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Geothermal Stocks Overview | Alternative Energy Stocks

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« Battery Manufacturers, Burger Joints and Secret Sauce | Main Geothermal Stocks Overview Tom Konrad CFAGeothermal power generation has several advantages over higher profilealternative energy such as wind and solar, but gets much lessattention.
Part of the lack of recognition for Geothermal power arises from aconfusion with the technology variously called Geoexchange, GroundSource Heat Pump, or Geothermal Heat Pumps. Geoexchange uses thenear constant temperature of the soil a few feet to a few hundred feetbelow the ground to heat and cool a building. According to theEnvironmental Protection Agency, Geoexchange is the most efficient wayto heat and cool a building, and is a very interesting energyefficiency technology (and
In contrast, Geothermal power involves using much higher temperatureheat from hot springs or wells much deeper into the earth to generateelectric power. Unlike Geoexchange, current Geothermal powertechnology requires an existing geothermal resource where naturalgeologic forces have brought an unusual amount of hot liquids intopermeable formations relatively near the Earth's crust. There iscurrently a great deal of
In contrast, Geothermal Power with a good resource can produceelectricity for pennies per kWh. Electricity from one of theworld's best geothermal resources, The Geysers in Northern California,is sold for3 to 3.5 cents per kWh, although many the lower grade resourcesbeing exploited today need prices between six and twelve cents,depending on who you ask. These prices are comparable to naturalgas fired generation and wind, and are considerably less expensive thansolar photovoltaic. Unlike natural gas, the operating costs ofrunning geothermal plants are very low, and they produce minimalemissions of any kind. Unlike wind, geothermal power is availablein all weather conditions, and geothermal plants generally run morethan 95% of the time, which makes them more reliable even than coalpower plants, which typically only produce power 80-90% of thetime.
Geothermal Power also has a small footprint, requiring only
All these factors mean that a good Geothermal resource located neartransmission can be very valuable to a company that can tap it. Unlike wind and sun, such geothermal resources are as rare as they arevaluable, since they only occur in areas with tectonic or volcanicactivity. This rarity is one of the factors keeping geothermal arelatively undiscovered technology among investors interested inrenewable energy, but it also means that the rights to develop theseresources are valuable, in much the same way as a good mineral depositis valuable to a mining company.
Perhaps most importantly, Geothermal power enjoys support from bothRepublicanand Democrats, with the recently proposed
Geothermal Stocks
Geothermal stocks fall neatly into two categories: Large cap companiesand junior exploration and development companies. The large-capcompanies are:
Ormat (
Calpine (
None of these companies are currently profitable, but all owngeothermal resources in various stages of development, includingproducing plants. With substantially all the cost of geothermaldevelopment coming up-front, investors in these companies need toconsider the availability of funding for development as well as theriskiness and time line for developing each company's geothermalassets. There has been a recent trend of consolidation in theindustry which is likely to continue in the current difficult financingenvironment, despite growing
These small micro cap companies include:
MagmaEnergyCorp. (Toronto: MXY.TO/Pink Sheets: MGMXF).
RamPowerCorp. (Toronto:RPG.TO/ RAMPF.PK).
RaserTechnologies(NYSE:RZ).
DISCLOSURE: Long HTM, NGLPF.OB.
DISCLAIMER: The information andtrades provided here are for informational purposes only and are not asolicitation to buy or sell any of these securities. Investing involvessubstantial risk and you should evaluate your own risk levels beforeyou make any investment. Past results are not an indication of futureperformance. Please take the time to read the full disclaimer
Posted by Tom Konrad on October 11, 2010 11:19 PM | Geothermal Stocks Overview advertise here




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