Under the agreement, SMUD receives energy, environmental and carbon-neutral attributes from the project.

Vulcan’s Patua geothermal energy project site, located near Fernley, Nevada, will be built in three phases and is expected to be the company’s first geothermal power plant. Phase I drilling recommenced in February 2010 and construction of a 60MW power plant is projected to begin in January 2011.

The project will produce electricity around the clock with power deliveries projected to occur as early as the first quarter of 2012, continuing through 2033.

John DiStasio, general manager and CEO of SMUD, said: ”This major renewable power source adds diversity to SMUD’s current renewable power portfolio.

”The additional baseload power supply avoids the challenge of integrating an intermittent source of renewable energy, such as wind and solar.”

The project initially will provide 500GWh per year, eventually ramping up to 1,000GWh per year. These gigawatt hours will count towards SMUD’s goal of 33% renewable energy by 2020.

Bob Warburton, acting CEO of Vulcan Power, said: ”A critical factor for our business is ensuring that we have the customers for the power we expect to produce.

”This power purchase agreement with SMUD is our third with a major utility. We are pleased to support the Sacramento area and the state of California in its commitment to renewable energy sources.”