Geothermal Pitches Wall Street

Representatives of the Geothermal Energy Association had their largest schmooze-fest ever in New York Thursday (Jan. 14). They met with Wall Street financiers, had lunch with politicians, including Senate Majority Leader Harry Reid (D-NV), Mayor Bloomberg declared “New York City Geothermal Energy Day”, and at the end of the day they even got to ring the closing bell on the stock exchange - well, on the smaller and less prestigious NASDAQ, but it’s still an honor.

Will Geothermal always remain the poor cousin of the better-established solar and wind industries?

The New York Times reports:

Overall, advocates say, geothermal technology is proven and has distinct advantages over wind and solar. Geothermal power is a steady and reliable baseload, which electric utilities appreciate. And geothermal plants use less land than wind farms or solar arrays.

But [the GEA Executive Director Karl] Gawell admits major Wall Street investment banks shy away from geothermal because it takes years to see a return on investments. A Nevada project that came online last year took five years to complete, compared with a lead time of little more than a year for a standard wind farm.

“They’re realizing that geothermal can be a good investment,” Gawell said. “You’ve just got to stay in there a little bit longer.”

Gawall also stopped in at the Wall Street Journal to pitch them on earth power, noting that 200 megawatts have come online in the past year.

“It’s being rediscovered in the U.S.,” Mr. Gawell says. While the U.S. is currently the world leader, the geothermal industry today is where the wind-power industry was 20 or 30 years ago, he says.

And given the role that big corporates—such as General Electric and Siemens—played in the explosion of the wind industry, the logical question is, when will big companies pile into geothermal? GE has been showing up at geothermal meetings lately, Mr. Gawell says, and GE Energy Financial Services finances some geothermal investments.

Analyst Byron King says it’s time the big companies jumped in and took over from the “mom and pop” operations. In his Energy & Scarcity Investor (via BeforeItsNews.com), he says:

The pre-crash business model of the geothermal industry is no longer appropriate to the tight-credit world in which we live… Post-crash, it’s clear that most publicly traded geothermal companies are too small. Back when credit was cheap, money flowed more easily and you could “afford” to be patient over a five-to-eight-year time frame. The same small team of developers was prospecting, leasing, drilling, finding, assessing, fundraising, developing, building, stringing electric line and selling power. Holy smokes, Batman! Where’s the point where we can MONETIZE this?

But in our new economic world, the small, mom and pop business approach just won’t cut it. Geothermal power takes too much upfront capital to make things work. It requires too many different management skill sets. Like many things in life, bigger is better with geothermal. In fact, the world’s largest geothermal producer is Chevron Corp. Is that big enough?

At least some of the investors are excited:

By 2012, “we think the strategic landscape starts to change quickly,” said Paul Leggett, a vice president of investment banking at Morgan Stanley. “We do think the geothermal industry is ready for a takeoff.”

(Originally appeared at Tenthmil.com)