Like most conglomerates, United Technologies Corporation (UTC), (NYSE:UTX) won't be found in any of the Clean Energy indices, but its growing portfolio of clean energy businesses makes it fit well into a diversified portfolio with a clean energy tilt.  A conservative capital structure and solid earnings and cash flow, and a decades long history of constantly increasing dividends make this a company that I'm comfortable holding for the long term.  

In terms of sustainability, the company has been recognized by Dow Jones as in the top 10% of the world's most sustainable companies.  Long before it became fashionable for companies to greenwash by reducing their environmental impacts, UTC pledged in 1996 to reduce their power and water usage by 25%, and they have met these goals while growing their business.  Their long track record of reducing their energy usage gives them a significant head start against rivals who have only recently jumped on the climate change bandwagon.

Of the company's eight major business units,  UTC Power and Carrier are both crucial to how we generate electricity and how we use it.  Carrier has a history of pushing for more stringent energy efficiency and environmental standards for air conditioning, a strategy which helps their business strategy since UTC's scale and research allow them to remain on the technological forefront.

UTC Power has a large portfolio of products which will help modernize our energy infrastructure.  They supply microturbines and Solid Oxide fuel cells, as well as integrated combined cooling, heating, and power products, which I feel are likely to become much more popular as more companies seek ways to lessen their environmental impact and energy bills at the same time.

With their PureCycle binary cycle turbine, UTC introduced the benefits of volume production to geothermal power by making slight modifications to an existing line of Carrier's industrial chillers which allow them to operate in reverse.  Raser Technologies (RZ) plans to use this technology in their aggressive plans to develop a large number of lower temperature geothermal resources throughout the Southwest.  According to a personal conversation I had with a Raser employee. UTC's ability to deliver the turbines quickly, and willingness to guarantee performance was key to Raser's selection of that technology in preference to rival products.

One other technology likely to be of great interest to clean energy investors is their molten salt storage technology, which provides a rare opportunity for a US-based public investor to participate in what I consider to be one of the most promising solar technologies: Concentrating Solar Thermal Power (CSP).  The thermal storage provided by molten salt gives CSP the potential to provide power on a dispatchable basis, allowing it to compete directly with expensive electricity from natural gas turbines.

Other divisions of UTC, such as the Sikorsky helicopter division, are major military suppliers, so traditional socially conscious investors may wish to avoid UTC.  On the other hand, the short supply of helicopters needed in modern warfare (as well a a large backlog in their Otis elevator division) have propelled strong earnings growth, while even relatively efficient air conditioners could not prevent Carrier from being hurt by the housing slowdown.  Such are the benefits of diversification.

At roughly $74, and a 17.3 P/E, UTX is not currently cheap.  I currently have only some out-of the money short puts on the company, but it's one that I intend to continue writing puts on until the stock falls and I'm assigned shares.

Click here for other articles in this series.

DISCLOSURE: Tom Konrad and/or his clients have long positions in UTX, RZ.

DISCLAIMER: The information and trades provided here 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.

Posted by Tom Konrad at 05:07 PM | Permalink | Comments (4) | TrackBacks (0)

This article is a continuation of my Ten Alternative Energy Speculations for 2008, with picks #8, 9, and10 published last Thursday.  If you haven't already, please read the introduction to that article before buying any of the stock picks that follow.  These companies are likely to be highly volatile, and large positions are not appropriate for many investors.   My least risky picks are part of that same article linked to above; the moderately risky picks are here.  This article contains the most speculative three picks.

#3 Nevada Geothermal Power (OTCBB:NGLPF or Toronto:NGP.V) US$1.29 or CAD$1.26

Geothermal first started catching investors' attention about six months ago.  I went into detail as to the reasons for its appeal, and the factors bringing it to investors' attention in this profile of Geothermal power in October.  

Since then, we have been given an added reason to appreciate Geothermal in the United States.  While the recent energy bill did not contain a national RPS, nor tax credits for renewables, it did give the geothermal community much of what they were asking for since it contained the "Advanced Geothermal Energy Research and Development Act of 2007." 

There are three ways to invest in geothermal power: through the technology, through existing plant operators, and through resource explorers and developers.  The provisions relating to Enhanced Geothermal Power and Co-production in oil fields should help technology and service providers such as Ormat (NYSE:ORA) and United Technologies (NYSE: UTX) over the long term, since they will help open up new opportunities for Geothermal.  Over the short term, which is what this article is about, I expect the "Industry-coupled drilling" provision will be most important, and help explorers and developers of conventional geothermal resources.

According to the Geothermal Energy Association, the Industry-coupled drilling provision "pairs the federal government with geothermal developers to reduce drilling risks and improve drilling precision."  Geothermal exploration and development is a very risky process, so government risk-sharing should greatly increase the value of Geothermal prospects by lowering the effective discount rate at which they are valued.  Coming as it does early in the development process, a reduction in risk could easily be worth more to a company which owns the rights to develop an undeveloped geothermal resource than the later boost to income that would come from a Production Tax Credit, even though the industry-coupled drilling provision is likely to cost the government far less than a Geothermal Production Tax Credit.

