Geothermal IM

ENSIVE
COMPREHENSIVE
COMPREHENSIV
Information Memorandum
Terratherma
March 2010
TM
LTD
SUSTAINABLE GEOTHERMAL ENERGY
Terratherma
LTD
TM
IMPORTANT INFORMATION: This Information Memorandum contains important information and requires your careful attention. It
should be read in its entirety. If you are in doubt as to its contents or the course of action you should take (if any), you should consult your
stockbroker, accountant, solicitor or other professional adviser immediately.
Ensure you read the IMPORTANT NOTICES section at the front of this Information Memorandum prior to reading the rest of this report or
making any decisions whatsoever in relation to the content contained herein.
NO RECOMMENDATION - The provision of this concise Information Memorandum is not and should not be considered an offer for
securities in the company, or as a recommendation in relation to an investment in the Company or its Projects, or that an investment in the
Company or its Projects is a suitable investment for the recipient or any other party.
Terratherma
Geothermal
Project Areas
Project Locations
Terratherma Ltds geothermal interests are located within
the world-class, highly prospective South Australian
Heat Flow Anomaly (SAHFA). A strategic selection of
16 geothermal exploration licences (GELs) is held by
Terratherma Ltd in 3 key geological provinces, covering
an area on 7923km2.
Project Rationale
Terratherma Ltd has secured geothermal project
areas with potential for the integrated utilisation of
geothermal resources, specifically; electricity production,
desalination and hydrogen production.
Project Equity & Partners

Terratherma Ltds holds a 100% equity interest in all of
its geothermal exploration licences, except GEL185
where Origin Energy Limited (ASX: ORG) is earning a 70%
interest through a joint venture agreement.
Company Status
Terratherma Ltd is a 100%, wholly owned subsidiary of
Australian Securities Exchange (ASX) listed, Eden Energy
Ltd (ASX: EDE).
Information Memorandum Development

The Terratherma Geothermal Project Information
Memorandum (TGP-IM) and Financial Model (TGP-FM)
was developed by Activated Logic in conjunction with
Terratherma Ltds parent company, Eden Energy Ltd, in
February 2010.
(South Australia)
Courtesy of: Mike Bee
v3.12. March 22, 2010
Sunrise over Port Augusta
Terratherma
TM
LTD
TERRATHERMA LTD I INFORMATION MEMORANDUM I

Important Notices
Please read this section carefully.
Confidentiality
The information contained in this concise Information Memorandum is being provided on a confidential basis to the recipient
solely for the purposes of general information or potentially evaluating an investment in Terratherma Ltd (the Company) or its
Projects (the Project/s).
By accepting a copy of this Information Memorandum the recipient agrees, for itself and its related bodies corporate and each of
their management, officers, employees, agents, representatives and advisers, to maintain the confidentiality of this information.
Any reproduction or distribution of this Information Memorandum, in whole or in part, or any disclosure of its contents, or use of
any information contained in this Information Memorandum for any purpose other than to evaluate a potential investment in the
Company or its Project/s, is strictly prohibited.
Aspects of this Information Memorandum contain proprietary intellectual property including but not limited to the AGITM, alBOSSTM, al-SIAMTM, GAMTM and al-I&PITM developed by Activated Logic Pty Limited and utilised for the purposes of examining and
progressing the advancement of Terratherma Ltds Projects. All aspects of these methodologies, including their existence and
application should be treated as commercial in confidence at all times and should not be disclosed to any parties under any
circumstances. All sections of this Information Memorandum are considered confidential, including all supplementary materials.
Status of Information Memorandum

The information contained in this Information Memorandum or subsequently provided to the recipient whether orally or in writing
by, or on behalf of the Company, or any of their respective management, officers, employees, agents, representatives and advisers
(the Parties) is provided to the recipient on the terms and conditions set out in this notice.
The information contained in this Information Memorandum has been furnished by the Company and other sources deemed
reliable but no assurance can be given by the Parties as to the accuracy or completeness of this information.
To the full extent permitted by law:
(a)
no representation or warranty (express or implied) is given; and
(b)
no responsibility or liability (including in negligence) is accepted,
by the Parties as to the truth, accuracy or completeness of any statement, opinion, forecast, information or other matter (whether
express or implied) contained in this Information Memorandum or its appendices or as to any other matter concerning them.
Recipients of this information are advised that the forecasts included in this Information Memorandum are forward-looking
statements and therefore are inherently speculative. Due to the subjective judgements and inherent uncertainties of statements
about future events, there can be no assurance that the Projects and/or Companys actual future results, or subsequent forecasts,
will not vary significantly from the forecasts and other forward-looking statements set out in this Information Memorandum. The
inclusion of the forward-looking statements set out in the Information Memorandum should not be regarded as a representation
or warranty with respect to their accuracy or the accuracy of the underlying assumptions or that the Company and its Projects will
achieve or is likely to achieve any particular results.
For a detailed list of the key risks, refer to Chapter 24 of this Information Memorandum.
Disclosure Notice
The publisher of this Information Memorandum, Activated Logic Pty Limited ABN 62 134 740 293 (Activated Logic), its directors,
officers, staff and their associates from time to time may hold investments in the securities mentioned in this publication and as a
result may benefit from any change in price of the relevant securities. Activated Logic and its advisers may earn brokerage, fees,
commissions, other benefits or advantages as a result of a transaction arising from any research or opinions mentioned in this
publication and distributed to existing and potential clients. Activated Logic may have provided corporate advice within the past
and may continue to provide corporate advice to companies (or related parties) concerned, for which Activated Logic may have
received gross fees and/or continue to receive fees.
No Recommendation
The provision of this Information Memorandum is not and should not be considered an offer for securities in the company, or as a
recommendation in relation to an investment in the Company or its Projects or that an investment in the Company or its Projects is
a suitable investment for the recipient. THIS INFORMATION MEMORANDUM DOES NOT CONSTITUTE INVESTMENT ADVICE.
Investor Enquiries
This Information Memorandum does not purport to provide all of the information the recipient may require in order to evaluate an
investment in the Company or its Projects. Recipients should make their own enquiries and evaluations they consider appropriate
to verify the information contained in the Information Memorandum and to determine the suitability of a potential investment in
the Company or its Projects (including regarding their investment objectives, financial situation, and particular needs) and should
seek all necessary financial, legal, tax and investment advice.
To the full extent permitted by law, no responsibility or liability (including in negligence) is accepted by the Parties:
(a)
for, or in connection with any act or omission, directly or indirectly in reliance upon; and
(b)
for any cost, expense, loss or other liability, directly or indirectly, arising from, or in connection with, any omission from or
defects in, or any failure to correct any information, in this Information Memorandum or any other communication (oral or written)
about or concerning them, or the issue of securities in the Company.
The delivery of this Information Memorandum does not under any circumstances imply that the affairs or prospects of the Company
or any information affecting it have been fully or correctly stated in this Information Memorandum or have not changed since the
date of this Information Memorandum or since the date at which the information is expressed to be applicable. No responsibility
or liability (including in negligence) is assumed by the Company for updating any such information or to inform the recipient of any
new information of which the Company may become aware.
Contact Details
For additional information or to clarify specific elements of this Information Memorandum contact Eden Energy Limited and
explicitly disclose how and when you obtained details of this Information Memorandum. Additional contact details in, Appendix 4.
Eden Energy Limited
Ph:
+61 (08) 9282 5889
Fax:
+61 (08) 9282 5866
Email: mailroom@edenenergy.com.au
Additional Information
Forward Looking Statements
Refer to the Appendices section of this Information Memorandum, or contact Eden Energy Limited.
This Information Memorandum contains forecasts and other forward-looking statements concerning the Company and its Projects.
These statements are based on a number of assumptions, expectations and estimates developed by the Company and its associates
that, while considered reasonable by the Company, are inherently subject to significant uncertainties and contingencies, many of
which are beyond the Companys control or reflect future business decisions which are subject to change.
RECIPIENTS OF THIS INFORMATION MEMORANDUM ARE CAUTIONED THAT THE COMPANY AND ITS PROJECTS ARE AT AN
EARLY STAGE OF DEVELOPMENT AND THAT ANY INVESTMENT IN THE COMPANY AND ITS PROJECTS CARRIES POTENTIALLY
SIGNIFICANT RISKS.
I INFORMATION MEMORANDUM I TERRATHERMA LTD
Table of Contents
1.
1.1.
1.2.
The Vision - Terratherma Ltd
..............................................
13
Executive Summary - Terratherma Ltd
..............................................
15
Energy - The Global Challenges
..............................................
18
Renewable Energy - An Emerging Sector
..............................................
21
The Foundations
The Future
2.
2.1.
Introduction
3.
3.1.
3.2.
3.3.
3.4.
3.5.
Introduction
The Emissions Challenges
Fossil Fuel Dependency
ETS & Transition to Cleaner Fuels
Australian CO2 Emissions Targets
4.
4.1.
4.2.
4.3.
4.4.
4.5.
4.6.
4.7.
Introduction
Reduced Emissions Intensity
Installed Renewable Energy Capacity
Renewable Energy Development Drivers
Technology Capacity Factors
Geothermal Advantage
Issues with Intermittent Power
5.
5.1.
5.2.
5.3.
21
21
22
22
23
23
23
24
Electricity - The Australian Market
..............................................
28
Introduction
Opportunities & Challenges
Industry Structure
Market Structure
Electricity Production
Electricity Transmission Infrastructure
7.
Electricity - The South Australian Market
..............................................
Introduction
Electricity Infrastructure
Electricity Demand Outlook
Renewable Energy Contribution
Opportunity for Geothermal Projects
8.
18
18
19
19
20
..............................................
6.1.
6.2.
6.3.
6.4.
6.5.
6.6.
7.1.
7.2.
7.3.
7.4.
7.5.
15
Renewable Energy - Investment Perspectives
Historical Performance
Inflows by Investment Type
GFC Implications
6.
13
13
Renewable Energy Target - Implications
..............................................
8.1.
8.2.
8.3.
8.4.
8.5.
Introduction
Expanded MRET
Renewable Energy Certificates (RECs)
Renewable Energy Certificate Prices
Carbon Pollution Reduction Scheme
9.
Electricity - Historical & Forecast Pricing
..............................................
24
25
25
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14.
14.1.
14.2.
14.3.
14.4.
14.5.
14.6.
14.7.
14.8.
14.9.
14.10.
15.
15.1.
15.2.
15.3.
15.4.
15.5.
15.6.
15.7.
15.8.
15.9.
15.10.
16.
16.1.
16.2.
16.3.
17.
17.1.
17.2.
17.3.
18.
18.1.
18.2.
18.3.
19.
19.1.
19.2.
19.3.
20.
20.1.
20.2.
20.3.
20.4.
9.1.
9.2.
9.3.
9.4.
9.5.
Introduction
NEM Activity
The NEM & Spot Market Prices
Interstate Electricity Price Comparison
Forecast Electricity Prices
10.
Geothermal - Integrated Applications
..............................................
40
40
40
40
21.1.
21.2.
21.3.
21.4.
21.5.
Desalination - Integrated Geothermal Application
..............................................
41
22.
10.1.
10.2.
10.3.
Introduction
Opportunity
Optimisation Benefits
11.
11.1.
11.2.
11.3.
11.4.
11.5.
11.6.
11.7.
Introduction
Desalination Technologies
Integrated Geothermal Desalination
South Australian Water Market
Water Capacity Additions
Terratherma Ltd Desalination
Terratherma Ltd Opportunity
12.
Hydrogen - Integrated Geothermal Application
12.1.
12.2.
12.3.
12.4.
12.5.
12.6.
12.7.
..............................................
Introduction
Hydrogen Production Methodologies
Direct Geothermal Hydrogen Production
Integrated Hydrogen Production
Terratherma Ltds Hydrogen Advantage
Terratherma Ltd - Medium Term Market Opportunities
Terratherma Ltd - Long Term Market Opportunities
13.
Geothermal Energy - Overview
13.1.
13.2.
13.3.
13.4.
..............................................
Introduction
Major Geothermal Energy Systems
Installed Global Geothermal Capacity
Forecast Global Geothermal Capacity
36
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37
13.5.
13.6.
13.7.
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21.
Global Geothermal Market Structure

Geothermal Technology
Enhanced Geothermal Systems (EGS)
57
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59
Geothermal Energy - Australia
..............................................
62
Terratherma Ltd - The Geothermal Journey
..............................................
72
Geothermal Project - Bollards Lagoon
..............................................
80
Geothermal Project - Moomba North
..............................................
84
Geothermal Project - Coorichina
..............................................
88
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92
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98
..............................................
101
Introduction
Identifying Geothermal Resources
Current Installed Capacity
Geothermal Heat Flow & Temperature
Geothermal Exploration Activity
Geothermal Market Development
Geothermal Market Expansion
Transition to Commercial Deployment
Financing Geothermal Market Expansion
Geothermal Energy Market Dynamics
Corporate Overview
Company History
Corporate Vision
Corporate Strategy
Segmented Geothermal Applications
Terratherma Ltds GEL Portfolio
Cost Implications of Deep Drilling
Terratherma Ltds Focus on the SAHFA
Geothermal Assessment MatrixTM
Geothermal Project Screening
Project Overview
Location & Geology
Commercial Potential
Project Overview
Location & Geology
Project Overview
Location & Geology
Geothermal Project - Pirie
Project Overview
Location & Geology
Geothermal - Commercialisation
Introduction
Geothermal Resource Delineation
Geothermal Value Creation
Geothermal Financing
Geothermal - Conceptual Development
Introduction
100MW Electricity Generation Scenario
Conceptual Development Parameters
Commercial Development Pathway
Electricity Generation Assumption
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103
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103
22.1.
22.2.
22.3.
22.4.
22.5.
22.6.
22.7.
22.8.
22.9.
Introduction
Project Scale
TGP-FM Overview
100MW Scenario - Data Inputs
100MW Scenario - Data Outputs
TGP-FM - Operational Sensitivity
TGP-FM - Price Sensitivity
Advantages of Integrated Geothermal
Summary of TGP-FM Implications
Geothermal - Conceptual Financial Analysis (TGP-FM) ..............................................
105
23.
Conclusion - Opportunities & Challenges
..............................................
112
24.
105
105
105
106
108
109
110
111
111
24.1.
24.2.
24.3.
Risks Specific to the Company

General Investment Risks
Other RIsks
Risks
..............................................
114
25.
Definitions
..............................................
120
26.
References
..............................................
122
Appendices
..............................................
125
114
119
119
Schedule of Figures
Figure 1 - Terratherma Ltd Project Development Schematic
Figure 2a - Global Atmospheric CO2 Concentration (last 800,000 years)
Figure 2b - World Energy Demand (1980 - 2030)
Figure 3 - CO2 Emissions by Conventional Fuel Type (CO2 emissions g/kWh)
Figure 4 - Australian 2020 Emissions Target Range (5-15 and 25% reduction scenarios)
Figure 5 - CO2 Emissions by Renewable Technology (CO2 emissions g/kWh)
Figure 6 - World Renewable Energy Generation (2000 - 2050) (50% Reduction Scenario)
Figure 7 - Typical Capacity Factors (various generation technologies)
Figure 8 - Renewable Energy (NEX) Index (comparison with Oil in US$ billions)
Figure 9 - Global new investment in renewable energy (US$ billions)
Figure 10 - Global Equity Investment in Renewable Energy (US$ billions)
Figure 11 - Global VC & PE Investment in Renewable Energy (US$ billions)
Figure 12 - Global Debt Financing of Renewable Energy (US$ billions)
Figure 13 - Electricity Market Structure
Figure 14 - Australian Electricity Generation (2006-07)
Figure 15 - Major Electricity Infrastructure Map (Australia)
Figure 16 - Electricity Transmission Map (South Australia)
Figure 17 - Electricity Supply & Demand Balance (S.A.)
Figure 18 - Electricity Supply & Demand Balance (South Australia)
Figure 19 - Renewable Electricity Generation (Australia)
Figure 20 - Wind Capacity Factors (South Australia)
Figure 21 - Wind Contribution during Peak Demand (South Australia)
Figure 22 - Forecast Renewable Energy Generation (As determined by MRET)
Figure 23 - REC Price Performance (2008-2009)
Figure 24 - REC Market Schematic (Overview)
Figure 25 - Regional Electricity Market Activity (2007-2008)
Figure 26 - Spot NEM Prices (1999-2008)
Figure 27 - Spot NEM Prices (1999-2008)
Figure 28 - Electricity Price Forecast ($MWh)
Figure 30a - Desalination Pathway Schematic (derived from geothermal energy)
Figure 30b - Technologies
Figure 31 - Reverse Osmosis (process)
Figure 32 - Desalination (Multi-Stage Flash)
Figure 33 - Desalination (Multi-Effect Distillation)
Figure 34 - South Australia Water Allocations (trading intensity)
Figure 35 - Adelaide Desalination Plant
Figure 36 - Terratherma Ltd (Coastal GEL Portfolio)
Figure 37 - Major Water Infrastructure (Adelaide)
Figure 38a - Hydrogen production pathways (derived from geothermal energy)
Figure 38b - Technologies
Figure 39 - Hydrogen production (capacity by method)
Figure 40 - Direct Hydrogen Production (Geothermal)
Figure 41 - Hydrogen Sulphide Damage (Geodynamics)
Figure 42 - Modular Hydrogen Production (Electrolysis)
Figure 43 - Thermochemical Hydrogen Production
Figure 44 - Eden Energy (Hydrogen Technology Inventory)
Figure 45 - SEM Image of Carbon Nanotubes
Figure 46a - Denver Hythane (Emissions Comparisons)
Figure 46b - Hythane Market (Diesel genset)
Figure 47 - Distribution (First Indian Hythane Station)
Figure 48 - System Components (Sensor & Mixer)
Figure 49 - Hydrogen Production (SMR Technology)
Figure 50 - Hythane Bus (MCI Classic Bus, California)
Figure 51 - Hythane Car (Honda Civic - converted by Eden Energy Ltd)
Figure 52 - Hydrogen Internal Combustion Engine (150kW)
Figure 53 - Natural Gas Pipelines (Australia)
Figure 54 - Liquified Natural Gas Tanker (Japan)
Figure 55 - Geothermal Energy Systems (Overview)
Figure 56 - Installed Geothermal Capacity (Global)
Figure 57 - Segmented Geothermal Market (Global)
Figure 58 - Geothermal Development Pipeline (By Country)
Figure 59 - Forecast Geothermal Capacity (Global)
Figure 60 - Segmented Geothermal Market (Global)
Figure 61 - Geothermal Technology Market (Global - 2008)
Figure 62 - Segmented Geothermal Market (By Technology - Global)
Figure 63 - Segmented Geothermal Market (By Technology Maturity - Global)
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Figure 64a - Soultz-sous-Forets EGS Project (France)

Figure 64b - Soultz-sous-Forets EGS Project (Reservoir)
Figure 65 - Landau EGS Project (Germany)
Figure 66 - Geodynamics 25MW CDP & GELs (Australia)
Figure 67 - EGS Installed Capacity & Development Pipeline (Global)
Figure 68 - Birdsville Geothermal Plant (Queensland)
Figure 69 - Earths Crustal Temperature Profile (Various)
Figure 70 - Geothermal Temperature Gradient
Figure 71 - Australian Surface Heat Flow Map (mW/m2)
Figure 72 - Australian Crustal Temperature Map (Est Temperature oC, at 5km depth)
Figure 73 - Australian Geothermal Exploration Licences
Figure 74 - Investment into the Australian Geothermal Sector (2000-2009)
Figure 75 - Australian Geothermal IndexTM
Figure 76 - Australian Geothermal Sector Development (pre-2007 to 2050)
Figure 77 - Forecast Geothermal Development Capacity in Australia (MWe)
Figure 78 - Forecast Geothermal Development (By project stage)
Figure 79 - Forecast Geothermal Development Costs ($/MWe)
Figure 80 - Forecast Australian Geothermal Financing Requirements ($ millions)
Figure 81 - Levelised Geothermal Electricity Generation Costs ($ /MWh)
Figure 82 - Forecast LRMC of Geothermal Energy in Australia by 2020 ($ /MWh)
Figure 83 - Terratherma Ltd Geothermal Evaluation Schematic (Overview)
Figure 84 - Geothermal Energy Utilisation (based on resource temp classification)
Figure 85 - Terratherma Ltd GEL Portfolio* (by region)
Figure 86 - Estimated Drilling Costs Vs Depth (In Australia)
Figure 87 - South Australian Heat Flow Anomaly (SAHFA)
Figure 88 - SAHFA Heat Flow Intensity (Distribution)
Figure 89 - Geothermal Assessment Matrix (GAMTM)
Figure 90 - Bollards Lagoon (Project Location Map)
Figure 91 - Gravity Signature (Blue is low, red is high)
Figure 92 - Seismic Line in GEL 169 (Through Noarlunga-1)
Figure 93 - Granite Depth in GEL 169 (Interpretation)
Figure 94 - Bollards Lagoon (Geothermal Exploration Map)
Figure 95 - Temperature Projection (oC at Noarlinga-1)
Figure 96 - Electricity Transmission Network (Proposed)
Figure 97 - Moomba North (Project Location Map)
Figure 98 - Heat Flow Distribution (Cooper Basin)
Figure 99 - Seismic Line in GEL 185 (75JAV, North-South)
Figure 100 - Depth to Toolachee Formation (Interpreted)
Figure 101 - Depth to Patchawarra Coal (Interpreted)
Figure 102 - Depth to Tirrawarra Formation (Interpreted)
Figure 103 - Depth to Pre-Permian Basement (Interpreted)
Figure 104 - Moomba North (Geothermal Exploration Map)
Figure 106 - Coorichina (Project Location Map)
Figure 107 - Coorichina Project (GELs over regional gravity)
Figure 108 - Torrens Hinge Zone (Interpreted cross-section, north-south)
Figure 109 - Coorichina (Geothermal Exploration Map)
Figure 111 - Pirie (Project Location Map)
Figure 112 - Pirie Regional Gravity (With heat flow values)
Figure 113 - Pirie (Geothermal Exploration Map)
Figure 114 - Torrens Hinge Zone (Interpreted stratigraphy in Port August Region)
Figure 115 - Geothermal Reporting Code (Australian)
Figure 116 - Geothermal Value Creation (Across value chain)
Figure 117 - Geothermal Value Creation (Process schematic)
Figure 118 - Geothermal Financing (By stage of development)
Figure 120 - Terratherma Ltd Conceptual Development Plan
Figure 121 - Power-cycle Thermal Efficiency Gradient
Figure 122 - Validation and Commercial Scale-up Timeline (Conceptual Development)
Figure 123 - TGP-FM (Input Table 1.1)
Figure 127 - TGP-FM (Output Table 2.1)
Figure 128 - TGP-FM (Output Table 2.2)
Figure 129 - TGP-FM (Well Output Sensitivity)
Figure 130 - TGP-FM (Capacity Factor Sensitivity)
Figure 131 - TGP-FM (Electricity Price Sensitivity)
Figure 132 - TGP-FM (Capital Cost per well equiv. Sensitivity)
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Information Memorandum Structure
Part A
Part A The Vision

1.
2.

.....................................
.....................................
13
15
The Vision
Part B Global Energy Markets

3.
4.
5.

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18
21
24
Part C The Electricity Market

6.
7.
8.
9.

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28
31
34
36
1.
..............................................
13
1.1.
The Foundations
..............................................
13
1.2.
The Future
..............................................
13
2.
..............................................
15
2.1.
Introduction
..............................................
15
Part D Integrated Geothermal Applications

10.
11.
12.

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Part E Geothermal Energy

13.
Part F Geothermal Energy in Australia

14.
Part G
Terratherma Ltd Geothermal Strategy
15.
Part H Geothermal Project Overviews

16.
17.
18.
19.



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Part I Commercialising Geothermal

20.
21.
22.
23.

Geothermal - Conceptual Financial Analysis (TGP-FM)
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98
101
105
112
Part J Supplementary Information

24.
25.
26.
Risks
Definitions
References
.....................................
.....................................
114
120
122
.....................................
125
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Part K Appendices

Various
10
Terratherma
TERRATHERMA LTD I INFORMATION
MEMORANDUM I 11
LTD
TM
1. The Vision - Terratherma Ltd

Terratherma Ltds vision is for the company to be recognised as the Australian market leader in the identification,
appraisal and commercialisation of quality geothermal resources, through the integrated utilisation of
geothermal energy in synergistic applications. Terratherma Ltd will seek to leverage its parent company, Eden
Energy Ltds extensive experience in renewable energy, especially in relation to the production of hydrogen.
1.1.
The Foundations
1.2.
Terratherma Ltd has assembled an impressive geothermal

project portfolio consisting of 16 geothermal exploration licences
(GELs) within the highly prospective, South Australian Heat Flow
Anomaly (SAHFA). Terratherma Ltd secured the prime Cooper
Basin GELs in 2004, before the mainstream focus on geothermal
exploration in Australia. The early entry of Eden Energy Ltd (ASX:
EDE) into the Australian geothermal exploration sector, has
provided Terratherma Ltd with an early mover advantage which
was pivotal in being able to attract major Australian energy
company, Origin Energy (ASX: ORG) as a joint venture partner
into the Moomba North project.
Terratherma Ltds GELs are held in three different geological
regions, the Cooper Basin, the Torrens Hinge Zone and the
Flinders Ranges, providing exposure to different geological
formations whilst diversifying risks. Geothermal exploration
activities conducted by Terratherma Ltd support the view that
the GEL portfolio held by Terratherma Ltd is highly prospective for
both Hot-Sedimentary Aquifer (HSA) and Enhanced Geothermal
Systems (EGS).
The strong platform of renewable energy technologies developed
by Eden Energy Ltd, particularly in relation to the production and
use of hydrogen as a fuel, provides Terratherma Ltd with the
capability to unlock the value of the geothermal portfolio.
Figure 1 -
The Future
After more than 5-years of intensive geothermal project

evaluation based on a combination of both technical and
commercial parameters, Terratherma Ltd relinquished projects
which did not meet its high expectations, in order to concentrate
on the core 16 GELs which cover 7923km2 of the SAHFA.
Terratherma Ltd intends to validate existing and identify
additional geothermal prospects within its geothermal
exploration portfolio that may potentially present attractive
development opportunities. Following the prioritisation of
geothermal prospects, Terratherma Ltd plans to obtain sufficient
geological data in order to establish an inferred geothermal
resource. Consistent with the introduction of Origin Energy to
the Moomba North project developed by Terratherma Ltd, as
additional projects reach more advanced stages of development,
the intention is to introduce capable geothermal joint venture,
development partners.
Terratherma Ltd plans to integrate the prospective development
of either desalination and/or hydrogen production capacity
with any potential geothermal development (figure 1) at the
pre-feasibility stage to provide maximum options for optimising
project efficiencies and returns. Terratherma Ltd plans to
specifically leverage its access to hydrogen technologies to
enable the integrated development of geothermal resources.
Terratherma Ltd Project Development Schematic

Exploration
Development
GEOTHERMAL PROJECTS
Geothermal Energy
ELECTRICITY
HYDROGEN
Desalination
WATER
Industrial Steam Turbine

(Dec 2004)
Source: Activated Logic, 2010.
Courtesy of: Siemens AG
12
13
2. Executive Summary - Terratherma Ltd

The substantial geothermal exploration portfolio held by Terratherma Ltd in South Australia, is highly prospective
for the delineation of both conventional and enhanced geothermal systems. Terratherma Ltd intends to attract a
capable joint venture partner and utilise its parent company Eden Energy Ltds technical expertise in renewable
energy, to develop a robust project development case and ultimately to commercialise these geothermal assets.
Terratherma Ltd holds a portfolio of 16 GELs in three separate
geological regions across South Australia, covering an area of
7923km2 of the South Australian Heat Flow Anomaly.
The Federal Governments Mandatory Renewable Energy
Target of 20% renewable energy use by 2020, which is supported
by Renewable Energy Certificates, provides a strong incentive
for geothermal project development.
In order to demonstrate the potential business case for a

geothermal development within Terratherma Ltds geothermal
project area, a detailed conceptual development scenario
based on a 100MW power plant was conducted.
Australia, as envisaged by Terratherma Ltd is in the

order of $100 million.
Terratherma Ltd recently signed a farm-in agreement with

major Australian energy utility, Origin Energy Limited, to explore
the geothermal potential of Terratherma Ltds Moomba North
project.
Terratherma Ltds GELs are highly prospective for both

conventional (HSA) geothermal systems, as well as enhanced
geothermal systems (EGS).
14
conceptual 100MW geothermal development in South
Electricity prices in South Australia are forecast to increase

rapidly due to increased demand, increased fuel costs, and
the imposed costs of carbon abatement. The concentration
of wind farm power generation in South Australia has
created an intermittent and volatile electricity generation
scenario,requiring increased baseload power, providing an
ideal scenario for geothermal development.
Following an extensive geothermal project evaluation

process over a 2 year period, Terratherma Ltd has relinquished
sub-optimal licences and has decided to concentrate on the 16
GELs with maximum geothermal potential.
Courtesy of: Tampa Bay Water
financial modelling indicates that, the NPV of a
Access to capital for geothermal development remains

an ongoing challenge due to the relatively high upfront
exploration and development costs associated with large scale
geothermal projects.
Terratherma Ltd has conducted extensive technical and

commercial analysis on its geothermal project portfolio
including significant geophysical analysis and well log data
interpretation to develop geothermal prospects.
(Feb 2008)
on a range of assumptions, preliminary
Geothermal energy is the only form of renewable energy

suitable for baseload power generation due to the very high
operational capacity factors, typically in the order of 90 - 95%,
particularly for binary cycle geothermal plants.
Electricity demand in South Australia is forecast to increase

substantially during the next decade, with the planned
expansion of giant Olympic Dam mine expected to require an
additional 600MW of electricity.
Seawater RO Desalination
Based
A dynamic financial model, the Terratherma Geothermal

Project Financial Model (TGP-FM) was developed to assess the
commercial potential of the conceptual development scenario.
Despite the high geothermal exploration and development

costs, Terratherma Ltd has identified a number of unique and
logical strategies for improving overall geothermal project
economics, and has validated these concepts through the TGPFM.
The two major differentiating strategies developed by
Terratherma Ltd, involve the potential development of either
hydrogen production and/or desalination, integrated within a
geothermal project.
Terratherma Ltds parent company Eden Energy Limited has
extensive experience in the production, transport, storage
and utilisation of hydrogen. Eden Energy Limited recently
announced the discovery of an innovative hydrogen production
technology based on a pyrolysis process, and has initiated
commercialisation activities with India Oil Corporation Limited,
commencing with scaling-up of the technology.
Terratherma Ltds investigations indicate that the integrated
application of geothermal energy production with either
desalination and/or hydrogen production is expected to deliver
significant efficiencies and economies of scale.
Preliminary financial modelling with the TGP-FM indicates an
integrated geothermal development involving either hydrogen
production or a desalination application are likely to deliver
exceptional economic improvements. The potential economic
value (as measured by NPV) which may be realised by an integrated
geothermal application, was found to be as much as 150%.
15
Part B
Global Energy Markets

3.
..............................................
18
3.1.
Introduction
..............................................
18
3.2.
..............................................
18
3.3.
..............................................
19
3.4.
..............................................
19
3.5.
..............................................
20
4.
..............................................
21
4.1.
Introduction
..............................................
21
4.2.
..............................................
21
4.3.
..............................................
22
4.4.
..............................................
22
4.5.
..............................................
23
4.6.
..............................................
23
4.7.
..............................................
23
5.
..............................................
24
5.1.
..............................................
24
5.2.
..............................................
25
5.3.
GFC Implications
..............................................
25
Geothermal Steam Field

(Sep 2008)
Courtesy of: ISPC
16
Terratherma
MEMORANDUM I 17
LTD
TM
3. Energy - The Global Challenges
3.3.
As the worlds population approaches 7 billion, the insatiable demand for energy in both the developed and
developing economies, particularly India and China, has never been greater. Despite our increased awareness
of anthropogenic climate change and the rapid emergence of the renewable energy sector, we remain heavily
dependent on fossil fuels for both primary energy production and a range of industrial applications.
Introduction
Figure 2b -
Significant population growth in the order of almost 80 million

globally per year, combined with rapid economic development
across the developing world, specifically across Asia, continue
to underpin the unprecedented growth in energy demand.
Whilst we are increasingly aware of the causes and impacts of
climate change, efforts are being made around the world to
limit the growth in greenhouse gas emissions, and in many
cases attempt to reduce ongoing greenhouse gas emissions.
The landmark global agreement for reducing greenhouse gas
emissions is the Kyoto Protocol which was adopted in December
1997, and subsequently signed by 187 countries.
Although both the developing and developed world are

implementing strategies related to increasing energy
efficiencies and reducing emissions through the development
of renewable energy capacity, these efforts remain largely
outweighed by the growth in consumption of fossil fuels by the
developing world (figure 2b).
18
CAGR = 1.7%
16
14
12
10
8
6
4
2
1980
2000
3.4.
pressure to rapidly reduce greenhouse gas emissions.
Figure 3 -
Coal-fired Power Station

