Salton Sea geothermal plant would use lithium tech that caught Tesla's eye
After years of false starts and disappointments, the Salton Sea lithium story may get a happy ending after all.
The next few months will be crucial.
To recap: In 2014, Elon Musk's Tesla Motors offered $325 million to buy Simbol Materials, a clean-tech startup that had developed technology to extract lithium — a key ingredient in electric car batteries — from the geothermal brine by the southern shore of the Salton Sea, in California's Imperial Valley. But the deal fell apart, with many observers blaming mismanagement at Simbol.
Within a few months, the cash-strapped startup had fired most of its employees and ceased operations. That was disappointing news for the Imperial Valley, an impoverished region increasingly besieged by health problems stemming from the shrinking Salton Sea. Local officials had hoped Simbol Materials would create hundreds of jobs and help fund efforts to restore the ailing lake.
Now a new startup has acquired Simbol's technology. And it's partnered with Australian developers who are trying to build a massive geothermal power plant, which would be the region's first new geothermal facility in years. Together, the companies hope to start producing climate-friendly energy — and enormous quantities of valuable lithium — as soon as 2021.
"This year's actually the year we get down and dirty and covered in hydraulic fluid," said Rod Colwell, CEO of the Australian firm, Controlled Thermal Resources. "It's exciting to actually get on site."
Last year, Colwell's firm leased 1,880 acres from the Imperial Irrigation District, which owns the land where their project would be built. It's a desolate place — muddy, foul-smelling and punishingly hot for much of the year. Some of the land used to be covered in water, but the lake is receding fast. Several of the area's 11 geothermal plants can be seen belching steam in the distance.
Colwell originally planned to drill exploratory wells last fall, but the government approval process has taken longer than expected. Company officials now say they hope to start drilling in May, after getting their conditional use permit from Imperial County in the next month or two.
"We're 95 percent done, we’re just waiting on some final archaeological reports," said Jason Czapla, the firm's chief engineer, who moved from Australia to El Centro to oversee operations last year.
Until those exploratory wells bore down thousands of feet into the hot geothermal reservoir, the project only exists on paper. But Colwell and his lithium partners have big ambitions.
Controlled Thermal Resources recently signed a development agreement with Alger Alternative Energy, which acquired Simbol's technology after the startup landed in receivership, a process similar to bankruptcy. Under their deal, Alger would extract lithium and other minerals from the geothermal brine that Controlled Thermal uses to generate electricity, then sell those minerals to third parties.
Critically, Alger officials say they've secured financing to build a full-scale lithium plant — and a 10-year contract to sell the lithium, in huge quantities that would reshape global lithium markets. The contract is with TZK Ventures, which itself is a partnership between Talon Technologies Group, a Washington, D.C.-based technology firm, and China-ZK, a state-owned energy company in China.
Martin Lockhart, Talon's chief executive, said TZK Ventures would in turn sell the lithium carbonate to buyers in Asia, where his company and China-ZK already have relationships. They'd have no shortage of buyers: Lithium is a main component of the lithium-ion batteries that power electric cars and energy storage systems for homes and utilities, and demand for those batteries is expected to skyrocket as the world transitions fossil fuels to cleaner forms of energy. In a December 2015 report, the investment bank Goldman Sachs described lithium as "the new gasoline."
Global production of lithium carbonate has been estimated at about 175,000 metric tons in 2015. Alger's contract with TZK Ventures calls for the startup to deliver 60,000 tons of the stuff per year.
"All of the pieces are in place right now, and we're very confident," Lockhart said last week during an interview at the posh Westin Mission Hills in Rancho Mirage, where he was staying.
mperial Valley residents have heard those kinds of promises before. In early January 2015, Simbol's vice president of business development, Tracy Sizemore, said at a public meeting that the startup would soon hire 400 people for the construction of its large-scale lithium extraction plant. But by the end of the month, the company had fired 38 people — the vast majority of its staff.
The consensus among people who have worked with Simbol or its successor company is that the proprietary technology worked as advertised, producing high-quality lithium at a demonstration plant in Calipatria. But Simbol's dramatic collapse still looms large over Alger's effort to revive the technology, in part because Sizemore, the former Simbol executive, founded the new company.
Lockhart insisted Sizemore and his new team know what they're doing, or else he wouldn't have signed a contract with them. He said the technology's been vetted by several third parties.
"I get the whole rain cloud from Simbol," Lockhart said. "That is a fiasco the likes of which business schools will be teaching classes about for generations. But the corner's been turned.”
If Lockhart, Sizemore and Colwell's vision comes true, it would be a boon for Imperial County, which has California's highest unemployment rate, often as high as 25 percent, and one of its lowest median household incomes, about $41,000. The region also has some of the state's highest rates of asthma hospitalizations and emergency room visits for children. That problem is expected to get worse in the coming years due to the shrinking of the Salton Sea. As the waters recede, vast stretches of dry lakebed are being exposed, allowing powerful winds to kick up dust, polluting the air.