US-based geothermal developers are most likely to benefit from this provision.  These include US Geothermal (OTCBB: UGTH, GTH.TO), Sierra Geothermal (OTC: SRAGF, SRA.V),  Raser Technologies, (NYSEArca:RZ), and Nevada Geothermal (OTC BB: NGLPF.OB, NGP.V)).  US Geothermal and Raser Tech are up over 3x from their 52 week lows, while Sierra and Nevada Geothermal are each up about 2x, although the Nevada Geothermal share price was stagnant for the previous two years, while Sierra Geothermal has been following a steady uptrend.

Comparing these last two with the least recent appreciation, Sierra Geothermal has many more early stage projects, while Nevada Geothermal has just four high quality projects nearer to production.  In fact, Nevada Geothermal owns Sierra Geothermal's most advanced project (Pumpernickel), and Sierra's exploration and development efforts will earn them at most a 50% share of the project.   This is only Nevada Geothermal's second most advanced project, after their wholly owned Blue Mountain project which is on track to begin producing electricity in 2009, and for which they have already completed a Power Purchase Agreement and an interconnection agreement with local utilities. Nevada Geothermal is currently funding development of its projects with loans from the likes of Geothermal specialist Glitner Bank and Morgan Stanley, while Sierra Geothermal is financing its exploration needs with dilutive private placements.

Because of the relatively small recent run-up for Nevada Geothermal, its strong financial position, and ownership of a late-stage project (as well as sufficient promising projects to keep them busy with development for many years to come), I see the most potential for robust returns in Nevada Geothermal among geothermal developers.   

#2 Finavera Renewables (TSX:FVR or FNVRF.PK) CAD$0.335 or US$0.3371

I chose to include Finavera in my Top Ten Speculations for 2008 for my own reasons, but AltEnergyStocks.com Editor Charles Morand has been following the company longer and more closely than I have myself, so I asked him to profile it.  You can read what he has to say about Finavera Renewables here or simply scroll down to the next post.

#1 First Solar (Nasdaq:FSLR) $267

When I disclosed that I was short First Solar in the first installment of this series, I received an incredulous comment soon after the article was syndicated on Seeking Alpha: "OUCH!! You have a short position in FSLR? I hope it doesn't come back and bite you!"  I'm sure the commenter is not alone in his conviction that First Solar's rise will continue.  The fact that First Solar has risen so far so fast only because people like the commenter have been purchasing the shares like hotcakes all year.

Shorting is inherently more dangerous than being long, because in a long position you can not lose more than you initial investment.  Shorting a momentum stock, even when it is overvalued, can be especially risky, because momentum tends to be a self-fulfilling prophecy, with more investors becoming interested and driving the price up as they try to buy the stock.  For all those reasons, shorting First Solar deserves to be the #1 riskiest of my 10 speculations for 2008. 

Why did I decide to short at all?  What makes me think that 2008 will be the year that First Solar's bubble pops?

First Solar's valuation seems out of line because of an inherent limitation on their profitability.  Their solar panels are based on Cadmium-Telluride (CdTe) thin film technology, and Tellurium (Te) is one of the scarcest elements in the Earth's crust.  In 2006, First Solar's 60MW of production consumed 4% of the world's annual supply of the metal.  In 2008, analysts expect revenues of approximately 4x the 2006 number, meaning they will need approximately 16% of new annual Tellurium supplies.  PrimeStar Solar, a private company is using a recent infusion of capital from General Electric (NYSE:GE) to quickly begin production of their own CdTe modules.  They do not disclose the timing of production "for competitive reasons," but their hiring and equipment orders speak of an aggressive schedule; I expect they will begin production in 2008.  

With this much demand on short-term Tellurium supplies, we can expect continued price increases.  First Solar cannot set the price of their product in the market, because they will be in direct competition with conventional solar modules as will as thin film modules based on CIGS and amorphous silicon technologies.  With the failure of the US Congress to extend tax incentives for solar or to pass a renewable electricity standard, demand for solar panels may not continue to grow as robustly as it it has in recent years.  If anything, this should cause prices per watt to fall somewhat in 2008.

Ethanol producers were caught in a commodity squeeze this year by using 25% of the United States corn supply.  In contrast to First Solar, ethanol production has only been growing 20-25% a year, much slower than the demand for Tellurium from CdTe cells, and corn production was artificially sustained at an uneconomically high level before the advent of corn ethanol by farm subsidies.  Hence, I would expect a commodity squeeze for CdTe producers at a lower percentage of supply.  My 16% projection for 2008 does not seem out of line to trigger a commodity squeeze, which could cause First Solar to miss (or at least cease to beat) earnings estimates in the coming year.  Missing or just failing to exceed earnings estimates almost always leads to quick price drops for high multiple companies.  According to Yahoo!, First Solar's trailing P/E is about 195.

If First Solar produces 240MW of panels in 2008, and Te prices remain at $100/lb, as they were in 2006, Tellurium cost alone would be $87 million [NOTE 3/8/08: I received a comment that I had lost a decimal in this calculation, with actual Te cost being only $8.7 million... don't take this as gospel, make sure to double-check if this makes a difference in your investment decision.], compared to First Call average estimated Revenues of $800M, and $146M estimated earnings.  I don't know what Tellurium prices were used in those estimated earnings, although I expect it was over $100/lb.  Whatever those estimates were, a $200/lb underestimate would completely wipe out earnings for 2008, and, as the oil price has shown us, even moderate increases in demand for a commodity with inelastic supply can create massive price rises.  What will new demand for Te rising from 4% of supply to 16% of supply in two years do to the price?

