Tata Power picks up 10% stake in Aussie firm

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Tata Power, in a bid to strengthen its renewable energy portfolio, has acquired (either by itself or through one or more of its subsidiaries in India or abroad) 29.4 million ordinary shares of Geodynamics Ltd, a listed Australia-based organisation specialising in geothermal energy and enhanced geothermal systems (EGS), representing 11.4% of the current issued share capital (equivalent to 10% of the increased share capital after allotment by Geodynamics). The shares will be acquired by Tata Power at an issued price of $1.50 per share, entailing a

total investment of $44.1 million (Rs 165 crore/INR=37.5) in absolute terms.

As part of the investment, Tata Power will also get a directorship on the board of Geodynamics. In addition to the cornerstone investment above, the companies have agreed to review the potential of geothermal prospects outside Australia by leveraging the companies’ respective strengths. Further, this alliance also helps in securing a foothold in the growing renewable energy market in Australia, the company release said.

Geodynamics is the industry leader in EGS with a market capitaliSation in excess of $350 million (August, 2008). Geodynamics has geothermal exploration interests in three Australian states including the licence for exploring 2000 sq km of area in the Cooper Basin. Geodynamics tenements in the Cooper Basin contain the hottest granites on earth and are estimated to provide a thermal resource equivalent of 50 billion barrels of oil.

Prasad Menon, managing director, Tata Power said, “We are happy to have decided to purchase a stake in Geodynamics. This strategic partnership not only strengthens our renewable portfolio but also creates opportunities to get a foothold in the growing renewable energy market in Australia. We look forward to the synergistic opportunities that the alliance presents us.”

Gerald Grove-White, managing director, Geodynamics Ltd, commented, “We are excited about this strategic partnership with Tata Power which we hope to expand into other areas of common interest. There are great synergistic opportunities for both the groups.”

Geothermal energy is the natural heat found within the earth, where temperature increases with depth, typically by 10-50º Celsius/km. In Enhanced Geothermal Systems (EGS) technology heat is extracted from granites located at a depth of a more than 4,000 metre by circulating water through them in an engineered artificial reservoir. The heated water returns to the surface under pressure and is converted into electricity via a heat exchanger and conventional geothermal power plant.