Geothermal

Tom Konrad CFA The most efficient way to heat and cool a building just got more efficient. Geothermal heat pump diagram via Bigstock Climatemaster, a division of LSB Industries (NYSE:LXU), recently announced that their new Trilogy 40 geothermal heat pump (GHP) had been certified by the Air Conditioning, Heating, and Refrigeration Institute (AHRI) to exceed 40 Energy Efficiency Ratio (EER) under ground loop conditions. EER is the ratio of effective cooling (heat removed) to the energy used, at maximal load, and is the standard...

Tom Konrad CFA Uncertainty surrounding the damage caused by a sulfur fire at LSB Industries‘ (NYSE:LXU) chemical facility Tuesday has brought the stock down $5 from Monday’s close, although the company was already well-valued and had just beaten analyst’s expectations for its first quarter results. This is extremely short-sighted of investors, who are no doubt spooked by the lack of information about the extent of the damage.  However, we have enough information to make a reasonable estimate as to the damage to LSB’s profits.  As I outlined Tuesday night, we know: The facility is insured for both damages and work stoppage....

Tom Konrad CFA Ormat Heat exchanger at GKW Landau. Geothermal water evaporates the carrier medium. Preheater and the evaporator. The steam line above connects to the turbine. Photo by Claus Ableiter via Wikimedia Commons Last Wednesday, Ormat Technologies (NYSE:ORA) reported a great quarter, beating analyst expectations for both earnings and revenues. Investors loved it: ORA was up 8% on the day to $20.69, and are up 14% at $21.85 as I write. I’m a big fan of geothermal power, and would love to own Ormat at the right...

By Jane Pater Salmon, Navigant Consulting Geothermal energy presents baseload clean energy at a lower cost than many other renewable energy alternatives. Despite this compelling value proposition, long development horizons and the risks associated with exploration and drilling activities present hurdles to developing the country's rich geothermal potential. Financing projects that use conventional geothermal technology remains challenging in the uncertain economic environment. In the past year, geothermal project developers used alternative strategies to overcome three common challenges to geothermal project finance. While the challenges for raising capital at the project level are consistent with those faced in...

Tom Konrad CFA Hezy Ram Geothermal industry veteran Hezy Ram has worked in the industry for over three decades.  His career began with 28 years of experience at Ormat (ORA), where he was Executive Vice President of Business Development, after which he founded Ram Power Corp. (RPG.TO/RAMPF.PK) in 2009.  In February, he resigned as CEO of Ram Power shortly after the company warned of significant delays and cost overruns at a key Nicaraguan project, a move he says was motivated by irreconcilable differences with other board members and major shareholders regarding the company's strategy.  Today,...

By Dana Blankenhorn Of all the energy harvesting technologies out there, geothermal remains the most maddening. In theory, there should be more than enough energy below our feet to power our world, and it should be cost-competitive for a fraction of the investment needed in wind or solar. In theory. Right now, the extraction of geothermal energy in the U.S. remains tied to Nevada and California, where the heat is close enough to the surface and in stable enough formations that a drill can reach it without the heat dissipating quickly. This has caused investors to sour on...

Tom Konrad CFA Which company might snatch battered Nevada Geothermal Power out of the scratch-and-dent bin for a song? When Raser Technologies (RZTIQ.OB) declared bankruptcy at the end of April, I shrugged it off.  I saw the writing on the wall for Raser in September 2009, when they failed to get a DOE loan guarantee.  But part of the letdown also had to do with resource risk: the company was producing consistently less power from their 10MW (rated) Thermo plant than expected. Early in 2011, Ram Power (RPG.TO, RAMPF.PK) stock was clobbered when they announced construction...

By Dana Blankenhorn Despite America's leadership in geothermal the industry remains in the “and” category. As in, “solar, wind, tidal, biofuels AND geothermal.” It's an afterthought. (Picture from Evergreen State University.) Why are geothermal companies having to organize politically to gain crumbs from the capital table? The answer is pretty obvious, but no one seems willing to state it plainly. The oil industry is holding back. A recent Time Magazine article on renewables and oil investment makes it pretty plain. Total's bought into solar, Shell and BP into biofuels. Chile's state oil-and-gas company sold-out its geothermal interests...

