When rain water comes into contact with heat it produces steam, which is used for producing power. The company would acquire 29.4 million shares of Geodynamics. After allotment it would be equivalent to 10 per cent of the increased share capital, according to a Tata Power press release.
The shares will be acquired by Tata Power at an issue price of Australia $1.50 or about Rs 56.25. As a part of the investment, Tata Power will also get a directorship on the board of Geodynamics.
Both companies have also agreed to review the potential of geothermal prospects outside Australia. This alliance also helps Tata Power in securing a foothold in the growing renewable energy market in Australia, the release said.
Geodynamics has a market capitalisation in excess of A$350 million. The company has developed enhanced geothermal systems technology. It has geothermal exploration interests in three Australian States including the licence for exploring 2000 sq km of area in the Cooper Basin, which is spread across South Australia and extends into Queensland.
Mr Prasad Menon, Managing Director, Tata Power, said the partnership strengthens the company’s renewable portfolio and creates opportunities to get a foothold in the growing renewable energy market in Australia.”
Geothermal energy is the natural heat found within the earth, where temperature increases with depth, typically by 10-50 degree Celsius/km. In enhanced geothermal systems technology heat is extracted from granites located at a depth of a more than 4,000 metres by circulating water through them in an artificially-engineered reservoir.
The heated water returns to the surface under pressure and is converted into electricity via a heat exchanger and conventional geothermal power plant. The technology can potentially enable the setting up of base load power plants.
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