Geothermal power developer Raser Technologies, Inc. (NYSE: RZ) announced today that it has reached an agreement with Evergreen Clean Energy LLC for the structuring and financing of well field development for up to 100 megawatts (MW) of geothermal power projects.
Under terms of the non-exclusive agreement, Evergreen is expected to provide approximately $30 million in financing for each power project funded, with final amounts for each project based on the expected capacity of the project. Evergreen’s funding commitment on a project by project basis is subject to additional project-specific due diligence and satisfaction of certain conditions by Raser, including certain permitting requirements and exploration efforts.
For the typical 20 MW project, Raser and Evergreen expect the financing commitment to be approximately $25 million to fund drilling and another $5 million paid to Raser in exchange for Evergreen’s participation rights in the project. In return for its investment, Evergreen will receive an equity interest of approximately 50% in each power project and will receive a 15% preferred return on the capital invested. The agreement also provides that Evergreen will receive warrants to purchase shares of Raser’s common stock in connection with the funding of each power plant project. The total amount of warrants to be issued will be dependent upon the amount of funding provided.
Raser expects to initially seek funding under the agreement to develop the Lightning Dock, New Mexico and Thermo, Utah resources, which collectively have the potential to support up to approximately 250 megawatts of power generation. However, Raser may seek funding for other sites selected for development if consistent with the agreement and Raser’s development plans.
Principal Executive Officer, Richard Clayton stated, “The agreement is designed to fund 100% of project drilling costs for projects that meet applicable conditions, which could allow Raser to build multiple power plants without having to raise significant new sums of money for well field development. We are excited to be partnering with a forward-thinking financing source like Evergreen and believe this model will provide tangible financial benefits for both entities.”
Dean Rostrom, co-founder of Evergreen Clean Energy LLC, commented, “This partnership enables us to actively participate in the development and commercialization of geothermal energy, an area we believe to have tremendous potential in the coming years.”
In September, Raser suffered a setback when the Department of Energy denied its application for a loan guarantee to develop its East Thermo project.
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