Local officials have long seen new geothermal plants as critical to improving the region's economic fortunes, and to covering up exposed lakebed as the shoreline recedes. The underground reservoir that happens to lie beneath the Salton Sea's southern shore is arguably the world's most powerful geothermal hot spot, with mineral-rich water heated to temperatures as high as 700 degrees Fahrenheit by the Earth's natural heat. Tapping that sizzling brine for energy production is a renewable process that doesn't create the carbon pollution that drives climate change.
But geothermal development has slowed in recent years due to the high up-front costs of building a plant, with only one new facility opening in the area since 2000. Controlled Thermal Resources thinks it can secure financing for the project by going big, and reaping economies of scale. Colwell has said the company's 280-megawatt plant — dubbed "Hell's Kitchen," after a restaurant that operated in the area in the early 1900s — would cost $850 million to build, compared to the $400 million another company spent to build the 50-megawatt Featherstone plant, which opened in 2012.
The lithium partnership with Alger should improve the economics of Hell's Kitchen even more, Colwell said, giving the Australian company an additional revenue stream.
"We conducted a thorough investigation of technologies. The closest we could come to a proven technology was Simbol Materials," Colwell said.
Hell's Kitchen might have another unique feature: the ability to shut down when solar farms are flooding California's power grid with electricity during the middle of the day.
As California barrels toward a clean-energy future — state law requires utilities to get 50 percent of their electricity from renewable sources by 2030 — grid operators have increasingly faced a novel challenge: too much solar power. Solar farms reach peak production during the middle of the day, when the sun is highest in the sky, sometimes generating so much energy that they're forced to shut down because there's not enough demand for all that electricity. But production then tapers off in the evening, right when electricity demand is ramping up as people get home from work.
That leaves a big gap in energy supply that grows as the sun goes down. For now, the state has filled that gap largely by building expensive, polluting "peaker" plants fueled by natural gas.
Geothermal plants are traditionally designed to generate electricity around the clock. But Colwell's team is working on a design that would allow them to limit production during the middle of the day, when the grid has plenty of solar power, then ramp back up in the evening. That would allow utilities to complement solar with climate-friendly geothermal, rather than climate-altering natural gas.
"It's basically just a new twist on the existing technology," said Jim Turner, a longtime Salton Sea geothermal executive who led the development of EnergySource's Featherstone plant, and who now works for Controlled Thermal Resources as its business development manager. "It hasn't been done at the Salton Sea — there hasn't been a need for it. But there is today."
Geothermal is far from the only way for California to meet its clean energy targets without using more natural gas: Smarter energy management, such as using more electricity during the middle of the day and less at night, is one of the cheapest options, as are energy efficiency and conservation. The Golden State could also import low-cost wind energy from Wyoming, which could help power California during periods when in-state wind and solar farms go offline. Energy storage technologies like batteries are likely to play a role, too.
Still, some clean energy advocates say California would benefit from new geothermal development, even though it's one of the more expensive options.
"Nothing we do in life is 'put all your eggs in one basket' — you don’t buy stock that way. You diversify," James Caldwell, a senior technical consultant at the Center for Energy Efficiency and Renewable Technologies, a Sacramento-based clean energy trade group, told The Desert Sun last year. "And nature rewards people who diversify. This is the same thing."
For Controlled Thermal Resources, nothing is certain until the company drills exploratory wells, confirms that the geothermal resource is adequate, goes through a lengthy permitting process at the California Energy Commission, secures financing, signs a contract with a utility and builds the plant. Czapla said construction isn't likely to begin until 2019, with Hell's Kitchen coming online in 2021.
If all that happens, Controlled Thermal could launch a new wave of geothermal development in the region, with a focus on lithium production and more flexible power plants. There's plenty of room for new projects: Estimates of untapped geothermal potential at the Salton Sea range from 1,500 to nearly 3,000 megawatts, on top of the 400 megawatts that have already been developed.
New geothermal plants could cover up exposed lakebed, limiting air pollution, and create much-needed jobs. They would also generate revenue. Under the terms of its lease, Controlled Thermal must pay the Imperial Irrigation District $40,000 per year during exploration, $230,000 per year once construction begins and royalties between 3 and 4 percent on any electricity or minerals it sells.
Alger and Controlled Thermal aren't the only Salton Sea firms working on lithium. EnergySource, which owns the Featherstone plant, started testing its own lithium extraction process last year, leading to an infusion of cash from a Texas-based investment firm, Mills Capital Group. Mills increased its ownership stake in EnergySource and is funding further testing of the lithium technology.
EnergySource President Eric Spomer told The Desert Sun in October that he expected the tests to take about six months. What differentiates his company's lithium extraction process from Simbol's, he said, is that it isn't totally new technology. EnergySource purchased several existing technologies, all of which have been proven elsewhere, and used its knowledge of the highly corrosive Salton Sea brine to tweak them so they work here, he said.
"Not one thing we’re doing individually is patentable by us or anybody else. It’s all stuff that’s off the shelf, but it’s uniquely applied to our brine," Spomer said last year. "Our whole goal is to be able to finance it. Being a science experiment is hard to finance."
Source: The Desert Sun