(Mar 2008)
Courtesy of: Marcin Rybarczyk
Global Atmospheric CO2 Concentration (last 800,000 yrs)
400
380
360
340
320
300
280
260
240
220
200
180
160
800,000
700,000
600,000
500,000
400,000
300,000
Years before present
Source: Adapted from Deutsche Bank, Investing in Climate Change 2009.
18
The
increased
concentration
of
atmospheric carbon dioxide, to levels
not seen previously at any time during
human history is very significant.
Concentration in 2009: 385 ppm
200,000
100,000
emissions by capping the allowable emissions, and providing

a market for emitters to trade the rights to pollute, effectively
putting a price on carbon dioxide emissions, and a price on carbon.
CO2 Emissions by Conventional Fuel Type (CO2 emissions g/kWh)
Figure 2a -
2015
The pressure to reduce greenhouse gas emissions has increased

substantially with the adoption of numerous emissions trading
schemes (ETS). The ETSs are designed to limit the volume of
Through the recent United Nations Climate Change Conference

held in Copenhagen in December 2009, many nations pressed
to achieve more aggressive and binding emission cuts, however
the outcome was a non-binding accord.
Global atmospheric carbon dioxide (CO2) levels continue

to increase (figure 2a) and independent of any impact on
climate change, the emissions continue to choke many major
cities around the world, evidenced by the reported cases of
respiratory related illnesses increasingly sharply in recent years.
2006
as technologies improved and with the advent of the internal

combustion engine, the rise of oil and later gas, dramatically
changed the world. More than two centuries later, fossil fuels
are still responsible for generating more than 80% of global
The abundance of fossil
energy requirements.
fuels combined with the
relatively low cost, high
energy output and reliability
Other Renewables
of fossil fuel based power
generation, remains the
Biomass and Waste
major demand driver for
Hydro
fossil fuel consumption. As
Nuclear
awareness of the impacts of
Gas
carbon dioxide emissions is
Oil
increasing, there is a gradual
Coal
transition to cleaner burning
(lower emission) sources of
fossil fuels, particularly natural
2030
gas (figure 3).
Source: Adapted from IEA, Energy Technology Perspectives, 2008.
in Copenhagen highlighted the mounting global
Atmospheric CO2 concentration, ppm
World Energy Demand (1980 - 2030)
- 0
The highly anticipated UN Climate Change Conference
3.2.
Since the development of the steam engine, which led to

the Industrial Revolution beginning in Great Britain and later
spreading throughout the world, the ever-increasing demand
for fossil fuels has been unstoppable. During the late 18th
Century, the primary fuel for the steam engine was coal, and
Billion tonnes of oil equivalent
3.1.
Coinciding with industrialisation and

resulting in exponential increases in
carbon dioxide emissions from this human
activity, the scientific data indicates a
correlation with these emissions and the
indicators of climate change.
Source: Adapted from Alpha Auctus, 2010.
The largest such scheme, the

European Union Emissions
Trading Scheme (EU-ETS)
was established to coincide
with the implementation of
the Kyoto Protocol and as a
result all European countries
are required to comply with
the required restrictions on
emissions.
The price on carbon emissions
is a powerful incentive for
emitters to transition to cleaner
sources of fuel such as gas,
which emits approximately
half the greenhouse gases of
coal based power generation.
The price on carbon is
also providing renewable
sources of power generation
including geothermal, with an
opportunity to be increasingly
competitive in a carbon
constrained economy.
19
4. Renewable Energy - An Emerging Sector

With increasing concern for the health of the planet, investment in the renewable energy sector is largely driven by
a combination of government policies relating to mandated requirements for the production and consumption
of renewable energy sources, the price of carbon emissions and concern for the future price of fossil fuels. The
renewable energy sector is made up of a diverse range of mature and emerging electricity generation technologies.
4.1.
Introduction
Historically, the development of renewable energy generation

capacity has largely been motivated by factors beyond
concern for the environment. Development has been driven
by either concern for the availability and cost of fossil fuels, or
alternatively by the need for power in remote locations.
The concern about both the environmental and economic
impacts of increased greenhouse gas emissions has resulted
in a major shift towards exploring and developing renewable
energy sources of power generation.
By definition, renewable energy sources including wind, wave
and solar are inexhaustible and do not require fuel to operate
and are therefore assumed to produce no greenhouse gas
emissions. Although this assumption is somewhat true, in
order to obtain a more accurate understanding of the true
status of greenhouse emissions for each source, a complete
lifecycle analysis needs to be undertaken. The analysis needs
(Dec 2009)
Courtesy of: Foreign Affairs, Denmark
In December 2008, the Australian Government released the

Carbon Pollution Reduction Scheme (CPRS) White Paper,
outlining an ambitious plan to reduce carbon emissions by
5-15% of 2000 levels (CPRS 2008). Following international
efforts to work towards all countries collectively decreasing
carbon emissions and with international negotiations in
Copenhagen approaching, the Australian Government
announced an additional stretch target of 25% (figure 4) in May
2009 (DCC 2009).
At the time of writing, the exact path for action is not entirely clear,
however there is wide consensus that increased efforts to reduce
greenhouse gases in the future will need to be implemented,
and these are expected to support renewable energy sources.
20
of the most sustainable and least greenhouse gas

emissions intensive sources of renewable energy.
4.2.
Figure 4 -
The biggest disadvantage facing

most of the renewable energy
alternatives is the low rate of
capacity utilisation.
Because
solar panels can only absorb
photons when the sun is shining,
and similarly wind turbines
will only turn when the wind
is blowing, these technologies
typically operate for less than
half the time. The comparatively
reduced operating time for
these
technologies
means
the emissions created during
manufacturing must be spread
over a reduced energy output.
Australian 2020 Emissions Target Range
(5-15 and 25% reduction scenarios)
The increased target of reducing emissions by 25% below

2000 levels by 2020 was subject to a number of conditions,
most notably an international consensus being reached by
developing economies at Copenhagen in December 2009. A
binding consensus was not achieved at Copenhagen, however
the current Federal Government remains determined to
progress with emissions reductions through the CPRS through
the formation of a national Emissions Trading Scheme (ETS).
The proposed ETS Bill presented in parliament for facilitating
the trading of carbon credits, which were intended to initially
be trading at a price of $10 per tonne in 2011/12, with a
transition to full market trading from July 1, 2012 was rejected
in late 2009.
Geothermal based energy production provides one
As market forces provide increased pressure to produce more

energy per gram of carbon
dioxide emitted into the
atmosphere, renewable energy
Figure 5 - CO2 Emissions by Renewable Technology (CO2 emissions g/kWh)
alternatives are being considered
more frequently.
Copenhagen Opening
3.5.
to incorporate both the emissions required to manufacture

and dispose of the renewable energy infrastructure once it has
reached the end of its operating life. A recent study conducted
by Alpha Auctus compared the full lifecycle greenhouse
gas emissions from a number of renewable energy sources
with conventional energy sources to provide a like-for-like
comparison of emissions (figures 3 & 5).
Source: Department of Climate Change, 2009.
Source: Adapted from Alpha Auctus, 2010 and proprietary Activated Logic data.
The high capacity factor of

geothermal energy (figure 7)
makes it suitable for baseload
electricity generation and also
helps reduce the emissions per
kilowatt of electricity generation.
21
4.5.
renewable energy production.
Of all the renewable energy technologies, geothermal energy

is a likely candidate for rapid growth in installed capacity as
the technology is relatively mature and developed geothermal
power plants generally achieve very high operating capacities
(figure 7), making the technology suitable for baseload power
generation. Baseload capacity is an important competitive
advantage over other competing sources of renewable energy.
4.4.
The major drivers determining the development of the

renewable energy sector can be divided into three categories:
4.6.
Demand for renewable energy - many commercial and

retail energy users are demanding the energy they purchase is
sourced from renewable energy sources.
dro
Hy
rge
La
ine
(C
CG
T)
al
Co
ar
Ga
sT
urb
cle
Nu
aic
Vo
lt
ola
oto
Ph
gS
tin
tra
In the case of binary-cycle plants where the working fluid

exchanges the thermal energy through a heat-exchanger, even
higher capacity factors greater than 95% are often achieved.
The high capacity factor of geothermal energy is a strong source
of advantage over other renewable energy technologies.
Price of carbon emissions - as we move towards a uniform

tax on carbon emissions (as is already the case in many parts
of the world), there is an incentive for non-polluting sources
of power.
The notable exception to renewable energy capacity factors

is geothermal power generation capacity. Conventional
geothermal power plants operating with flash-cycles typically
operate with capacity factors in the 85% - 90% range.
Government policies - through a range of support

mechanisms including innovation grants, feed-in-tariffs,
production and investment tax-credits and mandatory
renewable energy purchases requirements.
22
Wa
v
Source: Adapted from Emerging Energy Research, 2009.
Price of fossil fuels - to reduce our exposure and lessen our

dependence on the price and availability of fossil fuels.
en
Co
nc
Source: Adapted from IEA, Energy Technology Perspectives, 2008.
ind
2050
2040
2035
ore
2030
Ge
2025
10
Tid
a
2,000
20
sh
4,000
As existing and emerging

renewable energy technologies
approach economic thresholds,
the adoption of these technologies
will be rapidly accelerated.
On
Hydro
ind
6,000
30
Wind
dro
Solar PV
8,000
40
ore
Solar CSP
10,000
50
Hy
Biomass, Waste
12,000
Of
fsh
Geothermal
Given
baseload
power
generation requires a capacity
factor of above 90%, it is
unlikely many of the renewable
technologies will be able to
compete as the primary source
of power, but will instead
become
supplementary
sources of power.
Due to limitations on existing
installed wind capacity in
South Australia, the network
requires additional baseload
power to ensure stable power
supplies for when the wind
infrastructure is not producing
power.
60
ss
14,000
70
all
Tidal
2020
Conventional
80
ma
Other
16,000
Research
and
development
incentives have been important
in the development of the
renewable energy sector, however
the ultimate scale and timing
of specific renewable energy
technologies will be determined
by markets and competitive
project economics.
Sm
Renewable Power Generation (Twh/yr)
18,000
2015
Typical Capacity Factors (various generation technologies)
90
20,000
2010
Power generation infrastructure is very capital intensive,

therefore it is important for power generation capacity to operate
with the maximum up-time, as the capital costs are spread over a
broader power output base, lowering the per unit cost.
100
(50% Reduction in Global CO2 Emissions by 2050 Scenario)
2005
Intermittent sources of power generation often require fossil

fuel powered backup power generation capacity to provide
continuity of supply, making these technologies less attractive.
Renewables
World Renewable Energy Generation (2000 - 2050)
2000
Figure 7 -
The issues associated with intermittent power generation are

two-fold:
A comparison between of the capacity factors for the various

power generation technologies, including both renewable and
conventional sources is given (figure 7) below.
al
Figure 6 -
an increasingly important and significant source of
Bio
The opportunities for developing additional large scale hydro

projects are limited and wind power generation is maturing
rapidly. Emerging technologies including solar photovoltaic
and tidal (amongst others) offer great promise, but are unlikely
to result in widespread adoption due to a combination of high
capital costs and limited operating capacity (figure 7).
geothermal energy capacity is becoming
4.7.
One of the biggest limitations confronting the majority of the

emerging renewable energy technologies is the percentage
of up-time a given technology will generate power (capacity
factor). Many of the renewable energy technologies including
wind, tidal, solar and wave are entirely dependent on natural
intermittent events which typically occur less than 50% of the
time.
erm
The renewed interest in innovative renewable energy generation

technologies has spurred unprecedented research and
investment to develop attractive sources of sustainable energy.
Installed
oth
Large scale hydro generation represents the majority of

currently installed renewable energy generation, while wind
generation represents an increasingly important source of
renewable energy generation capacity (figure 6).
Capacity Factor (%)
4.3.
Unlike
CSP Installation
(Apr 2009)
Courtesy of: Alla Leitus
competing sources of renewable energy
production, geothermal energy production is suitable

for baseload power production.
Hellisheidi Geothermal Plant

(Sep 2009)
Courtesy of: Bahay Ozcakmak
23
5. Renewable Energy - Investment Perspectives
5.2.
The development, commercialisation and adoption of renewable energy projects such as geothermal energy
powered electricity generation, are highly dependent on high investment inflows into the sector. During the
last decade as the price of fossil fuels has increased, competing renewable energy sources have become more
competitive and as a result, have attracted increased investment into the renewable energy sector.
Investment inflows into renewable energy projects globally

has experienced volatility during the last year, with appetite for
equity (figure 10) falling considerably, although the availability
of debt (figure 12) has improved since early 2009.
5.1.
Figure 10 -
In recent years as the drivers for renewable energy emerged,

the investment flows into the sector have increased rapidly,
reaching a high of US$122 billion in new capital inflows globally
in 2008 (figure 9).
The challenging renewable energy investment environment

in 2009 resulted in new capital being invested in the more
advanced projects and technologies, as these were perceived
to be less risky investments.
With the onset of the global financial crisis in late 2008, asset
valuations and new investments across all sectors fell sharply,
with increased risk and liquidity challenges experienced in
capital markets in the early part of 2009.
Despite the substantial fall in global renewable energy

investments in 2009, the outlook for investment into the
sector remains positive with all of the key development drivers
remaining or increasing in relevance.
Figure 8 -
Renewable Energy (NEX) Index (comparison with Oil in US$ billions)
500
450
400
350
300
250
200
150
100
50
0
2006
2005
2004
2003
2008
2007
Renewable Energy Index (NEX)
2010
2009
AMEX Oil
Source: Activated Logic 2009. Adapted from NEF, 2009.
Figure 9 -
Global new investment in renewable energy (US$ billions)

40.9
36.2
32.5
28.3
28.8
24.0
23.2
24.3
25.2
24.9
18.0
14.9
13.3
11.7 11.7
4.5
Q1
04
3.3
3.5
Q2
04
Q3
04
5.7
Q4
04
7.6
Q1
05
8.8
Q2
05
8.5
Q3
05
Q4
05
Q1
06
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
24
Q3
07
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
Q2
09
Given one of the major reasons

renewable energy projects are
adopted is to reduce the emissions
of greenhouse gases from fossil fuel
sources, a comparison of investment
performance of both the sectors
provides valuable insights (figure 8).
The comparison in figure 8
demonstrates that as the price of
oil started increasing at the start
of 2007, eventually peaking above
US$147 per barrel on the 11th of
July 2008, investment in renewable
energy escalated (figure 9).
By December 2008, as the price of oil
fell to a low of US$32.50 per barrel
due to reduced demand and the
onset of the global financial crisis,
investments in renewable energy
projects fell sharply.
Following
large falls in equity markets, the first
quarter of 2009 was marked by a
dramatic fall in investment (figure 9),
back to levels not seen since 2006.
The widespread caution towards
new investment was not isolated to
the renewable energy sector.
The 2009 June quarter, was marked
by a return in investor confidence,
with various renewable energy
focused financial stimulus initiatives
being announced, combined with
increased liquidity in capital markets.
5.3.
At the height of the global financial

crisis in 2009, many renewable energy
projects stalled due to the lack of
liquidity in investment markets. The
major implications are outlined below:
Investors seeking significant capital
growth at the small end of the sector
and yields at the larger end will be
attracted to the renewable energy
sector.
Global Equity Investment in Renewable Energy (US$ billions)

12.8
Global investment in the renewable

energy sector increased by US$24.3
billion during the June 2009 quarter,
an increase of 82.7% on the March
2009 quarter.
5.7
4.4
3.9
2.0
0.2
0.2
0.1
Q1
04
Q2
04
Q3
04
0.4
Q4
04
0.7
Q1
05
1.0
Q2
05
1.7
4.7
3.4
3.1
2.9
2.5
1.6
2.4
1.3
0.7
Q3
05
0.1
Q4
05
Q1
06
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
Q3
07
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
Q2
09
Figure 11 -
4.2
3.5
2.6
2.2
1.7
0.7
0.2
Q1
04
Q2
04
0.3
0.4
0.4
Q3
04
Q4
04
Q1
05
0.7
Q2
05
0.5
Q3
05
0.9
Q4
05
1.2
Q1
06
Q2
06
Q3
06
1.6
1.2
Q4
06
Q1
07
Q2
07
1.9
Q3
07
2.5
2.4
1.8
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
1.4
Q2
09
Figure 12 -
Global Debt Financing of Renewable Energy (US$ billions)

27.1
25.5
23.7
25.4
23.5
21.5
19.4
20.5
18.6
16.6
12.0 11.6
5.0
4.1
2.4
Q1
04
Q2
04
6.5
7.1
7.2
Q2
05
Q3
05
8.8
8.8
Q4
05
Q1
06
11.4
3.1
Q3
04
Q4
04
Q1
05
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
Q3
07
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
Small-scale project developers and

independent power purchasers are
finding it difficult to finance their
projects and are selling out to more
established players.
A strong trend towards consolidation
is being observed. Money is only
being lent to corporates with strong
balance sheets with whom the banks
seem to have close relationships.
Global VC & PE Investment in Renewable Energy (US$ billions)
2.2
GFC Implications
Q2
09
As bigger deals generally have the

security of larger, more creditworthy
developers, they are naturally more
likely to reach completion under
difficult circumstances than smaller
deals with less well-established
counterparties.
Developers are having increasing
difficulty reaching financial close
on their projects due to a marked
decrease in the availability of project
debt. This, however, could provide
investment opportunities for liquid,
fast-moving buyers, such as utilities
and corporates.
Government support through
stimulus packages will bring new
capital and new lenders to the table,
which will help small and mediumsized developers get through the
credit squeeze.
This section has been adapted from New Energy
Finance,2009.
25
Part C
The Electricity Market

6.
..............................................
28
6.1.
Introduction
..............................................
28
6.2.
..............................................
28
6.3.
Industry Structure
..............................................
28
6.4.
Market Structure
..............................................
28
6.5.
..............................................
29
6.6.
..............................................
29
7.
..............................................
31
7.1.
Introduction
..............................................
31
7.2.
..............................................
31
7.3.
..............................................
32
7.4.
..............................................
33
7.5.
..............................................
33
8.
..............................................
34
8.1.
Introduction
..............................................
34
8.2.
Expanded MRET
..............................................
34
8.3.
..............................................
35
8.4.
..............................................
35
8.5.
9.
..............................................
36
9.1.
Introduction
..............................................
36
9.2.
NEM Activity
..............................................
36
9.3.
..............................................
37
9.4.
..............................................
37
9.5.
..............................................
37
..............................................
35
HV Powerline Sunset
(May 2006)
Courtesy of: Christof van der Bij
26
Terratherma
MEMORANDUM I 27
LTD
TM
6. Electricity - The Australian Market
6.5.
The Australian electricity market consists of a national electricity grid on the east coast of Australia linking major
population centres, and regional satellite electricity grids in the Northern Territory and Western Australia. With
the exception of significant wind generation in South Australia and the Snowy hydro-electric scheme in NSW, the
majority of power generation in Australia is predominantly from coal and gas fired generation facilities.
6.1.
Introduction
An efficient and robust domestic electricity generation industry

is of major importance to most sectors of the economy, directly
contributing approximately 1.5% of Australias gross domestic
product (ABARE, 2009). In addition, the electricity industry
facilitates the capturing of additional value-add opportunities
across all sectors, as the electricity industry has been
demonstrated to provide significant productivity multipliers to
other industries.
6.2.
During August 2009, legislation to implement a national

renewable energy target (RET) was passed by the
Commonwealth Parliament. The primary aim of the RET is
to increase the mandatory renewable energy target (MRET)
of 9,500GWh, to 45,000GWh by 2020. The RET is expected to
increase renewable energy production to 20% of total electricity
production in Australia, by 2020. The governments view is that
the RET will provide an incentive to accelerate the uptake of
Australias abundant renewable energy sources, which include
solar, wind and geothermal energy. (DCC, 2010)
In assessing the comparative costs of bringing renewable
energy projects on-line, major consideration needs to be
given to the factoring in of historical government investment
through subsidies that assisted the construction of many of the
conventional electricity generation industries such as coal-fired
power stations.
The challenge for the electricity industry is to be able to source
sufficient and reliable amounts of renewable energy to meet the
statutory 20% requirement. Additional information about the
RET, renewable energy certificates are discussed throughout
this information memorandum.
28
Industry Structure
The majority of Australias electricity demand is across the

eastern seaboard and through to South Australia. In 1998, the
National Electricity Market (NEM) was established to connect
and facilitate the trade of electricity between the Australian
Capital Territory, New South Wales, Queensland, South Australia
and Victoria. Tasmania later joined the NEM through Bass-Link
in 2005.
Australia is a major exporter of coal and due to the abundance

of both black and brown coal in Australia, the vast majority
(~84%) of Australias electricity production has traditionally
been derived from coal (figure 14). Although coal is considered
a relatively inexpensive source of electricity, increasing pressure
regarding its significant carbon emissions will inevitably lead
to an increasing proportion of electricity generation being
produced from more sustainable sources.
Figure 14 -
Australian Electricity Generation (2006-07)
other renewables 0.5%
oil 1%
hydro 2%
gas 11.6%
wind and
solar PV 0.9%
The NEM is made up of a wholesale sector and a retail

sector, which interact to determine the electricity needs and
production capacity and trade through the central spot market.
Major electricity consumers and retailers often enter into
contractual arrangements with generators to manage price
risks associated with spot market volatility.
6.4.
6.6.
Across
Australia, the majority of electricity generation
and transmission infrastructure is divided into two distinct
geographic profiles. On the east-coast the National Electricity
Market (NEM) is generally concentrated around population
centres (figure 15) with the exception of far north Queensland
and regional South Australia, which service major mining
operations. In contrast, a significant proportion of Western
Australia and the Northern Territorys power generation is
remote and designed to service regional townships and
specific mining related projects and is not intended for regional
transmission. The contrast in the density of power generation
between the east coast and the west coast of Australia due to
the presence or lack of transmission infrastructure is significant
(figure 15).
A network of high voltage electricity transmission infrastructure,
typically in the order of 275 - 500kV links major towns and capital
cities on the east coast of Australia, including a direct link to the
giant Olympic Dam mine in remote South Australia (figure 15). A
high voltage, underwater DC line connects Tasmania to the NEM
through Victoria.
brown coal
27.4%
Additional information specific to the South Australian electricity

market structure is found in the next section, chapter 7.
black coal 56.4%
Market Structure
Source: Adapted from AEMO, 2009.
The central management of the electricity spot market,

including the dispatch of electricity from generators up until
the 30th of June 2009, was managed by the National Electricity
Market Management Company (NEMMCO). On the 1st of July
2009, NEMMCO along with 5 other electricity and gas entities
was incorporated into a new statutory body - the Australian
Energy Market Operator (AEMO).
The establishment of AEMO provides the NEM participants with
increased market transparency, efficiency and a more proactive
role in renewable energy market development. In November
2009, AEMO received a landmark report into network extensions
for geothermal projects.
A detailed overview of the relationship between the primary
stakeholders in the market including generators, consumers
and AEMO is provided below (figure-13).
Figure 15 -
Major Electricity Infrastructure Map (Australia)
Tom Price
Paraburdoo
, Denham
Kalbarri
transmission
network
plant dispatch instructions
generators
distribution
network
load dispatch instructionsa
AEMO
determines the amount
of power required
PERTH
Collie
Margaret River
consumers
Georgetown
Tennant Creek
Townsville
Collinsville
Moranbah
Ti-Tree
Alice Springs
Barcaldine
Kings Canyon
Yulara
Mt Stuart
Proserpine
Mackay
Stanwell
Rockhampton
Gladstone
Bundaberg
Birdsville
Roma
Mt Keith
W indimurra
W orsley
Murrin Murrin
Menzies
Kalgoorlie/Boulder
Kambalda
Maryborough
Tarong
Esperance
Hopetoun
Albany
BRISBANE
Olympic Dam
Leigh Creek
Woomera
Coffs Harbour
Broken Hill
Gunnedah
Nyngan
Port
Whyalla
Dubbo
Macquarie
Buronga Hillston
Hunter Valley
Newcastle
Hay Griffith
Berri
SYDNEY
Port Lincoln
ADELAIDE
Bendigo
Canberra
Albury
MELBOURNEDC link
electricity settlement payments
Gordon
Cairns
Mt Gambier Anglesea
purchase bids
electricity settlement payments
Borroloola
McArthur River Barron Gorge
Daly Waters
Mt Magnet
Donga ra
W oodada
Electricity Market Structure
Nhulunbuy
Katherine
Kununurra
Argyle
Fitzroy Crossing
Carnarvon Plutonic
Wiluna
Jabiru
Pine Creek
Shay Gap
Marble Bar
Telfer
Nullagine
Wittenoom
Jimblebar
Newman
Karratha
Ge raldton
Figure 13 -
DARWIN
DC LINE
500 kV
Power Station
330 kV
Substation
275 kV
Geothermal
220 kV
Derby
132 / 110 kV
Broome
66 kV
33 / 22 kV Port Hedland
1 ]
Growth of the Australian electricity generation industry has

managed to keep pace with steadily increasing demand, due
to Australias abundance of energy resources. Specifically, the
significant reserves of coal and gas used for domestic electricity
generation. The greatest challenge facing the industry is not
one of power generation capacity, but rather environmental
sustainability. The industry is investing heavily into alternative
technologies, research & development and initiatives to assess
the effectiveness of existing transmission infrastructure in
accommodating the increasing renewable energy generation
capacity.
6.3.
HOBART
29
7. Electricity - The South Australian Market

The growth of the South Australian electricity market has been driven by increased demand from industry,
specifically the mining sector, and additional increased peak residential demand. On the supply side, South
Australia leads the country with installed wind generation capacity, although challenges include the increased
need for baseload power capacity, providing potential opportunities for geothermal energy.
7.1.
Introduction
During 2009, the South Australian electricity industry

generated approximately 13,000GWh of electricity, with 52%
of the electricity generated by gas-fired power stations, 34%
generated by coal-fired power stations and 14% from wind.
Figure 16 -
The intermittent nature of wind generation, combined with

peak electricity load during exceptionally warm summers, and
growing demand from industry, present significant challenges
and opportunities for the South Australian electricity market.
Electricity Transmission Map (South Australia)

Map not to scale.
7.2.
The majority of South Australias

electricity generation and transmission
infrastructure is concentrated to the
southeast of Port Augusta, connected
primarily by a network of 132kV and
275kV transmission lines (figure 16).
Two
electricity
transmission
interconnectors,
Heywood
and
Murraylink, connect the South
Australian electricity network to the
National Electricity Market (NEM).
Wind farms represent the most
significant
source
of
existing
renewable energy based electricity
generation in South Australia, and
are also heavily concentrated in the
coastal regions south of Port Augusta.
Existing
and
planned
mining
developments across South Australia,
are increasingly requiring additional
electricity supply as these mines come
online. The planned expansion of BHPBillitons (ASX: BHP) massive Olympic
Dam mine alone, is expected to
require almost half of South Australias
electricity generation when the mine
is at fully capacity (OD-EIS, 2009).
The strategic location of Terratherma Limiteds
Geothermal Exploration Licences (GELs) to
coincide with the major electricity transmission
network in South Australia is shown in figure 16.
Terratherma GELs
The proximity of Terrathermas GELs to

transmission infrastructure is a major advantage
over geothermal projects located more remotely.
SA Wind Farm
(Oct 2009)
Source: Adapted from Electranet, 2009.
Courtesy of: JM Dianej
30
31
7.3.
7.4.
Recent heat waves during the summer of 2008/09 and 2009/10

have highlighted the electricity supply constraints in the South
Australian electricity market. The rapid increase in demand
during these peak summer periods has resulted in minor power
shortages and rapid escalation of wholesale electricity prices
during these periods.
increased requirement is for an additional 565MW of electricity

by 2018/19 (figure 18). If the optimistic (high) case is realised an
additional 1,500MW of electricity generation will be required by
2018/2019.
Figure 17 -
Growth in electricity demand during 2008/09 was in the order

of 4%, mainly due to increasing pumping demand and rampup of mining operations at the Oz Minerals (ASX: OZL) recently
commissioned Prominent Hill mine (ESIPC, 2009).
22,000
actual
During May 2009, the Electricity Supply Industry Planning

Council (ESIPC) released its Draft Annual Planning Report which
provided forecasts for electricity demand in South Australia out
to 2018/19 (figure 17).
GWh
16,000
14,000
12,000
Figure 19 -
10,000
432
155
565
505
2,500
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
SA Additional Capacity to meet Reserve
SA Supply (New Capacity)
SA Supply (Existing Generation)
SA 10% PoE Demand - DSM + Reserves
SA 10% PoE Demand - DSM
SA 50% PoE Demand - DSM
Source: Adapted from ESIPC, 2009.
32
MW
MW
MW MW
NSW
VIC
QLD
SA
WA
TAS
NT
Other
68
78
17
22
27
5
1
16
0
359
0
6
0
0
42
0
15
10
6
0
0
36 4 275
34 566
4 659
0
5
63
32
0 2 276
0
0
Aust
218
380
73
total
MW
MW
18
134
13
740
201
144
0
4.0
0.7
0.4
0.7
0.7
0.0
1.6
63
0.5 4459
0.0
813
0.1 1066
0.0
778
0.0
336
0.0 2425
0.0
3
63
137 7814 1 249
71
1 9 942
Figure 21 -
MW
Figure 20 Calendar
Year
Wind Capacity Factors (South Australia)

Canunda
Starfish
Hill
Lake
Bonney
S1
Cathedral
Rocks
Wattle
Point
Mt Millar
Hallett
S1
Lake
Bonney
S2
Snowtown
S1
2006
34%
31%
23%
19%
30%
7%
2007
38%
29%
28%
33%
35%
15%
2008
34%
29%
28%
35%
35%
19%
32%
25%
27%
2009
26%
26%
21%
26%
32%
24%
35%
21%
39%
9%
The low capacity factor of wind projects means these projects

can only be relied on to provide electricity at the 95% confidence
interval only approximately 3% of the time (figure 21). In order
to be able to stabilise the electricity supply volatility in the
South Australian electricity network due to the installed wind
capacity, additional baseload generation capacity is required.
Geothermal energy projects are the only renewable energy
projects capable of producing baseload power (figure 7).
The
projected growth in the South Australian
electricity market is expected to provide Terrathermas

geothermal projects with major opportunities.
Wind Contribution during Peak Demand (South Australia)

Ou tpu t wh ere Deman d is with in 10% of Win ter
Peak Demand
90%
3,000
2010-11
MW
The rapid expansion of wind generation capacity in South

Australia provides electricity security challenges for the state
electricity network, because the timing of power generation
from wind is difficult to predict and the capacity factors for wind
in South Australia are typically under 30% (figure 20).
100%
328
59
2009-10
MW
Source: Adapted from ABARE, 2009.
4,000
245
Renewable Electricity Generation (Australia)
woodother
biogas bagasse waste renewables hydro wind solar other
Output as a percentage of installed capacity
Demand and Available Capacity (MW)
ADDITIONAL CAPACITY
REQUIRED
2018-19
4,500
2017-18
2016-17
2015-16
2014-15
2013-14
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
Electricity Supply & Demand Balance (South Australia)
3,500
Despite the abundance of numerous renewable energy

alternatives available in South Australia, including solar and
geothermal, to date with the exception of a small contribution
from biogas, the majority of renewable energy is sourced from
wind generation (figure 19).
A number of geothermal exploration companies, including Panax

(ASX: PAX), Petratherm (ASX: PTR) and Geodynamics (ASX: GDY)
plan to construct geothermal demonstration activities in the next
2-years. For additional information, refer to Chapter 14.
2005-06
Figure 18 -
high
low
ESIPC constructed various future electricity demand scenarios

(figure 17) based on a most likely case of 1.8% year on year (yoy)
growth, a low case assuming 1.5% yoy growth and an optimistic
case with 4.8% yoy growth (ESIPC, 2009). The significant
difference between the most-likely and optimistic scenario is
due to the uncertainty of whether the planned expansion of the
Olympic Dam mine progresses.
If the most-likely scenario is modelled to determine the increase
in electricity generation capacity required to meet demand, the
base
18,000
7.5.
During the first quarter of 2010, the installed wind capacity

is expected to reach 868MW, with an additional 880MW of
advanced stage projects of which 295MW are considered to
be on the verge of a final investment decision (ESIPC, 2009).
The recently expanded MRET has encouraged the continued
expansion of South Australias wind resources as many of
the projects are at an advanced stage, and the technology is
considered mature.
Electricity Supply & Demand Balance (S.A.)
20,000
Top 10% of all h ou rs in th e dataset
80%
Ou tpu t wh ere Deman d is with in 10% of Summer

Peak Demand
70%
60%
50%
40%
20%
95% level
50% level
30%
output f or the 50% level
10%
output f or the 95% level
0%
0%
10%
20%
30%
40%
50%
60%
Percen tage of Time
70%
80%
90%
100%

33
8. Renewable Energy Target - Implications

The recently expanded Mandatory Renewable Energy Target (MRET) places a legally binding obligation on
wholesale purchasers of electricity in Australia to proportionally purchase renewable energy. The primary
function of the MRET is to encourage the development of the Australian renewable energy industry through the
establishment of a Renewable Energy Certificate (REC) market for both the supply and demand of RECs.
8.1.
Introduction
The Australian Governments Mandatory Renewable Energy

Target (MRET) was established on the 1st of April 2001, with a
target of achieving 9,500GWh of renewable energy generation
per year by 2010. According to the Office of the Renewable
Energy Regulator (ORER, 2009), the MRET was set to encourage
additional generation of electricity from renewable energy
sources and achieve reductions in greenhouse gases.
At the time of introduction of the MRET in 2001, the Australian
MRET was the first of its kind globally, highlighting the
innovation of the Australian renewable energy industry.
The initial target of 9,5000GWh was exceeded well before 2010,
and on the 20th of August 2009, the Australian Parliament passed
legislation to implement an expanded national renewable
energy target (RET) of 45,000 GWh by 2020 (figure 22).
The rapid scale-up of the MRET is argued by many geothermal
energy and solar energy advocates as favouring the more
advanced and immediately scalable technologies, specifically
wind generation capacity.
Figure 22 -
8.2.
Expanded MRET
The expanded MRET scheme is expected to reduce red tape

by encompassing individual state targets, and also provide an
incentive and investor certainty for developers of renewable
energy projects.
The significant increase in the RET ensures that the Australian
renewable energy industry has a strong regulatory and market
basis for advancing ambitions to dramatically increase the
installed capacity of renewable energy generation in Australia.
Linked to the MRET, the creation of Renewable Energy Certificates
(RECs) are also supporting renewable energy in Australia.
By
ensuring wholesale electricity customers are
8.3.
Information about RECs (ORER, 2009):

