A Vancouver-based company has won the right to explore geothermal energy potential on the central coast with what it considers a low-ball bid, a signal that there's little interest from investors in this renewable energy source in B.C.

The provincial government announced yesterday that Sierra Geothermal Power Corp. bid on and won an exploration permit on a parcel of 8, 074 hectares in the Knight Inlet. The company paid $24, 963.89 for the one-year permit.

"We were very surprised to see we were the ones who got the land," said Anthony Srdanovic, Sierra's manager of marketing and investor relations. "So there isn't a lot of interest from other people in developing here."

In a press release, Energy Minster Blair Lekstrom said British Columbia has "significant geothermal energy potential and continues towards advancing geothermal energy generation in this province."

"We will put this resource to work for our economy, generating new jobs and new wealth for rural B.C. communities, while lowering greenhouse gas emissions," stated Lekstrom.

A ministry spokesperson there are two other geothermal exploration permits issued in the province, one at North Meagre Creek and one in the Valemount area.

Most of the Knight Inlet parcel falls in the Da'naxda'xw/Awaetlala Nation's territory. According to a Sierra press release, the company signed a memorandum of understanding with the nation to explore geothermal resources there, and could transmit electricity on a high voltage power line being built for run of river projects underway in the area, including the Bute Inlet project.

"The geothermal rights from the Crown coupled with our earlier memorandum of understanding with the Da'naxda'xw/Awaetlala Nation provides the ideal combination to move a project forward," stated Gary Thompson, Sierra's president and CEO in a press release. "We are excited to have won the bid for the Knight Inlet lands."

Srdanovic said while the province is taking a step in the right direction by issuing the permit, both the provincial and federal governments could do more to encourage geothermal development in B.C, by introducing a feed-in tariff or tax incentives.

"In British Columbia, we live on a major fault, on the ring of fire, with major volcanoes. We could get a lot of megawatts out of British Columbia, that's a lot more sustainable and unobtrusive than hydro is."

Geothermal heat is stored deep below the earth's surface. Accessing this heat requires deep drill wells and pipes that capture this heat and convert it to steam, which drives turbines and produces electricity.

Sierra has 16 geothermal projects in the U.S., most in Nevada. Srdanovic said south of the border, they can access to incentives, grants, loan guarantees and investment tax credits.

"Our focus is on the U.S.," Srdanovic said.

Colleen Kimmett reports for The Tyee.