6 Ways to Play Clean Energy 24 comments
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Is it wind energy, or is it solar energy? Is it bio-diesel or hydroelectric energy? The debate on what is the best form of clean energy to invest in has been growing like green shoots for years. Let me give you a hint of one possible winner: The Geysers.
The Geysers in California supply power for several plants. These power plants emit only excess steam and very minor amounts of gases. In the Mayacamas Mountains, located 72 miles north of San Francisco, naturally occurring steam field reservoirs below the earth's surface are being harnessed by Calpine to make clean, green, renewable energy for homes and businesses across Northern California.
The Geysers, comprising 30 square miles along the Sonoma and Lake County border, is the largest complex of geothermal power plants in the world. Calpine (NYSE:CPN), the largest geothermal power producer in the U.S., owns and operates 15 power plants at The Geysers with a net generating capacity of about 725 megawatts of electricity - enough to power 725,000 homes, or a city the size of San Francisco.
The Geysers meets the typical power needs of Sonoma, Lake, and Mendocino counties, as well as a portion of the power needs of Marin and Napa counties. In fact, The Geysers satisfies nearly 60 percent of the average electricity demand in the North Coast region from the Golden Gate Bridge to the Oregon border. The Geysers is one of the most reliable energy sources in California delivering extremely high availability and on-line performance and accounts for one-fourth of the green power produced in California.
Recently, energy analyst Matt Badiali wrote a piece based on a question submitted to The Growth Stock Wire that sums up how undervalued and under-appreciated Geothermal Energy really is:
Q: What do you think is the best investment to take advantage of the government's support of clean energy? – D.H.
A: In one sentence, D.H., my take on clean energy is "Solar and wind bad, nuclear and geothermal good."
It all comes down to economics. Solar and wind farms just don't produce enough energy to cover their enormous start-up costs. Nuclear produces awesome amounts of clean electricity. But from an investor's standpoint, I think the biggest money will be made in geothermal energy.
Geothermal energy harnesses the heat of the Earth to produce electricity. To vastly simplify things, geothermal wells drilled into the ground allow steam to rise to the surface, which spins turbines and generates electricity. Unlike wind, solar, and biomass, geothermal power is a reliable, economically viable power source right now.
Today, about 50 countries around the world harness geothermal energy. Iceland built an entire heavy industry around smelting aluminum with geothermal power.
The one big problem with geothermal plants is the initial cost. Drilling into volcanic terrain is difficult and expensive. It's also expensive to buy and install the turbines that produce electricity and run the power lines to the grid. However, once you have spent the money, you simply harness the Earth's heat to generate the steam. You don't need fuel or much maintenance.
Unfortunately, that initial expense discouraged much expansion in geothermal. Banks and investors did not want to invest because it took too long for them to be repaid. That all changed with the Obama administration.
The Feds are doing all they can to get geothermal plants built. The Department of Energy is backing construction loans and the Treasury is covering 1/3 of construction costs through grants.
In addition, the cap and trade bill will hike electric rates two or three times their current prices. That's what will drive a bubble in alternative energy – low-cost financing, government backing, and huge upside.
It's the same formula that brought us the real estate bubble – they just changed the name to "green power." Regardless of how you view alternative energy, buying these stocks today is like buying real estate in 2002. You'll wish you loaded up once this bubble heats."
The argument for Geothermal Energy's attraction and potential is very convincing. The "one big problem" with geothermal is far outweighed by its many, many benefits. The U.S. Dept. of Energy web site does an outstanding job discussing the benefits.
Federal and state money is going to be channeled in the direction of geothermal energy in the years ahead, no doubt about it. Besides CPN we really like Ormat Technologies (NYSE: ORA), U.S. Geothermal (NYSE: HTM), and Nevada Geothermal (NGLPF.OB).
It is impossible to find an ETF that exclusively invests in geothermal energy as far as I know. The PowerShares WilderHill Clean Energy (NYSE:PBW) does contain CPN and ORA as two of its top ten holdings.
Accumulating geothermal stocks and an ETF like PBW makes a lot of sense right now, especially during times of market corrections and pullbacks. Green investors should at least add them to their "wish list" and pick a buy limit price that makes sense.