RECs are an electronic form of currency initiated by the
Renewable Energy (Electricity) Act 2000;
RECs may be created, on the internet based registry system
(known as the REC Registry), by eligible parties for each
megawatt-hour of eligible renewable electricity generated
or deemed to have generated;
8.4.
The current REC spot price is approximately $35 for each certificate
(figure 23) which represents 1 MWh. REC prices have decreased in
response to binding cuts not being achieved at Copenhagen. The
Coalition of Australian Governments (COAG) recently increased
REC penalties from A$40 per MWh to A$65 per MWh.
Figure 23 -
REC Price Performance (2008-2009)
RECs are created by registered persons;

RECs are validated by the Office of the Renewable Energy
Regulator;
RECs are registered;
RECs are traded between registered persons;
RECs are eventually surrendered to demonstrate liability
compliance against the requirements of the Australian
Governments mandatory renewable energy target or
voluntary surrender; and
RECs may be traded separately from the physical electricity
in a REC market.
Source: Activated Logic, Adapted from NextGen, 2010.
required by law to purchase a percentage of their

electricity from renewable energy sources, the MRET
provides geothermal project developers with market
Figure 24 -
REC Market Schematic (Overview)
certainty.
Forecast Renewable Energy Generation (As determined by MRET)
Source: ORER, 2010.
8.5.
34
The Australian Government is proposing the implementation of

a national Emissions Trading Scheme (ETS) based on a cap and
trade mechanism, as part of the Carbon Pollution Reduction
Scheme. The establishment of a market placing a price on carbon
emissions will further improve the appeal of renewable energy
technologies. The ETS has not been approved by parliament,
but is intended to provide a solution beyond the MRET.
RECs are a very valuable source of income available

for renewable energy projects, and will be pivotal in
ensuring the competitiveness of geothermal projects,
particularly at the early stages of development.
35
9. Electricity - Historical & Forecast Pricing
9.3.
Since the mid 1990s, major changes in the Australian electricity industry, including privatisation and less
prohibitive competition policy have contributed to fundamental changes in the industry, most notably the
emergence of integrated electricity generators and retailers. The Australian electricity transmission network is
increasingly interconnected with state electricity prices slowly converging towards a national average.
9.1.
Introduction
The
Historically, the major influences on the price of electricity

within the National Electricity Market (NEM) have included the
impacts of reliable coal-fired baseload power generation, gasfired power generation to meet peak demand, and improved
transmission interconnections.
regional interconnection, sophisticated financial

structures and flexible fuel substitution.
This era of change has delivered choice and broadly
In contrast, the future price of electricity production is likely to

be influenced by commodity prices, particularly gas, however
undoubtedly the major influence will be the cost of carbon emissions
and the cost of renewable energy required to displace emissions.
Figure 25 -
result is a highly competitive, increasingly
stable prices for customers and an attractive climate

for investors, while maintaining an increasing supply
security.
Garnaut Review, 2008.
Regional Electricity Market Activity (2007-2008)

Queensland
$52/MWh
51.3 TWh
57.2 TWh
QNI
534
9.2.
New South Wales

$42/MWh
Directlink
70
78.3 TWh
73.1 TWh
SnowyNSW
state
56
volume weighted average annual price ($/MWh)
Snowy
$45/MWh
total annual demand (TWh)

total generation (TWh)
0.5 TWh
3.4 TWh
148
VicSnowy
South Australia
$74/MWh
13.3 TWh
13.0 TWh
Heywood
Victoria
$47/MWh
15
Murraylink
15
52.2 TWh
53.4 TWh
BassLink
(operational in 2005)
261
Tasmania
NEM Activity
The major interstate electricity

linkages (figure 25) assist in the
equilibration of electricity supply and
price between states connected to the
NEM.
South Australia exports a similar
amount of power into the NEM as it
imports, however the exported power
is generally cheaper off-peak wind
capacity, and the imported electricity
is often more expensive.
Significant electricity generation
from the Snowy Mountains Scheme
provides an important source of
renewable electricity to the states
of New South Wales and Victoria.
However, during years of drought, the
electricity generation capacity of the
Snowy Mountain Scheme is reduced
significantly, hence the demand for
alternative sources of electricity in
the region increases, leading to an
inevitable increase in the price.
$55/MWh
10.3 TWh
Western Australia
na
20.7 TWh e
20.7 TWh e
Northern Territory
na
1.6 TWh e
1.6 TWh e
Source: Adapted from ABARE, 2009.
36
8.1 TWh
The average price for electricity in South

Australia is above other states in the NEM. The
increasing peak electricity requirement in South
Australia, is largely addressed by more expensive
electricity from gas-fired power plants which
provide electricity on demand, importantly
when wind generation capacity is not available.
The NEM is an increasingly effective market mechanism

for allocating energy to where it is demanded, by ensuring
equilibrium in supply and demand for electricity and reaching a
market consensus and ultimately determining electricity prices.
However, the diverse geographic distribution of electricity
generation and consumption centres means that significant
price variations still exist between major electricity production
and consumption regions.
The trade between states connected to the NEM is designed
to stabilise price fluctuations between state electricity prices,
as demonstrated by the dramatic fall in electricity prices in
Tasmania in 2005 as a result of the state joining the NEM (figure
26). However, due to the limited interconnected electricity
capacity between South Australia and Victoria (via Heywood
and Murraylink); during periods of peak demand the spot price
in South Australia has increased significantly, increasing the
volume weighted average price (VWAP).
Despite South Australia being connected to the NEM

grid, the average price realised in South Australia per
megawatt-hour in 2007-08 was almost 50% higher
than all other states on the grid.
9.4.
The Western Australian and Northern Territory electricity

generation systems are not connected to the NEM (figure
15), consequently the pricing of electricity sold is generally
determined by regional supply demand dynamics and is
independent of the NEM environment (figure 26).
The Snowy Mountains generation capacity which covered its
own region within the NEM, was abolished in July 2008 and the
generation capacity was split between New South Wales and
Victoria. The impact of spot market electricity prices from the
Snowy Mountains generation capacity being distributed is that
the overall NEM prices are less volatile (figure 27).
Figure 26 -
Figure 27 -
Spot NEM Prices (1999-2008)
Source: Garnaut, 2008.
9.5.
As discussed in Chapter 8, the implementation of an expanded

MRET and the likelihood of a domestic ETS place significant
pressure on conventional electricity generation technologies,
particularly those dependent on fossil fuels. Depending on the
severity of carbon emission reductions as proposed through
the Federal Governments Carbon Pollution Reduction Scheme
(CPRS), the ability to produce inexpensive fossil-fuel derived
electricity will be greatly diminished.
The magnitude of proposed global emissions cuts is based
around a number of metrics largely determined by the
concentration of atmospheric carbon dioxide peaking at a
given level. The conservative reduction scenario relies on a
peak of atmospheric CO2 at 550ppm (figure 4), and is forecast
to result in the doubling of electricity prices (figure 28). The
scenario requiring more dramatic cuts aiming for 450ppm
of CO2 is forecast to have an even more dramatic impact on
electricity prices (figure 28).
Figure 28 -
Electricity Price Forecast ($MWh)
Spot NEM Prices (1999-2008)

New South Wales
South Australia
200
150
Average
Queensland
Victoria
Snowy Region
Tasmania
VIC
TAS
SNOWY
100
SA
50
QLD
NSW
$/MWh
1999
Dec
Dec
Dec
Dec
Dec
2000
2001
2002
2003
Source: Adapted from AEMO and ABARE, 2009.
Dec
Dec
2005
Dec
Dec
2007
2008
Source: Garnaut, 2008.

37
Part D
Integrated Geothermal Applications

10.
..............................................
40
10.1.
Introduction
..............................................
40
10.2.
Opportunity
..............................................
40
10.3.
Optimisation Benefits
..............................................
40
11.
..............................................
41
11.1.
Introduction
..............................................
41
11.2.
Desalination Technologies
..............................................
41
11.3.
Integrated Geothermal Desalination
..............................................
42
11.4.
South Australian Water Market
..............................................
43
11.5.
Water Capacity Additions
..............................................
43
11.6.
Terratherma Ltd Desalination
..............................................
44
11.7.
Terratherma Ltd Opportunity
..............................................
44
12.
..............................................
45
12.1.
Introduction
..............................................
45
12.2.
Hydrogen Production Methodologies
..............................................
45
12.3.
Direct Geothermal Hydrogen Production
..............................................
46
12.4
Integrated Hydrogen Production
..............................................
46
12.5.
Terratherma Ltds Hydrogen Advantage
..............................................
47
12.6.
Terratherma Ltd - Medium Term Market Opportunities
..............................................
50
12.7
Terratherma Ltd - Long Term Market Opportunities
..............................................
51
Transformer Interconnector
(Nov 2009)
Courtesy of: Terna Spa
38
Terratherma
MEMORANDUM I 39
LTD
TM
10. Geothermal - Integrated Applications
11. Desalination - Integrated Geothermal Application
The presence of thermal energy and exploitation of this energy through hot-water in geothermal energy systems,
lends these projects to the strategic application of logically integrated technologies, specifically desalination and
hydrogen production. The integration of these potentially attractive downstream processes, presents Terratherma
Ltd with a number of exciting opportunities to capture increased value across the broadened value chain.
A number of established desalination technologies exist, specific technologies require either thermal energy,
electrical energy or a combination of both to extract fresh water from seawater. Geothermal projects are ideally
suited to cascaded integration with desalination projects as geothermal projects produce vast amounts of direct
heat, waste heat and have high capacity factors producing large amounts of electricity, even during off-peak periods.
10.1. Introduction
10.2. Opportunity
11.1. Introduction
The environmental and economic benefits from the successful

development of geothermal energy projects can be improved
further through the cascaded utilisation of geothermal outputs
including direct heat, waste-heat, electricity and water.
South Australia, the region which hosts Terratherma Ltds geothermal

interests is facing a serious water shortage, presenting opportunities
for desalination. In addition, Terrathermas parent company, Eden
Energy Ltd has significant expertise in relation to hydrogen.
A number of proven processes exist to convert both waste-heat

and offpeak power from geothermal plants into desalination
throughput, resulting in clean, fresh water (figure 30). Although
Figure 30a-
Figure 29 -
direct means of desalination through either thermal or

membrane processes are popular, hybrid processes utilising the
strengths of both approaches are increasingly being adopted.
Desalination Pathway Schematic (derived from geothermal energy)
Technologies
A diverse range of desalination

technologies are commercially
available including:
GEOTHERMAL
Exploration
Thermal Energy
Figure 30b -
Electrical Energy
Thermal/Distillation Methods
Multi-Stage Flash Distillation
Development
Multi-Stage Flash Distillation
Mechanical Work
Direct Source
Multi-Effect Distillation
Vapour Compression Distillation
GEOTHERMAL PROJECTS
Geothermal Energy
Solar Humidification
Distillation Process
ELECTRICITY
Membrane Process
Reverse Osmosis
HYDROGEN
Desalination
WATER
11.2. Desalination Technologies
10.3. Optimisation Benefits
Refer to Section 22.8 for detailed analysis.

Geothermal projects involve the drilling of deep wells to depths
of up to 5km to access thermal energy within the earth, either in
naturally occurring water at depth (conventional geothermal),
or alternatively through systems where water is injected
under pressure to create a reservoir (figure 55) within hot rocks
(enhanced geothermal system).
Of the large amount of thermal energy recovered through
the geothermal fluid, only a small proportion of this energy
is converted to electrical energy, the remainder is expelled as
waste-heat through the cooling fluid and heat-exchangers.
The opportunity exists for multi-stage flash (MSF) desalination
Electrodialysis Reversal
40
Electrodialysis
WATER
It is reasonably expected that the output of an integrated

development will be substantially higher than the sum of its
parts, largely due to efficiencies created through economies of
scale and the options available to optimise operations.
Membrane Methods
plants to be integrated with geothermal plants, whereby the

desalination plant improves the output of a geothermal project
through an enhanced heat-sink due to the superior cooling
achieved by seawater. In turn the cost-efficiency of the MSF
desalination improves due to the lower operating costs as a
result of utilising the free energy in the form of waste-heat
from the geothermal plant.
Similar efficiencies exist for hydrogen production where excess
electricity generation capacity can be diverted to hydrogen
production during offpeak periods, optimising returns.
Terratherma Ltds proposed integration of desalination

and hydrogen production capacity with geothermal
development, potentially provides major operational
synergies and economic advantages, resulting in a
powerful source of competitive advantage.
As illustrated in the Desalination Pathway Schematic (figure 30a),

the majority of desalination technologies fall into one of two
categories: (a) Thermal methods, which effectively involves the
heating of water in any number of ways to produce water vapour
and the eventual distillation, and (b) Membrane methods, which
involve the use of selectively permeable membranes to create
concentration gradients to produce fresh water. Although
additional desalination methods such as cumbersome freezing
or methane hydrate crystallisation exist, most common methods
are variants of either thermal or membrane methods.
Multi-Stage Flash Distillation (MSF) is the process of heating
seawater to high temperatures (~120oC) and sequentially
circulating it through vessels with incrementally lower chamber
pressures to produce water vapour, and upon distillation, water.
Multi-Effect Distillation (MED) is similar to MSF, except it generally
operates at lower temperatures to prevent issues with scaling.
Vapour Compression Distillation (VCD) involves the compression
of water vapour to generate heat for evaporation of pure water

from seawater.
Solar Humidification (SH) and other variants rely on the principle
that various configurations of water evaporation and collection
can be devised to harvest fresh water after it has been evaporated.
Reverse Osmosis (RO) involves pumping seawater under pressure
through a network of semi-permeable membranes within pipes
which extract salt, resulting in the production of fresh water.
Electrodialysis is the process of providing an electrical charge to
seawater, resulting in the movement of salt through a membrane,
leaving behind fresh water.
Due to the large-scale of MSF plants, they represent approximately
85% of all water production from desalination technologies. In
terms of the installed number of plants, MSF and RO installations
represent approximately 40% each, with the remainder divided
between Electrodialysis, MED, VCD and hybrid installations.
41
11.3. Integrated Geothermal Desalination

The production of water directly from conventional geothermal reservoirs has been
practised in the past, however the combined concern for the environment, and also the
recharge of geothermal reservoirs has ensured this method is rarely practised.
Reverse Osmosis (process)
Figure 31 -
Geothermal electricity-based desalination

The use of electrical energy by pumping seawater through membranes (as outlined
in the desalination pathway schematic, figure 30a), is known as the process of reverse
osmosis desalination. Reverse osmosis is the simplest and most direct desalination
process for producing water from geothermal resources, after direct water extraction
from geothermal fluids. The process of reverse osmosis (figure 31) is simple to integrate
with geothermal systems, as the only connection involves the sourcing of renewable
electricity which is utilised by the reverse osmosis process. There is no connection with
the geothermal fluids, and no heat exchange.
Desalination (Multi-Stage Flash)

condensing coils
Heat Source
Steam derived from
either low-grade,
heat, waste heat or
from direct steam
from Geothermal
plant.
South Australias water requirements are predominantly met

from local catchments including runoff from the Mount Lofty
Ranges, River Murray flows and a number of indigenous sources,
predominantly sourced from the Great Artesian Basin.
fresh water
Figure 34 -
In order to provide Adelaide with a more reliable source of water, the

State and Federal Governments have invested $456 million in the
construction of a 100GL desalination plant at Port Stanvac, south of
Adelaide (figure 35). The plant will utilise reverse osmosis technology,
and is expected to be commissioned in December 2010.
Figure 35 -
Adelaide Desalination Plant
Source: SA Water, 2010.
South Australia Water Allocations (trading intensity)
sea water
pump
brine to sea
Source: Adapted by Activated Logic, 2010. From John Zactruba, 2009.
Modular MED systems suitable for geothermal desalination

The installation of modular multi-effect distillation (MED) units (figure 33)
provides flexibility in being able to scale the installed desalination capacity
with the incremental development of a geothermal project. The modular
MED units work on a similar sequential flash principal as MSF plants, but
typically operate at lower temperatures.
The MED systems either utilise a mechanical vapour compressor for heat,
or of greater relevance to Terratherma Ltd, are able to utilise steam from
geothermal plants as the primary energy source to heat the incoming
seawater. The modular units are relatively compact, reliable and simple
to operate and have a very high capacity, up to 68ML per day, despite the
seawater not requiring pretreatment before entering the systems. Most
importantly in the case where geothermal steam is available, the operating
electrical requirements are very attractive. Entropie, a major French
manufacturer of MED systems claims its modular units require less than
1kWh per 1000L of water produced, indicating a highly efficient option.
42
In South Australia, water licences and water allocations are

directly linked, where annual water allocations are made based
on the availability of water in a given licence area. South Australia
has approximately 1,691GL of volumetric water licences on
issue, with the majority concentrated within the River Murray
Prescribed Water Course (River Murray PWC), South Australias
primary water source (figure 34).
During 2008/09, South Australia continued to be a net importer

of interstate water allocations, importing approximately 336GL of
water to meet the states critical water requirements. Specifically,
in December 2008, the South Australian Government bought 201
GL of water allocations on the interstate market for critical urban
needs in the state capital, Adelaide. Similarly, throughout the first
half of 2009, an additional 30 GL was purchased by the South
Australian Government. In addition to urban requirements,
permanent water allocations are traded in other parts of the
state, for both townships and agricultural uses.
Source: SA Water, 2010.
Figure 32 -
11.5. Water Capacity Additions
Recent prolonged drought conditions in the greater MurrayDarling Basin catchment area, particularly in New South Wales
have resulted in reduced inflows into the river system. The severe
water shortages have been exceptionally problematic in South
Australia, as the state is highly dependent on the River Murray
inflows, yet the state is last to receive the river flows as it is down
stream from both New South Wales and Victoria.
The reverse osmosis desalination process does not involve the boiling of water, therefore
the energy requirements are relatively low when compared with competing sources of
desalination, however the upfront capital cost are high. Furthermore, the technology is
scalable, but does not benefit from major gains in efficiency or from economies of scale
as the efficiency is derived from the membrane surface.
Geothermal heat-based desalination

Large multi-stage flash (MSF) distillation plants
(figure 32) are often integrated with power
generation plants in a cogeneration configuration
to utilise waste heat. MSF plants are able to be
engineered in a similar configuration for use with
geothermal power plants, ensuring the geothermal
brine is utilised as an energy source to heat
seawater, whilst providing a source of cooling for the
geothermal power plant. Given energy costs make
up over half of the operating costs of a MSF plant,
the integration of such a plant with a geothermal
plant will improve overall economics dramatically.
11.4. South Australian Water Market
Figure 33 -
Desalination (Multi-Effect Distillation)
Source: Entropie, 2010.
A number of effective desalination technologies

suitable for direct integration with geothermal
power production projects are available.
Source: National Water Commission, 2009.

43
12. Hydrogen - Integrated Geothermal Application
11.6. Terratherma Ltd Desalination

The 12 contiguous geothermal exploration
licences (GELs) which make up the Pirie Project are
strategically located in the key north-south trending
infrastructure corridor between Port Augusta and
the state capital, Adelaide (figure 36).
Figure 36 -
Terratherma Ltd (Coastal GEL Portfolio)
Terratherma GELs
In addition, the Pirie Project GELs are located in a

highly prospective geothermal exploration domain
in close proximity to the Southern Ocean, through
both the St Vincent Gulf and the Spencer Gulf.
Terratherma Ltds Pirie Project (Chapter 19), provides
a number of potentially attractive integrated
geothermal and desalination development
opportunities.
The integration of a hydrogen production process with geothermal power generation presents a range of exciting
opportunities to accelerate the adoption of hydrogen as a renewable fuel, whilst improving the commerciality
of Terratherma Ltds geothermal projects. Terratherma Ltds parent company, Eden Energy Ltd has developed a
range of innovative technologies for the economic production and effective utilisation of hydrogen.
12.1. Introduction
The adoption of a global hydrogen based energy system
commonly referred to as the hydrogen economy, to replace the
existing fossil fuel based energy systems, is increasingly gaining
momentum. Hydrogen is considered to be an ideal energy source
as its use in fuel cells produces water instead of harmful carbon
dioxide, nitrous oxides, unburnt hydrocarbons and particulate
matter. Hydrogen may also be used directly in an internal
Figure38a -
combustion engine, or alternatively in a fuel mix with either

natural gas or diesel to improve efficiency and lower emissions.
For these reasons, in September 2009, nine of the worlds largest
car manufacturers collectively urged governments to assist in the
development of hydrogen distribution infrastructure. The use of
hydrogen as a fuel in vehicles has been demonstrated by more
than a dozen major automotive manufacturers in recent years.
Hydrogen production pathways (derived from geothermal energy)
Technologies
A diverse range of technologies

are available and being developed
to produce hydrogen including:
GEOTHERMAL
Thermal Energy
Figure 38b -
Electrical Energy
Thermal Methods
Hydrocarbon Reforming
Source: Adapted by Activated Logic, 2010. Terratherma GEL Portfolio super imposed on Electranet Map, 2009.
Thermochemical Cycles
Mechanical Work
Direct Source
11.7. Terratherma Ltd Opportunity

The potential market for high-value water produced by
Terratherma Ltd, can be divided into two major regions. The first
region is the supply of water to the major regional market of
Adelaide and surrounds (figure 37). Despite water consumption in
Adelaide falling by 30% over the last five years due to restrictions
and the introduction of water saving devices, the state capital
remains highly vulnerable to supply side shortages due to local
and regional drought conditions.
Electrolysis Methods
Figure 37 -
Major Water Infrastructure (Adelaide)
Electrolysis
Proton Exchange Membrane
Methane Pyrolysis
Source: Activated Logic, 2010, adapted from Balta et al 2009.
12.2. Hydrogen Production Methodologies

The majority of hydrogen currently produced (figure 39) is by
the thermochemical cracking of hydrocarbons, either as a byproduct in petrochemical processing, or the direct production
from steam methane reforming (SMR). The remaining 4%
consists predominantly of electrolysis derived hydrogen which
is produced by the splitting of water molecules into hydrogen
and oxygen through the use of an electrical current.
desalination plant is likely to be close to both
44
Hybrid Cycles
HYDROGEN
Ltd proposes the location of any
geothermal resources and key water markets.
Alkaline Electrolysis
Eden Energy Ltd Method
Outside Adelaide, the proposed expansion of BHP-Billitons

Olympic Dam mine presents a significant opportunity to provide
large volumes of water for a large-scale, long-life project. BHPBillitons recently released Environmental Impact Statement,
highlights plans for a 200ML/day (73GL/year) reverse osmosis
based desalination plant based at Point Lowly in the Upper
Spencer Gulf. The proposed desalination plant is forecast to
require 35MW of electricity to operate at the proposed output
capacity.
Terratherma
Various Thermochemical Cycles
Source: National Water Commission, 2009.
With the exception of Eden Energy Ltds pyrolysis technology,

the majority of alternative sources of hydrocarbon derived
hydrogen production emit carbon dioxide, undermining the
benefits of hydrogen reducing emissions. The source of energy
utilised in the electrolysis process determines whether the
production of hydrogen is sustainable.
Figure 39 -
Hydrogen production (capacity by method)
Source: Adapted from Balta et al 2009, by Activated Logic, 2010.

45
12.3. Direct Geothermal Hydrogen Production

Hydrogen gas is commonly vented during the geothermal steam
separation process, presenting a potentially recoverable source
of hydrogen gas to supplement existing hydrogen production
infrastructure. A recent study by the University of Iceland found
that geothermal wells in the Krafla geothermal area in Iceland
produce approximately 50 tonnes of hydrogen (H2) gas, and 40
tonnes of hydrogen from hydrogen sulphide (H2S) annually.
Given the large number of geothermal wells required to develop a
substantial geothermal field, the direct capture of hydrogen, and
the separation of hydrogen from hydrogen sulphide, presents a
potential opportunity to produce inexpensive hydrogen.
12.5. Terratherma Ltds Hydrogen Advantage

Figure40 -
Direct Hydrogen Production (Geothermal)
12.4. Integrated Hydrogen Production

Figure 42 -
Modular Hydrogen Production (Electrolysis)
Eden Energy (Hydrogen Technology Inventory)
Hydrogen Products
Existing
Technologies
Emerging
Technologies
Hythane Fuel
Pyrolysis derived Renewable Hydrogen
Optiblend Dual Fuel
Optiblend Dual Fuel - Next Generation

Hydrogen Supply Integration
Source: Adapted by Activated Logic, 2010. From Eden Energy Ltd, 2009.
Innovative Pyrolysis Technology for Hydrogen Production

A joint venture between Eden Energy Ltd and the University
of Queensland (with assistance from the Australian Research
Council) has been focused on pyrolysis approaches to
producing hydrogen from natural gas. Although chemical
processes for producing hydrogen from natural gas, such as
the steam methane reforming (SMR) process already exist,
these technologies produce carbon dioxide as a by-product,
undermining the sustainability of the hydrogen produced.
Source: MVS, 2010.
Thermochemical hydrogen production

Figure43 - Thermochemical Hydrogen Production
Hydrogen production through a thermochemical reaction
Thermochemical Cycle
Major Compounds
involves a series of chemical reactions, using a combination of
Ispra Mark 9
FeCl2, HCl
heat and electrolysis, resulting in the decomposition of water
Copper
Chlorine
Cycle
CuCl
, HCl
2
into hydrogen and oxygen. In a landmark study in 2009, Balta
Argonne
LiNO2, I2, H2O
et al reviewed 100+ thermochemical cycles potentially suitable
Shell Process
Cu, H2S
for the production of hydrogen from geothermal resources, and
Astrojet Central
Cs, H2O
following extensive analysis, outlined the five most suitable low
temperature thermochemical cycles, as summarised in figure 43.
46
Figure 44 -
Hydrogen Internal Combustion Engine
Hydrogen production through Electrolysis

Hydrogen can be produced by electrolysis, by passing an electrical
current through two electrodes in water, where the water
molecules split and produce oxygen at the anode and hydrogen at
the cathode. Electrolysis is simply the reverse reaction to hydrogen
oxidation which occurs in a fuel cell. Numerous modular hydrogen
electrolysis (figure 42) designs are available for connecting to a
power source which may integrated with a geothermal project.
Numerous variants for the electrolysis derived hydrogen
production exist, including the Alkaline process which involves
an aqueous solution of potassium hydroxide. The most suitable
electrolysis technology is potentially the High Temperature Steam
Electrolysis (HTSE), where the heat is sourced from geothermal.
and development, organic growth and a number of synergistic

acquisitions, Eden Energy Ltd has optimised a range of innovative
technologies (figure 44) necessary for the production, liquefying,
distribution and marketing of hydrogen gas.
The presence of hydrogen sulphide at the Innamincka project

Figure 41 - Hydrogen Sulphide Damage (Geodynamics)
operated by Geodynamics (ASX: GDY) in the Cooper Basin of South
Australia, led to hydrogen embrittlement of the well casing in the
Habanero-3 well (figure 41). Geodynamics later confirmed that the
embrittlement issues could be avoided by using a different grade
of steel. Two of Terratherma Ltds geothermal exploration licences
(GEL185 & GEL169) are in the immediate vicinity of the Innamincka
project, and present a potential opportunity to produce hydrogen
gas directly from geothermal well fluids.
Source: Geodynamics, 2009.
The production of hydrogen can be further integrated with

geothermal projects, with a number of alternative technologies
available, to ensure maximum production efficiencies and
improved overall project economics.
Introduction
Terratherma Ltds objective of renewable hydrogen production
integrated with a geothermal energy system is supported by the
extensive experience developed in this area by Terratherma Ltds
parent company, Eden Energy Ltd. Through inhouse research
Figure 45a -
SEM Image of Carbon Nanotube (single wall)
The recently developed Eden Energy Ltd JV pyrolysis technology, is

a highly innovative process where microwave energy induces the
thermal decomposition of methane, through a pyrolysis reaction
yielding hydrogen. Importantly, instead of carbon dioxide being
produced as a by-product, the process has been engineered to
synthesise the carbon from the pyrolysis reaction into very high
value carbon fibres or nanotubes (figure 45a, 45b & 45c).
The carbon fibres and nanotubes produced by the pyrolysis process
are of high value as they are suitable in a range of specialised
applications, including in the aviation and medical sectors.
Source: Eden Energy, 2009.

47
The key advantages of carbon fibres and nanotubes are:
Figure 45b -
SEM Image of Carbon Nanotube (single wall)
tensile strength up to 200-300 times of steel

approx 17% the weight of steel
great electrical / structural qualities
potential replacement for steel/aluminium in vehicles, aircraft
and many other applications
Assuming the development and commercialisation of the

pyrolysis technology progresses satisfactorily, Terratherma
Ltd anticipates the technology may be integrated with its
geothermal energy activities. The proposed configuration is for
geothermal energy to be used for electricity generation, with
electricity sold into the grid during periods of peak demand to
attract a price premium, and during periods of offpeak demand,
revert to the production of hydrogen and carbon nanotube and
fibre production (section 22.8).
Source: Eden Energy, 2010.
Figure 45c -
SEM Image of Carbon Nanotubes (bundled)
Eden Energy Ltd has played an important role in the adoption

of hydrogen based fuels in India, and continues to be an
integral partner in helping India achieve its goal set out in the
Indian Hydrogen Roadmap - for 20% of all vehicles to be using
a hydrogen based fuel by 2020. During 2010, Eden Energy Ltd
will conduct a commercial sized Hythane bus trial, with the Gas
Authority of India and Mahanagar Gas. The bus trial will use buses
installed with a customised Hythane bus engine developed
collaboratively with Ashok Leyland, the largest bus manufacturer
in India.
Source: Universit di Salerno, 2010.
48
Source: KCR 2006.
Figure 47 -
Distribution (First Indian Hythane Station)
Optiblend - Utilisation of Hythane

Eden Energy Ltd, has developed a system to displace up to 70%
of diesel use in diesel engines, by utilising an Optiblend dual
fuel kit and ongoing use of Hythane. The components required
for the Optiblend dual fuel kit have been developed by Eden
Energy Ltd (figure 48).
System Components (Sensor & Mixer)
Source: Eden Energy Ltd, 2009.
Figure 49 -
Hydrogen Production (SMR Technology)
Denver Hythane (Emissions Comparisons)
Emissions (grams/mile)
Figure 46a -
These proprietary blends are commonly known as Hythane

(trademark owned by Eden Energy Ltd), or referred to as HCNG.
The addition of hydrogen to natural gas to produce Hythane
results in a 10-15% improvement in efficiency, and significant
reduction in harmful emissions (figure 46a).
Hythane Market (Diesel genset)
The adoption of Hythane is underpinned by the low conversion

costs (most often consisting of suitable engines) and the
improved operating efficiencies, while reducing all major forms
of emissions including carbon monoxide, nitrous oxides and
unburnt hydrocarbons.
Figure 48 -
Hythane - Overview
During the late 1980s, scientists developed a range of enhanced
natural gas (predominantly methane) blends incorporating
approximately 20% hydrogen gas by volume (7% by energy).
The addition of hydrogen was incorporated into natural gas to
improve both the speed of ignition and the extent of combustion
as hydrogen is powerful combustion stimulant for accelerating
the combustion of methane within an engine. Hydrogen is also
a powerful reducing agent for efficient catalysis at lower exhaust
temperatures.
Figure 46b -
Immediate and significant market opportunities exist in both

India and the United States, where Eden Energy Ltd is very active
in leading the adoption of Hythane. During 2009, Eden Energy
Ltd bolstered its first mover advantage in India by building the
first public Hythane station in India for India Oil (figure 47).
The premium price expected to be achieved for the carbon

nanotubes ensures hydrogen production through the innovative
pyrolysis process is effectively a low cost by-product. The large
and growing market for strong lightweight materials will support
the continued growth of the carbon fibre and nanotube market.
The Eden Energy Ltd joint venture is advanced in the process
of patenting the innovative pyrolysis technology in more than
50 key international markets around the world and is confident
the technology will eventually be commercially deployed. In
February 2010, the Eden Energy JV announced a term sheet with
Indias largest company, Indian Oil Corporation Limited (IOCL) to
scale-up the pyrolysis technology for larger scale demonstration,
before ultimate commercialisation.
Hythane - Market
The market for the premium natural gas blend, Hythane is
substantial and is forecast to grow rapidly. Hythane is suitable in
both the transport and power generation industries, as the fuel is
suitable for use in most vehicles including locomotives and also
gas turbine and internal combustion generators (figure 46b).
Source: Adapted from Colorado Department of Health & Eden Energy Ltd, 2009.
Hythane - Future Production

The current source of hydrogen used by Eden Energy Ltd for
the production of Hythane, is from compact steam methane
reforming (SMR) units (figure 49). Unlike the SMR process
which produces carbon dioxide as a by-product of hydrogen
production, Eden Energy Ltd have developed a method which
produces carbon fibres from the carbon, and pure hydrogen gas.

