The Energy That's Quietly Gaining Steam
The geothermal sector has been quietly steaming for some time now.
Often overlooked when it comes to cleantech fanfare — I've even called it the bastard child of renewable energy — it's only a matter of time until the industry gains rock star status.
Unlike wind and solar, geothermal is one of the few clean sources of energy that can provide baseload power without storage devices. And while it may not have the same sex appeal as wind and solar, the use of geothermal energy will quietly double in the next six years.
This is great news for investors.
Even better, the geothermal space isn't crowded with public companies, so the profits generated will be much more concentrated.
The smart money is already beginning to take notice, so you'll want to start sniffing around, too.
Here's what you need to know about investing in geothermal energy companies.
Since the 1970s, the geothermal sector has mostly been dominated by large global conglomerates like GE, Siemens, and Mitsubishi. The only major pure play has been Israeli-born Ormat Technologies (NYSE: ORA).
That company has been and will be the benchmark of the industry. Any Green Chip investor worth his salt should own shares of this company. Because not only is Ormat a leader in the geothermal power generation space – it also builds geothermal power plants for smaller geothermal companies in the U.S. and abroad.
Some of these smaller companies are public, and some aren't. But over the past few years, nearly every small public geothermal company operating in the United States has paid off big for investors. And this is not likely to change anytime soon.
With the rush to develop new, cleaner energy technologies, geothermal's ability to provide baseload power – and do it inexpensively – is attracting a lot of big institutional money.
You see, geothermal is one of the cheapest forms of energy, and the cheapest of all forms of renewable energy. At a typical cost of around 5 cents per kWh, it's about half the price of grid utility power, on par with the lowest-cost power sources available.
And in the clean energy game, it's all about cost. So it should come as no surprise that smaller geothermal companies are starting to get a lot of investor attention these days. Beyond Ormat Technologies, you also have companies like Nevada Geothermal (OTCBB:NGLPF), Ram Power (TSX:RPG) and U.S. Geothermal (AMEX:HTM) that are providing opportunities for early geothermal investors.
You can read more about these companies at Green Chip Stocks.