FOUR geothermal companies have had to give up multimillion-dollar grants from the government to help pay for project drilling because they have been unable to attract matching funds from private investors. The failure of the companies to attract private funds has prompted the Labor government to close its drilling grants scheme and put the unused money into a $126 million emerging renewable energy program launched by the Energy Minister, Martin Ferguson, yesterday.
The geothermal drilling program offered companies $7 million grants to help test hot rock temperatures, up to five kilometres underground.
In a statement to the stock exchange yesterday, Green Rock Energy, Greenearth Energy, Hot Rock Ltd and Torrens Energy said tough market conditions and the design of the grants had contributed to their failure to attract matching finance.
The troubles of the four companies - two of which have projects in Geelong and Koroit in Victoria - means only one company, Geodynamics, will receive a grant from a second round of the $50 million drilling program for a Hunter Valley project.
Two other geothermal projects - both in South Australia - which were awarded grants in the first round of the scheme were able to match the $7 million. The chief executive of the Australian Geothermal Energy Association, Susan Jeanes, said she was very concerned the four companies would have to give up grants.
She said geothermal projects had large upfront costs that private markets are often unwilling to commit to. She said future grants had to be redesigned to take the needs of the industry into account.
The new renewables program announced yesterday will fund solar, ocean and geothermal energy technologies.
Mr Ferguson said a third of the scheme's funding was expected to be committed to geothermal projects following the closure of the drilling scheme.
He said the program had a ''flexible design'' which would ensure ''government support is tailored to the needs of industry as they evolve over time, while also putting in place the appropriate safeguards for taxpayer-funded investments''.
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