Over the last couple of years, developments in this small and relatively new industry has been dominated by three publicly listed companies, Geodynamics, Petratherm and Green Rock Energy.

Following months of exploratory and drilling work, each of these pioneers is confident that further positive results in their respective tenements will warrant construction of a power plant to deliver energy to the national electricity grid.

HDR exploration and production relies on exploiting hot granite rock trapped beneath layers of insulating rock no more than 5km below the earth's surface. The heat in such 'reservoirs' can reach more than 250C.

Generating useable energy from hot rocks involves drilling two parallel wells. Water will be pumped down one well at extremely high pressure, passing through fractures in the granites. The super-heated water would then be transferred up via a second well to a power station to generate steam and then electricity.

But at this point it’s still just theory. Not one joule of electricity has been produced in this way, but that hasn’t deterred several other companies from following the footsteps of their more experienced counterparts to seize new exploration permits and try their luck.

Havilah Resources spin-off Geothermal Resources, Lakes Oil subsidiary Geothermal Energy Victoria and Eden Energy are showing more than just a passing interest in the sector.

Geothermal Resources chairman Bob Johnson told EnergyReview.net that the company stumbled across its potential HDR resource while looking for cheap ways to provide electricity for its mining operations near Lake Frome in South Australia.

“But when we looked closely we realised we had a geological situation that looked identical if not superior to that belonging to Geodynamics,” he said.

“Time will tell if we’re right but our initial research tells us that our granite source rocks could be three to ten times hotter than theirs.”

Last year, Geodynamics upgraded the reservoir at its Habanero project to 11 million cubic feet, which the company said at the time was considerably higher than achieved elsewhere in the world.

So if a hotter reservoir has been identified at Geothermal Resources’ block, as Johnson suggests, it would be good news for the company and lend further support for developing HDR into a viable and renewable energy source.

“If the heat generating capacity is a lot higher, it means our wells would be cheaper to drill as we wouldn’t have to go so deep,” he said.

“And because we’re close to infrastructure, we can do a phased development, scaling it up over time.”

With the outlook seemingly positive, Geothermal Resources is picking up the pace to undertake further exploration and appraisal.

Since listing a couple of weeks ago, the company has been awarded a fifth geothermal exploration license and has also applied for a $2.5 million Federal Government REDI (Renewable Energy Development Initiative) grant to give them a headstart.

In addition, the South Australian government awarded the company a $100,000 PACE (plan for accelerating exploration grant) to drill several holes to about 500m to determine the subsurface heat flow across the Frome project area.

Over the next 18 months, the plan is to collect more information, drill shallow holes and develop a 3D model of the potential resource, according to Johnson.

Another company, Eden Energy, which is preparing to list on the ASX with a $10 million IPO, is also encouraged by initial exploration in its blocks 80km from the Olympic Dam area, in the Cooper Basin.

In the next few months, Eden plans to re-enter an abandoned minerals well drilled by its parent company, Tasman Resources, to a depth of 800 metres.

“Tasman had a fairly big geological data base. We examined it for geothermal potential, liked what we saw and acquired an exploration license,” Eden chairman Greg Solomon told EnergyReview.net.

“According to table charts, this well looks like it’s right on target in a high heat flow area.”

But Solomon admits that this HDR project is not the firm’s top priority. The diversified energy company is currently working towards commercialising coal seam methane from its blocks in Wales and is developing a wide range of hydrogen related technologies from its operational base in Colorado, USA.

“All of our projects our extremely exciting - it’s just that the others are further along at the moment and are happening right now,” he said.

“Having said this, we are still actively pursuing HDR and intend to use about 15-20% [or about $1.5 million to $2 million] of our capital raising on this work.”

Eden has eight prospective geothermal licences in South Australia, which already have a working investment/policy framework in place. The company says at least two of these leases are near the power grid.

Most of Australia’s HDR exploration takes place in or around the Cooper Basin, which has been recognised as a world-class site for this type of exploration. But other parts of Australia are also becoming acknowledged as having HDR potential.

Victoria will this month release its first round of geothermal exploration permits for bidding, as the state looks increasingly towards lower-emission energy sources.

The release of geothermal acreage in Victoria follows recent changes to state legislation, which are designed to give hot rocks explorers more certainty in their investment.

Lakes Oil subsidiary Geothermal Energy Victoria will be one contender for the blocks, chairman Robert Annells told EnergyReview.net.

The company has been evaluating prospects in the state since the Geothermal Energy Resources (GER) Act 2005 was enacted in June last year.

“It will be tendering based on spending commitment, but we hope to be very competitive,” Annells said.

“Some of our areas of interest are not generally regarded as ‘hot’ areas, which will hopefully work in our favour.”

But not everyone is as enthusiastic about the land release as Annells.

“I think the Victorian Government has got it wrong making companies compete for blocks,” Solomon said.

“What works for oil and gas won’t work for geothermal. The petroleum industry is well established involving big companies with lots of money. This sector is only just getting off the ground and the companies don’t have much to spend.”

Solomon said Eden would not be competing for the Victorian blocks, while Johnson said Geothermal Resources would be staying put in South Australia where diminishing coal supplies and low gas reserves mean the focus is gradually shifting towards renewables.

However, some renewables, such as solar, wind and hydro are less reliable than fossil fuels as weather affects their availability.

But advocates say geothermal power is different from other renewables, as it can produce energy continuously, making it ideal for baseload energy supply.