Disclosure: I do not currently own any of the stocks or funds mentioned.
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please remember investments can fall as well as rise. And they will! - Advanced Investor Technologies LLC accepts no responsibility for any loss or damage resulting directly or indirectly from the use of this content.
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One critical piece of information I did not see here is the sheer necessity to understand the water rights issue for these firms. Without the water rights, and especially, the actual available quantity, it really doesn’t matter what property you own or quality of staff and management.
To that point the states of Nv and Utah this week agreed to begin de-watering the snake and thousand spring valley to pump into the Las Vegas Basin. This is just one of those issues that bears monitoring for anybody plying in the sector.
Disclaimer, I currently hold HTM.
The key distinction with solar is that the costs are dropping very rapidly. Technology is being deployed to reduce those total installed costs for solar even more. For the next 10 years or so it will trend like the computer industry; effectively much lower costs per watt every year.
Take it from one who knows. The costs to drill a geothermal well have only gone up. It’s a very installation-intensive business with minimal technology. Solar is benefitting now from manufacturing scale and technology improvements that are reducing costs dramatically, resulting in very favorable prices for solar generated electricity.
'Marc, you're making two contradictory statements. First you say that solar and wind have enormous start-up costs. Then you say that the one big problem with geothermal is the initial cost: drilling, turbines and some maintenance (by the way, nuclear is off the charts in this regard).'
Er, no it's not. Here are the levelised costs:
www.instituteforenergy.../
Nuclear: 107.3
And here is your favourite, solar
Solar thermal: 229.6
Solar PV: 395.7
And here are the costs for the subject of this article, geothermal: 111.5
As can be seen, where available geothermal is very competitive.
Of course, if the US had a reasonable regulatory regime which was interested in facilitating safe nuclear power instead of hindering it in any way possible, nuclear costs would be far lower.
As it is, the cheapest power may be available by buying Russian or Chinese modular reactors and simply importing them at a fraction of US
build costs:
nextbigfuture.com/2009...
Where available though geothermal looks good, especially in it's low temperature variety:
www.greencarcongress.c...
nextbigfuture.com/2009...
It sounded a bit too much like a perpetual motion machine to me for a long time, but once you start getting external tests using materials not provided by Blacklight......
Fractional quantum states?
More heat out than you put in?
Uh huh. Sounds like cold fusion warmed over.
On Aug 14 02:21 PM Davewmart wrote:
> There is a seventh clean power source, or there may be, but since now we have some external verification, it may be worth a flutter by the bold, and certainly bears watching as it would cause huge<
smartstops.blogspot.co...
On Aug 14 11:08 AM Ferdinand E. Banks wrote:
> Very interesting article. Very important for my work. But the problem
> with this kind of energy is that there isn't enough of it. I've heard
> a lot of good things about it recently, and I suspect that It's fine
> for investors, but it wont mean much for the energy requirements
> of the country...unfortuntely.
Look at your electric bill. Typically HALF of the cost of residential and commercial electricity is the generation cost -- the rest is transmission, distribution and in some cases nuclear decommissioning. You have none of that with Distributed Generation power.
According to the IER report you quoted for comparison purposes: "Since the availability of wind or solar is dependent of forces outside of the operator’s control, their levelized costs are not directly comparable to those for other technologies."
Commercial and residential customers are going to flock to rooftop sources of power in greater numbers as costs for these systems continue on their rapidly declining path. These customers will look at their electric bills and make their own decisions -- and won't rely on their utilities to choose expensive power sources that are more profitable for utilities.
On Aug 14 02:17 PM Davewmart wrote:
> rooferguy said:
> 'Marc, you're making two contradictory statements. First you say
> that solar and wind have enormous start-up costs. Then you say that
> the one big problem with geothermal is the initial cost: drilling,
> turbines and some maintenance (by the way, nuclear is off the charts
> in this regard).'