49
12.6. Terratherma Ltd - Medium Term Market Opportunities

Traditional Hydrogen Markets
The present value of hydrogen produced worldwide is
approximately US$300 billion per year, and is forecast to grow in
the order of 20% per year for at least the next decade (Balta et
al, 2009). The majority of current hydrogen production is utilised
for industrial processes, specifically the production of ammonia
and the cracking of heavy hydrocarbons such as oil shale into
lighter hydrocarbons. The use of hydrogen in the petrochemical
industries, helps explain the dominance of hydrocarbon based
hydrogen production systems (figure 39).
Adoption of Hydrogen in Australia
The growth in demand for hydrogen, is expected to come
from primary transport, where fossil fuels will increasingly
be substituted by hydrogen fuels. Hydrogen will Initially be
used in a blend with natural gas (Hythane), as the transition is
straightforward, and in the longer term, hydrogen will be used in
its pure state in either a fuel cell or internal combustion engine.
Hythane in Australia
Terratherma Ltd plans to develop a hydrogen production capacity
integrated with its geothermal projects, and utilise the hydrogen
produced to provide Hythane, initially in South Australia and
eventually nationally. Eden Energy Ltd has developed the
necessary technologies required to produce, store and distribute
Hythane (figure 47). Hythane has been extensively trialed, both
independently and by Eden Energy Ltds partners including
major energy companies and engine manufacturers, including
Ashok Leyland (Indias largest bus manufacturer) and has proven
to be premium blend of natural gas. Depending on the location
Figure 51 -
Figure 50 -
Hythane Bus (MCI Classic Bus, California)
Source: Courtesy So Cal Metro, 2007.
and scale of Terratherma Ltds geothermal projects, Terratherma

Ltd may have the opportunity to develop a Hythane production
capacity in South Australia.
Eden
Energy Ltds Hythane gas does not require
special cryogenic storage conditions, and is the

only currently commercially viable hydrogen based
transport fuel available.
Hythane Car (Honda Civic - converted by Eden Energy Ltd)
12.7. Terratherma Ltd - Long Term Market Opportunities

Emerging Hydrogen Markets
Following decades of research into the development of hydrogen
fueled vehicles, with specific focus on hydrogen fuel cell electric
vehicles (FCEVs), there is increasing optimism that hydrogen
powered vehicles will eventually replace a proportion of fossil-fuel
based vehicles. Although many existing vehicles can benefit from
cleaner burning hydrogen through the adoption of Hythane, the
next generation of vehicles will utilise a 100% hydrogen based fuel,
which is expected to happen when hydrogen can be produced
more competitively.
Figure 52 -
Hydrogen Internal Combustion Engine (150kW)
The two primary candidates for utilising hydrogen in vehicles

include hydrogen fuel cell technology, and specialised hydrogen
internal combustion technology (figure 52). The market readiness
for FCEVs was highlighted in September 2009, when nine of the Source: HyFLEET:CUTE, 2009.
worlds largest automobile makers
including Daimler AG, Ford Motor Figure 53 - Natural Gas Pipelines (Australia)
Company, Honda Motor Company and
Toyota Motor Corporation, collectively
made a joint statement encouraging the
development of hydrogen infrastructure.
Alternatively, Eden Energy Ltd, has
developed and patented a hydrogen
based internal combustion engine,
which is more efficient than existing fuel
cells, and will become available when
supporting infrastructure is in place.
Hydrogen Transportation
Hydrogen can be transported in
liquified form in cryogenic equipment
adapted by Eden Energy Ltd, or in
its blended form (Hythane) can be
treated similar to compressed natural
gas (CNG) and with minor adjustments
may be transported in pipelines (figure
53) to key markets across Australia.
Source: ABARE, 2009.
Hydrogen Export Markets

Depending on the potential scale of any integrated hydrogen
production from Terratherma Ltds geothermal projects, and
the realisable hydrogen price, Terratherma Ltd may have the
opportunity to export hydrogen. Key international hydrogen
markets, particularly in Asia can potentially be supplied using
existing LNG infrastructure including tanker ships (figure 54),
Figure 54 -
Liquified Natural Gas Tanker (Japan)
The depth of experience developed by Eden Energy

Ltd, will provide opportunities and greatly assist
Terratherma Ltd in achieving its ambitions in the
production of hydrogen from renewable geothermal
Courtesy of: Eden Energy Ltd
50
resources.
Source: SP - Energy Frontier, 2009.

51
Part E
Geothermal Energy
13.
..............................................
54
13.1.
Introduction
..............................................
54
13.2.
Major Geothermal Energy Systems
..............................................
54
13.3.
Installed Global Geothermal Capacity
..............................................
55
13.4.
Forecast Global Geothermal Capacity
..............................................
56
13.5.
Global Geothermal Market Structure
..............................................
57
13.6.
..............................................
58
13.7.
Enhanced Geothermal Systems (EGS)
..............................................
59
Cooper Basin Oil & Gas Exploration

(Sep 2009)
Courtesy of: Impress Energy
52
Terratherma
MEMORANDUM I 53
LTD
TM
13. Geothermal Energy - Overview
13.3. Installed Global Geothermal Capacity
13.1. Introduction
13.2. Major Geothermal Energy Systems
The successful development of geothermal energy requires a

source of extractable thermal energy, the presence of a suitable
reservoir, water to extract and transport the thermal energy
and a location amenable to the development and utilisation, or
transmission of geothermal energy.
The basic operating principle for geothermal energy (figure 55)
involves the pumping of cold water into a hot underground
reservoir followed by the subsequent extraction of hot water and
the conversion of the water to steam due to lower atmospheric
pressure at surface. Finally the steam is utilised to turn a turbine
and generate power.
Figure 55 -
Volcanic - geothermal systems are typically high temperature

and shallow resources presenting attractive development
opportunities, however are not present in Australia.
Hot Sedimentary Aquifer - geothermal systems are
characterised by the presence of moderately hot-water,
typically hosted in permeable sandstones at intermediate
depths and present in Australia.
Enhanced Geothermal Systems - involve the creation of an
artificial reservoir typically in granite rocks, and the addition
of water. EGS projects are largely at the experimental stage of
development, however Australia is considered a world leader.
Following 40 years of consistent growth in the global geothermal

sector, by the end of 2009, installed capacity was 10,676MW with
a very large pipeline of development projects at various stages
of development. The majority of new geothermal capacity
(figure 56) in the 1970s was in the western United States, with
Figure 56 -
Installed Geothermal Capacity (Global)
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Geothermal Energy Systems (Overview)
Terratherma
GEOTHERMAL RESOURCE
TYPE, LIMITED TO VOLCANIC
REGIONS
a significant increase in the latter part of that decade again in

the United States, and also in the Philippines in response to the
Energy Crisis. During the 1990s the majority of growth came from
the Asia Pacific, specifically the Philippines and Indonesia. During
the last decade Europe has made a more significant contribution.
10,000
Capacity (MW)
In its purest form, geothermal energy refers to the energy contained within the earths crust, mantle and super-hot
core, with estimates that temperatures at earths core is approximately 5,000oC, and may exceed 7,000oC . The
utilisation of the energy within the earth for power generation, or other energy harnessing objective is commonly
referred to as geothermal energy, and has been increasingly exploited during the last century.
Added
TM
LTD
Cumulative Installed in Previous Years
Source: Activated Logic, 2010. Adapted from Emerging Energy Research, 2009
Balanced Portfolio
POWER
PLANT
INSULATING
SEDIMENTS
POWER
PLANT
INSULATING
SEDIMENTS
SANDSTONE OR
CARBONATE
HEAT EXCHANGER
HEAT
EXCHANGER
VOLCANIC
HEAT SOURCE
HEAT SOURCE
CONVENTIONAL GEOTHERMAL RESOURCES
54
TRANSMISSION
INSULATING
SEDIMENTS
FRACTURED
GRANITE
(CLOSED LOOP)
HEAT EXCHANGER
RADIOGENIC GRANITE
HEAT SOURCE
INNOVATIVE TECHNOLOGY
By conducting exploration
activities across a range of
geologically diverse basins,
Terratherma Ltd believes it
has improved the probability
of being able to delineate
attractive geothermal resources.
Terratherma Ltd is confident
the combination of balanced
exposure
to
different
geothermal systems, with a
comprehensive understanding
of the key commercial drivers
in geothermal development,
will enhance the likelihood
of
achieving
commercial
outcomes.
Due to geothermal expertise in key markets, the types of geothermal

resources available for development, the current and forecast
geothermal capacity can be divided into three primary categories
(figure 57). The near term growth in geothermal capacity, will come
Figure 57 -
from countries with geothermal expertise, followed by countries

with high quality conventional geothermal resources. In the
medium to longer term, growth is expected to come from projects
involving newer technologies including EGS projects.
Segmented Geothermal Market (Global)
High Temp Hydrothermal
POWER
PLANT
TRANSMISSION
Through the innovative and

systematic examination of
geothermal energy exploration
systems, Terratherma Ltd has
assembled an exciting project
portfolio (Chapters 16 - 19).
Caribbean
East
Africa
Indonesia
Iceland
Russia
Canada
Chile
Low Temp Hydrothermal
TRANSMISSION
ENHANCED GEOTHERMAL
SYSTEM (EGS)
Central
America
Philippines
Italy
NZ
US
Mexico
Japan
Turkey
Drivers of near-term
global growth
Nascent geothermal
markets with significant
growth potential
Hungary
Germany
India
China
Limited conventional resource

potential, but exploring low-temp
and EGS opportunities
EGS
HOT SEDIMENTARY
AQUIFER (HSA)
Geothermal Resource Type
VOLCANIC
Australia
0.2
0.4 Installed Geothermal

0.6
0.8
Capacity
1.2
55
13.5. Global Geothermal Market Structure
13.4. Forecast Global Geothermal Capacity

The global geothermal industry is experiencing unprecedented
growth, where the current development pipeline is similar in
size to all of the existing installed geothermal capacity (figure 58).
The near term growth is expected to come from countries with
significant existing capacity.
The conservative estimate for growth of the global geothermal

sector is for a tripling of installed capacity to 30,000MW over
the next decade, with an optimistic target of 40,000MW (figure
59). The development of EGS projects in places like Australia is
expected to make a major contribution from 2015 onwards.
Geothermal Development Pipeline (By Country)
Figure 58 -
Emerging Geothermal Markets
Markets with existing geothermal capacity driving new global growth
5,000
Figure 60 -
4,500
4,000
3,500
Segmented Geothermal Market (Global)
Emerging Pure-Play
Developers
Operating
Develop
Developers with
Operating Assets
Announced Pipeline
3,000
2,500
2,000
Terratherma Ltd that leverage their skills in exploration and

early stage development to establish geothermal projects. At
the other end, we have large, diverse and typically risk-averse
utilities and independent power producers (IPPs) looking to
establish significant renewable energy generation capacity. The
major exception to the polarised geothermal value chain, is the
geothermal market leader, Ormat Technologies (NYSE: ORA)
which is the only vertically integrated geothermal developer.
Established Geothermal IPPs
Own
Ownership Oriented
Utilities and IPPs
Established Owners with
In-House Development
Teams
Megawatts (MW)
For a relatively small segment of the power generation industry,

geothermal energy has attracted a large number of globally
significant companies positioning themselves for the expected
surge in geothermal activity as outlined in figure 59. The
geothermal development industry consists predominantly of
two distinct groups at opposite ends of the geothermal valuechain (figure 60). At one end of the value chain we have relatively
small, early stage, highly focused geothermal companies like
Renewable s-Focused IPPs
1,000
500
0
TM
Pure-play developers and

utility / IPPs converge to develop
and own geothermal
projects
Utilities Taking LongTerm View w/ EGS/Low

-temp Focus
Terratherma
Diversified IPPs
Exploring Increased
Involvement
Emerging Developers Yet to

Complete a Project
1,500
LTD
Forecast Geothermal Capacity (Global)

US carbon legislation and National RPS drives
sustained growth in the US. This is complemented
by significant growth in Indonesia and the
Philippines. Niche low -temperature and EGS activity
picks up momentum in Australia, and to a lesser
extent in Central Europe
45,000
High Case
Base Case
40,000
Installed 2008
Increased growth internationally, with
Southeast Asia, Latin America, Chile,
Mexico, and East Africa complementing
steady growth in the US. Mega -scale
projects in New Zealand also brought
online, with potential for additional
growth in Iceland
35,000
30,000
Near -term growth driven by
the US, New Zealand, and
increased activity in Indonesia
and Turkey
MW
25,000
Renewable Developers
Active in geothermal
Figure 59 -
Geothermal Market Participants

In most cases, early stage projects are identified and evaluated
by the smaller pure play geothermal developers, and as projects
are sufficiently derisked, larger utility style partners are often
introduced to manage the development of projects.
15,000
10,000
5,000
0
2009
2010
2011
2012
2013
56
Oil and Gas Players
20,000
2008
2014
State-Owned Utilities with Local

Ownership Focus
EGS Focused
Developers
2015
2016
2017
2018
2019
2020
Other important market participants include specialist drilling

companies and power plant providers as the geothermal industry
often requires specialised applications of these technologies.
Increasingly, companies from similar industries are entering
the geothermal sector by leveraging their specific strengths,
particularly in the case of oil and gas exploration companies.
Terratherma Ltd Positioning

In order to create and maintain a sustained source of
competitive advantage (SCA), Terratherma Ltd is firmly focused
on the delineation of high-quality geothermal resources and
the effective integration of these resources with synergistic
developments.
Terratherma Ltd has access to unique downstream technologies,
particularly in the area of hydrogen production and utilisation
from parent company, Eden Energy Ltd which enables
Terratherma to optimise project development and capture value
across broader segments of the value chain.
57
13.7. Enhanced Geothermal Systems (EGS)
13.6. Geothermal Technology

Single Flash
Level of Market Maturity (MW Installed)
Technology Overview
Dual Flash Figure 61 - Geothermal Technology Market (Global - 2008)
The type of power generation technology utilised inPhilippines
the development
Hybrid
of a geothermal field is largely determined by the characteristics of
7%
Dry Steam
Binary
the geothermal reservoir being developed.
9%
US
Dry Steam
US
25%
The simplest fields to develop are dryMexico
steam fields, as the naturally
Italy
Binary Cycle
Dual Flash
occurring steam is able to be utilised directly in power generation.
14%
10,676 MW
Indonesia
High temperature volcanic resources are developed withUSflash
based systems where the geothermal fluid flashes to steamNew
when
Zealand
Japan
Iceland
it is brought to surface, as the atmospheric
pressure
is
lower.
Indonesia
Single Flash
EGS/Hot Rock
Iceland
Kenya
45%
Alternatively, lower temperature
geothermal Iceland
resources often
utilise
Germany
Guatemala
relatively new binary geothermal technology, where the benefits of France
Japan
a working fluid with a lower boiling temperature are exploited. USAustralia
Stage of Market Development (Time)

Figure 62 -
Segmented Geothermal Market (By Technology - Global)
700
Flash -Binary Hybrid

Single Flash
EGS
600
Dry Steam
Double Flash
Binary
Added Capacity (MW)
500
400
300
200
100
Figure 63 -
Segmented Geothermal Market (By Technology Maturity - Global)
Level of Market Maturity (MW Installed)
Single Flash
Dual Flash
Philippines
Dry Steam
US
US
Mexico
Italy
Japan
Iceland
US
New Zealand
Indonesia
Iceland
Japan
Iceland
EGS/Hot Rock
Kenya
Germany
Guatemala
France
Australia
US
Stage of Market Development (Time)

58
Flash Systems
The primary advantage of flash systems
is the large capacity of turbines which
can be utilised (>50MW) resulting in
low per megawatt installation costs. A
number of flash plant variations exist,
including dual-flash systems where
the same configuration incorporates
both a high-temperature and a lower
Hybrid
temperature7% bottoming cycle to
Binarypower generation capacity.
optimise
9%
Research & Development

Extensive research and development of EGS concepts have
been conducted since the early 1980s with major initiatives
in France, Germany, Iceland, Japan, Switzerland and most
recently in Australia. An experimental EGS project in Soultzsous-Forets in France (figure 64) has been ongoing for more
than two decades and during 2007 installed an organic rankine
cycle power plant to generate electricity. The first commercial
EGS project, is a 2.5MW project in Landau (figure 65) in Germany
which was commissioned in November 2007.
The target geological structures are typically hosted

in radiogenic granites which release heat as the small
concentrations of potassium (K), uranium (U) and thorium (Th)
decay. The methods for drilling and fracturing these structures
to create artificial reservoirs is largely at an experimental stage.
One of the major challenges restricting the development of

EGS projects is the ability to be able to achieve sufficiently
high flow rates in the geothermal reservoir to achieve
economic thresholds. In early 2009, Geodynamics (ASX: GDY)
demonstrated the first EGS proof of concept in Australia.
Figure 64a -
Soultz-sous-Forets EGS Project (France)
Source: GRE, 2009.
Figure 65 -
Binary Cycle Systems

Dual Flash
The
of binary cycle
14% emergence
10,676 MW
technology
provides
developers
with the option to be able to extract
energy from lower temperature
Single Flash
geothermal resources.
Binary systems
45%
are increasingly being used in either
bottoming cycles or even in higher
temperature applications where the
geothermal fluids contain impurities
including silica lead to scaling and may
also result in damage to turbines.
Figure 64b -
Soultz-sous-Forets EGS Project (Reservoir)
Source: Genter et al, 2009.
Landau EGS Project (Germany)
Recent EGS innovations, including two demonstration
Dry Steam
25%
Binary Cycle
Indonesia
Dry Steam
Many of the early geothermal fields
developed, particularly in the United
States and Italy consist of dry steam
reservoirs, where the steam is used
directly to turn a turbine for power
generation.
Although dry-steam
geothermal fields present attractive
development
opportunities,
the
presence of these types of fields is very
limited and almost all identified fields
have already been developed.
Introduction
Recent exploration efforts towards identifying suitable
geological settings for enhanced geothermal systems (EGS), are
driven by the need to expand geothermal production outside
predominantly volcanic regions. Engineered geothermal
systems consist of artificially created or enhanced geothermal
reservoirs (as illustrated in figure 55) in hot dry rocks. Unlike
conventional geothermal systems which involve reservoirs with
high permeabilities and porosities, EGS projects are typically
developed in hard, non-porous rocks, including granites.
projects in Europe, and the achievement of geological

proof of concept by Geodynamics in Australia, highlight
the technical feasibility of establishing enhanced
Terratherma Ltd has the opportunity to advance EGS
development and pioneer the integrated utilisation of
EGS resources.
Source: GRE, 2009.
59
Part F
Commercial Demonstration
Recent successful demonstrations of EGS projects in a number
of different geographical and geological settings, has given
confidence to geothermal developers to pursue commercial
scale EGS development (figure 67).
Figure 66 -
Geodynamics 25MW CDP & GELs (Australia)
Geothermal Energy in Australia
Due to the high heat generating granites in Australia, particularly

within the South Australian Heat Flow Anomaly (SAHFA),
Australia is considered an ideal location to pursue commercial
EGS development. More than 20 different companies are
actively pursuing EGS development in Australia, including the
market leader, Geodynamics which has been exploring EGS
systems in the Cooper Basin of South Australia for almost a
decade.
In November 2009, Geodynamics announced plans to develop
a 25MW EGS Commercial Demonstration Plant (CDP) at its
Cooper Basin project, expected to commence production in
2013. Geodynamics is well advanced in its objective to develop
500MW of installed EGS capacity by 2018, as it has already
drilled a series of wells and conducted stimulation in the target
reservoirs.
GEL 185
Terratherma Ltd
14.
..............................................
62
14.1.
Introduction
..............................................
62
14.2.
Identifying Geothermal Resources
..............................................
62
14.3.
Current Installed Capacity
..............................................
62
14.4.
Geothermal Heat Flow & Temperature
..............................................
64
14.5.
Geothermal Exploration Activity
..............................................
64
14.6.
Geothermal Market Development
..............................................
65
14.7.
Geothermal Market Expansion
..............................................
67
14.8.
Transition to Commercial Deployment
..............................................
68
14.9.
Financing Geothermal Market Expansion
..............................................
69
14.10.
Geothermal Energy Market Dynamics
..............................................
70
Terratherma Ltd holds a strategic GEL (with joint venture partner

Origin Energy) adjoining the advanced EGS project (figure 66)
being developed by Geodynamics.
Source: Adapted by Activated Logic, from Geodynamics, 2009.
Figure 67 -
EGS Installed Capacity & Development Pipeline (Global)

EGS Under Development
Installed EGS
Drilling Depth (meters)
750
1,500
2,250
Average Hydrothermal Drilling Depth
3,000
3,750
3
4,500
8
5
5,250
6,000
2006
2007
2008
2009
2011
2012
Project
Country
MW
Project
Country
MW
Soultz-sous-Forets
France
2.0
Gro Schnebeck
Germany
2.0
Landau
Germany
2.5
Cooper Basin
Australia
25
Aktiengesellschaft
Germany
5.0
Bad Urach Expansion
Germany
1.3
Paralana
Australia
7.5
Coso
US
2.5
Desert Peak
US
n/a
60
2010
Terratherma
MEMORANDUM I 61
LTD
TM
14. Geothermal Energy - Australia
Figure 71 -
Australian Surface Heat Flow Map (mW/m2)
With the exception of a small binary geothermal plant in regional Queensland, the use of geothermal energy in
Australia is almost non-existent. The Australian continent does not host any of the conventional shallow depth,
high temperature volcanic geothermal resources exploited in other parts of the world, however it is home to some
of the hottest high-heat producing granites in the world.
14.1. Introduction
14.3. Current Installed Capacity
The active continental plate margins which give rise to spectacular

volcanic events and also host major geothermal resources in
regions where magmatic intrusions are in contact with water
near the surface, do not exist in Australia. The conventional
geothermal systems in Australia are predominantly of the hot
sedimentary aquifer type (figure 55) which have trapped heat
at depth, in a natural reservoir. The majority of geothermal
exploration efforts in Australia are focused on EGS resources.
The only installed geothermal energy capacity in Australia is a

small 120kW binary geothermal power plant (figure 68) in the
Queensland regional township of Birdsville, operated by Ergon
Energy. The energy source for the geothermal power plant is the
geothermal fluid pumped from the Great Artesian Basin (GAB)
which is approximately 98oC before it enters the power plant to
generate electricity.
Figure 68 -
Birdsville Geothermal Plant (Queensland)
14.2. Identifying Geothermal Resources

The basic premise adopted during the identification of
geothermal resources, is that prospective geothermal resources
must be both technically and economically feasible to constitute
a worthwhile geothermal resource. Generally, the deeper a
geothermal resource is, the greater the technical and economic
challenges are in developing these resources as the price of
drilling increases exponentially, with increased depth (figure 86).
As the temperature of the Earths core is interpreted to be greater
than 5,000oC (figure 69), the deeper we drill during geothermal
exploration, higher temperatures are encountered. One of the
major challenges during geothermal exploration is to identify
regions where very high temperatures can be intersected at
relatively shallow depths (figure 70).
Figure 69 -
Earths Crustal Temperature Profile (Various)
Terratherma
TM
LTD
Geothermal Exploration Licences
Source: Activated Logic, 2010. Adapted from HDRPL, 2009.
Figure 72 -
Australian Crustal Temperature Map (Est Temperature oC, at 5km depth)
Source: PIRSA, 2010.
Figure 70 -
Geothermal Temperature Gradient
Cooper Basin
(South Australia)
Terratherma
TM
LTD
Geothermal Exploration Licences
Source: Activated Logic, 2010. Adapted from Examiner, 2009.
62
Source: Activated Logic, 2010. Adapted from Examiner, 2009.
Source: Activated Logic, 2010. Adapted from Chopra, 2007.

63
14.4. Geothermal Heat Flow & Temperature
14.5. Geothermal Exploration Activity
14.6. Geothermal Market Development
The importance of high temperatures for establishing

geothermal energy projects as discussed in section 14.2 is
important, however the temperature alone does not provide an
indication of the heat flow. A high heat flow measurement from
the target reservoir is important as it provides an indication
of the geothermal energy producing capacity (thermal
conductivity) of the specific geological sequence.
As outlined in previous sections, the highly prospective

geological settings in Australia, contribute to the extremely
large geothermal resource potential present in Australia.
Geoscience Australia estimates that if only 1% of Australias
geothermal potential was realised, the recovered energy would
equate to 26,000 times Australias annual primary energy
consumption (Geoscience Australia, 2008).
Introduction
The development of the Australian geothermal energy sector is
influenced by the supportive regulatory environment, and the
major technical progress achieved by independent geothermal
explorers assessing a range of geothermal projects. Despite
the significant potential, the Australian geothermal industry is
considered an emerging industry with major risks. The size of
the Australian geothermal sector, as determined by the market
value of Australian Securities Exchange (ASX) listed geothermal
companies is approximately $500 million. In comparison, many
small to medium-tier oil and gas companies with significantly
reduced upside potential, regularly trade with capitalisations
similar to the entire Australian geothermal sector.
During 2009, Dr Graeme Beardsmore from Hot Dry Rocks Pty Ltd
compiled heat flow measurements from a number of regional
datasets to compile a surface heat flow map for Australia (figure
71). The map is a useful guide in highlighting potential regions
of interest for geothermal exploration, however is severely
limited in many regions due to the scarcity of local heat flow
data. An earlier version of the heat flow map was developed
(figure 72) in 2007 from data obtained from Geoscience Australia
up until 2005, and was used to make estimates of subsurface
temperatures at a depth of 5,000m across Australia. The crustal
temperature map suffers from similar limitations to the heat
flow map.
Figure 73 -
Australian Geothermal Exploration Licences
Investment Performance
A recently published research report by Activated Logic (AGI,
2009) found that the value of the Australian geothermal sector
as measured by the Australian Geothermal IndexTM (figure 75)
had decoupled from the broader Australian equities market
since April 2009.
Terratherma Ltd has incorporated these geothermal exploration

principles with key commercial and regional geological
interpretations to assemble a high quality geothermal
exploration project portfolio (Part H).
Figure 75 -
Australian Geothermal IndexTM
to contain very high sub-surface temperatures and

high heat flows.
Australia is leading the world in terms of exploration for EGS

resources, and has a strong domestic geothermal exploration
sector, consisting of a strong private sector including
geothermal exploration companies
and public institutions.
600
400
350
500
Expenditure A$ million
300
400
250
300
200
150
200
100
100
50
0
2000
2001
2002
2003
2004
2005
2006
Source: Activated Logic, 2010. Adapted from AGIAA, 2009.
64
2007
accurate and reliable information on geothermal energy

resources in Australia;
networks that encourage sharing of information and
experience between stakeholders including companies,
researchers and governments in Australia and overseas;
geothermal technologies suited to Australian conditions;
a skilled geothermal workforce;
a consistent, effective and efficient regulatory framework for

geothermal energy.
Source: AGEA, 2009.
The greatest challenges for the industry include the development

and adoption of adequate technology (particularly for EGS), the
securing of appropriate investment to finance exploration and
development activities, and the construction of infrastructure to
provide critical-mass for the industry.
Investment into the Australian Geothermal Sector (2000-2009)
Annual
Cumulative
an attractive investment environment in which early stage

ventures are able to mature to a level sufficient to attract
private finance;
a geothermal sector which understands and can contribute

to the institutional environment within which it operates; and
2008
2009
Number of Geothermal Licences

& Licence Applications
Figure 74 -
Through an extensive consultation process with AGEA and

AGEG, in December 2008 the Department of Resources,
Energy and Tourism released two landmark reports to guide
the development of the Australian geothermal industry (DRET,
2008). The first report, the Australian Geothermal Industry Development Framework outlines eight steps necessary for the
development of the industry (DRET, 2008):
community understanding and support of the economic,

environmental and social benefits of geothermal energy;
Terratherma Ltd has secured a portfolio of highly

prospective geothermal projects in regions interpreted
Industry Development
The Australian geothermal industry through its two peak
bodies, the Australian Geothermal Energy Association (AGEA)
and the Australian Geothermal Energy Group (AGEG) have
identified key challenges facing the industry.
Approximately
50
companies
holding almost 400 geothermal
exploration licences (figure 73) are in
the process of exploring, evaluating
and
developing
geothermal
resources in Australia. Since the
year 2000 when the first geothermal
exploration Licences were issued
in South Australia, geothermal
activity has escalated rapidly, with
annual investment into the Australia
geothermal sector approaching
$200 million during 2009 (figure
74). With a number of geothermal
projects reaching more advanced
stages, the rate of investment is
forecast to accelerate further.
The actual value of the AGITM did not deteriorate significantly

during the second half of 2009, but was outperformed by the
broader market as measured by the all ordinaries (XAO) as
confidence returned to global equity markets.
Renewable Energy Investment
Investment in the renewable energy sector continues to
increase at a rapid rate (figure 9) due to a strong regulatory
environment, subsidies by numerous governments and a price
premium being paid for renewable energy generation in the
form of renewable energy certificates. Continued concern for
global warming as a result of greenhouse gas emissions, and
the continued volatility in oil and gas prices will continue to
support investment into renewable energy.
Additional information, refer to Chapter 5.
Regulatory Environment
The key market mechanism for ensuring the large scale
adoption of renewable energy in Australia is the mandatory
renewable energy target (MRET) set by the Federal Government.
In addition, the government is pressing ahead with a proposed
carbon pollution reduction scheme (CPRS) with the emissions
trading scheme at the heart of the plan, although the plan has
been met with resistance in parliament (figure 76).
The development and adoption of new technologies is essential
for the development of the Australian geothermal sector,
and was addressed by the Geothermal Industry - Technology
Roadmap (DRET, 2008).
Additional Information, refer to Section 13.2.
65
Australian Geothermal Sector Development (pre-2007 to 2050)
2050
National emissions reduction target of

60% below 2000 levels by 2050, through
the Carbon Pollution Reduction Scheme
will provide a very strong incentive for
investment in renewable energy.
2040
7% Baseload Power Target by 2030
2030
Safe, secure, reliable, competitively

priced, renewable and emissions-free
base load power from geothermal
energy for centuries to come.
CPRS supported by two funds: the A$500 m

Renewable Energy Fund and the A$150 m
Energy Innovation Fund. These funds should
stimulate over $1.5 billion investment in
renewable energy generation.
5,500 MWe Geothermal Target
Generation capacity from Engineered Geothermal

Systems (EGS) to contribute 6.8% of total capacity.
Renewable Energy Certificates
Electricity production not produced from

renewable sources attracts a penalty for
$65 MWh until 2030. Effectively forms the
base price for RECs, a powerful incentive
for geothermal.
2020
Renewable Energy Target
Target for 20% of Australias electricity

to come from renewable energy sources
by 2020. Effectively subsidising billions
of dollars in clean energy investment.
14.7. Geothermal Market Expansion
CPRS Policy Initiatives
5,500 MWe from EGS

2,200 MWe from EGS
Figure 76 -
Installed Generation Capacity by 2020
Independent report by MMA found that the

Geothermal Industry is expected to make a
significant contribution to Australias future
energy needs, with forecast of 2200 MWe
baseload capacity by 2020 based on current
policy settings.
2019
A$153 m of co-funding awarded to

Petratherm and Geodynamics to assist
with geothermal demonstration.
Geothermal Drilling Program
A$50 m of co-funding for geothermal

proof-of-concept projects specifically
at the drilling stage.
Geodynamics Proof of Concept
Geodynamics demonstrated project

proof of concept through the
circulation of fluids at Habanero.
GIDF & GITR launched by DRET
The Geothermal Industry Development

Framework and Technology Roadmap
launched by the Department of
Resources, Energy & Tourism.
2013
2012
2011
2010
2009
2008
pre
2007
Source: Activated Logic, 2009. Compiled from various proprietary and public sources.
66
Commercial Scale Deployment
Progress to commercial scale deployment

by circa 2015, based on compelling evidence
from earlier demonstration scale projects.
Goals of AGEG & AGEA, with strong support
from state and federal governments.
Proposed Emissions Trading Scheme
Scaled-up Plants
Commercial Electricity Production
2015
Figure 77 -
Forecast Geothermal Capacity

The significant efforts of the Australian geothermal sector are
expected to result in the establishment of a major renewable
power generation industry in Australia. Due to the shorter time
to market, for conventional HSA geothermal resources, and the
fact that these types of geothermal resources do not require
the development of additional technologies, these projects are
expected to dominate geothermal production in Australia until
about 2014. By 2014, it is expected that much of the research
and development into EGS projects will be well advanced, and
a number of successful demonstration projects will have been
built. Given the number of attractive HSA geothermal projects
in Australia are limited, it is expected that beyond 2014, EGS
projects will make up the majority of installed geothermal
capacity (figure 77).
In late 2009, the industry body representing all geothermal
companies in Australia (AGEA) collected information from its
members to determine the expectations of the sector for the rate
of geothermal development in Australia. Following the collection
of this market data, AGEA engaged Activated Logic Pty Limited
to conduct a thorough assessment of the Australian geothermal
sector and provide forecasts for likely development. One of the
major findings was that the Australian industry expects to install
between 1640 and 2342 MWe by 2020, depending on whether
the optimistic or pessimistic scenario is achieved (figure 77).
Forecast Geothermal Development Capacity in Australia (MWe)
Geothermal Power Demonstration
Demonstrate success with geothermal power

generation so the investment community is
convinced geothermal energy is real. By 2012.
Geothermal Industry Development Grants

Renewable Energy Certificates
Renewable Energy Dem Program
2016
Geothermal Industry Research Grants
Geothermal Power Demonstration
Several geothermal power generation

demonstration projects in distinctively
different geologic settings. At least 3 by
2012 - Geothermal Industry Roadmap.
Discovery of Geothermal Resources

EGS Proof of Concepts
Geothermal
Demonstration
Plants
Geothermal
Industry Development
Grants
Prototype Validation
Estimated GEL associated work programs

committed to be spent by companies by
2013.
2017
stnarG tnempoleveD yrtsudnI lamrehtoeG
A$1.5 b Geothermal Work Programs
International research initiatives including the recently awarded

US$80 million by the US Department of Energy specifically for
research and development (R&D) of EGS technologies, (DOE,
2009) will inevitably assist EGS commercialisation around the
globe, further building confidence in the commercialisation of
EGS projects. During 2009, almost $200 million was invested in
the exploration and development of geothermal resources in
Australia (figure 74) - a significant achievement for an industry
with a market capitalisation of under $500 million (AGI, 2009).
As an increasing number of geothermal projects in Australia
transition from exploration to development and production
stages, confidence in the financial feasibility of the sector is
forecast to increase, in turn leading to increased investment.
As the scale of geothermal projects increase, the installed costs
(per MW) fall dramatically (figure 79).
2018
2014
Industry Critical Mass

In order for the Australian geothermal industry to succeed over
the long-term, the industry will need to substantially increase
in size to ensure that allied industries including drilling and
engineering companies continue to invest in the sector. The
Australian geothermal industry with increased capacity will also
lower the realised price on unitised costs, further improving
the economics of marginal projects which may presently be
considered non-economic to develop.
Proposed Emissions Trading Scheme
ETS by 2011/12 with the initial price of

carbon emissions for the 1st year set at A$10
per tonne and market trading by July 2012.
Government Grants for Geothermal
A$114 m in grants awarded by the federal

and state governments to develop the
geothermal industry.
Renewable Energy Demonstration Program

Demonstrate geothermal energy production at
commercial scale. At least 3 applications been made.
GEL Grant Applications
48 companies hold 385 Geothermal

Exploration Licences covering
360,000 km2 in Australia.
First GELs Granted
First geothermal exploration licences

granted to Geodynamics in 2001.
Source: Activated Logic, 2010. Adapted from AGEA data, 2009.

