to carry us out of this crisis," says Asgeir Margeirsson, CEO of Geysir Green Energy. As Thorunn Sveinbjarnardottir, Iceland"s Environment Minister, puts it: "Icelanders think about this resource in almost biblical terms."

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