Head's Up: Geothermal Sector is Getting Hot and Bubbly

When Warren Buffet, the most famous investor and richest person on Earth, makes an investment move, people take notice.

Or at least they should.

So get this: Buffet’s Berkshire Hathaway has been investing big in geothermal energy.

He’s doing it through CalEnergy, a utility operating ten geothermal plants in Southern California.

And Berkshire Hathaway is not alone among leading investment houses that are giving geothermal a try and a boost.

There’s Goldman Sachs (US Geothermal). Morgan Stanley (Nevada Geothermal). And Chevron, a long-time investor that’s now anteing up even more. Among others.

And now you can add Google to that list. 

The global search giant has let it slip that it’s "in talks" with the "incredible" Ormat Technologies, reports Haaretz. That jibes with rumors that Google has been eyeing Ormat for its mega investment project to make renewables cheaper than coal.  

Ormat, a leader in Enhanced Geothermal Systems, is the most successful geothermal outfit on the planet, by most accounts. It outperformed the S&P over the last year by 40 percent.

Intrigued? 

Here are some more nuggets on geothermal, courtesy of this recent CNBC piece.

Last year, total investment in geothermal shot up 186 percent over 2006, to $3 billion. Half of all the new money is being spent in the US. CNBC says geothermal could account for 60 percent of the electricity needs in Oregon, Idaho, California and Nevada, with the right investments, of course.

Currently, with 3,000 megawatts, the US boasts roughly one-third of total global geothermal capacity, already. Sure, that's small -- equivalent to just six conventional power plants. But it's still enough to generate $1.8 billion in electricity sales. And it's growing fast, with a bullish future.

Why so hot and bubbly?

One reason, as we’ve detailed before, is common sense. Geothermal is one of the most sure-fire untapped energy bets in America.

It’s abundant. The availability of the geothermal resource base is 130,000 times America's current yearly consumption of energy.

It’s cheap. For $800 million to $1 billion in R&D funding – spread out over 15 years -- geothermal could be deployed on a scale that would produce more than 100,000 MW of additional new capacity in the US by 2050. That’s less than the price of one 275 MW clean-coal plant and more than 360 times more energy.

And it’s clean.

There's one more explanation for the geothermal investment boom: the federal clean energy tax credit.

It has made geothermal comparable in price, and competitive, to wind energy, the powerhouse of American clean energy.

Problem is, that tax credit is set to expire in December. You probably know the story by now.

The House passed it. The Senate may not. Again. At least not in its current form. Still, it's likely to slip through. Eventually. Somehow. Someday.

All in all, expect bumps and bruises over the coming years in the geothermal sector. But the investment dark horse of the clean energy revolution is gaining steam -- thanks in part to a heady mix of investors sending more and more dollars its way.

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