UPDATE 1/2/08: Ken Zweibel, President of PrimeStar Solar and former head of NREL's thin film partnership program, got back to me today on a research question for this article, now that the holidays are over.   He couldn't tell me much for strategic reasons, but did say that he isn't skeptical of First Solar's valuation, and "There is more Te from nontraditional sources than people are aware of."  I believe he is referring to Te from oceanic ridges, which I don't believe can be extracted in significant quantity within the next couple years, although a Tellurium price rise like the one I anticipate would lead to mining of oceanic ridges in the medium to long term.  Nevertheless, Ken is responsible for much of what we know about CdTe technology, so his comments should not be taken lightly, and there may be other nontraditional sources which can ramp up production more quickly. 

The other reason to believe that First Solar's meteoric rise might halt in 2008 has to do with investor sentiment.  An unscientific survey of sentiment among Seeking Alpha bloggers (myself excluded) has turned negative (as far as I can tell, only Andrew Ling is still writing positively about the stock), and the Tellurium problem is getting wide attention.  How long will it take the mainstream press to latch on to the Tellurium story?  It's impossible to say, and another run like last quarter could easily squeeze out the shorts.  

Taking this all into account, my short position is only about 0.1% of my portfolio, more of an intellectual experiment than a real bet.  As Keynes said, "The market can remain irrational longer than you can remain solvent."   I wouldn't advise anyone to take a short position in FSLR so large that they could not sleep through another doubling of the stock price. 

If any play is for gamblers, this is it.  But cards are stacking up against First Solar.

Links: Picks #10,9,8; Picks #7,6,5,4. Pick #2 Finavera Renewables

DISCLOSURE: Tom Konrad and/or his clients have long positions in UGTH, SRA, RZ,  NGP,  ORA, UTX, FNV, GE, and a short position in FSLR.

DISCLAIMER: The information and trades provided here 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.

Posted by Tom Konrad at 09:33 PM | Permalink | Comments (12) | TrackBacks (0)

Last Thursday and Friday I attended the Geopowering the West Investors' Forum in Montrose, CO (hosted by the Delta-Montrose Electric Association, Colorado's most progressive Rural Electric Cooperative.)  I've long been interested in geothermal stocks, and I first started adding them to managed portfolios in 2003.  As a whole, those stocks have more than doubled in the 1-4 years since they were purchased.

Fundamental Advantages of Geothermal Electricity

Why did I make those first purchases?  Geothermal power has some unique advantages over other forms of renewable energy.

1. Geothermal is base load power.  Utilities have a strong preference towards base load and dispatchable power generation (basically power which is always on or power which they can turn on at will.)  In fact, geothermal plants often have capacity factors 86-95%, well above traditional base load generation such as coal.  So geothermal power is a premium electricity because of its reliability.  Until a recent fire (not caused by the geothermal facility) the plant installed last year at Chena Hot Springs in Alaska, was running at 99.4% availability. 
2. It is inexpensive.  Depending on the resource, the price of geothermal power is comparable to that of wind power, new coal plants, or biomass.  It is considerably less expensive than solar photovoltaic or nuclear power, or the cost projections for "Clean Coal" otherwise known as Internal Gasification Combined Cycle with carbon capture and sequestration.  Using numbers presented at the conference, a geothermal power plant will cost $3-4 per rated watt, but produce about five times as much electricity as a similarly rated (and more expensive) photoelectric panel because of the much higher capacity factor.
3. Geothermal has a small environmental footprint.  Where solar and wind farms gather energy over large areas, a geothermal plant gathers heat from the hot rock or fluids below ground by means of one or a few wells.  Because of this, the footprint needs to be only the size of the turbines which actually generate the power, smaller than the footprint of a coal fired plant generating the same amount of power, without the the necessity of coal mining and without significant emissions of carbon dioxide or other pollutants.
4. In the later life of a geothermal plant, operations produce excellent income streams. While the plants often require refurbishment, with careful management geothermal reservoirs need not degrade over time, and net margins often exceed 60%.

New Developments

Why are people only now starting to talk about geothermal power?

