Sunday, January 17, 2010

Geothermal Stock Review and Future Prospects


Geothermal energy comes from deep within the planet and although it does not garner the attention of wind and solar, it is nonetheless one of the largest and most efficient potential sources of energy in the world today.

With geothermal's total global generating capacity 0f about 10,000 megawatts (MW) of electricity, it could match all of the energy available from coal, oil, and gas combined. According to the UN World Energy Assessment report, the geothermal resource is roughly 280,000 times the annual consumption of primary energy in the world.

To help investors see the value of renewable investments, The Green Market followed the progress of both Solar and Wind, stock in 2009. On January 15, 2009 The Green Market added 4 geothermal stocks (NGLPF.OB, LXU, WFIFF.PK and RZ) to its geothermal stock portfolio. Here is a review of the performance of these 4 stocks in 2009.

Nevada Geothermal Power (NGLPF.OB) gained 220 percent, LSB Industries (LXU) gained 69 percent and Waterfurnace Renewable Energy (WFIFF.PK) gained 24 percent. Of The Green Market's geothermal stock, Raser Technologies (RZ) was the only one to post a loss in 2009. The average gain for The Green Market's geothermal stock was 61 percent in 2009.

Despite the positive performance of The Green Market's stock, the Geothermal sector is still coming to terms with technical limitations. In December, the US geothermal company AltaRock Energy's $36 million pilot "Geysers" project in Northern California was shut down due to technical limitations. The company's drill bits were breaking as they attempted to probe caprock formations. Without penetrating that shallow stone, deeper, high-temperature structures can't be exploited. AltaRock's California operation may be closing in favor of its other endeavor in Oregon.

AltaRock and its ultra-deep (three miles) geothermal technology have also come under increased scrutiny for their potential to cause small earthquakes. Geothermal Explorers is a European firm now being prosecuted for causing tremors of up to 3.4 on the Richter scale below the Swiss city of Basel. Proper seismic risk assessment is an important part of the production process.

In Pacific Rim countries like the Philippines, geothermal is growing rapidly. Locally traded Geothermal energy company Energy Development Corp. has more than doubled in the past year. EDC has a 150 MW geothermal plant up and running near the south of Luzon, they also have significant hydropower and wind energy operations throughout the Philippines.

Britain already has 5,000 shallow earth heat pumps installed across the country and one geothermal plant operating in Southampton. Through its "Deep Geothermal Challenge Fund," the UK's Department of Energy and Climate Change is funding exploration of a second geothermal turbine plant in Cornwall. This site is being developed by Geothermal Engineering, Ltd. with 1.5 million pounds in government money. EGS Energy has drawn two million for a borehole, also in Cornwall, and £461,000 is being invested in a Newcastle University geothermal plant for the Eastgate carbon neutral village in Durham.

The Obama administration has joined other governments in their support for geothermal. The president and his energy team directed nearly $440 million into geothermal exploration projects in the US in 2009. The largest geothermal system in the world is known as the Geysers in California's North Coast region. The largest single plant is one proposed for Sarulla, North Sumatra, Indonesia.

Going forward, industry leader WaterFurnace Renewable Energy looks as though it will add to its 24 percent performance in 2009. There are several other opportunities including US Geothermal (AMEX: HTM) and Ormat Technologies (NYSE: ORA).

Geothermal plants provide energy with the smallest of footprints. Geothermal heat pumps can also produce savings of more than 60% on heating and cooling costs making them economically attractive for commercial and residential applications. With geothermal's growth capacity estimated at 9.5% per year through 2015, the future looks bright for geothermal energy.
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Next: Next: Stock Review and Future Prospects: Energy Efficient (Smart) Grid, Energy Efficient Lighting

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