I’ve said it over and over: Geothermal is a clean and green way of generating electrical power. It has worked for over 100 years. OK, there’s still more new technology to invent. You can always tweak and improve everything. But the basics are there with geothermal. It’s not rocket science. The world could do just fine by adopting the existing geothermal technology base on a large scale. Really, there are few secrets left to break in the realm of drilling geothermal wells. (Just remember, the rocks tend to be harder and hotter than in oil wells.) And there is not that much new inventing that has to occur in the realm of spinning turbines to generate power.
You surely know that windmills don’t turn when the wind doesn’t blow. And solar does not generate electrons in bad weather or at night. But geothermal runs 24 hours per day, in essence “mining” heat from the bowels of the earth. (That is, the fuel is “free.”) Thus, geothermal offers reliable baseload power. And geothermal emits near-ZERO carbon dioxide (trace amounts at worst), so it completely trumps any and all fossil fuels for a clean power source. There are no long-term waste or storage issues, like with nuclear. There are many locations within the U.S. – and around the world – that are completely suitable for geothermal. Geothermal is a technology whose time ought to be here.
Yes, the time for geothermal ought to be here. So why isn’t the geothermal business exploding? First, geothermal power is competing against a worldwide installed base of existing power systems and economics. When most people think of electricity, they don’t naturally conjure up images of steam wells turning turbines. Few schools anywhere teach future geologists how to “do geothermal.”
Second, the pure-play geothermal companies are small firms subject to the same credit crunch as everything else that has gotten hosed in the past year. (Note, however, that the largest geothermal power player in the world is Chevron.) At the same time, all five of the ESI geothermal companies are following their business plans. There is no bad news from any of them. Each of the geothermal companies is on target and budget. They are generally doing well, with sufficient cash to fund their current business plans. Yet the stock prices of the ESI players are trading flat or down. All I can say is that we should consider it our opportunity to buy a few more shares at low prices and to wait to profit in the future.
Rick Rule has a great way of putting it all in perspective. And I had a long talk with Rick about the geothermal players. Here is some of what he told me.
“Geothermal is easy to understand,” said Rick. “You drill a hole. You lower pipe. You get steam up the pipe from the heat of the earth. You use the steam to spin a turbine. You make electricity. You sell the electricity down the wires. But for as easy as it is to understand, it takes special expertise to put it all together. And the world does not have a vast army of people with that geothermal expertise, as you have with the oil industry. So geothermal is still in a developmental stage. That’s what we have to realize. It takes patience.”
Rick continued: “The good news is that the political and economic climate for geothermal is improving almost every month. Every time the U.S. government, the European Union or the United Nations passes some new regulation about saving the environment, we are one step closer to the geothermal power revolution. Everything that the regulators are doing seems to be making the world tougher for burning carbon and easier for industries that don’t emit CO2. That means that they’re paving the way to a geothermal power build out.”
Rick and I discussed how already, Nicaragua-based Polaris Geothermal is selling CO2 credits to German buyers. “Hey,” said Rick, “if the Germans want to give me euros for my CO2 credits at Polaris, I’ll take their money. Meanwhile, Polaris is operating and selling power to people who want electrical power down in Nicaragua. Eventually, the stock market will figure this out. I’m patient.”
Until next we meet,
for Markets and Money
P.S. So the future for geothermal is bright. The worst I can say is that the geothermal future is coming slower than I anticipated a year or two back. But it’s coming, of that I’m certain.
In fact, there are three government mandates that could just about guarantee geothermal’s future…and one of these mandates could happen soon…very soon.