1. Geothermal electric is not a new industry.  The first geothermal electric power plant was built in the 1920s.  But now we have a maturing industry seeing progress in new technology.  Not only can lower temperature resources now be used, but United Technologies (NYSE: UTX) has recently introduced a low temperature capable generator based on proven water chiller technology.  This has the potential to rapidly increase the speed and lower the cost of project development.
2. There is a growing awareness of the need for carbon-free sources of power.  The IGCC's and Al Gore's recent win of the Nobel Peace Prize is just one recent sign of this.  
3. Energy Policy Act of 2005 changed the regulatory environment.  There is a new commitment from national government to simpler lease structures and royalty payments.
4. Current projects typically developed over a three year period, which is actually quite quick when compared to typical 5 year lead times for coal plants.
5. There exists an abundance of overlooked resources because of greater temperature reach.  Historical studies assumed that electricity simply could not be generated below 300 F, but new technologies can handle temperatures below 200F, which geometrically increases the number of sites with potential for generation.
6. Was seen as relatively small potential until the MIT Study which came out this year.  Enhanced (aka Engineered) Geothermal Systems (EGS) hold out the promise that the extractable amount of energy is not limited by the resource size or availability.   There is simply so much heat stored in the Earth's crust, that only extracting a fraction of a percentage of it would allow us to meet our energy needs for the foreseeable future.  While EGS holds out promise, the technologies needed still require significant research.  From an investor's perspective, more concerned with the prospects for the next ten years than the next fifty years, EGS is much more important for the interest it generates in geothermal than it is for investment opportunities.   Nevertheless, in terms of meeting our long term energy needs, I expect Enhanced Geothermal Systems to be a much cheaper and simpler solution than Carbon Sequestration from Coal plants.
7. Geothermal as oil co-product.  Many existing oil wells also bring up sizeable quantities of water at temperatures sufficient to run small binary cycle turbines.  While this resource at any one oil well is likely to be small (less than a megawatt), aggregating all the wells in a large oil field could produce significant power at low cost given that the costs of exploration and exploratory drilling need not be paid for by the geothermal electricity generated. 

Tricks of the Trade

What does a geothermal investor need to watch out for?

1. Exploration risks. Prospecting for geothermal resources using remote sensing and surface sampling is useful for defining the drilling target, but does not significantly reduce the risk of not finding a resource sufficient to produce power.  This is in distinct contrast with oil prospecting, where prospecting significantly reduces risk.
2. Risks to resources currently in use.  Attendees were treated to a Jeep tour through the geothermal history of the town of Ouray.  Over twenty years ago, the city started a series of test wells around the town with the hope of finding enough geothermal hot water for a district heating system, and to keep their Hot Springs Pool open year round.   All did not go as planned, and three of the owners of springs around the city filed lawsuits against the city charging that the city's drilling had reduced their flows.  The parties settled, but the city was forced to discontinue drilling.  While the city of Ouray officials did not admit to decreasing flow rates of other pools, after listening to both sides, I think the owners of the springs had real grievances (and the courts seemed to agree with that assessment.)
3. Unexpected effects of new technology.  One large potential problem is induced seismicity [MS Word document] when trying to stimulate reservoirs in hot dry rock for EGS.   One reason for an investor to consider geothermal development companies rather than geothermal equipment suppliers is that a company with a known geothermal resource will generally benefit from the evolution of technology, while a technology supplier could easily lose market share to competitors.
4. A geothermal resource developer must be able to connect to the grid.  No matter how hot the resource nor how close it is to the surface, the developer must be able to connect to the electric grid at a point where there is sufficient available capacity to sell the electricity.  The ability to negotiate a Power Purchase Agreement with a local utility having a respectable credit rating will also enable the developer to gain access to financing on more favorable terms.
5. Ownership of geothermal resources is legally complex.  As the City of Ouray found in the dispute mentioned above, unless an owner has put a resource in use, they may find that a court of law will not uphold their ownership of that resource.
6. Many of the future resources to be developed are likely to be "blind."  That is, there is no surface indication of the hot rock below.  Exploration for such resources is likely to be more lengthy and costly than past exploration. 
7. As with any industry, quality management and personnel will be able to find opportunity in a crisis, while less able teams will be unable to exploit all the opportunities available.
8. Skill in managing geothermal reservoirs is essential.  Pumping a reservoir too quickly or reinjection of cool fluids in the wrong place can greatly reduce the production from geothermal reservoirs.
9. Except when the developer plans to use less efficient and more expensive air cooling, the availability of low temperature cooling water in sufficient quantities will be necessary to generate electricity.  

Companies

Here is a short list of interesting companies involved in geothermal power production and some reasons you may want to consider them for investment.

1. Ormat (NYSE:ORA).  Ormat is the granddaddy of geothermal stocks.  A vertically integrated company, they not only explore and develop their own resources, they also will contract to manage resources for other developers (such as US Geothermal's Raft River project).  Their long history and current profitability gives them the safest pure-play geothermal stock available.  They are experts with binary cycle turbines and reservoir management, as well as applying their binary cycle technology to waste heat recovery as well as a concentrating solar power experiment.
2. United Technologies (NYSE: UTX) is not really a geothermal company at all, but I include them because of their recent innovation in producing low temperature binary cycle turbines on an assembly line basis, using an adaptation of their industrial chiller technology, for which they recently won a R&D 100 award.  While this may never become a significant part of UTX's bottom line, it is likely to change the economics of geothermal development for the better.  I also expect to see the PureCycle turbine applied to a myriad of waste heat applications, quite possibly more than to geothermal.
3. Raser Technologies, (NYSEArca:RZ), Nevada Geothermal (OTC BB: NGLPF.OB, NGP.V) , US Geothermal (OTCBB: UGTH, GTH.TO), Sierra Geothermal (OTC: SRAGF, SRA.V), Polaris Geothermal (PGTHF.PK), and Western GeoPower Corp (WGPWF.PK, WGP.V) are geothermal developers.  I find it very difficult to determine which will succeed and which will fail, and so prefer to own a little of each, buying when I feel the stocks are relatively inexpensive from a technical analysis standpoint.  Raser is not a pure geothermal developer; they also develop high performance electric motor technology which is interesting to me, but the synergies are far from obvious.)   