67
14.9. Financing Geothermal Market Expansion
14.8. Transition to Commercial Deployment

Commercial Deployment
The development of the Australian geothermal sector,
particularly the EGS focused segment, is expected to follow
a commercialisation path consistent with other emerging
technology industries. Because the Australian geothermal sector
is at the early stages of development, the majority of expenditure
is associated with exploration related activities (figure 78),
however this is expected to change as the sector matures.
Figure 78 -
Economies of Scale
Small scale geothermal projects, including early stage
demonstration projects are expensive on a per megawatt basis
(figure 79), as many major costs such as drill rig mobilisation are
fixed costs, independent of the size of the project. Larger projects
are able to take advantage of these economies of scale. The
recently awarded, renewable energy demonstration program
(REDP) grants are important in funding early stage projects.
Forecast Geothermal Development (By project stage)
Introduction
As outlined in previous sections (figures 9 - 12), the expansion of
the global geothermal industry has been progressing strongly.
However, particularly in the post global financial crisis (GFC)
environment, the shortage of capital is proving to be the major
bottle-neck in the commercialisation and broader adoption of
geothermal energy, globally. The lack of capital is severe across
all levels of the geothermal value-chain, but is particularly
problematic at the earlier exploratory stages of development,
where risks are deemed to be unacceptable for prospective
investors.
Large, proven, conventional geothermal projects at the advanced
stages of development, in established geothermal areas such
as the western United States or Indonesia have been able to
raise capital through project financing. In contrast, smaller,
earlier stage projects with unproven geology and speculative
(inferred) geothermal resources, particularly EGS projects are
experiencing major difficulties in raising capital to explore and
develop these projects. The immediate priority for the majority
of Australian geothermal projects is to raise additional capital to
be able to conduct proof of concept activities.
Figure 80 -
Financing Challenges
In general, all geothermal investment requirements up until a
small scale power plant is built on site, are funded by at-risk
capital, effectively equity from private investors, venture capital
funds, or other early stage investors (figure 80). In late 2009,
Australian geothermal company - Geodynamics, indicated
that in order to be able to access more attractive capital from
traditional project finance (debt) sources, an intermediate sized
(25MW) commercial demonstration plant (figure 66) would
need to be built and operated successfully for a year.
Securing
adequate investment to enable the
successful demonstration of large-scale geothermal

energy in Australia remains a challenge, however
Terratherma Ltd remains confident in the commercial
prospects of high-quality projects.
Forecast Australian Geothermal Financing Requirements ($ millions)
Source: Activated Logic, 2010. Adapted from AGEA & MMA data, 2009.
Figure 79 -
Forecast Geothermal Development Costs (A$/MWe)
Source: Activated Logic, 2010. Adapted from AGEA data, 2009.
68
Source: Activated Logic, 2010. Adapted from AGEA & MMA data, 2009.
69
Part G
14.10. Geothermal Energy Market Dynamics

In the short term, restrictive capital markets continue to put
pressure on geothermal development in Australia, however the
ultimate rate and magnitude of geothermal development in
Australia will be determined by competitive market dynamics.
(Garnaut, 2009) headed by Professor Ross Garnaut made

projections on the future price of electricity, with major
increases forecast during the next few years, due to the cost of
carbon abatement.
As geothermal project development costs move down the cost

curve (figure 79) due to larger projects reaching more advanced
stages of development, the construction of geothermal projects
for electricity generation is forecast to become increasingly
feasible. The Federal Governments Climate Change Review
An increasing electricity price over the next decade, to coincide

with the falling cost of electricity generation over the same
period (figure 81), is expected to act as a strong catalyst for
increased exploration and development of geothermal energy
resources in Australia.
Figure 81 -
Levelised Geothermal Electricity Generation Costs ($ /MWh)

Improving Geothermal Returns
Innovations
in
geothermal
technology during the next
decade are forecast to improve
geothermal output, and lower the
long run marginal cost (LRMC) of
geothermal electricity generation in
Australia (figure 82). The two major
innovations expected to lower the
LRMC of geothermal electricity
generation are summarised below:
Terratherma Ltd Geothermal Strategy

15.
..............................................
72
15.1.
Corporate Overview
..............................................
72
15.2.
Company History
..............................................
72
15.3.
Corporate Vision
..............................................
73
15.4.
Corporate Strategy
..............................................
73
15.5.
Segmented Geothermal Applications
..............................................
74
15.6.
Terratherma Ltds GEL Portfolio
..............................................
75
15.7.
Cost Implications of Deep Drilling
..............................................
75
15.8.
Terratherma Ltds Focus on the SAHFA
..............................................
76
15.9.
Geothermal Assessment MatrixTM
..............................................
77
15.10.
Geothermal Project Screening
..............................................
78
Cycle efficiency

Source: Activated Logic, 2009. Adapted from MMA data, 2008 & data from Garnaut Review, 2008.
Forecast LRMC of geothermal energy producon in

Figure 82 - Forecast
LRMCbyof2020
Geothermal
Energy
in Australia
by 2020 ($ /MWh)
(A$/MWh)
Australia
based on
innovaons
Heat exchanger innovations

$120
$97
$100
$99
$98

$63.70
$60
$40
$20
$0
HSA
EGS
Average
Geothermal
Cycle Efficiency
Heat Exchanger
70
Combined
Improvement in Geothermal
Source: Activated Logic, 2010. Adapted from AGEA 2009 Survey data, and QGECE efficiency estimates.
Porous metal and other

innovations in heat exchanger
technologies are expected to
increase output efficiencies by
10-30%.
Combined innovations
$82.32
$79.38
$80
Super-critical and gliding-cycle

technologies (ie: Kalina Cycle)
have the potential to increase
power output efficiencies by
10-30% for only a marginal
increase in cost.
The potential improvements

are expected to increase the
efficiency of geothermal plants
from the current 30-40% of
their theoretical limits, to that
of more mature technologies
such as coal and gas with
efficiencies of ~70%.
The above mentioned and other

innovations collectively, have the
potential to significantly improve
forecast geothermal project returns
in the medium term.
Terratherma
MEMORANDUM I 71
LTD
TM
15. Terratherma Ltd - The Geothermal Journey
15.3. Corporate Vision
The goal to identify and potentially commercialise geothermal resources in Australia is well advanced for
Terratherma Ltd, as the company was one of the first in Australia to apply for geothermal exploration licences.
With the assistance of parent company Eden Energy Ltds expertise in the hydrogen market, Terratherma Ltd has
the opportunity to potentially commercialise a number of highly prospective geothermal projects.
To be recognised as the Australian market leader in the

identification, appraisal and commercialisation of quality
geothermal resources, through the integrated utilisation of
geothermal energy in synergistic applications.
15.1. Corporate Overview
15.2. Company History
15.4. Corporate Strategy
Company Status
During 2004, while the geothermal industry in Australia was very

much in its infancy, the private company Eden Energy recognised
the potential for commercialising geothermal energy in Australia,
and commenced the acquisition of highly prospective tenements
in South Australia.
In order to achieve the ambitious corporate vision, Terratherma

Ltd has developed a systematic corporate strategy (figure
83) involving value creation and realisation through the
optimisation of both the technical and commercial drivers.
Terratherma Ltd is critically aware of the significant technical
challenges involved in developing integrated geothermal
projects, however is excited by the commercial opportunities,
and remains firmly aware of the relevant market dynamics.
Terratherma Ltd is a 100%, wholly owned subsidiary of

Australian Securities Exchange (ASX) listed, Eden Energy Ltd
(ASX: EDE). Refer to Appendix 4, for Corporate Structure.
Project Equity & Partners
Terratherma Ltds holds a 100% equity interest in all of its
geothermal exploration licences, except GEL185 where Origin
Energy (ASX: ORG) is earning a 70% interest through a joint
venture agreement.
Project Rationale
Terratherma Ltd has secured geothermal project areas with
potential for the integrated utilisation of geothermal resources,
specifically; electricity production, desalination and hydrogen
production.
Project Locations
Terratherma Ltds geothermal interests are located within
the world-class, highly prospective South Australian Heat
Flow Anomaly (SAHFA). A strategic selection of geothermal
exploration licences (GELs) is held by Terratherma Ltd in 3 key
geological provinces.
Industry Participation
Terratherma Ltd, is active within the Australian geothermal
sector and is a member of the two industry associations.
MEMBER
AGEA
Australian Geothermal
Energy Association
AGEA is the national industry

association for the Australian
Geothermal Industry.
MEMBER
AGEG is an organisation focused on
improving the technical capability of
the Australian Geothermal Industry.
72
In June 2006, Eden Energy listed on the Australian Securities

Exchange as a diversified clean energy company, with a platform
of gas exploration, hydrogen production and geothermal
exploration assets. The rationale for combining Eden Energy
Ltds geothermal assets with other technologies, particularly
hydrogen production and transport, was to take advantage of
potential operational and development synergies which may be
created through a joint development.
Recognising the significant progress made by the Australian
geothermal industry during the three year period, particularly
in the area of understanding EGS resources in South Australia,
Eden Energy Ltd sought to concentrate its geothermal interests
in a dedicated geothermal entity. As a result of the increased
requirement for concentrating Eden Energy Ltds geothermal
interests, Terratherma Ltd was established in August 2007 as a
wholly owned subsidiary of Eden Energy Limited. The formation
of Terratherma Ltd, meant new geothermal applications were
made directly by Terratherma Ltd instead of Eden Energy Ltd,
and existing geothermal licences held by Eden Energy Ltd were
assigned to Terratherma Ltd pursuant to a Deed of Assignment.
Consistent with Terratherma Ltds objective of focusing on
quality geothermal projects, a number of geothermal projects
held by Eden Energy Ltd, in both South Australia and New South
Wales which did not demonstrate the level of prospectivity
initially interpreted, have subsequently been relinquished. In
September 2009, Eden Energy Ltd successfully introduced major
Australian energy company, Origin Energy Ltd as a joint venture
partner into the Moomba North project. Terratherma Ltd is
confident Origin Energys geothermal expertise, particularly from
the nearby Geodynamics Innamincka project will greatly assist in
the evaluation of the Moomba North project, and may present
additional opportunities for Terratherma Ltd.
Eden Energy Ltd and Terratherma Ltd have agreed to conduct a joint
feasibility study in due course in relation to the production of clean
hydrogen from geothermal power. The key objective is to determine
whether geothermal power can be commercially exploited for
hydrogen production, for sale into both Australian and overseas
markets as a zero emission fuel for transportation or power generation.
Terratherma Ltds corporate strategy involves identifying highly

prospective geothermal projects, and conducting a thorough
assessment of the key drivers in determining both the technical
and commercial potential of a given project, before progressing
Figure 83 -
The proposed integrated development of geothermal

projects in South Australia, positions Terratherma Ltd
strongly with a powerful source of differentiation.
with more thorough project evaluation activities. The technical

evaluation involves a range of geological analysis from both
a basin-wide examination to specific project geological
parameters as determined by a geothermal assessment matrix
(refer to Section 15.9).
Interpretation of the commercial aspects of the geothermal
projects is an ongoing task, commencing before the application
of geothermal licences and continuing during the investigative
phases. Terratherma Ltd intends to identify attractive
geothermal prospects within its geothermal exploration
portfolio which present attractive development opportunities,
and when practicable introduce capable development partners.
Terratherma Ltd Geothermal Evaluation Schematic (Overview)

Geothermal Project Pipeline
Evaluation
and
appraisal
of
geothermal exploration portfolio to
identify technically and commercially
robust
geothermal
projects,
potentially suitable for development.
Technical Drivers
Commercial Drivers
Established geothermal industry with information exchange

Potential for multiple geothermal system types
Presence of strong high heat producing granites
Thick insulating sediments
Different geological basins
high heat flow
Capability to integrate with other synergistic technologies

Potential for PPA to underwrite investment
Proximity to markets and infrastructure
Participation across the value chain
Large resource potential
high value markets
High Quality Geothermal Projects

The
geothermal
projects
in
Terratherma
Ltds
portfolio
continually undergo assessment
against both the key technical and
commercial drivers.
Terratherma
TM
LTD
Source: Activated Logic, 2010. Adapted from Eden Energy Ltd, 2009.
73
15.5. Segmented Geothermal Applications

Generally, in order to economically develop a geothermal
resource a high temperature gradient (figure 70) and heat
flow are required (section 14.4). The major challenge for many
emerging geothermal projects is the exceptional drilling depth
required in order to reach an adequate temperature suitable
for power generation, commonly considered to be a minimum
of 150oC (figure 84). Because more powerful drilling rigs are
required to drill deeper geothermal wells, the costs of these
Figure 84 -
15.6. Terratherma Ltds GEL Portfolio

wells increase exponentially with depth (figure 86). Terratherma
Ltds geothermal development strategy involves segmenting
any identified geothermal resources based on temperature
profiles and determining relevant applications that will yield the
most optimal return. Lower temperature geothermal resources
are suitable for a number of different applications (figure 84)
and may also be directly integrated with higher temperature
applications including power generation.
Geothermal Energy Utilisation (based on resource temperature classification)
Resource
Classification
The rates of reaction and thermal conversion efficiencies are typically high for high temperature
geothermal resources, however at these temperatures resources are less common.
HEATING & COOLING APPLICATIONS
90 C
o
SEA WATER DESALINATION
Moderate
Temperature
HYDROGEN PRODUCTION
150oC
ELECTRICITY GENERATION
High
Temperature
GEOTHERMAL OPERATING TEMPERATURES
350oC
Figure 85 -
Licence
number
Ltd
has
assembled
robust
geothermal exploration portfolio in geologically and

geographically diverse regions, presenting potentially
significant opportunities for integrated geothermal
development.
Licence holder
Interest (%)
Bollards Lagoon (Cooper Basin)

GEL 169
Eden Energy Limited
100
Moomba North (Cooper Basin)

GEL 185
Eden Energy Limited
30
Origin Energy Limited
70
Origin Energy Limited is earning a 70% by having paid $1m to Eden Energy Ltd
upfront and making a contribution of $500,000 to exploration expenditures.
Following the rigorous screening process, Terratherma Ltd

currently hold 16 GELs (including two projects where a Deed
of Assignment has been signed between Eden Energy Ltd and
Terratherma Ltd) in South Australia. Terratherma Ltds GELs are
held in three different geological regions, namely the Cooper
Basin, the Torrens Hinge Zone and the Flinders Ranges, effectively
providing exposure to different geological formations whilst
diversifying risks. In addition to the geological diversification,
geographical diversification increases the commercial scope of
potential opportunities outside of a single region.
Terratherma
Terratherma Ltd GEL Portfolio* (by region)
Coorichina (Torrens Hinge Zone)

GEL 329
Terratherma Limited
GEL 330
Terratherma Limited
100
100
Pirie (Flinders Ranges)

Terratherma Limited
GEL 411
GEL 412
Terratherma Limited
GEL 413
Terratherma Limited
GEL 414
Terratherma Limited
GEL 415
Terratherma Limited
GEL 416
Terratherma Limited
GEL 417
Terratherma Limited
GEL 418
Terratherma Limited
GEL 419
Terratherma Limited
GEL 420
Terratherma Limited
GEL 421
Terratherma Limited
GEL 422
Terratherma Limited
100
100
100
100
100
100
100
100
100
100
100
100
Additional information available in Appendix 1.
15.7. Cost Implications of Deep Drilling
Low
Temperature
40oC
The extraction of energy from low temperature geothermal resources, is difficult as these resources
contain low levels of energy, and the thermal conversion efficiencies are typically very low.
Source:: Activated Logic, 2010.
The potential for Terratherma Ltd to utilise lower temperature

geothermal resources, or to be able to use the waste-heat from
geothermal plants for secondary or integrated applications
provides a number of value-added opportunities. The utilisation
of low to moderate temperature geothermal resources has the
potential to significantly enhance overall project economics for
projects which intend to develop high temperature resources.
74
Consistent with Terratherma Ltds corporate strategy,

Terratherma Ltd has conducted extensive evaluation (figure 83)
of a large number of geothermal projects in Australia to arrive
at the currently assembled geothermal exploration licence
(GEL) portfolio (figure 85). Ongoing evaluation activities have
resulted in the discontinuation of a number of Terratherma Ltds
New South Wales based and South Australian projects including
the Renmark project (GEL 175 & 176) which is currently in the
process of being surrendered. The stringent assessment of
geothermal projects held by Terratherma Ltd based on the
technical and commercial drivers (figure 83) is important in the
sustained competitiveness of these projects.
Terratherma
Ltd
proposes
an
innovative
commercialisation approach involving segmenting

potential geothermal production capacity based on
temperature profiling, followed by the integration of
each of the separate applications.
The costs of deep drilling, particularly in remote locations can

be very significant, in many cases significantly greater than
the market capitalisations of the companies proposing to fund
these deep exploration wells. Furthermore, depending on the
type of geothermal resource being developed, drilling costs
related to steam field development may constitute more than
55% of all field development costs.
Achieving high geothermal resource temperatures by drilling
deep wells (figure 70) is driven by the increased quality
(temperature) of resources and the flexibility for utilising this in a
greater range of applications (figure 84). However, the increased
temperature and flexibility come at a significant cost, resulting
from the exponentially increased drilling costs as the drilling
depths increase (figure 86). The limitation for many geothermal
companies is the significant depth they have to drill to develop
a project, whereas Terratherma Ltd has the flexibility given its
multiple intended applications.
Figure 86 -
Estimated Drilling Costs Vs Depth (In Australia)

75
15.9. Geothermal Assessment MatrixTM
15.8. Terratherma Ltds focus on SAHFA

The South Australian Heat Flow Anomaly (SAHFA) is a
region with elevated heat flows which primarily occurs
through the eastern Gawler Craton, the Delamerian
Fold Belt and the Curnamona Province (figure 87).
Average heat flows are elevated relative to Proterozoic
or younger terrains on other continents mean heat
flow within the SAHFA is 9210 mWm2 compared to an
average of 51-54 mWm2 in other countries (Neumann et
al, 2000). In comparison recent exploration wells drilled
in proximity to Terratherma Ltd (effectively in the centre
of Terratherma Ltds three project areas) indicate a heat
flow of approximately 120 mWm2, well above the already
elevated heat flow temperatures.
Figure 87 -
South Australian Heat Flow Anomaly (SAHFA)
Prominent Hill
Olympic Dam
TECHNICAL DRIVERS
The maximum heat flow measured within the SAHFA,

126 mWm2 (Neumann et al, 2000) occurs at Parabarana
Hill, approximately 30km northeast of the Paralana
Hot Springs. Recent drilling by numerous geothermal
exploration companies indicates that the SAHFA is
likely to extend further south, further increasing the
prospectivity of Terratherma Ltds Pirie Project.
Figure 88 -
Leigh Creek
The in-depth assessment of geothermal potential requires

a systematic assessment of key parameters, principally
categorised as either technical or commercial drivers as
described in the corporate strategy section. (section 15.4)
Terratherma Ltd has adopted a dynamic project evaluation
approach, where the technical drivers and commercial drivers
are assessed simultaneously to ensure projects remain both
technically and commercially attractive. Activated Logic has
incorporated the analysis conducted by Terratherma Ltd, into
a proprietary geothermal analysis methodology developed by
Activated Logic, the Geothermal Assessment MatrixTM (figure
89).
The key technical drivers utilised in the Geothermal Assessment

MatrixTM are largely determined by the geothermal reservoir
characteristics. The specific parameters relating to the physical
volume of the reservoir, the temperature of the reservoir, the
heat flow and existence of geothermal fluids, and the ability
to extract heat through these fluids are some of the major
technical drivers.
Pt Aug
Augu
A
Augusta
ug
A brief explanation of each of the key technical drivers essential

for successful geothermal development, are described below:
SAHFA Heat Flow Intensity (Distribution)

Adelaide
Area of High Heat Flow
Terratherma Ltd GELs
100
Reservoir Volume
A given sub-surface space hosted within a prospective geological
sequence in which geothermal energy is hosted and is suitable
kilometres
STAINABLE GEOTHERMAL ENERGY
Figure 89 -
to act as a reservoir where thermal energy can be reasonably

extracted. A reservoir is required to be within practical drilling
depth, have sufficient temperature and heat flow capacity, but
also the ability to have geothermal fluids circulated through it, to
enable the extraction of thermal energy. Enhanced geothermal
systems often require the creation of an artificial reservoir in a
largely impermeable granite dominated sequence to enable the
creation of an underground heat-exchanger (figure 55).
Reservoir Temperature
High heat flow is important in determining geothermal project
efficiencies and is influenced by high reservoir temperature,
heat producing geological sequences and the existence of
sufficient thermal insulation above the geothermal heat source.
Reservoir Flow Capacity
The presence of a geothermal reservoir with sufficient volume
and elevated temperatures is only useful if a sufficient fluid flow
rate is able to be established to extract a proportion of the thermal
energy contained within the reservoir. The flow rate is often
dependent on natural fractures contained within the reservoir,
and the specific porosities and permeabilities of the geological
sequences which make up the reservoir. Enhanced geothermal
systems often require the enhancement of existing fractures to
achieve commercially attractive flow rates. Flow rates are generally
much higher for conventional projects, as enhanced geothermal
systems are often hosted in impermeable geological sequences.
Geothermal Assessment Matrix (GAMTM)
Source: Activated Logic, 2010. Adapted from Neumann, 2006.
Reservoir
Volume
A major regional study conducted by Geoscience Australia utilising

multidisciplinary approach including, geochronology, geochemistry,
petrology and geophysical modelling provided increased resolution
of the regions with elevated hear flow. The analysis by Geoscience
Australia highlighted a high heat flow zone within the SAHFA which
trends in a north-south direction, proximal to Terratherma Ltds
geothermal project areas (figure 88).
-3
Heat production (Wm )
Source: Activated Logic, 2010. Adapted from Geoscience Australia, 2008.
76
Reservoir
Temperature
Reservoir
Flow Rate Capacity
As increased sub-surface heat flow modelling is conducted, there is

increasing confidence that the exceptionally high heat flow region
of the SAHFA will be expanded further to both the south and west,
upgrading the potential of Terrathermas Coorichina and Pirie projects.
In addition to the hot granites, radiogenic iron oxide deposits also
occur in the SAHFA most notably at Olympic Dam and Prominent Hill,
and may potentially contain even higher heat flows than the granites.
Tasman Resources (ASX: TAS), the largest shareholder and parent
company of Eden Energy Ltd has recently discovered a new Iron Oxide
Copper Gold Uranium (IOCGU) system to the north east of Olympic
Dam, which may provide Terratherma Ltd with an opportunity to
explore for regions of high heat flow in this style of geological setting.
TECHNICAL
DRIVERS
Power Cycle
Technology
Proximity to
Infrastructure
High value
Markets
Project
Integration
COMMERCIAL DRIVERS

77
Part H
COMMERCIAL DRIVERS
The key commercial drivers utilised in the Geothermal
Assessment MatrixTM are determined by a combination of cost,
location and market driven parameters. The specific exploration
and development costs, the operation and maintenance costs,
the distance to major electricity markets, and the availability of
high value markets are some of the major commercial drivers.
A brief explanation of each of the key commercial drivers
essential for geothermal development is described below:
Proximity to Infrastructure
The distance a prospective geothermal project is located
from infrastructure will influence both the exploration and
development costs, as remote projects incur higher costs in
relation to rig-mobilisation and other transportation sensitive
items. In addition, the distance to electricity transmission
infrastructure (figure 16) is another important commercial
consideration as the construction of high voltage powerlines
and sub-stations is a very capital intensive activity.
High Value Markets
The commercial value created by geothermal development is
ultimately derived from being able to generate project revenues
which will exceed the cost of developing and operating a given
geothermal project, over the operating life of a geothermal
project. High value markets provide the greatest opportunity
for significant project profits to be generated, and can be found
in regions of the NEM where the production of peak-time
electricity is lucrative, such as South Australia.
Project Integration
The systematic integration of geothermal development with
other industrial applications, provides opportunities to improve
project economics and overall commerciality by realising overall
economies of scale, and shared development costs. Terratherma
Ltd has numerous opportunities to potentially integrate both
desalination and/or hydrogen production (figure 29) across its
geothermal project portfolio, presenting significant commercial
opportunities.
projects in geologically diverse basins including:

Cooper Basin (Moomba North & Bollards Lagoon)
Flinders Ranges (Pirie)
Torrens Hinge Zone (Coorichina)
Geothermal Project Overviews
A variety of geothermal targets have been identified in the

project areas based on different geothermal systems (figure
55), and often more than one type of geothermal system target
exists in a given project area.
16.
..............................................
80
16.1.
Project Overview
..............................................
80
16.2.
Location & Geology
..............................................
80
The major different geothermal system target types across

Terratherma Ltds portfolio include both enhanced geothermal
systems (EGS) and conventional geothermal systems of the hot
sedimentary aquifer (HSA) type.
16.3.
..............................................
83
17.
..............................................
84
17.1.
Project Overview
..............................................
84
17.2.
Location & Geology
..............................................
84
Hot granites (e.g. Moomba North & Bollards Lagoon)
17.3.
..............................................
87
Fractured, relatively brittle, rock types in areas of high heat

flow. (e.g. Coorichina & Pirie)
18.
..............................................
88
These geothermal resource targets, should they be located

at appropriate depths with high enough temperatures, may
require enhancing the existing permeability to enable injection
and extraction of hot geothermal fluids. These types of systems
may be dry, requiring the addition of water or another fluid to
extract the heat, or contain pre-existing waters which may be
suitable for heat extraction.
18.1.
Project Overview
..............................................
88
18.2.
Location & Geology
..............................................
88
18.3.
..............................................
91
19.
..............................................
92
19.1.
Project Overview
..............................................
92
Hot sedimentary aquifer targets:
19.2.
Location & Geology
..............................................
92
19.3.
..............................................
95
Enhanced geothermal system targets:
Buried sedimentary units (e.g. Moomba North)

These geothermal resource targets, include deeply buried
sedimentary units, with adequate porosity and permeability,
in areas of elevated heatflow, beneath appropriate thermal
insulation. In addition, major fault zones, especially graben
or basin margins or large regional structures, offer zones of
naturally enhanced permeability that potentially could form
geothermal systems.
Commercial Considerations
15.10. Geothermal Project Screening
The Geothermal Assess MatrixTM methodology has been applied

to the all of Terratherma Ltds geothermal project areas. A short
summary of the key findings is provided in the individual
project section (sections 16 - 19, respectively).
The geothermal project portfolio assembled by Terratherma Ltd

address not only the technical drivers essential for geothermal
project development, but also cover the key commercial
drivers. Terratherma Ltds geothermal project portfolio includes
projects in close proximity to infrastructure (Pirie), high value
markets (Coorichina, Bollards Lagoon) and projects suitable for
integrated applications (Pirie).
Despite Terratherma Ltd eliminating a number of projects which

did not meet the necessary technical or commercial criteria,
Terratherma Ltd maintains a diverse range of geothermal
The diversified geothermal project portfolio provides

Terratherma Ltd with a diverse range of opportunities, whilst
minimising project specific technical and commercial risks.
Application of GAMTM to Terratherma Ltds Projects
78
Terratherma
MEMORANDUM I 79
LTD
TM
16. Geothermal Project - Bollards Lagoon

Terratherma Ltds Bollards Lagoon project consists of a single geothermal exploration licence, GEL169 which covers
an area of 498km2 and is located to the south of the Moomba gas field and a cluster of geothermal exploration
licences granted in the Cooper Basin area. The Bollards Lagoon project is highly prospective for relatively shallow
enhanced geothermal systems, and is located in an area with high heat flow.
16.1. Project Overview
The Bollards Lagoon project presents both a technically and
commercially attractive opportunity for the exploration of
EGS resources within GEL 169. Advanced geological studies
conducted by Terratherma Ltd and its consultants indicate the
potential for high temperature EGS targets at relatively shallow
depths, particularly in the north west of the licence where the
insulating cover is thicker and well data for nearby wells confirm
the high temperature gradients.
Although the production of hydrogen is likely to be technically
feasible at this location, given the remote location along with
desalination these additional applications are unlikely to be
considered. The primary objective at this location is EGS based
electricity production into the planned transmission network.
Additional information about this project and the titles of relevant
technical reports are available in the Appendices section.
Figure 90 -
Preliminary Geothermal Prospectivity Summary

L
VH
Enhanced Geothermal System

Hot Sedimentary Aquifer
Technical Prospectivity
Commercial Prospectivity
body which is postulated to elevate crustal heat generation

significantly above background levels, thus generating
relatively high temperatures at shallow levels in the crust.
A range of historical geophysical data including 2D Seismic, and
a MT survey covering GEL 169 already exist and have assisted
in the interpretation of the geological aspects of the licence
and more specifically its geothermal prospectivity. The most
useful data however comes from a petroleum exploration well
drilled by Beach Petroleum (BPT) in July 2004 (figure 94) named
Noarlunga-1 which intersected a condensed Jurassic and
Permian sequence before entering pre-Permian basement at
1504m depth. The well was terminated 35m into the basement
sediments at a depth of 1539m.
Detailed seismic interpretation by HDRPL in 2007 (figure
92) utilising the data obtained from Noarlunga-1 for depth
calibration, allowed HDRPL to provide a more detailed analysis
of the primary geological features within GEL 169.
Hydrogen Production
Figure 92 -
Seismic Line in GEL 169 (Through Noarlunga-1)
Desalination
Bollards Lagoon (Project Location Map)

Terratherma
16.2. Location & Geology
TM
Prominent Hill
Olympic Dam
Leigh Creek
The Bollards Lagoon project (GEL 169) is located on the

southern margin of the Cooper Basin (figure 90) and is on the
southern flank of a geological structure referred to as the
Tenappera Trough. Eden Energy Ltd selected this GEL as a
suitable geothermal exploration area based on a low bouguer
gravity signature (figure 91), which may indicate a buried granite
Figure 91 -
Gravity Signature (Blue is low, red is high)
PROJECT LOCATION
Adelaide
100
kilometres
80
A compressive stress regime can be inferred throughout much

of the Australian continent from the Australian Stress Map.
Compressive stress (minimum compressive stress vertical) is
ideal for enhancing horizontal fractures and it is reasonable
to assume that if a granitic body does lie beneath GEL 169, it
probably contains some fractures with this orientation. These
are attractive conditions for the development of an EGS
reservoir.
Limited data is available on temperatures within GEL 169.
However, using thermal conductivity profiles for the two wells
closest to the licence, derived from stratigraphic information in
the public domain and from published thermal conductivity
values, heatflow estimates were calculated for the GEL 169
region by HDRPL.
Source: HDRPL, 2007.
Figure 93 -
Granite Depth in GEL 169 (Interpretation)
The Noarlunga-1 well completion report prepared by Beach

Petroleum provided indications of bottom hole temperatures
(BHT). Once taking into account corrections based on the
fact that the bottom hole temperature in the well had not
yet equilibriated, HDRPLs estimation provides a value of
91.3C, giving a geothermal gradient of 44.1C/km. The
nearby petroleum exploration well to the north east of GEL
169, Aldinga-1 (figure 94) has a higher calculated geothermal
gradient of 55.1C/km, demonstrating the significant heat
flows in the area.
Pt Augu
Au
A
Augusta
ugu
The two closest and most relevant drill holes to GEL 169,
Noarlunga-1 and Aldinga-1 (figure 94) intersected basement
between 1500 m and 1600 m below surface. Temperature at
the basement interface is less than 100C at both locations,
implying that any commercial geothermal energy resource in
GEL 169 will be located within the basin basement. The precise
basement lithologies are not yet known.
The available data suggest that heat flow is 100 mW/m within
Noarlunga-1, and 119 mW/m within Aldinga-1. Note that the
figure for Noarlunga 1 is based on what Terratherma considers
to be a conservative estimate of bottom hole temperature, and
thus represents a conservative estimate of heat flow.
LTD
Bollards Lagoon
The interpretation of the seismic data (figure 92) has allowed

HDRPL to develop a depth map (figure 93) for the interpreted
presence of granite bodies in GEL 169. This data is important in
the establishment of a geothermal resource model.
The exploration concept based on the presence of a shallow

buried granite in GEL 169 by Terratherma Ltd was supported by
the seismic studies conducted by HDRPL (figure 92). The actual
presence of buried granite at this location however remains
a risk, as the only deep well in GEL 169 was not drilled to a
sufficient depth to confirm the presence of a granite body.

