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Introduction to Investing in Geothermal Energy StocksCertain countries or regions – including Iceland, California and parts of New Zealand – are rich in geothermal activity, and have harnessed this as a power source. However, as a whole, geothermal power is responsible for providing less than one per cent of the world’s energy needs. In the United States too, though it is the world’s largest generator of geothermal energy – thanks mainly to developments at The Geysers in Northern California – this is well under one per cent of total power. However, the fast-growing desire among many consumers for clean energy, along with a growing number of governmental programs and incentives, suggests a bright future for geothermal projects. A survey by the Geothermal Energy Association (GEA), released in January 2008, identified 86 new geothermal power projects in a dozen US states. When developed, these projects would provide up to 3,368MW of new electric power capacity, more than doubling US geothermal power capacity to 6,304MW. A statement from the GEA said these projects will inject $11 billion into local economies, and it added that “if we can build and sustain this momentum, geothermal energy can become a major US energy source. The GEA believes that, with the right federal and state support, geothermal energy could meet up to 20 per cent of America’s energy needs by 2030. Unfortunately, stock market opportunities are not plentiful. Several power utilities use geothermal energy, but it is generally a minor part of their business. Calpine Corporation, the leading geothermal plant operator, thanks to its ownership of power plants at The Geysers, was recently in bankruptcy. The stock that seems to get cited most frequently as the representative geothermal play is Ormat Technologies, a leading manufacturer of geothermal power plants which also operates geothermal facilities. An intriguing development is enhanced geothermal system technology, which takes advantage of the intense heat of rock formations deep below the earth’s surface. Under this technology, water is injected into fractures in the rocks, with the resulting hot water pumped back up to the surface to provide power generation. A major MIT report investigated ways in which America could use this technology to provide 100,000MW of power capacity by 2050. In Australia, work is already under way on enhanced geothermal system projects. Eight publicy listed companies are among those involved, with one of these, Geodynamics, announcing in January 2008 that it had succeeded for the first time in drilling a production well, which would bring the hot water back up to the surface. February 3rd, 2008
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