Geothermal Companies Receive Cost Sharing Grants

My entire portfolio of Geothermal companies received DOE cost-sharing grants Friday. Here's a quick run-down:

• Nevada Geothermal (NGLPF.PK, NGP.V) received $1.7M for its Crump Geyser project, and $1.6M for its Black Warrior project. NGP also celebrated completion of its Blue Mountain Faulkner 1 plant the same day.
• US Geothermal (HTM) received $3.77M for it San Emidio project.
• Sierra Geothermal (SRAGF.PK, SRA.V) received $10M for exploration at its Alum and Silver Peak projects.
• Ormat (ORA) received two grants, and is likely to benefit from other grants since geothermal exploration companies such as US Geothermal contract with them for many services.
• Up to $61.9M was awarded to ground source heat pump demonstrations, which will help my two Geothermal Heat Pump stocks, Waterfurnace Renewable Energy (WFIFF.PK) and LSB Industries (LXU).

Market Reaction

While the geothermal exploration companies (NGP, HTM, and SRA) were all up Friday, Ormat and the geothermal heat pump stocks were down (ORA -1.23%, WFI.TO -1.12%, and LXU -2.67%, on a day the S&P 500 fell 2.81%) Ormat was probably down in sympathy with the market because it is much larger than the other companies listed, and these grants won't make that much difference to its bottom line. Waterfurnace and LSU may have gotten less market benefit since the grants were not directly to them, and money for geothermal heat pumps was already expected to be part of these grants.

Practically the only (nearly) pure-play geothermal company that didn't get something was Raser Technologies (RZ), which I told readers I sold in September when the DOE announced they were no longer under consideration. I sold Raser at $1.78, taking a small (11%) loss. It closed Friday at $1.18. I'm glad I got out when I did, although readers of the article who sold on my recommendation will have done better than I. Raser bumped around in the $1.80-85 range for a couple weeks after I published my article, and even hit $2 briefly.

DISCLOSURE: LONG NGPLF, HTM, SRA.V, ORA, WFIFF, LXU.

DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Comments

[Jack Yetiv:]

In discussing these above companies, I think a major point needs to be made regarding NGLPF. Although it's great that NGLPF received about $3.5 million on Fri, a much more significant development occurred on Oct. 9--NGLPF made a $58 million application for a payment of the 30% investment tax credit. According to the press release (and to the Treasury's rules), the npayment should be forthcoming in early December since the Blue Mountain geothermal plant against which this credit has been sought has hit thye necessary benchmarks to receive this payment.

I am absolutely flabbergasted the after receiving both the $3.5 million grant and expecting the $58 million credit payment in about 30 days, is not trading at closer to $1.50 than under a dollar.

Jack Yetiv

Disclosure: Long over 100K shares of NGLPF with a cost basis of about 90 cents and RZ.

Nov 01 10:32 PM

[20-20 Hind ...:]

There is no such thing as a geothermal "industry." At most, they apply for licenses and do some engineering. The machinery installed are off-the-shelf units from giants like UTX.

For obvious reasons, good geothermal sites are far from electricity consumers.

Geothermal is an intriguing concept (who doesn't like free energy?) but it will never be a mainstream business for investors to profit from. IMHO

Nov 02 12:33 PM

[Tom Konrad:]

20/20-
In fact, most of the geothermal industry is like the mining exploration industry: they acquire mineral rights and drill to find hot water. Saying this is not an industry is like saying oil wildcatters are not an industry.
Vertically Ormat actually supplies far more turbines to geothermal projects than UTX (used only by Raser, as far as I know.) Ormat is a vertically integrated geothermal company, from exploration to drilling to turbines to production.

Read my geothermal industry primer to get a better understanding of the companies involved.
www.altenergystocks.co...


On Nov 02 12:33 PM 20-20 Hind sight wrote:

> There is no such thing as a geothermal "industry." At most, they
> apply for licenses and do some engineering. The machinery installed
> are off-the-shelf units from giants like UTX.
>
> For obvious reasons, good geothermal sites are far from electricity
> consumers.
>
> Geothermal is an intriguing concept (who doesn't like free energy?)
> but it will never be a mainstream business for investors to profit
> from. IMHO

Nov 02 01:39 PM

[Heyya:]

You have much to learn about the geothermal industry. It is indeed an "industry." There are a couple companies that use off the shelf units, but the larger projects are designed and engineered for the specific sites and geothermal systems. As for being far from consumers, not all of them are; an example of the contrary is that there is about 100 MW of geothermal energy produced right on the outskirts of Reno, the Steamboat projects owned by Ormat (ORA). Before you make such comments about an industry you don't understand, a good site to learn more is at: www.geo-energy.org/abo...


On Nov 02 12:33 PM 20-20 Hind sight wrote:

> There is no such thing as a geothermal "industry." At most, they
> apply for licenses and do some engineering. The machinery installed
> are off-the-shelf units from giants like UTX.
>
> For obvious reasons, good geothermal sites are far from electricity
> consumers.
>
> Geothermal is an intriguing concept (who doesn't like free energy?)
> but it will never be a mainstream business for investors to profit
> from. IMHO

Nov 02 04:27 PM

[1reward:]

I agree. geothermal is not an industry it is a complete joke comparable to ethanol.

Nov 03 11:41 AM

[The Geoffster:]

What do you think of Magma Energy?

Nov 05 07:10 PM

[Tom Konrad:]

I have not looked into Magma. It was interesting that Magma got a big grant from DOE, but I haven't spent the time looking at the company yet in order to render an opinion.


On Nov 05 07:10 PM The Geoffster wrote:

> What do you think of Magma Energy?

Nov 06 11:07 PM