81
Figure 94 -
Bollards Lagoon (Geothermal Exploration Map)
Building on the estimation of surface heat flow, thermal

conductivity and heat generation within crustal rocks,
temperature can be projected to arbitrary depth by making a
number of assumptions. This temperature at depth estimation
procedure was adopted for the both the deep wells (figure 95),
and the temperature for Noarlunga-1 at 5000m was estimated
to be 202.9oC.
Figure 95 -
Temperature Projection (oC at Noarlinga-1)
Given the relative thinness of the post-Permian basin sequence

in this tenement, a hot sedimentary aquifer (HSA) geothermal
system is unlikely to be viable in GEL 169. An Engineered
Geothermal System (EGS)-type play in the basement is the
primary target. Available temperature data suggest that
heat flow in the area is high enough to generate attractive
temperatures for an EGS geothermal development at depths
less than 4000m.
Terratherma proposes to extend the areal extent of heat
flow estimates by assessing existing thermal data from
approximately 56 wells surrounding GEL 169. Detailed
seismic interpretation, including interpretation of additional
horizons and 2D lines to the original HDRPL interpretation, and
the results of the MT survey will assist in mapping the depth
of sedimentary cover and the extent of the possible buried
granite. Together these insights into regional 3D geology and
heat flow distribution will allow an estimation of stored heat in
the assumed granitic basement. From these studies, an Inferred
Geothermal Resource may be estimated.
16.3. Commercial Potential
Figure 96 -
Electricity Transmission Network (Proposed)
The high heat flow and temperatures encountered at

Terratherma Ltds Bollards Lagoon geothermal project, confirm
the prospectivity of GEL 169 to host a potential EGS project.
The licence is located between two of the most advanced EGS
projects in Australia, with the Innamincka project operated by
Geodynamics (ASX: GDY) to the north and the Paralana project
operated by Petratherm (ASX: PTR) to the south east (figure 96).
Terratherma Ltd
GEL 169
In late 2009, both these advanced EGS projects were awarded

$153 million in funding under the Renewable Energy
Development Program (REDP) and are at the advanced stages
of project demonstration. The Australian Energy Market
Commission (AEMC) has proposed a scale efficient network
extension (SENE) to connect the proposed geothermal
developments in the north east of the state, initially to the
power transmission infrastructure at Port Augusta. The
proposed transmission network intersects Terratherma Ltds
GEL 169 (figure 96), and is likely to provide a cost-effective
electricity delivery capacity for the Bollards Lagoon project.
Source: HDRPL, 2008
82
Given the location of the Bollards Lagoon project, desalination

is an unlikely application for this project, however there may
be opportunities for both SMR and pyrolysis based hydrogen
production, given the proximity to gas supplies at Moomba.
Source: AGEA, 2009

83
17. Geothermal Project - Moomba North

Terratherma Ltds Moomba North project consists of a single geothermal exploration licence, GEL 185 which
covers an area of 494km2 and is located to the north of the Moomba gas field and a cluster of geothermal
exploration licences granted in the Cooper Basin Area. The Moomba North project is highly prospective for both
hot sedimentary aquifer and enhanced geothermal systems.
The Moomba North project presents both a technically and
commercially attractive opportunity for the exploration of
primarily hot sedimentary aquifer resources within GEL 185.
Advanced geological studies conducted by Terratherma Ltd
and its consultants indicate the potential for high temperature
HSA targets at relatively shallow depths, as well as EGS targets,
however the HSA targets are considered lower risk at this
location. Well data from nearby petroleum exploration wells
confirm the high temperature gradients at this location.
Origin Energy (ASX: ORG) is earning a 70% interest in the
Moomba North project, and is also a joint-venture partner
of the adjoining Innamincka geothermal project to the east,
which is operated by Geodynamics (ASX: GDY).
Figure 97 -

L
Prominent Hill
Olympic Dam
Leigh Creek
Pt Augu
Au
A
Augusta
ugu
PROJECT LOCATION
Adelaide
100
kilometres
84
Figure 98 -
Depth to Patchawarra Coal (Interpreted)
Figure 102 -
Depth to Tirrawarra Formation (Interpreted)
Figure 103 -
Depth to Pre-Permian Basement (Interpreted)
Heat Flow Distribution (Cooper Basin)

Hydrogen Production
Desalination
LTD
Moomba North
Figure 101 -
Whilst no heat flow wells exist within the licence area (figure
104), numerous heat flow measurements have been calculated
from well temperatures directly to the south of GEL 185. Heat
flow within the licence area is expected to be a low risk, as the
majority of heat flow measurements from a large sample size in
the Cooper Basin indicate typically high values (figure 98).
TM
Depth to Toolachee Formation (Interpreted)
VH
Moomba North (Project Location Map)

Terratherma
Figure 100 -
The Moomba North project (GEL 185) is located on the southern

end of a geological structure referred to as the Nappamerri
Trough (figure 97), and is on the northern flank of the Moomba
gas field. The proximity of GEL 185 to the Moomba gas field
provides a large number of petroleum exploration wells from
which direct geological data has been obtained to develop an
advanced interpretation of the geothermal potential of this
licence.
Geological data from three petroleum wells on the boundary of
GEL 185, Moomba-73 and Moomba-86 on the southern margin
of the permit and Mootanna-1 on the eastern margin (figure
104) have been interpreted by HDRPL to develop a geothermal
model for the project. The three petroleum wells described
above were drilled to 3025m, 3085m and 3050m, respectively,
providing direct evidence of geological sequences at this
depth and direct bottom hole temperatures (BHT), from which
geothermal gradients have been calculated. The highest BHT
was encountered in the Moomba-86 petroleum well which was
212oC, implying a very significant geothermal gradient of 62oC/
km. The Moomba-73 petroleum well encountered a geothermal
gradient of 54oC/km and slightly higher at Mootanna-1 well
with 58oC/km. In addition to the exceptionally high geothermal
gradients, a thick sedimentary sequence exists just above the
basement, providing an ideal HSA geothermal target.
Source: HDRPL, 2008. After Beardsmore, 2004.
A seismic line (figure 99) which intersects GEL 185 in a northsouth direction was interpreted by HDRPL, and the results
confirm the deepening of the basement geology towards the
northern end of the licence, away from the Moomba gas field.
The sediments which overlay the basement in this area are the
thickest in the entire Cooper Basin and are often associated
with the majority of oil and gas reservoirs in the Cooper Basin,
but have not been drilled at this location as they are in a trough,
a poor petroleum exploration target. The topographic peak
of the regional geological structures in the licence area is the
Moomba gas field, and the thickness of sediments increase
away from the structural high (figures 100 - 103).
Figure 99 -
Seismic Line in GEL 185 (75JAV, North-South)

85
Figure 104 -
Moomba North (Geothermal Exploration Map)
The potential to create an enhanced geothermal system within

GEL 185 is dependent on being able to identify suitable hot
basement at a practical depth for drilling, but deep enough
to ensure adequate temperatures. The approximate depth to
Pre-Permian crystalline basement is interpreted to be between
4000m and 4500m (figure 103). Terratherma Ltds Moomba
North project is to the immediate west of the Innamincka jointventure EGS project (figure 105), operated by Geodynamics
(ASX: GDY).
Geodynamics is a leading developer of geothermal energy in
Australia (figure 66) and the results to date are very significant
for Terratherma Ltd, since Terratherma Ltd considers GEL 185 to
cover similar geological features to Geodynamics tenements.
There are strong regional trends with continuity of structural
elements between the two tenements resulting in similar
geothermal conditions. Consequently the Geodynamics
program provides a close analogue for future operations on
GEL 185, but with attention to permeability at shallower depths
either in porous sediments or in natural fracture systems
associated with major structures.
As demonstrated by the petroleum exploration wells on the
southern margin of GEL 185 (figure 104), temperatures in excess
of 200oC have been encountered at depths just over 3000m,
indicating temperatures in excess of 250oC are likely to exist in
the upper basement.
Despite the proximity of GEL 185 to the ground-breaking EGS

project operated by Geodynamics, the greatest geothermal
potential within GEL 185 is in the form a hot sedimentary
aquifer (HSA) geothermal system. The combination of high
temperature gradients above heat producing basement, and
insulation by overlying lithologies (good heat insulation),
provide an ideal setting for a HSA geothermal system in GEL
185.
Above the interpreted basement which may be suitable as an
EGS, there are three sedimentary sequences (figure 99) which are
the target formations for the development of a HSA geothermal
system. The shallowest sedimentary sequence potentially
suitable is the Toolachee formation (figure 100) at a depth of
approximately 2500m. Beneath the Toolachee formation is the
Patchawarra formation (figure 101) at a depth of 3300m in the
south of GEL 185 and increasing to 3800m in the north. The
final sedimentary sequence before basement is the Tirrawarra
formation (figure 102) ranging from a depth of 3500m in the
south to 4000m in the north of the licence area. The three main
target formations described are all known to contain reservoir
sands hosting oil and gas elsewhere in the Cooper Basin and
may have the necessary porosity and permeability qualities to
host a HSA geothermal system in GEL 185, based on available
well data.
Figure 105 -

Terratherma Ltd
GEL 185
The high temperature gradients encountered in three separate

petroleum exploration wells, combined with geophysical data
indicate the potential for EGS and HSA geothermal systems
at Terratherma Ltds Moomba North geothermal project. The
favourable geological setting for hosting a conventional HSA
project provides a potential opportunity to develop a shallower
and less complex geothermal system at Moomba North.
Source: HDRPL, 2008
86
The Moomba North geothermal project is Terratherma Ltds

most commercially advanced geothermal project, following the
introduction of Origin Energy as a joint venture partner during
September 2009. Following the payment of $1 million to Eden
Energy Ltd in 2009, Origin Energy will incur the first $500,000 in
joint venture expenditure, at which point Origin Energy will have
earnt a 70% interest in the Moomba North project. Terratherma
Ltd considers Origin Energy an ideal partner for the Moomba North
project, as Origin Energy has developed significant expertise in
both conventional and renewable energy power generation,
including geothermal. Origin Energy is a joint venture partner in
the nearby Innamincka geothermal project which may present
future synergies in bringing large scale electricity generation to
market (figure 105). The potential for the integration of hydrogen
production or for desalination at this location is low.
Source: AGEA, 2009

87
18. Geothermal Project - Coorichina

Terratherma Ltds Coorichina project consists of two geothermal exploration licences, GEL 329 & 330 which cover
an area of 993km2 and is located approximately 50km to the north of the giant Olympic Dam mine, operated by
BHP-Billiton. The Coorichina project is highly prospective for enhanced geothermal systems due to the thick cover
of insulating sediments covering an exceptionally hot region of the South Australian Heat Flow Anomaly (SAHFA).
The Coorichina project presents both a technically and
commercially attractive opportunity for the exploration of EGS
resources within GELs 329 & 330. Geological studies conducted
by Terratherma Ltd and its consultants indicate the potential for
high temperature EGS targets due to the interpreted presence
of buried heat producing granites beneath insulating sediments
providing an ideal geological sequence for the production of
elevated temperature gradients within the SAHFA.
Although the production of hydrogen is likely to be technically
feasible at this location, given the remote location, along with
desalination these additional applications are unlikely to be
considered. The primary objective at this location is EGS based
electricity production for either the NEM or Olympic Dam.
Figure 106 -

L
VH

Hydrogen Production
Desalination
Coorichina (Project Location Map)

Terratherma
TM
LTD
Coorichina
Prominent Hill
Olympic Dam
Leigh Creek
PROJECT LOCATION
Adelaide
100
kilometres
88
The observation that the heat flow anomaly extends beyond

the margins of the fold belt, suggests that it reflects anomalous
heat production rates in the basement rocks, an interpretation
supported by widespread Uranium mineralisation in MesoProterozoic rocks in the various cratons surrounding the Adelaide
fold belt. The local influence of elevated Uranium concentrations
on the heat flow field has been demonstrated around the
Olympic Dam mine on the Stuart Shelf. This is a region of the
Figure 108 -
Gawler craton bordering the Adelaide fold belt covered by a thin

veneer of essentially undeformed Neo-Proterozoic sediment.
Figure 107 -
Coorichina Project (GELs over regional gravity)

Terratherma
LTD
Source: Terratherma Ltd, 2010.
Interpreted Seismic Section (through GEL 329, refer to Figure 109 for location)
The Coorichina project is targeting the recently recognised

Mulgaria sub-basin, a 100km by 10km wide sedimentary
structure up to 6km in depth. The sub-basin was identified by
the Geoscience Australia seismic survey conducted along the
borefield road in 2003. The Mulgaria sub-basin sediments are
located within the Torrens Hinge Zone (figure 108), a complex
faulted transition zone between the Gawler Craton to the west
and the Adelaide Geosyncline to the east. The Torrens Hinge
Zone is a structurally complex region with predominantly fine
grained sediments of the Adelaide Geosyncline overlying the
Eastern edge of the Gawler Craton, with basement rocks likely
to be thermally anomalous.
Pt Augu
Au
A
Augusta
ugu
The Coorichina Project is located 50km north of the BHP-Billiton

(ASX: BHP) operated Olympic Dam mine, and encompasses
the current water pipeline and the proposed Olympic Dam to
Moomba gas pipeline route, as well as the proposed electricity
transmission network linking the Cooper Basin to Olympic Dam
(figure 110).
The measurement of individual heat flows in both South

Australia and New South Wales show systematic variations in
surface heat flow across Southern Australia. The measured heat
flow increases from approximately 50mW/m2 in the western
Gawler Craton to greater than 110mW/m2 in the vicinity of the
western boundary of the Adelaide fold belt before falling to ~6575mW/m2 in the vicinity of the Willyama Inliers in the eastern
parts of the fold belt. These data points clearly demonstrate that
the western boundary of the fold belt an area associated with
the THZ (figure 108) is located within a province of unusually
high heat flow. Geologically, this anomalous heat flow province
corresponds with regions in which the major crustal growth
occurred in Palaeo-Proterozoic through Meso-Proterozoic
times, and is clearly 'hotter' than the older fragments of the
western Gawler craton where the major crust forming events
are Archaean in age. The South Australian heat flow anomaly
forms part of a broad band of elevated surface heat flow
through the central part of Australia. Importantly, this band
corresponds approximately with the distribution of Palaeo- and
Meso-Proterozoic crust in the Australian continent.
Additionally, the project is situated within a region of overall

enhanced geothermal anomalism. The insulating sedimentary
blanket of the Mulgaria sub-basin overlies both the SA Heatflow
anomaly as well as the radiogenically anomalous basement of
the Gawler Craton rocks including Hiltaba suite granites and
possibly radiogenic heat producing granites (figure 108).

89
TM
Figure 109 -
Coorichina (Geothermal Exploration Map)
The Coorichina geothermal project area contains no effective deep

drill holes, therefore all of the available geological information has
been obtained from several shallow holes and interpretations of
regional geophysical surveys. The Olympic Domain of the Gawler
Craton, located on the eastern edge of the craton and underlying
the Torrens Hinge Zone (THZ) hosts both IOCG systems as well as
granites belonging to the Hiltaba Suite (Figure 108). A drill hole by
Western Mining Corporation approximately 30km to the south of
the Coorichina project intercepted granitic gneiss, a potential heat
source, at a depth of 900m. The regional gravity and magnetic data
(figure 107) show a similar structure trending toward the Coorichina
geothermal project area, however this will need to be confirmed
by drilling.
The granites found in this region on the eastern margin of the Gawler
Craton (figure 108) are characteristically enriched with radiogenic
elements, particularly uranium, and commonly intrude the Olympic
Domain. The Roxby Downs Granite that hosts the massive Olympic
Dam mineral deposit, is an example of this radiogenic granite.
Terratherma Ltd considers the Hiltaba Granites to be particularly
attractive targets for hosting geothermal resources amenable to
developing an engineered geothermal reservoir. Terratherma Ltds
geological investigations indicate the granites are likely to be hot
granites anomalously enriched in radioactive isotopes which mean
that the heat source will require less thermal insulation to achieve
an economically attractive geothermal resource.
Figure 110 -
Terratherma Ltd
GEL 329 & 330
Source: HDRPL, 2008
90
Source: AGEA, 2009

The geothermal potential within Terratherma Ltds Coorichina
project requires significant additional geological data (figure 109)
including geophysical studies and a number of shallow wells in the
licence area to provide heat flow data. In order to further confirm
the presence and properties of the heat producing basement and
the insulating sediments a deep geothermal exploration well will
be required. Terratherma Ltd intends to utilise an opportunity
to obtain direct temperature, heat flow and stratigraphic data,
through the assistance of parent company, Eden Energy Ltd.
The Coorichina project overlaps the Petroleum Exploration Licence
(PEL) 183, held by Eden Energy Ltd. Eden plan to drill a stratigraphic/
test well into a gas exploration target in the central Mulgaria subbasin in near future. The planned well is currently expected to be
drilled to 2000m. The data from this well will provide a significant
acceleration to Terratherma Ltds geothermal assessment, with
temperature, heat flow and stress data all available from the gas
well, at minimal cost to Terratherma Ltd.
The location of Coorichina in close proximity to BHP-Billitons
(ASX: BHP) Olympic Dam mine (figure 110) potentially provides
Terratherma Ltd with both immediate and longer term
opportunities for power offtake. The giant Olympic Dam mine is
a multi-mineral ore body located 270km north of Port Augusta
and is the worlds fourth largest remaining copper deposit, fifth
largest gold deposit and the largest uranium deposit. According
to the recently released Draft Environmental Impact Statement
(EIS) submitted by BHP-Billiton for the planned expansion of the
Olympic Dam mine (OD-EIS, 2009), the expansion will require 600
MW of additional electricity, almost half of South Australias current
electricity capacity.
The Coorichina project overlaps the Borefield Road, an unsealed road
linking the Olympic Dam mine site to Bopeechee approximately
110km away. The Borefield Road to Boopeechee is an important
infrastructure corridor with existing clearances. A major water
pipeline transporting water sourced from the Great Artesian Basin
(GAB) to the Olympic Dam mine parallel the Borefield Road. In the
event of a successful geothermal development at the Coorichina
project, the Borefield Road would facilitate the rapid construction
of powerlines from the Coorichina project area to the Olympic Dam
mine site. Alternatively, the transmission network proposed by
AEMC is planned to intersect Terratherma Ltds GEL 330 (figure 110),
and is likely to provide a cost-effective electricity delivery capacity
for the Coorichina project.
The primary focus for Coorichina is to confirm the presence of a
suitable geothermal setting and subject to exploration success,
eventually develop a geothermal power plant. With the planned
development of numerous regional mining developments,
an opportunity for either integrated hydrogen production or
desalination may exist in the future.
91
19. Geothermal Project - Pirie

Terratherma Ltds Pirie project consists of twelve geothermal exploration licences, GELs 411 - 422 which cover an
area of 5938km2 and is located between Port Wakefield and Port Augusta. The Pirie project is highly prospective for
enhanced geothermal systems due to the thick cover of insulating sediments covering an exceptionally hot region
of the South Australian Heat Flow Anomaly (SAHFA), and may be suitable for integrated geothermal applications.
The Pirie project presents both a technically and commercially
attractive opportunity for the exploration of EGS resources
within GELs 411 - 422. Geological studies conducted by
Terratherma Ltd and its consultants indicate the potential for
high temperature EGS targets due to the interpreted presence
of buried heat producing granites beneath insulating sediments
providing an ideal geological sequence for the production of
elevated temperature gradients within the SAHFA.
The primary objective of the Pirie project is the development of
EGS based electricity production to be supplied to the National
Electricity Market (NEM). Given the proximal location of the Pirie
project to both the Spencer Gulf and Gulf St Vincent, the integrated
production of hydrogen or desalination may be feasible.
Figure 111 -

L
focus of the Pirie project is the potential for granite or fractured

basement targets for engineered geothermal systems.
Data relating to the direct measurement of heat flow within
the Pirie project area is limited (figure 113), however data from
the immediate surrounds from other geothermal exploration
companies confirms the presence of both potentially suitable
geothermal reservoir and high heat flow. Terratherma Ltds
interpretation of high heat flow potential within the Pirie
project, as a result of the basement rocks beneath the Adelaide

Geosyncline being mostly thermally anomalous Gawler
Craton granites (figure 114), was supported by recent results
announced by Torrens Energy (ASX: TEY).
High heat flows have been confirmed in both the northern end
of the Pirie project near Port Augusta, and also the southern end,
with elevated heat flow measurements reported on both the
south-east and south-west margins of the Pirie project (figure 112).
VH

Figure 112 -
Pirie Regional Gravity (With heat flow values)
Terratherma
TM
LTD
Terratherma Ltd
GELs
Regional
Heat Flow
101mW/m2
Hydrogen Production
Desalination
Pirie (Project Location Map)

Terratherma
TM
LTD
The Pirie project is located between Port Wakefield and Port

Augusta (figure 111), and was selected by Terratherma Ltd
because the licence areas were interpreted to exhibit some of
the key technical and commercial parameters required for a
viable geothermal project.
Pirie
Prominent Hill
Olympic Dam
Leigh Creek
Pt Augu
Au
A
Augusta
ugu
PROJECT LOCATION
Adelaide
100
kilometres
92
The Pirie project area is located on the western margin of the

Adelaide Geosyncline, close to its junction with the eastern
edge of the Gawler Craton, a region referred to as the Torrens
Hinge Zone (figure 108). In this position Neoproterozoic
age (Adelaidean) sediments thicken rapidly to the east,
and although there is a lack of drilling data, it is likely that a
significant portion of this area is underlain, at least in part, by
granitoids including thermally anomalous granites of the
Hiltaba Suite based on analogy with the Torrens Hinge Zone
geology further to the north.
The presence of granitoids is considered to be a potentially
significant geothermal heat source within the project area. The
potential geothermal heat source is interpreted to be effectively
insulated and trapped by a thick sequence of fine-grained,
locally carbonaceous, Neoproterozoic sediments, up to several
kilometres thick, forming the western margin of the Adelaide
Geosyncline. The basal coarse-grained sediments of the
Adelaide Geosyncline provide a hot sedimentary aquifer style
geothermal exploration target for the Pirie Project, however the
Regional
Heat Flow
101mW/m2
Regional
Heat Flow
91mW/m2

93
Figure 113 -
Pirie (Geothermal Exploration Map)
High heat flow of 101mW/m2 recently encountered at the

Theoden well by Torrens Energy, only 5km to the south-east of
the Port Augusta township (figure 112) and less than 10km from
the Terratherma Ltd held GEL 149 confirms the geothermal
prospectivity at this location. The presence of high heat
flow in this region can be extended further north where an
additional well approximately 50km north of Port Augusta was
measured to have a 96mW/m2 heat flow value. The northern
extent of thermal anomalism can be extended at least an
additional 130km north of Port Augusta, where the Torrens
Energy operated Parachilna hosts numerous heat flows with
measurements in the order of 120mW/m2.
Figure 114 -
Terratherma Ltds Pirie geothermal project is located in a

geological region known to host thick insulating sediments, with
high heat producing granites at depth (figure 114). Additional
geophysical and exploration well data is required by Terratherma
Ltd to more precisely define geological structures which are
likely to present the highest probability of being suitable for the
development of an enhanced geothermal system. Despite, the
significant geological uncertainties, the extensive contiguous
north-south trending geothermal exploration licence portfolio
held by Terratherma Ltd offers diverse geothermal exploration
targets in a region with high heat flow, which may be suitable for
the development of a geothermal system.
Torrens Hinge Zone (Interpreted stratigraphy in Port August Region)
Source: Torrens, 2009

The Pirie project area is strategically located and serviced by
major infrastructure, including:
the National Highway and other main roads
power transmission lines forming part of the National Grid
a natural gas transmission pipeline from the Cooper Basin
sections of the National Rail Network
close proximity to the coast and to port facilities at Port Pirie
The strategic location of the Pirie project is valuable in both the
exploration phase and also during the potential development
phases of any geothermal development. The location close
to the South Australian coast is also important from the
perspective of integrated geothermal applications, specifically
for the production of hydrogen and the production of fresh water
through desalination.
Source: HDRPL, 2008
94
During the earlier stages of potential commercial geothermal

development at the Pirie project, the focus will be on the
generation of electricity from geothermal resources. The
proximity of high voltage transmission lines across the entire

project area is a powerful advantage, given the very high costs of
building electricity transmission infrastructure. In addition to any
electricity generation initiatives, the Pirie projects may potentially
be suitable for the application of desalination technologies to
assist with the shortage of water in South Australia for both
domestic and industrial markets. The production of hydrogen
through the use of geothermal energy is an additional potential
application of any potential geothermal development in the Pirie
project. Given, Terratherma Ltds parent company, Eden Energy
Ltd has a significant international position in the production,
storage, transport, and marketing of hydrogen and hydrogenbased fuels, the development of a hydrogen export business
out of South Australia presents major opportunities.
Additional Infrastructure Information for Pirie geothermal project
is available in the following sections:
Electricity Transmission & Major Infrastructure - Section 7.2
Desalination Opportunities - Section 11.7
Hydrogen Production - Section 12.7
95
Part I
Commercialising Geothermal
20.
..............................................
98
20.1.
Introduction
..............................................
98
20.2.
Geothermal Resource Delineation
..............................................
98
20.3.
Geothermal Value Creation
..............................................
99
20.4.
Geothermal Financing
..............................................
100
21.
..............................................
101
21.1.
Introduction
..............................................
101
21.2.
100MW Electricity Generation Scenario
..............................................
101
21.3.
Conceptual Development Parameters
..............................................
103
21.4.
Commercial Development Pathway
..............................................
103
21.5.
Electricity Generation Assumption
..............................................
103
22.
Geothermal - Conceptual Financial Analysis (TGP-FM)
..............................................
105
22.1.
Introduction
..............................................
105
22.2.
Project Scale
..............................................
105
22.3.
TGP-FM Overview
..............................................
105
22.4.
100MW Scenario - Data Inputs
..............................................
106
22.5.
100MW Scenario - Data Outputs
..............................................
108
22.6.
TGP-FM - Operational Sensitivity
..............................................
109
22.7.
TGP-FM - Price Sensitivity
..............................................
110
22.8.
Advantages of Integrated Geothermal
..............................................
111
22.9.
Summary of TGP-FM Implications
..............................................
111
23.
..............................................
112
Flinders Ranges, South Australia

(April 2008)
Courtesy of: Peripitus
96
Terratherma
MEMORANDUM I 97
LTD
TM
20. Geothermal - Commercialisation
20.3. Geothermal Value Creation
Terratherma Ltds geothermal projects are at various stages of development, It is envisaged that the exploration
and development of the geothermal projects may be accelerated through the delineation of significant geothermal
resources, and the subsequent rapid commercialisation through the rapid development of an attractive business
model. The integrated geothermal applications are expected to enhance project competitiveness.
The creation of long term sustainable value through geothermal

resources can be achieved through two interlinked, but distinct
strategies (figure 117):
- Exploration and development (growth)
- Geothermal energy production (margin)
20.1. Introduction
20.2. Geothermal Resource Delineation
The successful commercialisation of geothermal resources

requires the alignment of high quality geothermal resources,
with a supportive regulatory environment and ultimately an
attractive business case.
The first stage of developing a geothermal resource, involves

identifying a suitable geothermal resource that has been
independently verified. In 2008, AGEA and AGEG launched
the worlds first geothermal reporting code, the Australian
Geothermal Reporting Code (1st Edition). The reporting code
provides a clear outline of the requirements for establishing
a geothermal resource or reserve through the introduction
of a detailed classification system. In November 2009, the
Australian Geothermal Reporting Code Committee (AGRCC)
released the 2nd Edition of the Reporting Code, where specific
requirements were imposed with regards to describing the
commercial potential of geothermal resources.
The quality of a geothermal resource is determined by the

objective assessment of the thermal energy in place. As
confidence in both the presence and quality of a geothermal
resources increases and the likelihood of commercial
production increases, the classification of the resource changes,
as required by the Australian Geothermal Reporting Code - 2nd
Edition, 2009 (figure 115).
In terms of a robust regulatory environment, the Australian
geothermal industry is widely recognised as a leader in
geothermal exploration, particularly in the area of EGS.
The Commonwealth Government has provided significant
assistance for the development of the Australian geothermal
industry, including preparation of the Australian Geothermal
Industry Development Framework (GIDF), a number of financial
grant schemes (figure 80).
The business case for geothermal development centres around
the creation of value through the geothermal exploration,
appraisal and development phases (figure 116 & 117). Once
adequate geothermal resources have been identified and
proven to be extractable through the demonstration of a proof
of concept pilot plant. Provided the Net Present Value (NPV) of
the project is attractive (sum of revenues will exceed the sum of
all costs), a development decision is made.
Figure 115 -
Geothermal Reporting Code (Australian)
According to the Geothermal Reporting Code, the major

geothermal energy categories are as follows (AGEG, 2009):
Exploration Results
- General
Geothermal Resource
The creation of value through geothermal exploration and

development requires the successful exploration of geothermal
resources and the subsequent appraisal and development
of these resources. Through the appraisal of a geothermal
resource, an effectively free source of energy (geothermal) is
identified which can potentially be utilised as a free fuel for
a range of applications including the production of electricity
and other integrated applications. Assuming the cost of
exploring and appraising a geothermal resource is less than
the value of a substantial delineated geothermal resource for
which there is a ready market, then the exploration process has
created value. Similarly, progressing through the development
stage of geothermal commercialisation also offers significant
value creation opportunities, however this stage is often more
challenging due to the increased capital intensity (figure 116).
The alternative strategy of extracting value from geothermal
energy production is only available through existing geothermal
production facilities where value creating initiatives such as
integrated applications are utilised to increase returns from a
fixed capital base.
Given the high cost of capital for smaller geothermal exploration

companies (including Terratherma Ltd), and the lack of existing
geothermal production capacity, these companies often
focus on creating value at the earlier stages of the geothermal
value chain. Generally focusing on value creation through
the exploration and appraisal (figure 116) stages of the value
chain which require technical assessment expertise. Once a
prospective geothermal resource is identified, a geothermal
exploration company generally attempts to introduce a larger
utility experienced in power generation and transmission, to
lead the geothermal development activities, including the
geothermal steam field and power plant.
Because of the very different risk and capability profiles of
the smaller exploration companies and the larger utilities and
independent power producers (IPPs), the global geothermal
market is strongly segmented (figure 60), with very few vertically
integrated market participants.
Terratherma intends to leverage its technical capabilities, both in
the area of geothermal and hydrogen to attract a commercially
focused partner to assist with geothermal development.
Terratherma
Ltd, has demonstrated its ability to
attract large integrated utilities with geothermal energy

expertise, through the introduction of Origin Energy into
the Moomba North project as joint venture partner.
- Inferred
- Indicated
Figure 116 -
- Measured
Geothermal Value Creation (Across value chain)
Geothermal Reserve
- Probable
- Proven
The geothermal information released by Terratherma Ltd and

its parent company Eden Energy Ltd, can best be described
under the Exploration Results classification. In order to be able
to advance geothermal exploration results to a Geothermal
Resource, additional data in the form of direct indicators
describing a geothermal resource is required.
Terratherma
Ltds geothermal projects, specifically
those in the Cooper Basin (Moomba North & Bollards

Lagoon) have significant existing geological data
which is expected to be sufficient for the delineation of
significant Inferred Geothermal Resources.
Source: AGCC, 2008.
98

99
21. Geothermal - Conceptual Development

Figure 117 -
Geothermal Value Creation (Process schematic)
Terratherma Ltd holds a large geothermal exploration portfolio in South Australia, and is in the unique position
of being able to potentially develop integrated applications for exploiting the significant geothermal potential.
In order to demonstrate the vast value which may be realised from Terratherma Ltds geothermal portfolio, a
conceptual plan has been prepared for one possible scenario based on a 100MW electricity generation project.
20.4. Geothermal Financing

Geothermal exploration and development is relatively capital
intensive, particularly during the both the exploration drilling
and also the power plant construction phases. It is therefore
important for geothermal exploration companies including
Terratherma Ltd to be able to secure adequate funding to be
able to conduct the necessary geothermal exploration activities.
As a geothermal project progresses through the major stages
of development (figure 118), the confidence in the potential
economic value of a specific project increases, and as a result is
Figure 118 -
Geothermal Financing (By stage of development)
generally considered to have less inherent risks. At the earlier

stages of exploration, because there is often major uncertainty
about the presence of an attractive geothermal resource, it is
often difficult to obtain funding and activities at this stage are
often funded by at-risk capital.
As projects progress through to proof of concept and validation
stages, equity markets are the primary source of funding.
Only once geothermal resources and production concepts are
validated, does debt-financing become available.
21.1. Introduction
21.2. 100MW Electricity Generation Scenario
As outlined in earlier sections, a number of potential

opportunities exist for Terratherma Ltd to develop geothermal
projects for the production of electricity, hydrogen and water
through desalination (figure 119) depending on the temperature
of the geothermal resource being exploited (figure 84).
A 100MW Electricity Generation Scenario has been selected to

represent one potential conceptual development pathway. It is
envisaged that the potential for a much larger capacity power
plant is likely to exist at various locations across Terratherma
Ltds portfolio, however a conservative approach has been
taken. In comparison, the operator of the Innamincka joint
venture which is situated between Terratherma Ltds Moomba
North and Bollards Lagoon projects, estimates the geothermal
potential to produce 10,000MW of electricity.
Although the exploration activities of Terratherma Ltd in

South Australia are advanced, the current results are classified
as exploration results under the Australian Geothermal
Reporting Code. Therefore, no inferences are made about
the commerciality of these projects in the form of a resource
estimate. For the purposes of demonstrating the economic
potential embedded in Terratherma Ltd geothermal portfolio,
Terratherma Ltd has provided analysis for a simplified
conceptual development scenario. The scenario chosen is a
simple 100MW Electricity Generation Scenario (Section 21.2.)
which could be either a HSA or EGS projects, and does not
involve any integrated applications.
The Conceptual Development Scenario and Financial Analysis

is based on numerous assumptions which are considered to be
accurate and feasible, however this is provided for illustrative
purposes only and should not be relied on for any purpose.
Refer to Important Notices section for additional information.
Figure 119 -
An integrated geothermal development may provide

Terratherma Ltd with the potential to be able to provide
electricity into the national grid (NEM) during peak times
and take advantage of high prices, and divert electricity
to hydrogen production and desalination at other times.
Despite the multiplier benefits which may be realised through
an integrated development, for the purposes of outlining
a Conceptual Development scenario, a standard 100MW
Electricity Generation scenario has been considered.
The technologies, project development path and other
parameters incorporated into the Conceptual Development
scenario are considered to be appropriate, although additional
improvements particularly in the area of technology
development can realistically be anticipated in the next 3-5
years.

