The Global View

Raser, Merrill Lynch agree geothermal financing


Jules Verne is clearly a fool. If you journey to the centre of the earth, you do not in fact find dinosaurs and such like. You’re more likely to find Merrill Lynch these days, after the company agreed to cough for some geothermal financing.

Merrill Lynch is now going to raid its change jar to finance 155 MW of geothermal power projects conducted by Raser Technologies. If all goes well, then Raser reckons it will be able to generate 100 MW per year for the first three years of its geothermal power production effort, and 150 MW each year after that.

Here’s some highlights from the new friendship:

Raser expects to receive approximately $4 million per year in cash fees and distributions, along with other tax benefits, during the first three years of operations from the 10.5 MW power plant after maintenance, operating expenses and debt service, and approximately $2.5 million per year in cash fees and distributions during the first ten years of operations. After the debt is retired in year 15 of the project, Raser expects to receive net distributions of approximately $3.5 million per year for the remaining life of the project.

• Raser expects subsequent power plants developed under this agreement to have similar economics.

• The plant is expected to be placed in service no later than the third quarter of 2008.
The financing commitment for the first 10.5 MW project is up to $44 million, in the form of 15-year, fully amortizing fixed rate notes, to fund approximately $33 million of total construction costs, in addition to a letter of credit, reserve accounts, accrued interest, transaction fees and other costs.