Geothermal has long been an underappreciated renewable energy technology.  That seems to be changing, which will be an excellent thing both for our hope of moving to a less carbon-intensive economy, and for early investors in the sector.

DISCLOSURE: Tom Konrad and/or his clients have positions in the following stocks mentioned here: ORA, RZ, NGLPF, UGTH.

DISCLAIMER: The information and trades provided here 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.

Posted by Tom Konrad at 10:48 PM | Permalink | Comments (4) | TrackBacks (0)

Nevada Geothermal Power Inc. (NGLPF) announced that it has initiated development drilling at Blue Mountain Nevada. Production test data from the wells will be used to complete a feasibility study for an initial 30 MW geothermal power plant.

In the initial program, four 13-inch diameter production wells will be drilled to 4000 feet (1200 metres) into the moderate temperature (300-330 degrees C) geothermal resource intersected in previous test holes. Permits have been obtained and drill pads are under construction. A water well rig will be used to drill the top 800 feet of each well and to set surface casing. A production drilling rig with a substructure to accommodate blow-out-prevention-equipment will then complete the holes to total depth. A suitable rig has been identified and is expected to be on site by the end of May. NGP expects to complete initial development drilling over the next six months. [ more ]

Posted by Mark Anderson at 08:31 AM | Permalink | Comments (0)

Ormat Technologies (ORA) announced that an Ormat subsidiary signed an agreement to purchase from CDC Group plc., a 14.09% partnership interest (13.67% on a fully diluted basis) in Orzunil I de Electricidad, Limitada (Orzunil), which owns the Zunil Geothermal Project in Guatemala. CDC Group's investment in this project has been managed by Globeleq, an emerging markets power company.

As a result of this acquisition, Ormat's annual net income from the Zunil project is expected to increase by approximately $0.6 million on a full year basis. [ more ]

Posted by Mark Anderson at 06:31 PM | Permalink | Comments (0)

US Geothermal Inc. (UGTH) has initiated a contract with Ormat Technologies (ORA) to begin building a binary cycle geothermal power plant that is designed to deliver 10 MW monthly average electrical power to Idaho Power Company under a 20-year term power purchase agreement. [ more ]

Posted by Mark Anderson at 09:19 AM | Permalink | Comments (0)

Nevada Geothermal Power Inc. (NGLPF) reported the completion of a geophysical survey at the Pumpernickel geothermal project in Nevada. The project is managed by Nevada Geothermal Power Company (a subsidiary of NGP), as Exploration Manager.

The final report is pending, however a preliminary assessment of the data shows that the survey successfully defined the contact between the valley fill and the basement rocks, and most importantly it established the positions of valley faults and their relationship to the geothermal system.

The data showed a good correlation with the 2005 resistivity data. The combined data will aid significantly in defining the boundaries of the geothermal reservoir and the subsequent design of the first production test wells, planned for 2006. [ more ]

Posted by Mark Anderson at 08:03 AM | Permalink | Comments (0)

Ormat Technologies (ORA) has entered into a 20-year power purchase agreement with Puget Sound Energy Inc. for the supply of power from a Recovered Energy Generation System (REGS), which will be located adjacent to the Sumas Compressor Station of Northwest Pipeline Inc. (NWP) in Sumas, Washington State.

The REGS will be owned by Orsumas and will use recovered waste heat from three NWP existing gas turbines driving compressors at the station, as well as interconnect to Puget Sound Energy's transmission grid. The facility will employ an ORMAT ® Energy Converter (OEC) and will have a design capacity of 4.95 MW net. [ more ]

This deal is expected to generate annual revenues of approx $2.3 mln with a 1% annual escalation.

Posted by Mark Anderson at 08:47 AM | Permalink | Comments (0)

Raser Technologies (RZ) announced a definitive agreement to acquire Amp Resources ("Amp"), a private company with technologies focused on geothermal heat and power generation. The deal is for about $260 million in cash and stock.

Raser will acquire Amp and its portfolio of technologies for heat transfer and renewable power generation. Raser will also assume ownership of multiple, long-term geothermal energy sales contracts with public and private utilities. These contracts call for an aggregate of $966 million from gross energy sales over 20 years. It is anticipated that these power generation projects will be developed and placed in service by December 2007. [ more ]

Raser is an early stage development company that specializes in electric motors and is a founding member of the Plug-In Hybrid Development Consortium. The shares of Raser have been up over 100% in the last month. Today the stock is currently trading down over 20% on the news. This could be interpreted as profit taking. Also, typically the shares of the acquiring company heads down on the day of the announcement due to fears of increased liabilities. Raser will assume liabilities and about $50 million in debt once the deal closes.

Green Car Congress has additional details about the technology. [ more ]

Posted by Mark Anderson at 02:11 PM | Permalink | Comments (0)

FPL Group Inc (FPL) is currently in the advanced stages of negotiations to acquire Constellation Energy Group (CEG). An FPL-Constellation merger would create a giant East Coast-based utility with a market capitalization, based on Tuesday's closing stock prices, of $26.97 billion - $16.93 billion for FPL and $10.04 billion for Constellation.

