Archive for the 'Geothermal' Category
Raser reports Q1
Geothermal developer Raser Technologies reported Q1 earnings yesterday with mixed results. If one were to judge the company purely by financial measures one would conclude this is a penny stock headed toward zero with accelerating losses, very little revenue, and negative shareholder equity. However, the market seems to be taking a much more optimistic view, assigning a market cap in excess of $500M, based on the non-financial aspects of the report which principally involves the development of 8 geothermal electricity projects in Utah and Oregon. Here is a snapshot of the consolidated balance sheet and operations statement:
With the bad news out of the way, the company has made progress toward developing its geothermal project portfolio with approximately 80MWe underway in 8 projects scattered throughout Utah, Nevada, and Oregon. Management expects that all 8 projects will be in commercial operation by the end of Q1 2009. Power purchase agreements totaling 22MW have been completed with the City of Anaheim and more agreements are in-process at this time. Ground was broken on the first plant in Utah and the company managed to secure some star power in the form of Senator Orrin Hatch for the ceremony. Project financing for 155MWe has been secured and power conversion units accounting for 45MWe have been ordered with about 8MWe now in possession of the company.
Possible snags in getting to commercial operation for these plants include: permitting, environmental impact reports, transmission, and most importantly, water availability and rights. The company has not spoken publicly about any of these issues and with 8 concurrent projects underway, there is substantial delay and completion risk yet to be mitigated. While it’s clear the company is moving full speed ahead in developing its projects, we can’t help but note that management claimed the first plant would be in operation in Q1 2008 in the earnings report one year ago. We said the company’s plans were overly aggressive then, we maintain that stance even as we’re impressed by the progress that has happened to date.
There is still substantial risk in this stock relative to the bet on positive cash flow in time to meet the committed financial obligations.
Links:
Raser Technologies 4 comments
Drilling Commences at Neal Hot Springs
Attribution: US Geothermal
US Geothermal, developer and operator of the Raft River project in Idaho, have commenced resource characterization with an ~1,100 meter exploration hole drilled parallel to the discovery well completed by Chevron in the 1970’s. Since there is a hot spring expressed on the surface, there is a very good chance that a hydrothermal system exists that is capable of supporting commercial geothermal operations. The project calls for 30 days of drilling operations followed by 60 days of testing to determine what sort of resource exists and supply the company with sufficient information to make the decision about further development of the site.
Links:
US Geothermal
Geothermal 101
Attribution: USGS
George Gorski over at Seeking Alpha has posted a nice entry on geothermal entitled “Geothermal 101″ - it’s a very good read and has the added benefit of exploring the geothermal supply chain in addition to developers and operators. It succeeds in giving a baseline education on the types of harvest techniques, the development challenges and benefits, and in the publicly traded companies participating in the industry.
Mr. Gorski, if you read this, there is one major correction to your article: Calpine (of San Jose - not San Diego) operates 19 of the 21 plants at The Geysers. The Northern California Power Association operates the other two. Also, two new developer/operators are working in The Geysers, US Renewables is re-powering a the old DWR Bottle Rock plant and Western GeoPower is re-powering the old PG&E Unit 15 plant. There are many more plants in California in the Mammoth, Coso, and Imperial Valley regions. Otherwise, a very good article and highly recommended.
Links: Geothermal 101 at Seeking Alpha
Geothermal Potential in Texas
Susan Combs, the Texas Comptroller of Public Accounts, has recently released a comprehensive report on energy in the state of Texas. The 33 chapter report is extensive and fact-based, covering virtually every energy source one can think of, fossil-based, renewable, and experimental. It’s really a fantastic bit of research.
Why does Texas care so much about energy? The answer is pretty simple, the average Texan consumes 3x as much energy per capita as the average US citizen and a large segment of Texas GDP is derived from energy related business. Those two facts mean that Texas suffers disproportionately as the price of energy rises but it also means that Texas has a potential advantage since it has a workforce that understands the energy business.
Chapter 21 has to do with the geothermal potential of Texas (see the map at the right) and covers co-generation as a consequence of oil/gas production, enhanced geothermal systems, and geothermal heat pumps. On the co-generation side alone, the report speculates that over 2,000MWe of production may be available. In the 1980s a 1MW co-generation test was run producing over 3,000MWh of power, but it was discontinued due to being non-cost competitive. While there are no active geothermal projects in Texas, recently leases on 11,000 acres have been granted generating over $50,000 in revenue for the state.
Of all the impact geothermal technologies could have in Texas, the most cost effective and most likely implementation is of geothermal heat pumps. A technology that effectively moves heat from the air to the ground and vice-versa. Particularly in the sweltering summer months, a GHP system could serve as a relatively inexpensive way to keep people cool as energy prices rise.
Q1 Strong for Ormat
Pure play geothermal equipment and electricity generator Ormat (ORA) turned in a very strong Q1 earnings result today. The company increased the top line from $62M to $69M Y/Y despite the fact that the product segment revenue fell by 50% in the same period. This was offset by an increase in the generation segment due to greater MWh produced and higher prices being secured for that energy.
Even better for long-term shareholders, costs were controlled tightly and were down $9M overall. But the electricity segment was down $1.1M while net output from the unit increased making it significantly more profitable. Profits for the quarter were $10M after taxes compared to -$5.8M in the same period last year.
No matter how you cut it, this was a stellar quarter for Ormat.
Disclosure: The author holds no position in Ormat.
