Geothermal Energy Stocks

Written By Nick Hodge

Posted January 7, 2008

Severe storms swept the Western part of the country this weekend, causing heavy flooding and dumping up to 11 feet of snow in the region plagued by wildfires just a few short months ago.

The storms, for all their severity, were little talked about in the face tomorrow’s New Hampshire primary election, the beginning of the NFL playoffs and the continued buzz about Roger Clemens’s alleged use of performance-enhancing drugs.

But the storms, in my opinion, deserved much more attention than they received. They did, after all, claim the lives of at least four people, with many others missing and injured.

And that’s not all. The storms also left hundreds of thousands without power. High winds and snow knocked down nearly 500 miles of power lines, and some folks could be in the dark for several days to come, as the bad weather is expected to continue at least through the early part of the week.

With the power failing on the West Coast, I thought it was a perfect time to discuss a source of power, indigenous to the area, that is rarely interrupted.

Geothermal Power

Although there are three types of geothermal power plants, the basic principle remains the same for each: heat from beneath the earth creates steam—either directly or indirectly—which is then used to power turbines and create electricity.

The underground heat needed to power turbines, however, is only adequate in certain parts of the world. Iceland, according to CEO of Iceland America Energy, Magnus Johannesson, gets 57% of its electricity from geothermal sources and heats 87% of its buildings with heat from beneath the ground. They use the free heat for everything from warming swimming pools to melting snow and ice on the streets.

In fact, with 80% of its electricity coming from renewable resources (the highest percentage in the world), Iceland actually has to produce CO2 to carbonate its soft drinks.

But when it comes to geothermal energy potential, the western US is no slouch. California and Nevada up to Oregon and Washington play host to the best geothermal resources in the county. And as they start to exploit that clean resource more and more, investors are starting to take notice.

Just north of San Francisco, The Geysers is the largest dry steam field in the world, and began producing electricity as far back as 1960. That area has enough installed capacity to power nearly one million homes. Nearly all of the geothermal plants there are owned by Calpine Corporation (NYSE: CPN).

Another major geothermal hotspot is the Basin and Range geological formation that stretches from Oregon and Idaho down through central Mexico. This is the area of most rapid development in geothermal power and investment in geothermal energy stocks.

Construction of plants there began during the energy crisis of the 1980s and has been resurrected in the face of a new energy crisis, high oil prices and concern over climate change. The installed capacity in the area stands at only 235 MW, leaving huge room for expansion and investment.

Green Chip Stocks has already made lucrative gains by recommending geothermal stocks operating in that area of the country.

Raser Technologies, Inc. (NYSE: RZ) and Ormat Technologies, Inc. (NYSE: ORA) have already brought Green Chip Stocks subscribers gains of 337% and 237%, respectively. And we think there is plenty more to come.

Expansion of plants in California and Nevada, coupled with new plants in Idaho, Oregon and Washington, will provided thousands of megawatts of clean renewable power for millions of residents.

And as the number of megawatts climbs, so do the returns of savvy investors who knew about this trend early on.

Next week we’ll shed more light on emerging opportunities in geothermal energy stocks.

In the meantime, be sure not to miss the next 200% play.

Until next time,

nick hodge


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