Bottom fishing for geo-thermal stocks
It is a hot time in geo-thermal land. We have all been warned by the republicans about geo-thermal and Nevada geothermal formally known by the symbol kri has had to give it's plant back to the lender. What does that mean for the geo-thermal industry. It's unclear if the tax breaks in the united states will be applied to new plants. The way it works is the depreciated is applied when the plant is built giving a tax break to the builder, many times these plants are on state or federal land so it is unclear if there is any real cost to this particular break but it makes a difference.
The current building boom is part of the stimulus program that was started to stop the economic collapse from getting worse. Many of these plants are just starting to come online or will come online in 2013. U.S. Geo-thermal now has three plants online but they are still working out the kinks. For the latest quarter they announced a loss of 6 cents so it is clear that they will do better in the future. The plants they do have are partially owned by u.s. geothermal they cover cost overruns by agreeing to sell minority stakes to another party.
One company that has a larger plant is ram power group. They recently went from a low of 20 cents and they currently trade above 25 cents. This is like the St. Louis Rams going to the Superbowl they intend to have everything by January. They have 35 megawatts online, they just got a tariff increase. They broke even last quarter and they have most of the work done on the second half of the project in nicaragua. If they don't have drilling problems the second half of the plant will be more profitable than the first part of the plant. From there they have a lease that already gives off steam that they call sell or build a plant on or perhaps they can go into solar as many in the geothermal business do (because geothermal plants produce more electricity at night.
Ora has just reported earnings and because they produce equipment they might not see the benefits of these smaller stocks. ram power could turn a profit of 2 cents and u.s. geothermal has one person saying they will break even next year while they pursue higher electricity rates by building in Honduras.
The author is long ora and ram power company
