Raser Technologies Inc. long has boasted its new Hatch geothermal power plant near the west-central Utah city of Beaver would launch a new era of energy production -- one in which electricity would be produced from low-temperature underground water that wasn't viewed as hot enough to produce power.
Yet six months after Raser flipped the switch on the plant and began generating power, the company is buying almost as much electricity to keep the place running as the plant is producing.
The problem: The plant can't operate at full capacity because its production wells are producing geothermal water that isn't hot enough, even though its temperature is higher than the 180 degrees Raser initially said it would need.
"We've run into a few challenges with some of our wells, but we now are reworking them to try and optimize the heat we're getting. Also, we will soon be bringing another [geothermal] well on line," said Issa Arnita, a Raser spokesman.
He said Raser is hoping the new and reworked wells will produce water with temperatures around 280 degrees, and that everything will be completed so the plant can operate at full capacity by the end of the year.
Raser's $103 million plant, which is named after U.S. Sen. Orrin Hatch, currently is producing and selling 5 megawatts of electricity to the city of Anaheim, Calif. Raser, though, is buying just under 4 megawatts from Rocky Mountain Power to run the plant.
The facility uses a new technology that has been described as similar to an air-conditioning system that runs in reverse. Hot water goes in and is used to heat a fluid that turns a turbine. Kilowatts and cooled water come out.
At full capacity, Raser contends the plant will produce around 14 megawatts of electricity -- 10 megawatts will be sold to Anaheim, and 4 will be used to run the plant and the pumps on its geothermal wells.
In its latest quarterly report filed with the U.S. Securities and Exchange Commission, Raser said it expects the additional construction and drilling costs will be approximately $10 million -- although the company noted it can't be certain its efforts will fix the problem.
Securities analyst David Phillips, a long-time Raser skeptic and Internet blogger who operates under the "10Q Detective" moniker, said Raser so far has been a lot better at selling its stock and raising money than actually delivering megawatts of electricity.
Just two months ago, Raser raised $23.8 million by selling 13 percent of its stock to a group of institutional investors. The company said the money will be used to help finance plans to develop future geothermal power plants.
"For Raser, everything is always going to be better next quarter," Phillips said. "It is a lot like the shifting sand. They always are off pointing to the next big thing. And I'm sure they're not through raising money yet."
In its quarterly report, Raser reported that it still will need to find additional financing to pay its bills so it can continue to operate. And it noted the $23.8 million it raised was "not sufficient to satisfy a meaningful portion of our financing needs for the foreseeable future."
Earlier this month, the company disclosed the U.S. Department of Energy had denied a loan-guarantee application for the future development of a new geothermal plant roughly six miles east of its Hatch plant in Beaver County.
The DOE stated that it believed the project "possesses fundamental strength but would benefit from continued development."
"They [the DOE] wanted a project that was further along in its development," Arnita said. "It wasn't a comment on our technology."
Anaheim's Integrated Resource Manager Steve Scior- tino said the city is eagerly waiting for Raser to provide the additional 5 megawatts of power it has promised from its Utah plant.
"We've been satisfied with the power they have been giving us," Sciortino said. "We understand they have run into some problems but are working to fix them."
Sciortino said, though, there is nothing in the city's contract with Raser that would penalize the company if it is unable to deliver the power.