Raser Technologies (NYSEArca: RZ) shares lost some ground in late trading Thursday and into today’s big down opening.
RZ makes final preparations to make the leap from development-stage spectacle to a revolutionary commercial-stage innovator.
RZ is scheduled to begin fulfilling its first ever geothermal power contract with the city of Anaheim next week (12/15) and bring its initial 10MW geothermal power plant online which will provide the energy within the next few weeks.
A recap of what we have gathered thus far – RZ has a significant leg upon its competition in a multitude of areas including:
- The ability to build out geothermal power plants in less than 12 months vs. 3-5 years;
- The ability to generate 25%-35% more power through its production process by using proprietary heat transfer technology;
- The ability to utilize lower temperature water to produce geothermal energy and increase profitability by not having to dig as deep for resources.
- Benefiting from a greater pool of potential resources because they can prospect a plethora of shallower pools not fit for competing geothermal energy companies; and
- The ability to access cool water in hot regions where no natural cool water reserves are present, a major roadblock for many geothermal energy companies (RZ is partnered with UTC, which owns Carrier, a major AC and cooling tower manufacturer).
Why conducting due diligence on RZ now could make for a good portfolio move.
For the sake of today’s discussion, I’ll provide you with a few reasons why I feel strongly that company’s near-term future is bright at current levels and why we should be digging a little bit deeper.
1. Superior engineering & plant construction capabilities – RZ was able to build its first geothermal power plant in just 12 months while competitors typically take 3-5 years. The company has established financing (Merrill Lynch), technology (United Technologies), engineering (Cummins & Barnard, Inc.), and drilling (Layne Christensen Company ) relationships with global leaders in their respective fields and the results thus far speak for themselves,
2. Revolutionary and innovative prospecting technology – RZ has partnered with United Technologies and is licensed to use its proprietary PureCycle binary geothermal technology that requires lower temperature water to fuel electricity producing turbines. This allows RZ to prospect a far greater number of potential geothermal resources than its competitors and also do so in a far more profitable manner, as they simply don’t have to drill as deep. Moreover, the company’s technology is modular, meaning that to build new plants or expand on established ones (8 planned over the near-term representing approximately100MW of power); RZ simply must link up more of its licensed PurceCycle systems via computer.
Raser’s CEO explained their strategy quite eloquently in a recent public statement by saying “You can win far more games by consistently hitting a lot of singles and doubles rather than trying to hit a home run every time. Our primary focus is on a game winning strategy of consistently and reliably hitting singles and doubles with the abundant lower temperature sites”.
3. Geothermal is ready to meet government requirements for renewable energy usage and decrease reliance on foreign oil, TODAY! – The U.S. is pegged to spend about $440B on foreign petroleum in 2008 prompting states including California to mandate that 33% of electric energy must be derived from renewable sources by 2020. While wind and solar power will certainly help the cause, both have significant limitations. Geothermal energy however, can be harnessed 24/7/365. With plans to bring at least 8 geothermal energy plants online over the next few years, RZ has positioned itself to capitalize on the growing number of government mandates and tax incentives aimed at increasing the use renewable energy.
With regard to the limitations of solar and wind power, the number of wind turbines required to produce the amount of energy necessary to fuel a city is extremely cost prohibitive due to the land it would require. Wind turbines are an eyesore, wind is not constant, and real estate is at a premium in many cities. Solar energy, quite simply, can only be harnessed during daylight hours when it’s not cloudy out.
Shares of RZ are now nearly $15 cheaper than their 52-week high of $18.44 despite the company being on the verge of making geothermal a major price-competitive source of U.S. energy supply. With the money, technology, and resources now in place, RZ is heading into 2009 intending to make mainstream geothermal energy a reality.
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