A Great Deal for Plutonic Shareholders, Not bad for Magma Tom Konrad CFA As a shareholder of Magma Energy Corp. (MGMXF.PK), I'm reading through the joint information circular on the proposed merger of Plutonic Power Corp (PUOPF.PK) and Magma to form "Alterra Power Corp." I'm not thrilled with the merger, although I plan to vote for it, now that it's arranged. Overall, I think the merged Alterra will be a stronger company than either company alone. Both companies are in capital intensive niche Renewable Energy industries, so the added scale and diversification of Alterra should better...

Dana Blankenhorn Most renewable energy companies specialize. Solar companies do solar. Wind companies do wind. Geothermal companies do geothermal. Biomass companies do biomass. But a small Canadian merger challenges that assumption. Magma Energy (MGMXF.PK), a geothermal company, said it will spend about $100 million in stock to buy Plutonic Power (PUOPF.PK), which has wind and hydropower projects, and ambitions to get into solar. The combined companies will go by the name Alterra Power. Both companies are based in Vancouver. Size really does matter, crowed Magma CEO Ross Beatty on a conference call announcing...

Tom Konrad, CFA The market for Organic Rankin Cycle geothermal turbines has become competitive. In my October 2010 profile of geothermal industry leader Ormat Technologies (ORA), I quoted a conversation I'd had with a Geothermal Energy Association (GEA) representative in 2006, where she told me that Ormat stood head and shoulders above all the other geothermal players.  As the only truly vertically integrated geothermal developer, with in-house exploration, drilling, turbine technology, and operations, Ormat is still unique among geothermal companies.  But not too long ago their Organic Rankin Cycle turbines (which they call Ormat Energy...

Tom Konrad CFA My take-aways from the GEA Finance Forum After a long time lost in the proverbial desert of high capital costs and few financiers willing to step up, a number of geothermal companies made breakthroughs last fall.  The Department of Energy (DOE) loan guarantees for geothermal power development began to come through, and financiers were beginning to step up.  Nevada Geothermal Power (NGLPF.OB) announced a deal with Ormat (ORA) in which Ormat will earn a share of Nevada Geothermal's Crump Geyser property by paying for and financing most of the development costs,...

Tom Konrad CFA Last week, I was on a panel at the Inside Commodities Conference, and spent some time talking with Tyler Mordy, director of research at Hahn Investment.  He's a top-down analyst (and CFA Charter holder) who had recently grown enthusiastic about Alternative Energy in general because the sector is so beaten down. We agreed that the most-beaten down sector of alternative is geothermal power stocks, which Tyler finds frustrating because Hahn works with managed ETF portfolios, and there simply is no geothermal ETF.  Nor is there likely to be, since one publicly traded company dominates the industry (Ormat Technologies...

Tom Konrad, CFA  Ormat is the 500-pound gorilla of the geothermal power industry.  Should you buy the stock? I've owned Ormat Technologies (NYSE:ORA) stock off and on since I first began to invest seriously in clean energy companies.  At one of the first renewable energy conferences I attended five years ago as part of my quest to understand the renewable energy investing landscape, I encountered a representative of the Geothermal Energy Association (GEA).  Here's how I recall our conversation: Me: "What are a few of the leading geothermal power companies?" GEA Rep: "Ormat." Me: "Are they...

David Gold Wind turbines stand tall and mesmerize with their motion. Solar cells bask in the sparkling sun.  Meanwhile, hidden down in the dark dirty underworld, a compelling technology sits quietly and gets no respect.  Once installed it largely goes unseen and, it seems, it’s equally invisible in the world of clean technology press, venture funding and government R&D funding.  Yet this technology provides some of the most intriguing economic returns available for reducing a building’s net energy consumption and I would welcome the right opportunity to fund an exciting business in this category. What is this Rodney Dangerfield...

Tom Konrad CFA Geothermal power generation has several advantages over higher profile alternative energy such as wind and solar, but gets much less attention.  Part of the lack of recognition for Geothermal power arises from a confusion with the technology variously called Geoexchange, Ground Source Heat Pump, or Geothermal Heat Pumps.  Geoexchange uses the near constant temperature of the soil a few feet to a few hundred feet below the ground to heat and cool a building.  According to the Environmental Protection Agency, Geoexchange is the most efficient way to heat and cool a building, and...