Constellation Energy Group is based out of Baltimore Maryland and is the holding company for Baltimore Gas and Electric. They also have an extensive presence in the wholesale power supply and generation business. The Power Generation Division currently uses 4.6% alternative sources for power generation.

FPL has a strong commitment to alternative energy generation and is one of the largest utilities in the US utilizing extensive wind farms. CEG has a large footprint in Nuclear power generation and the combination of these two companies would make a top-tier producer of power generation for the East coast markets and a potential of 30,000 megawatts of power generation. CEG also gives FPL the ability to enter the wholesale supply side of the power generation business.

Typically you would see shares of the acquiring company down and shares of the acquired company up with this type of announcement. The market is liking this potential merger and CEG is up over 7% and FPL is also trading up 0.6% this morning.

Posted by Mark Anderson at 10:01 AM | Permalink | Comments (0)

Ormat Technologies (ORA) said it has agreed to buy a 50.8 percent partnership interest in Orzunil I de Electricidad Ltd., owner of a geothermal plant in Guatemala, for $14.8 million. The Zunil project includes one power plant with a capacity of 24 megawatts that is expected to generate $12.5 million in revenue next year and boost Ormat's net income by $1.9 million in 2006. [ more ]

Posted by Mark Anderson at 10:30 AM | Permalink | Comments (0)

Shares of Calpine Corp. (CPN) suffered a greater than 20% loss yesterday and is now down almost another 13% today. All of this was caused by a court ruling stating that they will be unable to use the $395 million in cash they received from the sale of oil and gas fields earlier this year for the purpose of buying natural gas to run its power plants.

The dispute stems from the Bank of New York's decision in September when, acting as trustee for Calpine bondholders, it withheld proceeds from Calpine's sale in July of North American oil and gas fields.

The bank froze the money after the bondholders said money from the sale couldn't be used to buy fuel futures but should be used instead to buy other assets or pay off debt.

The move prompted Calpine to file a lawsuit against the Bank of New York and Wilmington Trust Co. seeking release of the funds, arguing that buying natural gas in storage is allowed under the terms of its notes. [ more ]

When I purchased this stock for the mutual fund I mentioned it was a very speculative play.

Shares in FPL and Calpine Purchased August 15
Calpine Corp. (CPN) is the other utility that I started a position in today. This one is a more aggressive play, but has the potential to generate better results. Calpine supplies electricity from natural gas-fired and geothermal power plants to wholesale and industrial customers in North America. This company has had some serious financial difficulties in the past and is trying to right itself. This is a very speculative purchase and I did not commit very much money into it. I purchased this stock with an average entry price of $3.35 for the mutual fund only.

With the stock now sitting at a dollar and change the big question is should I sell now? As I stated above I didn't purchase a large amount of the stock, so this loser doesn't seriously affect the portfolio. If they would have gotten a positive ruling then the small amount of stock would have seen some good gains. It was a gamble and one that is lost. There are now fears that bankruptcy is just a couple of quarters away. I'm going to sit with my shares for now since it is sitting at the 52 week lows. I will continue to watch this stock to see if they can get an appeal, but the hopes are fading quickly. The company still has a book value of over $6, so it could see itself purchased by a larger company in the future. So I will hold for now.

This is also just another reminder that many of the stocks in the Alternative Energy sector are very small companies. Many are on the verge of breaking out big over the next couple of years, but there are also many that can blow up in your face. So as they say, make sure all your money is not in one basket.

Posted by Mark Anderson at 02:59 PM | Permalink | Comments (0)

Ormat Technologies (ORA) announced that Ormat subsidiary, Puna Geothermal Venture ("PGV"), completed the re-drilling of an existing production well at the Puna Geothermal Project (the "Puna Project") located on the Big Island, Hawaii. The well re-drilling increased net generating capacity of the power plant by approximately 4 MW, bringing total net generating capacity to approximately 29 MW. [ more ]

Posted by Mark Anderson at 11:17 AM | Permalink | Comments (0)

Nevada Geothermal Power Inc. (NGLPF) reported that exploration work at the Pumpernickel Geothermal Project (5710 acres/8.92 square miles) is underway. In Phase I - 3D "E-SCAN", resistivity survey methods will be utilized to map the deep geothermal source waters feeding surface hot springs. Results are expected in four weeks. Subsequently a series of six 250-meter (820 foot) gradient wells will be drilled to test the interpretation of the E-SCAN survey. [ more ]

Posted by Mark Anderson at 11:07 AM | Permalink | Comments (0)

US Geothermal Inc. (UGTH) announced today that the company has met requirements for a listing on the OTC Bulletin Board, as confirmed by J Giordano Securities Group of New York City, market maker for the company's securities.

US Geothermal holds the rights to approximately six and one-half square miles, which comprise the Raft River project development in Southeastern Idaho, a geothermal reservoir that was a former US Department of Energy geothermal research facility. [ more ]

Posted by Mark Anderson at 12:14 PM | Permalink | Comments (0)

Nevada Geothermal Power Inc. (NGLPF) reported that the next phase of development is underway at its Blue Mountain Geothermal site, with drilling to deepen the Deep Blue 2 (DB2) well by an additional 700 metres (2,300 feet).