> Er, no it's not. Here are the levelised costs:
> www.instituteforenergy.../
>
> Nuclear: 107.3
> And here is your favourite, solar
> Solar thermal: 229.6
> Solar PV: 395.7
>
> And here are the costs for the subject of this article, geothermal:
> 111.5
>
> As can be seen, where available geothermal is very competitive.<br/>Of
> course, if the US had a reasonable regulatory regime which was interested
> in facilitating safe nuclear power instead of hindering it in any
> way possible, nuclear costs would be far lower.
> As it is, the cheapest power may be available by buying Russian or
> Chinese modular reactors and simply importing them at a fraction
> of US
> build costs:
> nextbigfuture.com/2009...
>
> Where available though geothermal looks good, especially in it's
> low temperature variety:
> www.greencarcongress.c...
claims which stretch credibility require above average standards of proof, and if no patent has been issued there may be a valid reason.
rowan univ is mentioned, it is in an area of new jersey with which i am familiar having lived there, it was glassboro state teachers college.
the word 'university' means you can pay $ & receive instruction in any field of study, but today anybody can call themselves a university.
> jack
Solar is IMO becoming a decent power source in hot climates to aid air conditioning.
The problems start if you try using it to supply base load.
You can manage overnight, as you only need a few hours of storage, although even that is expensive.
But annual variation is a killer, as you can't possibly store for months and even at the latitude of the Mohave winter solar incidence is a fraction of summer.
I have figures here for Cairo - see 1.6:
www.powerfromthesun.ne...
So to get the true costs for solar as baseload you need to calculate the costs of oversizing your installation to provide enough power for the winter, and disregard any subsidies as those just mean someone else is paying - the grid and other power users in the case of feed-in tariffs.
Solar is a darn nuisance for the grids, and only tolerable because it is such a small part of total power.
I am not against solar, but it is not a panacea, or suitable for base load.
Solar hot water is a different matter, and it is a scandal that it is not routinely installed in almost all areas of the States.
It is much more efficient and cheaper than PV.
I am pretty doubtful too, but Blacklight seems to be putting itself to the test much more than, say EESTOR.
They have a couple of patents issued, which are referenced on their site.
I will have to see more tests by several different labs to become reasonably convinced that they are on to something.
Lots of residental owners are going with solar panels today, same thing with wind turbines.
At least it is a start.
I build these models for a living and the most important parts (of any well reasoned model) are the variable data inputs that drive the model. Very few people know the appropriate inputs, and most of the ones that do, already work for companies such that the information never goes beyond the best interests of the "employer".
Misinformation is the game for many in the solar industry...and the Web is very little help unless you know exactly where to look.
On Aug 15 10:50 AM Fred W wrote:
> I think the author needs to update his knowledge on the actual cost
> of producing, transmitting and distributing "centralized" generation.
> Transmission and its maintenance is no small line item in a 20-30
> year project pro forma--unlike the case for distributed solar PV.
> Germany has proven that solar can supply 10-15% of a country's electricity
> demand w/o high insolation factors and do it quickly...at least when
> compared to nuclear, and in many cases coal plants as well (waiting
> for permitting approval).
> I build these models for a living and the most important parts (of
> any well reasoned model) are the variable data inputs that drive
> the model. Very few people know the appropriate inputs, and most
> of the ones that do, already work for companies such that the information
> never goes beyond the best interests of the "employer".
> Misinformation is the game for many in the solar industry...and the
> Web is very little help unless you know exactly where to look.
On Aug 15 11:37 PM fishluvrain wrote:
> I am hoping this can generate some future response: I recently started
> looking into a penny stock (I will leave it un named). It led me
> to investigate a technology Plasma Gassification. The basic premise
> being creating a super hot electric arc and vaporizing a material
> (garbage/trash) with the end result of the technology creating electricity.
> There are real companies developing this technology but had not heard
> of it before last month. Is it real or imaginary. Does it havee
> a future. Any bloggers in the energy arena willing to look into
> it?
On Aug 18 05:58 PM Heyya wrote:
> As a geothermal industry insider, I highly praise these types of
> power plants. They are far less land-intensive than solar and wind,
> meaning a much smaller environmental footprint. Yes, start-up costs
> are high, but as shown above, less or at least no more than others.
> I also see a lot of benefit to this industry coming from DOE loans.