A STALLED geothermal energy project near Koroit has been given renewed hopes under the federal government's controversy carbon tax regime.
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Proponents of the Australia-first project to tap a vast underground water basin for generating electricity are $16 million short of target to sink two deep bores to test the commercial viability.
Prime Minister Julia Gillard's announcement early this month of a carbon tax and suppport for renewable energy has given principal company Hot Rock Limited cause for predicting a $23m drilling program could start next year.
Prior to the announcement hopes were dimming on attracting commercial partner investment or more taxpayer money on top of a $7m federal grant secured last year.
"This will instill more confidence in the industry," Hot Rock executive chairman Dr Mark Elliott told The Standard yesterday.
"Investors tend to run away if there is no certainty.
"The government has offered funding for investigations and a loan guarantee.
"Our future is much stronger than it was before.
"We applaud the government for making a very hard decision.
"It is still subject to detail and effective implementation."
Dr Elliott said he hoped to learn in the next few months if more government funding had been approved.
"We would hope to be able to start drilling next year," he said.
"The casing is already on site, the well head is in storage and we are negotiating with a drilling company."
If test drilling shows a commercially-viable supply the company would look to invest $300m on a 50 megawatt base load power station.
"We believe sedimentary aquifers are the future for geothermal energy industry in Australia," he said.
"There have been previous models in granite, but not using sedimentary aquifer.
"The Otway Basin, particularly near Koroit, has excellent potential already outlined by previous gas and oil exploration work.
"We need to find out how much hot water we can get to the surface."
The company plans to use water 3700 metres deep through two wells - one drawing water up and the other to return it to the aquifer, unpolluted.
pcollins@standard.fairfax.com.au