Exploration
Development
GEOTHERMAL PROJECTS
Geothermal Energy
ELECTRICITY
HYDROGEN
Desalination
Source: Activated Logic, 2010. Adapted from Islandsbanki, 2009.
100
WATER

101
Figure 120 -
Terratherma Ltd Conceptual Development Plan
STAGE 1
Proof of Concept
STAGE 2
Validation & Optimisation
STAGE 3
Commercial Scale-up
STAGE 1 - Proof of Concept

Introduction:

Objective:
Detailed laboratory work on core-samples, down-hole well data including highly

specialised temperature analysis, regional logs and seismic and extensive modelling
have been conducted and are expected to result in an inferred geothermal
resource estimate.
To drill test the target geothermal reservoir and confirm the presence of a
suitable geothermal reservoir for either HSA or EGS based on the interpreted
geological model. Target temperatures are expected to be in the range of
170oC - 220oC. Successfully fracture stimulate the injection well,
then optimally drill a production well and improve the connectivity of the
reservoir through stimulation. Demonstrate productive interconnectivity between wells
and confirm through extended closed-loop flow test.
Establish a Measured Resource as per the 2009 Geothermal Reporting Code.
Start Date:
1st January 2008
Completion Date: 31 December 2013

st
STAGE 2 - Validation & Optimisation

Objective:

Confirm the proof of concept results, by validating additional geological data including
stress testing and reservoir growth monitoring, additional reservoir engineering
and testing to determine optimal strata for well completion based on pressure,
porosity, flow rate and temperature. Incorporate information into optimal well
configurations and power plant, size, type working fluid.
Establish a Probable Reserve as per the 2009 Geothermal Reporting Code.
Start Date:
1st January 2014
21.3. Conceptual Development Parameters
21.5. Electricity Generation Assumption
The development of the conceptual 100MW Electricity

Generation scenario can be divided into three stages (figure
120), the initial proof of concept stage, followed by validation
and optimisation activities, and ultimately commercial scaleup.
Depending on the specific geothermal project area held

by Terratherma Ltd, based on current interpretations,
temperatures in excess of 200oC may reasonably be expected
at depths ranging from 4,000m - 5,000m. If a low temperature
cut-off of 150oC is assumed for a geothermal resource estimate
which may be obtained for electricity generation purposes,
then the average temperature of the geothermal reservoir can
be expected to be at least 170oC.
Following the establishment of an Inferred Geothermal Resource

Estimate (figure 115), Terratherma Ltd plans to construct a
1MW pilot plant (figure 122) to be able to demonstrate proof
of concept that the project geology and technology are able
to be commercialised. The proof of concept is also valuable
precursor to the validation and optimisation stage where
a commercial demonstration plant may be constructed to
showcase the robust project operating parameters, required to
access competitive sources of debt financing.
21.4. Commercial Development Pathway

Due to the critical-mass requirements to realise process
efficiencies and the ability to scale-up as required, the general
development pathway for a geothermal project involves the
progressive development from conceptual to commercial stages
as various technical and commercial milestones are achieved.
The validation and commercial scale-up timeline (figure 122)
for the 100MW conceptual development scenario, highlights
a possible project development path based on conventional
geothermal developments. The validation and optimisation
stage is based on a 5MW power plant with the commercial
demonstration project based on a larger 30MW power plant.
Assuming successful demonstration, the large-scale commercial
development is able to be rapidly advanced subject to prevailing
market conditions.
Figure 121 -
Based on established project parameters of the probable reserve, the current

outlook for renewable energy prices, cost of capital, practical development scenarios
established through the preparation of a suitable BFS - commit to project sanction
(FID). To develop the project to ensure that the NPV and IRR of the project and other
benefits are realised in a timely manner.
Establish a Proven Reserve as per the 2009 Geothermal Reporting Code.
Start Date:
1st January 2015
102
thermoelectric conversion efficiency is: 13.62%

nominal net electrical power output is: 100MW
nominal power plant life is:
30 years
Then the minimum geothermal energy required to develop

and provide energy for the conceptual 100MW geothermal
power plant for 30 years, is 868PJ.
The above calculation refers to a conceptual development
scenario and the technology, scale and timelines are subject to
a range of project developments, which are highly dependent
on satisfactory progress being made during the critical proof
of concept stage. The impacts of the electricity generation
capacity are assessed in Chapter 22, with the Terratherma
Geothermal Project Financial Model (TGP-FM).
In general, the temperature (T)

of a working fluid dictates the
conversion efficiency (ce) of thermal
power to electrical power, such
that as the temperature at which
the conversion takes place the
generally higher the efficiency can
be expected to be. The thermal
to electrical power conversion
efficiency (figure 121) has recently
been explored at depth in a recent
MIT publication relating specifically
to EGSs by Tester et al, (2006).
Completion Date: Ongoing - potentially indefinite expansion.
170oC
Power-Cycle Thermal Efficiency Gradient
STAGE 3 - Commercial Scale-up

If;
the average reservoir temperature is:
Completion Date: 31st December 2014
Objective:
By using Testers energy conversion equation and assuming

generally accepted average values for parasitic power losses
and nominal power plant output and plant life, we can
approximate a conceptual development scenario.
Source: Tester, 2006. Adapted from Professor Hal Gurgenci QGECE, 2008.
103
Figure 122 -
22. Geothermal - Conceptual Financial Analysis (TGP-FM)
Validation and Commercial Scale-up Timeline (Conceptual Development)
2050
Scale-up 1,000 MWe
2040
Scale-up 500 MWe
2030
Direct distribution to major regional customer as

well as direct connection to the National Electricity
Market.
Commercial Production - Phase C
Commercial Production - Phase B
Commercial Production - Phase A
Confirm the proof of concept results, by validating

additional geological data including stress testing
and reservoir growth monitoring, additional reservoir
engineering and testing to determine optimal strata
for well completion based on pressure, porosity, flow
rate and temperature. Incorporate information into
optimal well configurations and powerplant, size,
type working fluid.
Start.
Proof of Concept
Proof of concept based on fluid circulation
between two wells achieved December 31st 2013.
Reservoir Engineering
104
Geothermal Industry Development Grants
Finalise
Commercial Scale-up
Based on established project parameters of

the probable reserve, the current outlook for
renewable energy prices, cost of capital, practical
development scenarios established through the
preparation of a suitable BFS - commit to project
sanction (FID). To develop the project to ensure
that the NPV and IRR of the Project and other
benefits are realised in a timely manner.
Front-end Engineering Design & PPA
Major power production from various productive

wells and connection & transmission to National
Electricity Market grid.
Phase A - Commercial Production
Second phase of new capacity installation

leading to major power production from various
productive wells and connection & transmission
to National Electricity Market grid.
Phase B - Commercial Production
Third phase of new capacity installation leading to

major power production from various productive
wells and connection & transmission to National
Electricity Market grid.
Phase C - Commercial Production
Implementation of power distribution integration

projects which may include hydrogen production
or large-scale desalination or other energy
intensive industries.
2020
~ 1,000 MWe
~ 500 MWe
~ 250 MWe
~ 200 MWe
2019
A detailed financial model, the Terratherma Geothermal Project - Financial Model (TGP-FM) has been developed
to provide a structured understanding of the impacts of key input variables such as power output per well, to the
overall project economics. The systematic and dynamic assessment of Terratherma Ltds geothermal projects
through the TGP-FM allows for project optimisation and also prioritisation.
22.1. Introduction
22.2. Project Scale
The Terratherma Geothermal Project - Financial Model (TGPFM) is a Microsoft Excel based dynamic spreadsheet (Appendix
2) with approximately 50 input variables and a number of
interlinked worksheets which provide key data outputs. The
TGP-FM is a valuable tool in rapidly assessing the impacts of
changes to key project parameters, provides an indication
of possible valuations and also highlights the prospective
commerciality of a conceived geothermal development.
The TGP-FM provides detailed information on the important

project parameters required to achieve commerciality,
particularly in terms of project scale required to be able to
reach efficiency thresholds and achieve project critical-mass.
Depending on a potential geothermal development for any

of Terratherma Ltds projects (part H), the key inputs and
assumptions can quickly be entered into the TGP-FM and an
initial dynamic assessment is made.
The financial analysis in this chapter is based on the Conceptual
100MW Electricity Generation Development scenario outlined
in Chapter 21.
2018
~ 100 MWe
2017
Small-scale proof of concept projects often incur many sunk

costs associated with performing one-off operations such as
deploying a drill-rig to the project site, and the costs can not be
distributed across many wells (generally a couplet). In addition
to the economies of scale afforded by larger projects, generally
the achievable flow rates of individual wells increase, as the
underground heat exchanger in the reservoir becomes more
efficient as it realises a reservoir wide critical-mass.
Recent modelling by Geodynamics indicates that the expected
electricity production per well for a demonstration size plant
is 4.3MWe, whereas a production well in a larger scaled-up
plant can be expected to produce 7.61MWe,
a significant increase of 75% (Geodynamics,
2009). The combination of reduced costs and
higher efficiencies means geothermal projects
are highly dependent on significant scale
to be able to produce competitively priced
electricity, particularly in remote areas.
22.3. TGP-FM Overview
2016
The Terratherma Geothermal Project - Financial

Model (TGP-FM) has been developed to
demonstrate the potential benefits of a
geothermal project development. The TGPFM is available in Microsoft Excel format
with approximately 50 input variables which
can be changed to assess the impact on
project economics.. The 100MW scenario was
developed as a conceptual scenario and has
been provided for illustrative purposes only.
~ 30 MWe
Proven Reserve
2015
~ 5 MWe
Probable Reserve
EXPLORATORY PRE-FEASIBILITY
2014
Measured Resource
Inferred Resource
pre 2014
~ 1 MWe
FINANCIAL MODEL
Terratherma
LTD
TM
The Conceptual Development Scenario and

Financial Analysis is based on numerous
assumptions which are considered to be
accurate and feasible, however this is provided
for illustrative purposes only and should not
be relied on for any purpose.
Refer to Important Notices section for
additional information.
105
22.4. 100MW Scenario - Data Inputs

The financial analysis in this section and throughout this chapter,
is based on the Conceptual 100MW Electricity Generation
Development scenario outlined in Chapter 21. The sole source
of data for the various geothermal project parameters into the
TGP-FM, is a series of interlinked data input tables (Appendix
2). A series of data tables feed data into the four primary input
tables (figures 123 - 126) which enables the TGP-FM to model
and calculate the outputs for the particular scenario.
project life was taken as 30 years from commissioning and is

considered a reasonable assumption based on operating history
in other parts of the world. The commissioning is assumed to be
gradual over a 3 year period with a 5MW demonstration plant in
2015, 38MW commercial demonstration in 2016, and complete
scale up to 87MW and ultimately 100MW in 2017 (figure 122).
The data provided in the data input tables is based on a

combination of industry standards, best-estimates and general
assumptions and may be varied from time to time, to provide a
more accurate overview of the conceptual geothermal project.
Figure 124 -
TGP-FM (Input Table 1.2)
The assumed price for the sale of electricity production and

RECs was derived from forward estimates from various sources
including Australian Treasury, (figures 23 & 28).
estimated drilling costs, as 4000m deep EGS wells requiring

fracturing are assumed, however less costly and shallower wells
may be suitable in a HSA system.
Project capital costs are based on a combination of recent

industry prices, company estimates and a range of other
assumptions. The greatest uncertainty in this section is for
Input Table 1.3 (figure 125)
Figure 125 -
It is assumed two thirds of project financing will be in the form

Figure 126 -
Full details of the rationale and explanation for each of the data
inputs is provided in the actual TGP-FM (Appendix 2), however
an overview of each of the data input tables is given below.
This conceptual development scenario assumes major funding
for the proposed project will come from the listing of the project
entity in an initial public offering (IPO), with the founders (the
parent company) receiving a proportion of the issued equity.
For the purposes of conducting this specific scenario analysis,
and consistent with the Validation and Commercial Scaleup Timeline (figure 122) it is assumed the 100MW conceptual
development will be completed during 2017.
The conceptual development scenario assumes 18
production wells will be required with a production capacity
of approximately 5.6MW (electrical) per well to achieve the
proposed 100MW nameplate capacity target. The capacity
factor assumed in the analysis was 95%, which is very high
for any form of power generation, but frequently achieved
for binary cycle based geothermal systems (figure 7) as the
geothermal fluids do not come in contact with important
power plant components due to the working fluid. The assumed
Figure 123 -
Source: Activated Logic, 2010. Data from TGP-FM, 2010.
106

107
22.6. TGP-FM - Operational Sensitivity

of equity sourced from an IPO, and the remaining third will be
available in the form of a syndicated loan (debt) at 11.68% pa.
Figure 128 -
TGP-FM (Output Table 2.2)

The depreciation schedule is assumed to be straight line over
a 20 year period, with a corporate tax rate of 30% in Australia.
A composite of four different valuation methodologies are
explored including book value and EBITDA multiples to derive
a weighted average estimate of the expected premium issued
shares will achieve upon listing on a public exchange.
The data ouputs presented in section 22.5 are based on the

100MW conceptual geothermal development scenario, and are
based on a range of operational assumptions. Because the actual
operational parameters are likely to deviate from the assumed
parameters, a detailed sensitivity analysis is built into the TGP-
Figure 129 -
FM. Although all of the key operational parameters may be

changed in the input tables (figures 123 - 126), detailed sensitivity
analysis has been conducted on two of the major operational
parameters, well output (figure 129) and capacity factors (figure
130) to determine the impacts on overall project economics.
TGP-FM (Well Output Sensitivity)

TGP-FM Sensitivity Scenario
TGP-FM Most Likely Scenario
22.5. 100MW Scenario - Data Outputs
The well output as measured by MWe produced per

well is a function of the geothermal reservoir fluid at
surface, the flow rate and ultimately the conversion
efficiency of the power plant.
The assumption in the conceptual development
scenario assumed well output of 5.59MW resulting in
an estimated net present value (NPV) of $100 million
for the project. Well output of 5.59MW was taken as
the most likely scenario, based on an average of South
Australian published geothermal resources.
The financial analysis including data outputs in this section and

throughout this chapter, is based on the Conceptual 100MW
Electricity Generation Development scenario outlined in
Chapter 21. The sole source of data for the various geothermal
project parameters for the TGP-FM, is a series of interlinked data
input tables (section 22.4). A series of data tables feed data into
the four primary input tables (figures 123 - 126) which enables
the TGP-FM to model and calculate the following outputs for
this particular scenario.
To determine the sensitivity of the project NPV to well

output, additional scenarios were conducted with
both higher and lower assumptions.
The modelling indicated that the minimum well output
required is 4.85MW per well, to ensure a positive NPV,
however when increasing assumed well output by
1MW was found to more than double project NPV.
The key findings, as determined by the data inputs and

calculated by the TGP-FM are summarised in the two output
tables (figures 127 & 128).
Summary
Internal rate of return
12.4%
Net present value
$100 million
Payback period
9 years
Capital cost per megawatt
$6 million
Nominal cost per megawatt hour
$48.27
Net return on invested capital
4.8%
Net return on common equity
7.2%
Equity premium at listing
53%
Figure 127 -
Figure 130 -
TGP-FM (Capacity Factor Sensitivity)


scenario assumed a capacity factor of 95% resulting in
an estimated net present value (NPV) of $100 million
for the project. The capacity factor of 95% was taken
as the most likely scenario, based on the average of
published binary cycle operational data.
TGP-FM (Output Table 2.1)
To determine the sensitivity of the project NPV to a high

capacity factor, additional scenarios were conducted
with both higher and lower assumptions.
Based
The modelling indicated that the minimum capacity

factor required is 82.4% to ensure a positive NPV,
however when decreasing the assumed capacity by
only 5% from 95% to 90%, was found to reduce project
NPV by almost 40%.

108
Binary cycle based systems including both Organic

Rankine Cycle and Kalina Cycle systems are typically
characterised by very high capacity factors.

109
22.7. TGP-FM - Price Sensitivity

The data ouputs presented in section 22.5 are based on the
100MW conceptual geothermal development scenario, and are
based on a range of price assumptions. Because the actual price
parameters are likely to deviate from the assumed parameters,
a detailed sensitivity analysis is built into the TGP-FM. Although
Figure 131 -
22.8. Advantages of Integrated Geothermal

all of the key price parameters may be changed in the input
tables (figures 123 - 126), detailed sensitivity analysis has been
conducted on two of the major price parameters, electricity price
(figure 130) and production well related capital costs (figure 131)
to determine the impacts on overall project economics.
TGP-FM (Electricity Price Sensitivity)

Electricity prices are forecast to continue to increase

strongly (figure 28) due to increased fuel costs and the
costs associated with carbon abatement.
scenario assumed an electricity price of $68.35/MWh
resulting in an estimated net present value (NPV) of
$100 million for the project. The electricity price of
$68.35/MWh was taken as the most likely scenario,
based on the price for forward contracts.
To determine the sensitivity of the project NPV to the
electricity price, additional scenarios were conducted
The modelling indicated that the minimum electricity
price required is $54.10/MWh to ensure a positive
NPV, however by increasing the electricity price from
$68.35/MWh to $75/MWh was found to increase project
NPV by over 46%.
Figure 132 -
TGP-FM (Capital Cost per well equiv. Sensitivity)

The capital cost per production well equivalent

incorporates the drilling costs (including pro-rata
injection well), steam field and connection, condensers
and power plant supply and installation.
scenario assumed a capital cost per well of $31.1
million resulting in an estimated net present value
(NPV) of $100 million for the project. The capital cost
of 31.1 million was taken as the most likely scenario,
based on the sum of the best estimates available.
To determine the sensitivity of the project NPV to
capital costs, additional scenarios were conducted
The modelling indicated that the maximum capital
cost possible is $37.2 million, to ensure a positive
NPV, however when decreasing the assumed capital
cost from $31.15 million to $25 million was found to
increase project NPV by more than 35%.
110
The potential operational and development synergies of

integrating either desalination or hydrogen production, or
possibly both with a geothermal development have been
explored in previous chapters, specifically Chapter 10.
forward sold through a power purchase agreement (PPA),

power plants designed to provide peak power (typically OCGT,
CCGT less frequently) are believed to achieve PPAs in the order
of $300/MWh, in South Australia.
Although detailed financial modelling for the 100MW conceptual

development scenario (chapter 21) has been provided through
the TGP-FM, the detailed financial modelling of the costs and
benefits of hydrogen production and desalination are beyond
the scope of this report. However, based on the preliminary
findings of the TGP-FM, future integrated development
scenarios may be developed and optimised to ensure successful
project outcomes.
Terratherma Ltds integrated geothermal development concept

potentially provides the opportunity to provide electricity
into the NEM when spot market prices are high, and divert
geothermal energy and electricity to the production of fresh
water and hydrogen during offpeak periods.
The sensitivities (figures 129 - 132) conducted for the TGPFM provide insights into the ultimate benefit of synergies
which may be realised through an integrated geothermal
development. The impacts of a high capacity factor (figure
130) are significant in maximising project value as measured by
NPV, and highlight the importance of ensuring the geothermal
capacity is utilised as intensively as possible.
Increase power output from 5.59MW to 6MW per well due

to thermal applications, particularly for desalination.
The multiple integrated applications for energy derived from

geothermal resources potentially provides Terratherma Ltd
with the flexibility to divert energy to the applications which are
expected to achieve the highest returns. A possible scenario
whereby Terratherma Ltds projects could exploit the synergies
in an integrated development has the potential to provide
electricity into the NEM during periods of peak demand. Longterm and offpeak electricity prices in South Australia are often
under $60/MWh, however during peak periods the spot market
prices increase rapidly with electricity prices exceeding $5000/
MWh on 27 separate occasions. Due to financing requirements
for a large proportion of future electricity production to be
To gauge the scale of benefits which may be derived through

an integrated geothermal development, the following
improvements were assumed:
Increase in realised power price from $68.35/MWh to $80/

MWh to reflect the peak price optimisation opportunity.
Reduce capital costs from $31.54 to $30 million per
production well equivalent due to reduced cooling
requirements and other infrastructure synergies.
By applying the above three integration derived improvements
to the TGP-FM most likely scenario based on the 100MW
conceptual development, the project NPV is improved by more
than 150% from an estimated $100 million to $258 million.
An integrated geothermal development as envisaged

by Terratherma Ltd, provides the flexibility to divert
geothermal energy to the application which achieves
the highest returns at any moment in time.
22.9. Summary of TGP-FM implications

The financial model (TGP-FM) developed to assess conceptual
geothermal development potential in financial terms has been
found to provide powerful insights into the sensitivities relating
to geothermal project valuations. In cases where there are
major trade-offs in terms of development options, for instance
drilling cost versus temperature (ultimately depth) (figure 86) the
TGP-FM provides a tool for comparing the scenarios (scenario
analysis) to identify the optimal development alternative.
Whilst the common objective of other geothermal exploration
companies often involves power generation alone, the
alternatives for optimising project financial returns is limited.
The integrated geothermal development strategy developed
by Terratherma Ltd, combined with the flexibility in geothermal
energy utilisation (figure 84) (due to the wide range of
geothermal temperature resources which may be utilised)
provides Terratherma Ltd with an opportunity to realise optimal
project outcomes. The analysis in Section 22.8, highlights

the potentially significant benefits which may be realised
through an integrated geothermal development. Terratherma
Ltd is in a unique position of having access to revolutionary
hydrogen production technologies which will potentially allow
Terratherma Ltd to capture value across the entire energy value
chain, and increase project returns.
Additional scenarios including direct geothermal use (heating
& cooling), different project scale (larger or smaller) and level
of integration are available, to demonstrate the possible
geothermal development opportunities and identify synergies.
The TGP-FM provides Terratherma Ltd with a dynamic

project assessment capability, ensuring optimal project
outcomes can be identified rapidly and reliably.
111
23. Conclusion - Opportunities & Challenges

The substantial geothermal exploration portfolio held by Terratherma Ltd in South Australia, is highly prospective
for the delineation of both conventional geothermal resources and enhanced geothermal systems. Terratherma
Ltd intends attract a capable joint venture partner and utilise its parent companys technical expertise in renewable
energy, to develop a robust project development case and ultimately to commercialise these geothermal assets.
Terratherma Ltd holds a portfolio of 16 GELs in three separate
geological regions across South Australia, covering an area of
7923km2 of the South Australian Heat Flow Anomaly.
The federal governments Mandatory Renewable Energy Target
of 20% renewable energy use by 2020, which is supported by
Renewable Energy Certificates, provides a strong incentive for
geothermal project development.
Based

Geothermal energy is the only form of renewable energy

suitable for baseload power generation, due to the very high
operational capacity factors, typically in the order of 90 - 95%,
particularly for binary cycle geothermal plants.
Access to capital for geothermal development remains

an ongoing challenge due to the relatively high upfront
exploration and development costs associated with large scale
Electricity prices in South Australia are forecast to increase

rapidly due to increased demand, increased fuel costs, and
the imposed costs of carbon abatement. The concentration
of wind farm power generation in South Australia has created
an intermittent and volatile electricity generation scenario,
requiring increased baseload power, providing an ideal scenario
for geothermal development.
Terratherma Ltd recently signed a farm-in agreement with

major Australian energy utility, Origin Energy Limited, to explore
the geothermal potential of Terratherma Ltds Moomba North
project.
Electricity demand in South Australia forecast to increase

substantially during the next decade, with the planned
expansion of giant Olympic Dam mine, expected to require an
additional 600MW of electricity.
Terratherma Ltd has conducted extensive technical and
commercial analysis on its geothermal project portfolio
including significant geophysical analysis and well log data
interpretation to develop geothermal prospects.
Following an extensive geothermal project evaluation
process over a 2 year period, Terratherma Ltd has relinquished
sub-optimal licences and has decided to concentrate on the 16
GELs with maximum geothermal potential.
Terratherma Ltds GELs are highly prospective for both
conventional (HSA) geothermal systems, as well as enhanced
geothermal systems (EGS).
In order to demonstrate potential business case for a
geothermal development within Terratherma Ltds geothermal
project area, a detailed conceptual development scenario
based on a 100MW power plant was conducted.
A dynamic financial model, the Terratherma Geothermal
Project Financial Model (TGP-FM) was developed to assess the
commercial potential of the conceptual development scenario.
112
Part J
Supplementary Information
24.
Risks
..............................................
114
24.1.
Risks Specific to the Company
..............................................
114
24.2.
General Investment Risks
..............................................
119
24.3.
Other Risks
..............................................
119
25.
Definitions
..............................................
120
26.
References
..............................................
122
Despite the high geothermal exploration and development

costs, Terratherma Ltd has identified a number of unique and
logical strategies for improving overall geothermal project
economics, and has validated these concepts through the TGPFM.
The two major differentiating strategies developed by
Terratherma Ltd, involves the integrated development of
either hydrogen production or desalination, with a geothermal
project.
Terratherma Ltds parent company Eden Energy Limited has
extensive experience in the production, transport, storage
and utilisation of hydrogen. Eden Energy Limited recently
announced the discovery of an innovative hydrogen production
technology based on a pyrolysis process, and has initiated
commercialisation activities with India Oil Corporation Limited,
commencing with scaling-up of the technology.
Terratherma Ltds investigations indicate that the integrated
application of geothermal energy production with either
desalination and/or hydrogen production is expected to deliver
significant efficiencies and economies of scale.
Preliminary financial modelling with the TGP-FM indicates an
integrated geothermal development involving either hydrogen
production or a desalination application are likely to deliver
exceptional economic improvements. The potential economic
value (as measured by NPV) which may be realised by an integrated
geothermal application, was found to be as much as 150%.
TERRATHERMA LTD I INFORMATION Terratherma

MEMORANDUM I 113
LTD
TM
24. Risks
There are a number of risk factors, both specific to the Company (Terratherma Ltd) and of a general nature, which
may affect the financial position, financial performance, cash flows and growth prospects of the Company, the
ability of the Company to pay dividends and the outcome of an investment in the Company. There can be no
guarantee that the Company will achieve its stated objectives or that forward looking statements will be realised.
Discussed below are certain, but not all, risks associated with an investment in Terratherma Ltd or its projects. Each of the risks
set out below could, if they eventuate, have an adverse material impact on the performance of Terratherma Ltd or its projects.
Any potential investment in the Company carries risk and, before deciding to invest in the Company, potential Applicants should
read this Information Memorandum in its entirety and, in particular, should consider the risk factors that could affect the financial
performance of the Company.
Neither Terratherma nor its officers, employees, agents and advisers guarantee that any specific objectives of Terratherma will be
achieved or that any particular performance of the Shares, including those offered under this Prospectus, will be achieved.
24.1. Risks Specific to the Company

24.1.1 Technical Risks
24.1.1.1 General Exploration and Development Risks
A major risk for the Company is a failure to locate the geothermal resources postulated in this Information Memorandum.
Geothermal exploration is a high risk activity with no guarantee of success. There can be no assurance that the proposed exploration
programmes described in this Information Memorandum will lead to the identification of geothermal resources. Similarly, there
can be no guarantee that discovery of a geothermal resource will result in a commercially viable project.
The interpretations and conclusions discussed in this Information Memorandum are based on current geological theory and
the best evidence available to the Company at the time of writing. All scientific conclusions are founded on an assessment of
probabilities and, however high these probabilities might be, there is no certainty that the conclusions will ultimately be proven
correct. Accordingly, any economic decisions which might be made on the basis of the interpretations or conclusions contained in
this Information Memorandum will carry an element of risk.
24.1.1.2 Risks Specific to Geothermal Energy Exploration

There are three critical components required for a geothermal system:
selecting project areas the Company has relied on interpretations of the likely depth to geothermal resources based on in house
and public domain data. These project areas have only limited direct information about the actual rocks present in the project
areas, generally from a limited number of drill holes. In most cases, drilling has only penetrated a short distance into the areas in
question. Interpretations of the geology at depth have therefore been extrapolated from geological maps, available drilling results
and interpretation of geophysical data. These interpretations are therefore largely based on geophysical and other data that may
not be unique and the source data used in these interpretations may not therefore be fully representative of the regional geology
of the project area. A significant risk exists that geothermal resources of economic temperatures may not be present at depths
reachable with commercial drilling technology. Additionally, viable resources rely on the depth of cover rocks and on the insulating
ability of the cover sequence.
Temperature Modelling
A fundamental part of the Companys proposed exploration approach is mapping heatflow using data from shallow drill holes
and then extrapolating those results to reservoir depths. Measuring heat flow in shallow holes and extrapolating the results to
significant depths assumes heat is only transferred by conduction through the rock column. However, groundwater flow through
rocks can redistribute heat by convection. Heat distribution may have a positive or negative impact on predicted temperature at
depth, and it is difficult to quantify or predict without independent evidence of groundwater flow. The Company believes that the
proposed modelling approach (which assumes no heat redistribution) is an appropriate tool to use, but should the assumptions of
this model prove inaccurate then misleading results may be obtained.
Nature of the Reservoir
A key component of the Companys philosophy is that a reservoir of heat will exist at a depth reachable by drilling, and that the
reservoir will be, or can be made to be, permeable enough to allow sufficient heat transfer between the reservoir and injected
waters such that the injected waters return to the surface hot enough to drive surface electricity generating equipment. The size,
depth, temperature and permeability characteristics of the Companys target reservoir(s) is uncertain at present. These factors will
be a focus of the Companys evaluation and technical work programme.
Induced Seismicity
The process of enhancing a deep reservoir to increase water permeability will affect the stress levels in the reservoir and this may
result in induced seismicity. The amount of seismicity rarely is at the level that is able to be felt by people on the surface. A study
commissioned by the International Energy Agency found that such induced seismicity is below the background coefficient of
ground acceleration, meaning that building design standards adequately cater for the maximum expected seismicity. It should be
noted that the phenomenon of induced seismicity is usually associated with the stimulation and enhancement of deep geothermal
reservoirs and not the utilisation of shallower, aquifer hosted geothermal resources that will be explored nearer urban areas.
available water;
24.1.2 Operating and Production Risks
the presence of adequately permeable aquifers or a rock unit susceptible to artificial permeability enhancement; and
The operations of the Company may be affected by various factors including failure to locate or identify commercially viable
geothermal resources, the failure to achieve predicted temperatures and circulation in exploration and production, difficulties in
commissioning and operating plant and equipment, mechanical failure or plant breakdown, inability to obtain satisfactory joint
venture partners, difficulties in obtaining requisite planning approvals and adverse weather conditions. No assurances can be given
that the Company will achieve commercial viability through the successful exploration and (subject to appropriate regulatory
approvals) production of its tenements or its tenement interests. Until the Company is able to realise value from its projects, it will
incur ongoing operating losses.
elevated temperature at a drill-reachable depth.

