Sierra Geothermal Power Corp.

Sierra Geothermal Power Corp.

December 18, 2006 09:00 ET

Sierra Geothermal Receives Drilling Permit in Nevada

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Dec. 18, 2006) - Mr. Gary Thompson, President of Sierra Geothermal Power Corp. (TSX VENTURE:SRA), is pleased to report that the Nevada State Office of the BLM issued a geothermal drilling permit on December 14, 2006. The permit allows for drilling to commence on the Reese River Project, Lander County, Nevada. Road upgrade work and drill pad construction commence this week with drill mobilization planned for late December 2006. The well 56-4 is planned as an exploration slimhole to a maximum depth of 1200m. The objective of the well is to test the geothermal reservoir characteristics. The slimhole well program is partially funded by the US Department of Energy's GRED III program in the amount of US$580,000.

Reese River has been rated by Richards and Blackwell as one of the top 10 undeveloped geothermal prospects in Nevada. Phillips Petroleum and Amax Exploration drilled 52 holes during the 70's and 80's. Contoured data of the temperature gradient wells show that the 150 degrees C/km heat flow anomaly is approximately 4.8 km (3 miles) long in the northeast direction by approx. 1.6 km (1 mile) wide. The center of the anomaly reaches a temperature gradient over 500 degrees C/km. Using a Monte Carlo simulation the potential geothermal resource at Reese River was estimated to have a 90% probability of generating 13 MW and a 50% probability of exceeding 30 MW (Source: New Geothermal Site Identification and Qualification, PIER study prepared by GeothermEx, 2004). A 30 MW power plant is enough electricity to power 24,000 homes.

Pending positive results from the 56-4 slimhole drilling, Sierra Geothermal plans to conduct geophysical surveys and drill several production assessment wells on the Reese River Project.

Sierra Geothermal is a renewable energy company focused on the exploration and development of clean sustainable geothermal power projects. Geothermal plants produce long-term revenues and provide continuous, base load power, often at or above 95% capacity thereby geothermal is the preferred source of green power for many utilities. Sierra Geothermal has recently acquired a large portfolio of geothermal projects. Sierra Geothermal intends to advance the development of its portfolio of projects through a combination of equity and/or joint venture partnerships while continuing to evaluate additional acquisitions.

On behalf of the Board of Directors,

Gary R. Thompson

The information provided in this news release contains forward-looking statements within the definition of the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995, including statements regarding potential energy resources and project development possibilities. These statements are based on Sierra Geothermal's current expectations and beliefs and are subject to a number of risks and uncertainties that can cause actual results to differ materially from those described in forward looking statements, including the risks that the resource potential of any one of our projects may be uneconomic due to the lack of a high temperature water supply, or financing will not be available for construction of the power plants, and the revenues generated will not prove sufficient to fund operations and/or service debt, among others. Readers are cautioned to review the risk factors identified by the company in its filings with Canadian securities agencies. Forward-looking statements are based on management's expectations, beliefs and opinions on the date the statements are made. Sierra Geothermal Power Corp assumes no obligation to update forward-looking statements if management's expectations, beliefs, or opinions, or other factors, should change.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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