Sunday, September 26, 2010

Geothermal energy is "green" and out of the spotlight

“Green” renewable energy is a popular topic in the news and with environmentally-minded stock market investors. Solar and wind production get almost all of the headlines, though, especially from the mainstream media outlets of large-city newspapers and network television. Bio-fuels, liquid fuels that can replace diesel and gasoline, consistently run in third place. Another contender that is even more earth-friendly gets very little media attention and is also very much “under the radar” with investors is geothermal energy.

What media coverage has received concentrated on a selected few areas of the world with obvious surface geysers(have to have those spectacular photos!) such as Iceland and California. This is high-temperature geothermal, using water and/or steam directly out of the ground and operating above 300F. The average person or investor does not even know geothermal is a proven energy source even at much lower temperatures, shallower depths and areas with no near-surface activity at all.

Low-temperature geothermal energy production can provide heating, cooling and hot water for buildings as well as electricity production with no emissions and very little above-ground infrastructure. It is also practical with already existing and proven technology almost anywhere on the planet. Installing a system is more expensive than most solar equivalents but bring the same energy savings, require fewer toxic chemicals and carbon emissions to manufacture the components and less potential future maintenance.

The U.S. military and Department of Energy(DOE) are putting considerable resources into geothermal right now(though still less than solar or wind). The DOE recently announced $20-million of new funding for a variety of geothermal projects ranging from large-scale commercial electricity generation to reclaiming the energy absorbed by oil & gas drilling brines discharged as waste-water to small systems supplying heating and cooling to a few buildings combined with aquaculture operations(one of which is currently operating in New York City). The new funding covers seven geothermal technologies suitable for cities, small towns and remote areas. The National Renewable Energy Laboratory(NREL) is teaming with IKEA stores to bring geothermal energy to new big-box stores. The Environmental Protection Agency(EPA) is investing in geothermal to reclaim some heavily polluted areas and the military is also investing heavily to reduce petroleum dependence at its bases.

One type or another of geothermal energy production is practical nearly anywhere in North America. Norwegian researchers think current oil & gas drilling technology could make geothermal much more easily accessible and the supply is inexhaustible. The United States Geological Survey(USGS) says over 120,000 MW of low-temperature geothermal energy is easily available and Rocky Mountain Power utility company has found about 800 MW of geothermal potential within 100 miles of its transmission lines in California, Utah, Oregon and Idaho. Nevada is becoming a geothermal hot-spot and U.S. Geothermal is now building a 11.5 MW plant in the northwest corner of the state to replace an existing power plant.

Stock share prices for companies in the field of geothermal energy production have been mostly flat for the past year, ignored by investors the same way geothermal has been ignored by the press. My current watch list has only four companies: U.S. Geothermal(HTM), Ormat Technologies(ORA), Nevada Geothermal Power(NGLPF) and Sierra Geothermal Power(SRAGF). ORA and HTM are by far the largest of the geothermal companies in North America. ORA’s shares currently trade around $29.50. The others are all under $1.00 per share, making them quite cheap investments. They are all low volatility stocks. With the spate of recently interest and money from DOE and the military ORA and HTM are both showing some signs of life and increasing share prices. With increased interest in geothermal within Nevada, NGLPF and SRAGF should follow the same path. Larger companies, such as Siemens and General Electric, are also showing signs of more interest in geothermal as a power source.

Is geothermal energy production on the verge of a major move into the mainstream of renewable energy? Are share prices of companies involved with geothermal about to start a long, steep climb to the stratosphere? It is still too early to make that call with any accuracy. The current interest and money in geothermal from federal government agencies bodes well. Private-sector interest and money from the likes of IKEA is also a very promising signal. Watch these stocks closely as things seem about to get quite interesting and may move quickly.

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