The Business Spectator has an update on the geothermal energy sector in Australia - A clean energy source feels the heat.

Has a cloud of steam ever generated as much excitement as the vaporised water that emerged from the Panax Geothermal’s Salamander well in South Australia last Thursday?

“Those are beautiful pictures,” said one geothermal company executive as photos were distributed by Panax in its announcement to the ASX. “It will warm the cockles of the hearts of all the geothermal energy producers.”

The geothermal industry has been having a tough time of late. A technology with pretensions to displace the fossil-fuel energy industry finds itself at its lowest ebb: an unexplained end to government funding, a lack of interest from institutional and other investors, delays in drilling programs and technical problems at Geodynamic have combined to send the share prices of most listed geothermal companies to one or two year lows.

Worse than that, it has shaken the conviction of many that geothermal can deliver on its promise of relatively cheap, emissions free baseload energy that could power Australia’s energy many times over if just one per cent of its resources are tapped.

Which is why all eyes are focused on the results of drilling at the Salamander well. The significance of the steam, says Panax CEO Bertus de Graaf, is that it is proof that the company has found a reservoir of energy, the first in a hot sedimentary aquifer in Australia. “What we don’t know yet is the quality of the reservoir,” de Graaf says. ...

If Panax can prove it has an economically viable reserve of energy and can set in train plans to connect an initial 5.9MW plant to the grid by the end of 2011, then it may convince the government to inject more funds into the industry, which is currently slated to receive less than a tenth of that promised to carbon capture and storage projects, and less than one sixth promised to large scale solar – even though Energy Minister Martin Ferguson likes to talk up its potential.

This approach has flummoxed many observers, but there are signs that Ferguson may be considering supplementary funding. He was a recent visitor to the Penola project and admitted that Australia would be hard pushed to even meet its 20 per cent renewable target by 2020 without a major contribution from geothermal.

But right now, many geothermal companies cannot access funds to drill their first well, most are running short on cash, and some, such as Petratherm, which is benefiting from a $63 million grant for its Paralana project, is tapping shareholders for the second time in a year.

The Adelaide Advertiser has an article on a company aiming to have Australia's first grid-connected geothermal power plant operational by 2011, ahead of front-runner GeoDynamics - Geothermal explorer reveals inferred resource at Penola.

HOT rocks explorer Panax Geothermal has revealed 41,000 petajoules of inferred resource at its Penola tenement in the State's South East. The company said 5 per cent of the inferred resource could be classified as a measured resource - sufficient to operate a 200 MWe geothermal base-load power plant for 30 years, subject to a full feasibility study.

Panax aims to have Australia's first grid-connected geothermal power plant operational by 2011. Its application for a $7 million drilling grant from the Federal Goverment also had been upgraded to a full merit assessment, executive director Kerry Parker said.

Mr Parker said the company was "quietly confident'' of grant approval which would see drilling at Salamander 1 in the advanced Penola Project, part of the company's limestone Coast geothermal project in SA, start by mid 2009. He said Panax was the only hot sedimentary aquifer project in Australia to reveal a measured resource highlighting Panax's advanced status.

Hot fractured rock explorer Geodynamics has Australia's most advanced project near Innamincka in the State's far north.