Customer Service 1 (888) 261-2693
Advanced Search

A New Power Boom Starts in California

By Matt Badiali, editor, S&A Resource Report
Thursday, June 14, 2007

The first thing you notice about the power plants is the silence.
 
I'm looking at the Geysers, located about 70 miles north of San Francisco, just outside of Sonoma, California. It is the largest developed geothermal field in the world. It's also an example of what's possible in power generation.
 
Standing on the western ridge, looking out across the deep green valley, you see another ridge about two miles away. The ridge is spiderwebbed with big, white pipes.
 
Wells drilled to 11,000 feet below the surface cut across steam-filled cracks in the rocks. The steam comes up the wells, through the pipes, and over to the generation plant. The steam turns a big turbine, which generates electricity.
 
The Geysers Field currently produces around 1,000 megawatts, but that capacity is expanding.
 
To put that in perspective, the Tennessee Valley Authority's Kingston Fossil Fuel plant produces 1,140 megawatts, or enough energy for 700,000 homes. The plant consumes 14,000 tons of coal per day to generate that much energy.
 
The power plant at the Geysers also strikes a pretty small footprint. It's nearly invisible compared to its power plant peers. Take the monstrous Four Corners coal mine/power plant I visited in Fruitland, New Mexico, for example. You could see its silhouette for miles around. The coal mine was a giant hole in the ground, and the noise of the operation was deafening.
 
Located in a 30-square-mile area in the Mayacamas Mountains on the border of Sonoma and Lake Counties, the Geysers are the crown jewel of Calpine, the largest producer of geothermal energy in North America. The power generated at the Geysers supplies 60% of the power needs from the Golden Gate Bridge north to the Oregon border.
 
California is an ideal place for developing geothermal power. The state currently gets 6% of its power (2,492 megawatts) from geothermal sources, and another 15 projects are underway. California's Renewables Portfolio Standard (RPS) requires that 20% of the state's electricity come from renewable sources by 2010.
 
Another bill is before the California State government that would increase the RPS to 35% by 2015. I see the bulk of it coming from geothermal plants like the Geysers... it's the best source of renewable energy – if it is available.
 
Reliability of Renewable Energy Sources
Company
Symbol
Geothermal
98%
Wind
30%
Solar
<50%
 
In the past, geothermal energy was expensive to produce. However, the economics have improved due to better drilling techniques, field management experience, and more efficient turbines. Because of tax incentives, producing geothermal power can be a hugely profitable enterprise.
 
My trip to the Geysers was part of an invitation only seminar hosted by a geothermal company. The other attendees were high net worth individual investors and bank analysts. The attendees came as far as Iceland and the Philippines to participate. Interest here is building...
 
For now, most investments in geothermal are companies working with new technologies. We're still in the early stages of the game, so it's difficult to invest in right now.
 
However, as the world invests billions into non-polluting sources of energy, this area will experience a huge boom in the coming decade. We'd be wise to follow it.
 
Good investing,
 
Matt Badiali




Recent Articles
Market Notes
The farm boom continues. Wheat at 11-year high... CF Industries at all-time high... farm lender Farmer Mac at 52-week high.
 
America's largest oil rig builder, National-Oilwell Varco, hits another all-time high... up 350% in the past three years.
 
Copper & gold miner Freeport McMoRan reaches new all-time high on strong metals prices.
 
Homebuilders plumb new depths... Pulte Homes, Meritage Homes, Standard Pacific, and Hovnanian reach new lows.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%