"We are investigating a potential deep - hotter production zone that would make Blue Mountain's economics extremely robust," said Brian Fairbank President and CEO. "A deep high temperature resource would allow us to use more efficient and cost effective 'dual-flash' technology similar to the 60MW power plant at the Dixie Valley high temperature field in Nevada. A Monte Carlo simulation by Susan Petty of Black Mountain Technology infers a minimum resource capacity of 110MW if temperatures between 220 degrees - 250 degrees C can be confirmed." [ more ]

Posted by Mark Anderson at 05:18 PM | Permalink | Comments (0)

Ormat Technologies (ORA) announced that it completed negotiations for two new 25 years Power Purchase Agreements (PPA) with Southern California Public Power Authority (SCPPA) for the purchase of renewable energy from its geothermal projects at the Ormesa Geothermal Facilities Complex and the Heber Geothermal Facilities Complex.

Ormat also announced that it celebrated the ground breaking and dedication of a new geothermal power plant within the Heber Geothermal Facilities Complex on Monday May 2, 2005. The new plant is dedicated to Mr. William R. Gould, who served as the Chairman of Southern California Edison (SCE) from 1980 through 1984, and was a driving force behind much of California's renewable energy programs. The new 10 MW William R. Gould plant is part of an 18 MW enhancement at the Heber Geothermal Facilities Complex, including an 8 MW enhancement to existing facilities, which supply power to Southern California Edison under ongoing PPAs. [ more ]

Posted by Mark Anderson at 05:11 PM | Permalink | Comments (0)

Ormat Technologies (ORA) broke ground today on the first geothermal electric generating plant to be built at Steamboat, Nevada since 1991. Known as the Galena Geothermal Project, when completed the plant will be added to the existing Steamboat geothermal plants and bring the total output from this geothermal complex to 44 megawatts of electricity through a process that extracts and re-injects the hot geothermal waters from the ground. One megawatt of electricity can supply energy up to approximately 1,000 typical homes in the area. [ more ]

Posted by Mark Anderson at 08:22 AM | Permalink | Comments (0)

Ormat Technologies (ORA) announced that two of its subsidiaries have entered into Supply and Engineering Procurement contracts for a new geothermal power plant to be constructed on Sao Miguel Island in the Azores. The contracts are for a total of 19,151,422 Euro (approximately $25 million), with construction on the power plant expected to be completed within 19 months from the contract date. [ more ]

Posted by Mark Anderson at 12:00 PM | Permalink | Comments (0)

Ormat Technologies (ORA) announced that the customer rendered final approval of the Purchase Order valued at approximately $16.9 million, for the supply of 102 remote power units for Communications and Cathodic Protection along a pipeline on the Sakhalin Island in the Russian Federation, as described in the press release dated December 9, 2004, and the Purchase Order became a definitive agreement. [ more ]

Posted by Mark Anderson at 12:52 PM | Permalink | Comments (0)

Ormat Technologies (ORA) announced that through a newly established project subsidiary, it has entered into a 25-year Power Purchase Agreement (PPA) with an electric utility according to which ORMAT will supply approximately 22 MW from recovered energy generation power plants. The power plants are to be constructed by ORMAT between 12 and 18 months from the effectiveness of the PPA. The power plants will be constructed on gas compressor stations along a Natural Gas pipeline in the Midwestern United States. [ more ]

Posted by Mark Anderson at 08:59 AM | Permalink | Comments (0)

Nevada Geothermal Power Inc. (NGLPF) is pleased to report on recent flow and injection testing of Deep Blue No.2 (DB-2) which penetrated the upper reaches of the geothermal resource, and an eight-hole temperature gradient drilling program at the Blue Mountain project in Nevada. The program has provided positive information on production capability of the inferred resource and expanded the known extent of the thermal anomaly. [ more ]

Posted by Mark Anderson at 08:30 AM | Permalink | Comments (0)

As mentioned in a previous entry, the Pennsylvania legislature passed SB1030, the Alternative Energy Bill, on November 20, 2004 which will require a total of 18% of Pennsylvania's electricity to be generated by alternative energy sources by 2020.

The standard requires 8% of Pennsylvania's electricity to be generated by so-called "Tier I" renewable sources of energy by 2020. Tier I resources include solar, wind, geothermal and biomass. The standard also requires 10% of the state's electricity to come from a second category of resources that include waste coal, integrated combined coal gasification technology, municipal solid waste, large-scale hydro, demand-side management and distributed generation systems. [ more ]

Posted by Mark Anderson at 09:59 AM | Permalink | Comments (0)

Colorado voters have approved an amendment requiring utilities to get part of their electricity from the sun, wind or plant and animal waste.

