Raser Technologies Inc., a Provo-based designer of electric motors, said Merrill Lynch & Co. has agreed to finance the development of Raser's first geothermal power plant to capitalize on demand for clean energy.

Merrill Lynch agreed to provide as much as $44 million in financing for a 10.5-megawatt plant planned to begin operations by the third quarter of this year, Raser said Thursday in a statement. The New York-based bank will provide funding for additional plants up to a total of 155 megawatts if certain conditions are met, Raser said.

Geothermal power plants tap underground reservoirs of steam to produce electricity while generating less pollution than generators that burn coal or oil. Raser and other companies are working on projects that would more than double the nation's geothermal power generating capacity to take advantage of tax incentives and meet demand from utilities that are required to increase purchases of renewable energy, according to a survey released Wednesday by the Geothermal Energy Association.

As part of the agreement, Merrill Lynch, the third-largest U.S. securities firm, also may receive warrants to buy as many as 3.7 million shares of Raser's common stock for funding the first 100 megawatts of geothermal power plants. The exercise price will range from $14.98 to $19.71 each. More warrants may be granted to Merrill Lynch if it funds an additional 55 megawatts of capacity.