There are significant risks in the technical assumptions made for successful geothermal energy production. Reliance is placed on
the geophysical data, and the interpretations and modelling carried out using this data, to estimate depths and character of the
material under exploration. Assumptions are made as to the quantum of radiogenic material as well as the nature and thickness of
insulating sedimentary blankets that cover the buried granites, which determine the temperatures present in the host reservoir and
are critical to successful production. These assumptions are based on sound geological knowledge and principles. However they
remain assumptions. Likewise the mechanical nature of the reservoirs is important and assumptions are made that the host granite
and overlying sediments can be fractured to deliver appropriate permeability to allow transmission of the hot water which drives
the entire process. Again, experience and knowledge of similar situations guide these assumptions, but there is a risk that these
assumptions will not hold. The technology associated with engineered geothermal systems is relatively new and the economic
viability of any particular geothermal system will depend upon the individual circumstances that apply in each case. In particular
the occurrence of enough water at sufficiently high temperatures and the ability to create sufficient flow though the reservoir will
be a critical factor in determining economic viability. There is no guarantee that any pre-existing permeability within any granite or
other basement rocks in any of the tenements in which Terratherma has an interest will be able to be enhanced to the point where
economic rates of water flow can be achieved through an underground heat exchanger.
Depth of Geothermal Resources and Thickness and Nature of Cover Rocks
Studies of geothermal power developments show that commercially attractive geothermal resources are mostly defined by the cost
of drilling. In the main, resource depths between 3000m to 5000m have been suggested as suitable for economic development. In
114
Even assuming that viable geothermal resources are located, the quality and rate of production of hot water will be variable
(depending, for example on the size of the geothermal resources, timing and/or success of development work and reservoir
quality). Production may be impacted or shut down for considerable periods of time due to any of the following factors:
operational and technical difficulties;
government regulation;
pipeline and processing interruptions;
equipment failure;
equipment or manpower shortages;
diminished pipeline capacity;
reservoir failures;
115
force majeure;
24.1.6 Competition
well blowouts;
Competition may have a material adverse effect on the Company. There is always the risk of competition both in relation to the
extraction of geothermal energy by other producers and the creation of electricity from other non-renewable energy (such as coal,
oil and gas) and renewable energy (such as wind, hydro or solar power) sources. These other energy sources may be able to produce
energy at lower costs, thus reducing demand for the Companys geothermal energy. One of the advantages for geothermal energy
is that it produces no carbon dioxide. However, other alternative clean energy systems, such as wind or solar, produce very low
levels (if any) of carbon emissions.
uncontrollable flows of well fluids;

formations with abnormal pressures;
pipeline ruptures or spills;
pollution;
releases of toxic gas;
extreme weather events;
inadequate water supplies;
unanticipated technical problems which may affect extraction rates and costs;
industrial and environmental accidents;
industrial disputes; or
unexpected shortages and increases in the cost of consumables, spare parts, plant and equipment.
Beyond the exploration and commercialisation stages, there is unspecified long term operational risk arising from the fact that the
generation of electricity from hot rocks is an industry in its infancy. As a result, there is no long term operating history, or precedent,
upon which to base a comprehensive assessment of the risks attached to the maintenance of long term (20 year plus) water
re-circulation through a subsurface heat exchanger. It is possible that chemical interaction between circulating water and rocks
could lead to alteration impairing the theoretical efficiency of the heat exchange mechanism and/or result in a build up of soluble
compounds in re-circulated water, requiring treatment and operational expense beyond that projected in current economic
modelling.
24.1.7 Electricity Market and Energy prices

The ability of the Company to successfully enter the commercialisation phase of its activities will depend upon its ability to sell any
electricity produced from commercially viable geothermal resources on commercial terms and prices. There can be no assurance
that the Company will ultimately be able to sell the electricity it produces on such terms. Electricity is a traded commodity in
Australia and its long term price may rise or fall and will be affected by many factors beyond the control of the Company, including
supply and demand fluctuations for energy, technological advancement, forward selling activities and other micro and macro
economic factors. The royalty requirements of the South Australian Government for a producing geothermal power station have
not yet been determined. These requirements may have a material adverse effect on the Company.
24.1.8 Title Risks
There is a risk that exploration costs may be greater than estimated in this Information Memorandum as a result of cost overruns
in drilling and other equipment failure. Adverse weather conditions over a prolonged period can also adversely affect exploration
costs. Should the Company proceed to the development phase, the design and construction of efficient generation facilities will
need to remain within capital expenditure budgets in order for development to be commercially successful.
Interests in exploration and mining tenements in Australia are governed by legislation and are evidenced by the granting of
leases or licences. Each lease or licence is for a specific term and carries with it annual expenditure and reporting conditions as
well as other conditions requiring compliance. These conditions include the requirement, particularly for exploration licences, for
compulsory reduction in the area held under licence from time to time. The Company could also lose title to the tenements it has
applied for (assuming they are granted) or its interest in the tenements the subject of the Deed of Assignment, if it or Eden (prior
to the date when the tenements the subject of the Deed of Assignment are assigned to the Company) does not meet the licence
conditions or if insufficient funds are available to meet expenditure commitments. The loss of granted tenements or the inability to
obtain new tenements may have a material adverse effect on the Companys financial position, financial performance, cash flows,
growth prospects, ability to pay dividends and Share price. Further, it is possible that the Company may in the future enter into
joint ventures with third parties, which raises the possibility of disputes and potential conflict with such joint venture parties which
would have a material adverse effect on the Company and its projects
24.1.4 Working Capital and Future Financing
24.1.9 New Licences
The Company is planning to raise sufficient funds to cover approximately two years of working capital requirements and, subject
only to the terms of any joint venture which may be entered into, the Company is likely to have to raise further capital prior to
the initial capital being exhausted. In this regard, capital costs in developing any of the tenements and tenement applications
in which the Company has an interest and bringing it into production will be significant. Any project areas that proved to be
commercially viable would ultimately require further major funding for deep circulation wells, reservoir fracturing, power plants
and infrastructure. The Companys ability to raise further equity or debt, or to divest part of its interest in the said tenements and
tenement applications, and the terms of such transactions, will vary according to a number of factors, including the success of
exploration results and the future development of projects, stock market conditions and energy prices. There is no guarantee that
such additional funds will be available to the Company and the Company may be adversely affected in a material way if, for any
reason, access to such funds is not available.
The Company will have to obtain retention licences and production licences to extract or release geothermal energy. Native title
legislation could apply to the grant of these licences and require the Company to follow the right to negotiate procedure before
such tenements could be validly granted.
24.1.5 Industry Risk
24.1.11 Native Title and Land Access Risk
The geothermal energy industry is newer and riskier than other energy industries. In order to access geothermal resources, drilling
is generally required at a deeper level. The deeper the drilling the higher the operational risk. Exploration and commercialisation
technology for geothermal resources is newer and relatively untested compared to other more established energy industries.
Whilst direct heat application of geothermal waters has been exploited at a number of places in the world, this has not been done
on a widespread scale. In respect of electricity generation, there is currently only one example of a Hot Dry Rock type geothermal
system producing electricity into a grid anywhere in the world and, while quite common throughout the world, only one small
scale conventional hydrothermal power system is in operation in Australia. As such, the commercial barriers to entry may not yet
be fully understood.
The geothermal exploration licences (GEL) granted to the Company and Eden Energy Ltd (in the later case, being the subject of the
Deed of Assignment) by the South Australian government have been made available on the basis that the Native Tile Acts (NTA)
Right To Negotiate (RTN) procedure does not apply. The basis for this interpretation has never been tested by any Court. If this
interpretation were tested, the Company may be required to reapply for its GELs and comply with the right to negotiate process
or negotiate an agreement with native title parties. There may be areas in the tenements and tenement applications in which the
Company has an interest or
24.1.3 Cost Risks
116
24.1.10 Acquisition of New Projects

The Company is assessing other parts of Australia and the world for additional attractive geothermal opportunities. The Companys
ability to acquire by way of grant additional tenements will be dependent upon the Company identifying suitable acquisition
target areas that meet the Companys acquisition criteria and which are not currently the subject of an application by a third party.
As with all of the tenements and tenement applications in which the Company currently has an interest, there is no guarantee that
any newly acquired tenements will contain a commercially viable geothermal resource.
in the future may acquire such an interest (including under the Deed of Assignment) over which legitimate common law native
title rights of Aboriginal Australians exist. If native title rights do exist, the ability of the Company to obtain the consent of any
117
relevant land owner, or to progress from the exploration phase to the development and production phases of the operation, may
be adversely affected. The NTA provides a series of procedures which the Company may need to comply with in order to be granted
additional rights in relation to land in respect of which native title has been determined to exist or a native title claim has been
registered. These procedures may require the negotiation of significant agreements with native title parties and may require the
payment of compensation for loss of or impairment of any native title rights and interests. Significant resources may be required
to administer any native title agreements in relation to which the Company is required to become a party. The success and costs of
administration of these native title issues may have a material adverse impact on the Company and its projects.
24.1.12 Aboriginal Heritage

State and Commonwealth legislation exists that is designed to protect sites of aboriginal heritage. Significant aboriginal sites
may be identified within the Companys project areas. The Companys policy is to undertake site surveys prior to undertaking any
activities that result in disturbance to the ground surface.
24.1.13 Environmental Risks

The mining, petroleum and energy industries have become subject to increasing environmental responsibility and liability. The
potential for liability is an ever-present risk. Exploration work will be carried out in a way that causes minimum impact on the
environment. Consistent with this, it may be necessary in some cases to undertake baseline environmental studies prior to certain
exploration or drilling activities, so that environmental impact can be monitored, and as far as possible, minimised. Although the
Company is not aware of any endangered species of fauna or flora within any of the tenements or tenement applications in which
it has an interest, no definitive study has been carried out over these areas and if any were discovered this could prevent further
work occurring.
24.1.14 No Valuation
No formal valuation of any of the tenements and tenement applications in which the Company has an interest or the Shares has
been carried out. The Company makes no representation as to the value of the tenements and tenement applications in which it
currently holds an interest. It is recommended that Applicants and their advisors should make their own assessment as to the value
of the Companys project areas.
24.1.15 Limited Operating History

The Company has only been in existence for a short time and only has limited experience in exploring for geothermal resources.
The Company has no history of developing or extracting geothermal energy nor in operating geothermal power plants.
Whilst the Company has engaged the services of highly qualified officers and consultants, the Company does not have a record
of any revenue-producing operations. Consequently, there is no operating history upon which to base an assumption that the
Company will be able to successfully implement its business plans or achieve its business goals.
24.1.16 Regulatory and Litigation Risk

If a commercially viable geothermal resource is located, much of the Companys then-operations will be governed by national
and local environmental laws and regulations that set standards regulating certain aspects of health and environmental quality,
provide for penalties and other liabilities for the violation of such standards and establish, in some circumstances, obligations to
remediate current and former facilities and locations where operations are or were conducted. This may have a material adverse
impact on the financial position, financial performance, cash flows, growth prospects, ability to pay dividends and Share price of the
Company. Liability could be imposed on the Company for damages, clean-up costs or penalties in the event of certain discharges
into the environment, environmental damage caused by previous owners of property acquired by the Company, native title claims,
tenure disputes, legal action from special interest groups and non-compliance with environmental laws or regulations. Changes
in government, monetary policies, taxation and other laws can also have a significant influence on the outlook for companies and
the returns to investors.
24.1.18 Insurance
Insurance of risks associated with the development of geothermal resources may not be available or may attract large premiums.
Accordingly, if a commercially viable geothermal resource is located, no assurance can be given that the Company will be able to
obtain such insurance coverage at reasonable rates, or that any coverage it arranges will be adequate and able to cover all claims
which may possibly arise out of its operations. If the Company incurs uninsured losses or liabilities, this could have a material
adverse effect on the Company or its projects.
24.1.19 Contractual Arrangements

The Company is a party to a number of material contracts. Failure by any party to a contract with the Company to comply with their
obligations could have a material adverse effect on the financial position of the Company.
24.1.20 Reliance on Alliances

The Company may need to rely on alliances with third parties in order to establish a viable company operating within the geothermal
industry. There is no guarantee that such alliances can be formed, or formed in a timely manner.
24.2. General Investment Risks

There are significant risks associated with any form of investment. The value of any investment in Terratherma or its projects will be
influenced by international and domestic factors affecting market conditions in equity, financial and commodity markets. Factors
specific to the Company include actual or anticipated announcements in regards to the Companys operations, financial performance,
financial position, growth prospects, contracts and agreements, exploration and production activity, announcement of new services
by the Company or competitors, changes in financial estimates, valuations or opinions of securities analysts, conditions or trends in
the geothermal industry, changes in the market valuations of competitors, announcements by the Company or its competitors of
acquisitions, strategic relationships, joint ventures or capital commitments and additions and departures of key personnel. External
factors include local and world economic conditions and outlook, general movements in local and international stock markets,
investor perceptions and sentiment, interest rates, the rate of inflation, exchange rates, levels of tax, taxation or other regulatory or
policy changes and accounting practice, government legislation or intervention, changes in government, inflation or inflationary
expectations, changes in financial estimates by securities analysts, natural disasters, social disorder or war in Australia or overseas,
international hostilities and acts of terrorism, as well as many other factors which are beyond the control of the Company. These
factors could have a material adverse effect on the Company and its projects.
24.3. Other Risks

The above list of risk factors is not exhaustive of the risks faced by the Company and its Shareholders. The above risks, and others
not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of
its projects. Therefore, no assurances or guarantees of future profitability, distributions, payment of dividend, return of capital or
performance of the Company or its securities can be, or is, provided by the Company.
24.1.17 Dependence on Key Personnel and Reliance on Third Parties

The Companys success depends to a significant extent upon key management personnel, as well as other management and
technical personnel including those engaged on a contractual basis. The loss of the services of certain personnel could have an
adverse effect upon the Company and its activities.
118
119
25. Definitions
Activated Logic means Activated Logic Pty Limited, the
company which has assisted the Company in the preparation
of this Information Memorandum;
AEMC means Australian Energy Market Commission;
AEMO means Australian Energy Market Operator;
AGEA means Australian Geothermal Energy Association;
AGEG means Australian Geothermal Energy Group;
AGITM means Australian Geothermal Index, an equity
index published by Activated Logic;
AGRCC means the Australian Geothermal Reporting
Code Committee;
ASIC means the Australian Securities & Investment
Commission;
Associate has the same meaning as in the Corporations
Act;
ASX means the Australian Securities Exchange Limited;
BFS means Bankable Feasibility Study;
BFS means Bankable Feasibility Study;
BHT means Bottom Hole Temperature;
Business Day means a day, other than a Saturday or
Sunday, on which banks are open for general banking
business in Adelaide;
GA means Geoscience Australia;
NEM means the National Electricity Market;
GAB means Great Artesian Basin;
NEMMCO means the

Management Company;
GDP means Geothermal Drilling Program;

GEL means Geothermal Exploration License issued by
PIRSA;
GFC means Global Financial Crisis;
GIDF means
Framework;
Geothermal
Industry
Development
Dollars and $ and A$ means the lawful currency of

Australia;
DRET means Department of Resources Energy & Tourism;
EGS means Engineered Geothermal System;
EIF means Energy Innovation Fund;
ESIPC means Energy Supply Industry Planning Council;
ETS means Emissions Trading Scheme;
EU-ETS means European Union Emissions Trading
Scheme;
FCEV means Fuel Cell Electric Vehicle;
FID means Final Investment Decision;
120
Olympic Dam and OD means BHP Billitons Olympic

Dam mine in the Roxby Downs region of South Australia;
GITR means Geothermal Industry Technology Roadmap;
PACE means Plan to Accelerate Exploration;
HDRPL means the geothermal

company, Hot Dry Rocks Pty Ltd;
PPA means Power Purchase Agreement;
energy
consulting
HHP means High Heat Producing Granite;

HTSE means High Temperature Steam Electrolysis;
Information Memorandum means this Information
Memorandum as modified or varied by any supplementary
information memorandum issued by the Company from time
to time;
IOCGU means Iron Oxide, Copper, Gold and Uranium
style of mineralisation;
IPO means Initial Public Offering of equity;
IRR means Internal Rate of Return;
PIRSA means Primary Industries and Resources South

Australia;
PE means Private Equity;
PEL means Petroleum Exploration Licence;
PJ means Petajoule, equivalent to 1015 Joules;
QGECE means Queensland Geothermal Energy Centre
of Excellence;
R&D means Research and Development;
REC means Renewable Energy Certificate;
REDI means Renewable Energy Development Initiative;
Joint Venture and JV has the meaning as in the

Corporations Act;
Couplet means two geothermal wells, generally consisting

of one injection well and one production well;
YoY means Year on Year.
NTA means Native Title Act;
OCGT means Open Cycle Gas Turbine;
CDP means Commercial Demonstration Plant;
CPRS means Carbon Pollution Reduction Scheme;
Market
NPV means Net Present Value;
GW means Gigawatt, equivalent to 109 Watts;
IPP means Independent Power Producer;
CNG means Compressed Natural Gas;
Electricity
O&M means Operating & Maintenance Costs;
CCGT means Combined Cycle Gas Turbine;
Company means Terratherma Limited;
National
WACC means Weighted Average Cost of Capital; and
kW means kilowatt, equivalent to 103 Watts;

Letter of Intent and LOI means a formal communication
indicating intent of action but is subject to the conditions of
the Letter which may or may not be binding;
REDP means Renewable Energy Development Program;

REF means Renewable Energy Fund;
RO means Reverse Osmosis;
RTN means Right to Negotiate;
SCA means Sustained Competitive Advantage;
SENE means Scale Efficient Network Extension;
LNG means Liguified Natural Gas;
SH means Solar Humidification;
LRMC means the Long Run Marginal Costs;
Shareholder means a holder of Shares from time to time;
Management or Board means the Management of the

Company;
Shares means fully paid ordinary shares in the capital of

the Company;
MED means Multi-Effect Distillation;

MJ means Megajoule, equivalent to 10 Joules;
SMR means Steam Methane Reforming, a method of

hydrogen production from methane;
MRET means Mandatory Renewable Energy Target;
THZ means Torrens Hinge Zone;
MSF means Multi-Stage Flash desalination;
USD and US$ means United States Dollar;
MT means Magnetotellurics;
VC means Venture Capital;
MW means Megawatt, equivalent to 106 Watts;
VCD means Vapour Compression Distillation;
MWh means the equivalent energy of 1MW utilised for an

hour;
VWAP means Volume Weighted Average Price;
121
26. References
This Information Memorandum has been prepared
for a specific purpose and is not intended for general
circulation. Various proprietary sources including
privileged and strictly confidential information
generated and held by Eden Energy Ltd, Terratherma
Ltd and Activated Logic Pty Limited have been used in
the preparation of this Information Memorandum.
The below list of references is intended as a general
overview of some of the public information sources
used to generate this information memorandum, but is
not intended to provide an exhaustive list of resources.
Most recent publications listed first.
13. CDH, 2009.

Denver Hythane Emissions Results.
Colorado Department of Health. November 2009.
14. Geodynamics, 2009. Geodynamics - 2009 Annual
General Meeting Presentation. Geodynamics Limited.
November 2009.
15. AGEA, 2009. AGEC Presentation - Outlook for 2010
and beyond. Australian Geothermal Energy Association.
November 2009.
16. Torrens, 2009. Geothermal Prospectivity of the Torrens
Hinge Zone - Evidence from New Heat Flow Data. Torrens
Energy Limited. November 2009.
17. SP Energy Frontier, 2009. Energy Frontier - 45,000m3
LNG TANKER, Kawasaki Shipbuilding Corporation. Ship
Photo. August 2009.
18. AGI, 2009. The Australian Geothermal Industry Research
Report, July 2009. The Australian Geothermal IndexTM.
Activated Logic. July 2009
1. Activated Logic, 2010. Geothermal Energy in Australia

- Industry Development Forecasts and a Business Case
for Increased Public and Private Investment. Activated
Logic. February 2010.
2. Activated Logic, 2010. Integrated Geothermal
Applications. Activated Logic. January 2010.
3. Alpha Actus, 2010. Complete Climate Change Solutions.
Alpha Actus. January 2010.
4. AEMO, 2010. Energy in Australia 2009. Australian Energy
Market Operator. January 2010.
5. DCC, 2010. Renewable Energy Target - How does the RET
work?. Department of Climate Change. January 2010.
6. MVS, 2010. Water Electrolysis Hydrogen Generator.
MVS Engineering. January 2010.
7. PIRSA, 2010. PIRSA Geothermal Energy - Current Use in
Australia. Primary Industries & Resources South Australia.
January 2010.
8. SA WATER, 2010. Desalination - Project Information.
South Australia Water. January 2010.
19. AGIAA, 2009. Australian Geothermal Implementing

Agreement Annual Report - 2008. AGEG. July 2009.
33. UNEP, 2009. Global Trends in Sustainable Energy

Investment 2009. United Nation Environment Program,
SEFI & New Energy Finance. June 2009.
34. OD-EIS, 2009. Olympic Dam Expansion EIS Information
Sheet. BHP-Billiton May 2009. Accessed in July 2009 at;
http://www.bhpbilliton.com/bb/odxEis.jsp
35. GDP, 2009. Geothermal Drilling Program. Department of
Resources, Energy & Tourism. June 2009. Accessed in July
2009 at; http://www.ret.gov.au
47. DRET, 2008. Australian Geothermal Industry Development Framework. Department of Resources,
Energy and Tourism. December 2008.
48. DRET, 2008. Australian Geothermal Industry - Technology
Roadmap. Department of Resources, Energy and Tourism.
December 2008.
49. CPRS, 2008. Carbon Pollution Reduction Scheme White
Paper. Department of Climate Change. December 2008.
Accessed in July 2009 at; http://www.climatechange.gov.
au/whitepaper/index.html
20. ORER, 2009. What are Renewable Energy Certificates?.

Office of the Renewable Energy Regulator. July 2009.
21. Geodynamics, 2009. Economics of Geothermal Energy.
Geodynamics. July 2009.
37. CEC, 2009. Energy Commissions Geothermal Program.

California Energy Commission. May 2009.
22. NEF, 2009. Global Trends in Clean Energy Investment - Q2

2009 Fact Pack. New Energy Finance. July 2009.
38. ESIPC 2009. Draft Annual Planning Report 2009.

Electricity Supply Industry Planning Council. May 2009.
51. Goldstein et al., 2008. Hot Rocks Downunder Geothermal

Plays in Australia. Goldstein, B. A., Hill, A. J., Budd, A. R.,
Holgate F., & Malavazos, M. Primary Industries & Resources
23. ElectraNet, 2009. South Australia Electricity Transmission

Map. Electranet. July 2009.
39. ABARE, 2009. Energy in Australia 2009. ABARE report for

Department of Resources, Energy & Tourism. April 2009.
52. IEA, 2008. TEnergy Technology Perspectives. October
24. GRE, 2009. ASX Announcement - Corporate Presentation.

Green Rock Energy Limited. July 2009.
40. UNEP, 2009. The Global Financial Crisis and its Impact on
Renewable Energy Finance. United Nations Environment
Program. April 2009.
53. Garnaut, 2008. The Garnaut Climate Change Review.
41. REDP, 2009. Renewable Energy Development Program.

Department of Resources, Energy & Tourism. April 2009.
Accessed in July 2009 at; http://www.ret.gov.au
Excellence - Research Program. Gurgenci, H. University of
25. Islandsbanki. 2009. Financing Geothermal Projects in

Challenging Times - Geothermal Research June 2009.
Richter, A. Islandsbanki. June 2009
26. REC Review, 2009. Carbon Market Economics and Ernst &
Young analysis, Monthly REC Review, May 2009. Adapted
from: Panax Geothermal June 2009 Investor Presentation
10. HyFLEET:CUTE, 2009. H 2 Internal Combustion Engine

(ICE) Technology. HyFLEET:CUTE. December 2009.
28. Panax, 2009. Panax Geothermal - Investor Presentation.

Graaf, B. D. Panax Geothermal. June 2009.
11. NWC, 2009. Australian Water Markets Report, 20082009. National Water Commission. November 2009.
29. DOE, 2009. President Obama Announces Over $467

Million in Recovery Act Funding for Geothermal and Solar
Energy Projects. United States Department of Energy. 27
May 2009.
32. DCC, 2009. Strengthening Australias 2020 Carbon

Pollution Target Fact Sheet. Department of Climate
Change. 4 May 2009.
46. Balta et al., 2009. Thermodynamic Assessment og

Geothermal Energy use in Hydrogen Production.
Faculty of Engineering, Ege University, Turkey, & Faculty
of Engineering and Applied Science, University of Otario
Institute of Technology (UOIT). January 2009.
50. OSEP, 2008. Geoscience Australias Onshore Energy

Security Program the Geothermal Energy Project. Budd
A. R., Holgate F.L., Gerner E. And Ayling B.F. Geoscience
Australia. November 2008.
27. Cleantech, 2009. Cleantech - The Impact on Key Sectors in

Europe. CMS Legal. June 2009.
122
31. UTC, 2009. PureCycle Power System - Model 280. Pratt&

Whitney. United Technologies Company. May 2009.
45. PIRSA, 2009. PIRSA Minerals - Carrapateena Resource

Definition. Primary Industries & Resources South Australia.
January 2009.
36. DCC, 2009. Strengthening Australias 2020 Carbon

Pollution Target. Department of Climate Change. May
2009. Accessed in July 2009 at; http://www.climatechange.
gov.au/emissionstrading/index.html
9. Zactruba, 2009.
Multistage Flash Desalination.
Published by Haresh Khemani. December 2009.
12. HDRPL, 2009. Surface Heat Flow Map. Hot Dry Rocks Pty
Ltd. November 2009.
30. RiskMetrics, 2009. Research Note: The Impact of Industry

Assistance Measures under the CPRS - Scheme Deferral
Update. Fryer, D. & Barraclough, M. RiskMetrics Group. 18
May 2009.
South Australia. Geoscience Australia. October 2008.

2008.
Chapter 20. 16 October 2008.
54. Gurgenci, 2008. Queensland Geothermal Centre of
Queensland. 16 October 2008.
55. SBC, 2009. Improving the economics of geothermal
42. GEA, 2009. U.S. Geothermal Power Production and

Development Update. Slack, K. Geothermal Energy
Association. March 2009.
development through an oil and gas industry approach.
43. MMA, 2009. Comparative Costs of Electricity Generation

Technologies Report to AGEA. Gerardi, W. & Nsair, A.
McLennan Megasanik Associates. February 2009.
56. Green Rock, 2008. Inferred Resources: Olympic Dam

Geothermal Energy Project. Green Rock Energy Limited.
3 September 2008.
44. Genter et al, 2009. Overview of the Current Activities of

the European EGS Soultz Project: From Exploration to
Electricity Production. Genter, A. Proceedings: ThirtyFourth Workshop on Geothermal Reservoir Engineering,
Stanford University, Stanford, California, February, 2009.
57. AGCC, 2008. Australian Code for Reporting of Exploration

Results, Geothermal Resources and Geothermal Reserves
- The Geothermal Reporting Code (2008 edition). The
Australian Geothermal Code Committee. 21 August 2008.
Long, A. Schlumberger Business Consulting. September

2008.
58. MMA, 2008. Installed Capacity and Generation From

123
Part K
Geothermal Resources by 2020. McLennan Megasanik
Associates. August 2008.
59. Dundee, 2008. Geothermal Energy - An Oversight
Success in 104 Years. Tharp, I. & Mahesh, S. Dundee Capital
Markets - Investment Research. 17 March 2008.
Appendices
60. Chopra, 2007. Estimated Crustal Temperature at 5km

Depth. Chopra, P. Map derived from the AUSTHERM05
database of Chopra & Holgate 2005. Oct 2007.
Appendix 1. - Terratherma Ltd Geothermal (GEL) Interests
..............................................
126
Appendix 2. - Terratherma Financial Model (TGP-FM)
..............................................
127
Appendix 3. - Terratherma JV Announcement (Origin)
..............................................
128
Appendix 4. - Contact Details & Corporate Structure
..............................................
130
Appendix 5. - Electricity Transmission Map (South Australia)
..............................................
131
61. Tester, 2006. Geothermal Plant Efficiency The Future

of Geothermal Energy. Tester, J. 2006. Derived from,
Queensland Geothermal Energy Centre of Excellence
Research Program, presentation. Gurgenci, H. Oct 2008.
62. ESIPC, 2006. Annual Planning Report. Electricity Supply
Industry Planning Council. June 2006.
63. BEEP, 2005. Bankable Energy Efficiency Projects Experiences in Central and Eastern European Countries.
Bankable Energy Efficiency Project. September 2005.
64. GEA, 2005. Factors Affecting Costs of Geothermal
Power Development Publication for U.S. Department
of Energy. Hance, C. N. Geothermal Energy Association.
August 2005.
65. Navigant, 2004. Power Generation Technologies - Market
and Technology Maturity Matrix. Navigant Consulting
2004. After Dundeer Securities, 2008.
66. Zang, 2002. Solid geology interpretation of the Gawler
Craton and the location of the Cleve, Olympic and
Moonta subdomains. Zang, W. March 2002.
Independent Geological Reports - Available by request

HDRPL, 2007. Seismic Interpretation of Geothermal
Exploration Licence Areas 169, 177 & 185, South Australia.
Waining, B. & Cooper,G., Hot Dry Rocks Pty Ltd. October 2007.
[Pages: 27, Status: Confidential]
Consultants Report, 2008. Independent Geological
Consultants Report. Prof Giles, D., University of Adelaide.
March 2008. [Pages: 8, Status: Confidential]
HDRPL, 2008. Terratherma - Risk Assessment of Identified
Geothermal Plays. Waining, B., Hot Dry Rocks Pty Ltd. October
2008. [Pages: 42, Status: Confidential]
124
Terratherma
TM
LTD
A number of proprietary and external information

resources relating to Terratherma Ltds geothermal projects
have been developed or procured by the company.
In limited cases some of these information resources,
including documents prepared by third-parties, may be
made available upon request, at the companys discretion.
TERRATHERMA LTD I INFORMATION Terratherma
MEMORANDUM I 125
LTD
TM
Appendix 1 - Terratherma Ltd Geothermal (GEL) Interests

Terratherma Ltd holds interests in 16 Geothermal Exploration Licences (GELs) covering an area of 7923km2 in South Australia.
GELs 169 & 185 are held by Eden Energy Limited, however an agreement is in place to transfer these licences to Terratherma Ltd.
Additional information about Terratherma Ltds GELs is available at:
http://www.pir.sa.gov.au/geothermal/licensing__and__applications/current_licences
Licence
number
Licence holder
Interest (%) Expiry date
Area
(km2)
Appendix 2 - Terratherma Financial Model (TGP-FM)

The Terratherma Geothermal Project - Financial Model (TGP-FM) has been developed to demonstrate
the potential benefits of a geothermal project development. The TGP-FM is available in Microsoft Excel
format with approximately 50 input variables which can be changed to assess the impact on project
economics.. The 100MW scenario was developed as a conceptual scenario and has been provided for
illustrative purposes only. Terratherma Ltd is able to rapidly run specific scenarios as required.
Further Min area to relinquish

renewals upon renewal (km2)
Bollards Lagoon (Cooper Basin)

GEL 169
Eden Energy Limited
100
01-Feb-2011
498
166
Eden Energy Limited
30
Origin Energy Limited
70
07-Jan-2011
494
2
165
Origin Energy Limited is earning a 70% by having paid $1m to Eden Energy Ltd upfront and
making a contribution of $500,000 to exploration expenditures.
Moomba North (Cooper Basin)

GEL 185
Coorichina (Torrens Hinge Zone)

GEL 329
GEL 330
Terratherma Limited
Terratherma Limited
100
100
03-Oct-2013
03-Oct-2013
497
496
2
2
166
165
100
100
100
100
100
100
100
100
100
100
100
100
13-May-2014
13-May-2014
13-May-2014
13-May-2014
13-May-2014
13-May-2014
13-May-2014
13-May-2014
13-May-2014
13-May-2014
13-May-2014
13-May-2014
498
500
495
499
485
498
500
498
498
470
499
498
2
2
2
2
2
2
2
2
2
2
2
2
166
166
165
166
161
166
166
166
166
156
166
166
Pirie (Flinders Ranges)

GEL 411
GEL 412
GEL 413
GEL 414
GEL 415
GEL 416
GEL 417
GEL 418
GEL 419
GEL 420
GEL 421
GEL 422
Terratherma Limited
Terratherma Limited
Terratherma Limited
Terratherma Limited
Terratherma Limited
Terratherma Limited
Terratherma Limited
Terratherma Limited
Terratherma Limited
Terratherma Limited
Terratherma Limited
Terratherma Limited
EXPLORATORY PRE-FEASIBILITY
FINANCIAL MODEL
Terratherma
TM
LTD
126
127
Appendix 3 - Terratherma JV Announcement (Origin)

On the 28th of September 2009, Terratherma Ltds parent company Eden Energy Limited (ASX: EDE) announced the farm-in of
major Australia energy utility, Origin Energy Ltd (ASX: ORG) into Terratherma Ltds Cooper Basin Geothermal Licence No 185 in
South Australia.
Additional ASX announcements made by Eden Energy Limited, including the Term Sheet announcement to scale-up the
innovative Pyrolysis Technology with India Oil Corporation Limited (IOCL) on the 5th of February is available for download from
the Eden Energy Limited website (refer to Appendix 4) or by visiting the Australian Securities Exchange website.
Details of the farm-in are summarised in the below ASX announcement.
ASX website, www.asx.com.au.
128
129
Appendix 4 - Contact Details & Corporate Structure
Appendix 5 - Electricity Transmission Map (South Australia)

Map not to scale.
Contact Details
Eden Energy Limited
Ph:
+61 (08) 9282 5889
Fax:
+61 (08) 9282 5866
Email: mailroom@edenenergy.com.au
Web: www.edenenergy.com.au
Corporate Structure
Terratherma Ltd (ABN: 75 126 933 140) is a 100% wholly owned
subsidiary of ASX-listed, Eden Energy Ltd (ASX: EDE).
Eden Innovations Ltd
Energy Assets
(Ireland)
(Various)
Hythane
Company LLC
Eden Energy
India Pvt Ltd
Coal Seam
Methane
Natural Gas
South Australia
(USA)
(India)
(Wales, UK)
(Australia)
Terratherma
TM
LTD
MEMBER
AGEA
Australian Geothermal
Energy Association
AGEA is the national industry

association for the Australian
Geothermal Industry.
MEMBER
AGEG is an organisation focused on
improving the technical capability of
the Australian Geothermal Industry.
Terratherma Ltd
(Australia)
Terratherma Ltd holds a significant
geothermal exploration portfolio in South
Australia consisting of 16 Geothermal
Exploration Licences (GELs), covering an
area of 7923km2.
Eden Energy Limited is seeking prospective
project development partners or investors to
assist with the evaluation and the potential
development of the geothermal portfolio.
Terratherma GELs
Source: Adapted from Electranet, 2009.
130
131
TM
Terratherma
LTD
TM

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SUSTAINABLE GEOTHERMAL ENERGY

Project Equity & Partners

Information Memorandum Development

v3.12. March 22, 2010

Sunrise over Port Augusta

TERRATHERMA LTD I INFORMATION MEMORANDUM I

Status of Information Memorandum

no representation or warranty (express or implied) is given; and

no responsibility or liability (including in negligence) is accepted,

Forward Looking Statements

I INFORMATION MEMORANDUM I TERRATHERMA LTD

TERRATHERMA LTD I INFORMATION MEMORANDUM I

The Vision - Terratherma Ltd

Executive Summary - Terratherma Ltd

Energy - The Global Challenges

Renewable Energy - An Emerging Sector

Electricity - The Australian Market

Electricity - The South Australian Market

Renewable Energy - Investment Perspectives

Renewable Energy Target - Implications

Electricity - Historical & Forecast Pricing

Geothermal - Integrated Applications

Desalination - Integrated Geothermal Application

Hydrogen - Integrated Geothermal Application

Geothermal Energy - Overview

I INFORMATION MEMORANDUM I TERRATHERMA LTD

Global Geothermal Market Structure

Geothermal Energy - Australia

Terratherma Ltd - The Geothermal Journey

Geothermal Project - Bollards Lagoon

Geothermal Project - Moomba North

Geothermal Project - Coorichina

Geothermal Project - Pirie

Geothermal - Conceptual Development

Geothermal - Conceptual Financial Analysis (TGP-FM) ..............................................

Conclusion - Opportunities & Challenges

Risks Specific to the Company

TERRATHERMA LTD I INFORMATION MEMORANDUM I

I INFORMATION MEMORANDUM I TERRATHERMA LTD

Figure 64a - Soultz-sous-Forets EGS Project (France)

TERRATHERMA LTD I INFORMATION MEMORANDUM I

Information Memorandum Structure

Part A The Vision

The Vision - Terratherma Ltd

Part B Global Energy Markets

Energy - The Global Challenges

Part C The Electricity Market

Electricity - The Australian Market

The Vision - Terratherma Ltd

Executive Summary - Terratherma Ltd

Part D Integrated Geothermal Applications

Geothermal - Integrated Applications

Part E Geothermal Energy

Geothermal Energy - Overview

Part F Geothermal Energy in Australia

Geothermal Energy - Australia

Terratherma Ltd Geothermal Strategy

Terratherma Ltd - The Geothermal Journey

Part H Geothermal Project Overviews

Geothermal Project - Bollards Lagoon

Part I Commercialising Geothermal

Part J Supplementary Information

I INFORMATION MEMORANDUM I TERRATHERMA LTD