The amendment requires the state's seven largest utilities to get a portion of their retail electricity sales from renewables, beginning with 3 percent in 2007 and climbing to 10 percent by 2015. Four percent of the renewables should be solar sources. [ more ]

Posted by Mark Anderson at 08:30 AM | Permalink | Comments (0)

Nevada Geothermal Power Inc. (NGLPF) announced today that it has acquired 7 square miles of private land and has applied for a one section federal geothermal lease for a total land area of 8 square miles (22 square kilometers) south and east of Black Warrior Peak, Washoe County, Nevada. The leases are on private land and are subject to a 3.5% royalty on gross revenue from electricity sales, however, NGP can purchase the royalty for US$1,000,000. Leases include surface and water rights. [ more ]

Posted by Mark Anderson at 08:52 AM | Permalink | Comments (0)

Nevada Geothermal Power Inc. (NGLPF) announced that Inovision Solutions Inc. (ISI), a TSX-V listed company, will fund up to C$5,000,000 in exploration and development expenditures for the Pumpernickel Geothermal Project under an option agreement to earn a 50% joint venture interest. In order to earn its interest, ISI must complete C$5,000,000 in project expenditures, make C$120,000 in cash payments and issue 600,000 shares to NGP over a five year period. In the first year, ISI must fund a C$400,000 work program, issue 100,000 shares and make a C$10,000 cash payment to maintain its option. NGP will be project manager. [ more ]

Posted by Mark Anderson at 08:59 AM | Permalink | Comments (0)

The Production Tax Credit (PTC) -- a critical factor in stimulating the growth of the US wind industry -- is very likely to be expanded to include geothermal energy as part of the JOBS tax package (H.R. 4520, the "American Jobs Creation Act of 2004") just approved by a Congressional Conference Committee. [ more ]

Posted by Mark Anderson at 09:08 AM | Permalink | Comments (0)

Nevada Geothermal Power Inc. (NGLPF) is pleased to report that a temperature gradient drilling program is near completion at the Blue Mountain project in Nevada. Eight holes have been drilled to depths up to 1020 feet using an air rotary rig to map the subsurface thermal anomaly outward from the central thermal zone. At three valley locations where the depth of overburden exceeded the capability of the air drilling equipment, additional drilling with a mud circulation rig may be conducted after the initial results have been compiled. Results from the current drilling combined with earlier temperature gradient data and test wells Deep Blue No. 1 and 2 will be used to determine the optimum location for two production test wells. [ more ]

Posted by Mark Anderson at 06:57 PM | Permalink | Comments (0)

New York will dramatically boost its reliance on renewable energy sources like wind and water over the next nine years under a policy approved by state regulators Wednesday.

Clean energy advocates and state officials said the action by the state Public Service Commission places New York among the leaders nationwide in the development of renewable energy. It comes 20 months after Gov. George Pataki first called for a statewide standard that would encourage the production of environmentally friendly energy. [ more ]

Posted by Mark Anderson at 08:54 AM | Permalink | Comments (0)

"Experts generally agree that our current reliance on fossil fuels is unsustainable. Already oil is near $50 per barrel, and the great millions of Chinese and Indians destined to take to the road in the next decades have not yet gotten behind the wheel."

This week Newsweek has written several special reports about alternative energy in all its forms. All of these reports can be found at the following link. [ more ]

Posted by Mark Anderson at 06:48 PM | Permalink | Comments (0)

Colorado House Speaker Lola Spradley, R-Beulah. and U.S. Rep. Mark Udall, D-Eldorado Springs, co-chairs of Amendment 37—the Renewable Energy Initiative—kicked-off their statewide campaign Thursday with stops throughout Colorado.

Amendment 37 would require 10 percent of Colorado's electricity be generated from renewable energy by 2015. The program is scaled beginning with a 3 percent requirement by 2007, 6 percent by 2011, and 10 percent by 2015. [ more ]

Posted by Mark Anderson at 05:48 AM | Permalink | Comments (0)

Colorado is the first state in the nation to place renewable energy on its ballots, thanks in part to grassroots support from Summit County.

On Nov. 2, Colorado voters will decide whether to require the state's seven largest utilities to generate 10 percent of their electricity from environmentally-friendly sources like wind power by 2015. [ more ]

Posted by Mark Anderson at 05:04 PM | Permalink | Comments (0)

Western GeoPower Corp (WGPWF) has received approval to start drilling on their new Geothermal energy operation facility at South Meager in Canada. This new facility could amount to over 100 MW capacity. [ full story at SolarAccess.com ]

GeoPower expects to have the South Meager plant ready for commercial generation by mid-2007.

Posted by Mark Anderson at 01:35 PM | Permalink | Comments (0)

The political climate for many of the western states are slowly starting to change to see the need for conversion to renewable energy sources. These test installations for Solar, Geothermal, and Wind energy are now producing real power for these areas. The key for us is to find the vendors that supply these installations. As the funding increases in these test beds, our growth will increase.

Here is a good article from the sfgate.com about the various western states initiatives.

"California's goal is to produce 20 percent of its electricity from renewable sources by 2017. New Mexico is aiming for 10 percent by 2011. Texas, despite its oil industry, has set a goal of 2.7 percent by 2009. A referendum headed for the Colorado ballot in November would require the state to get to 10 percent by 2015." [ full story at sfgate.com ]

Posted by Mark Anderson at 01:30 PM | Permalink | Comments (0)

BusinessWeek.com discusses John Kerry's plan to increase alternative energy usage for the country.

John Kerry's blueprint for energy independence doesn't suffer from lack of ambition. In early August, he'll unveil an energy plan that he says can break America's addiction to foreign oil, revitalize the U.S. auto industry, help farmers and coal miners, fight global warming, and create jobs -- all for just $2 billion per year. "We can live in an America that is energy independent," Kerry promises. [ full story at businessweek.com ]

Posted by Mark Anderson at 05:53 PM | Permalink | Comments (0)