Geothermal energy accounts for about 9,300 megawatts of the world’s electricity. That adds up to 60 million people in 24 countries who are getting their power from the Earth’s heat.

In the United States, more than 2,800 megawatts of electricity from geothermal plants supplies four million people in Alaska, California, Hawaii, Nevada and Utah. Six percent of California’s power comes from geothermal sources, where 15 new projects are under development.

Progressive, nuclear-free California is the perfect place for geothermal expansion. The state of California will require 20% of electricity sales to come from renewable resources by 2010. In 2006, 15% of all electricity used in California came from geothermal, wind, solar and small hydro.

On top of this, The Geysers in Northern California is the largest geothermal development in the world. And there’s one small company that’s paving the way for geothermal expansion.

You may be familiar with Calpine Corp. (CPNLQ: OTC BB). Calpine became the world’s biggest geothermal power provider in the late 1990s after completing the largest IPO ever for an independent energy provider in 1996.

This alternative energy star declared bankruptcy in 2005 and was eventually de-listed from the NYSE. And as this former giant rebuilds, one tiny competitor is preparing for operations at The Geysers, as well as a second location on the West Coast.

Unfortunately, I can’t divulge the name of this bulletin board gem in this forum. It’s just too small and too illiquid to reveal to a large audience.

Currently, the company is pursuing two projects that are under development. One of them is a $100 million geothermal facility at The Geysers in Northern California that is projected to go online sometime before the end of the decade. This will be just what California needs to fulfill its green energy needs as 2010 approaches.

We’ll be watching to see how the power giants respond to these developments. Buyouts and consolidation could be eminent in the near future. We could even see geothermal power expand beyond areas like The Geysers. Modern technology and advanced drilling should allow these kinds of operations to spread to locations where geothermal power was thought to be impossible.

Best,
Gunner
July 11, 2007

Small-Cap Energy Companies was originally featured in the Penny Sleuth.