One geothermal industry expert expects growth in the geothermal energy market, but believes the best investments are outside the US in places like Africa. Hezy Ram, with over 30 years experience in the industry, said in an interview with Seeking Alpha that North America’s current low natural gas prices are hampering geothermal growth by lowering the wholesale price of electricity.
However, in places like Africa which houses excellent geothermal energy potential in its Great African Rift Valley, most energy is generated from oil. Since oil floats around $100 a barrel, the cost of electricity exceeds $0.20 per kWh. Ram said that geothermal can be the low-cost producer of energy and will not have to rely solely on subsidies or renewable portfolio standards to create demand.
And just who is poised to take the lead in geothermal energy? Ram said two types of companies make the most sense and first off are oil and gas firms. He said that they have the expertise and use the same equipment and techniques, but most importantly, the hydrocarbon sector has the capital to spend. A good PR campaign can also catapult stocks and public image like Chevron – the largest geothermal driller in the world – and its spin on its Philippine and Indonesian geothermal assets.
The other group that could be a powerful beneficiary of geothermal energy is power utilities. This would require the utilities to take on major risks when drilling which is a new realm for most. However, utilities and oil and gas firms have been working together for years so perhaps the best option is to create JVs in order to exploit the geothermal potential. Or maybe just ask Iceland for a little help.
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