Geothermal energy is one of many sources of alternative energy that have been discussed as a replacement for traditional sources, and growth in geothermal generation has started to increase sharply. The energy produced is available 24 hours a day, and is environmentally friendly as it emits no greenhouse gases.

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What is it?
Geothermal energy is derived from the heat of the earth. The U.S. currently produces just over 3000 MWs of geothermal energy, with most of it in California. There are 126 new projects in various stages of planning, which would add another 5650 MWs to the grid.

Calpine Corporation (NYSE:CPN) operates 15 geothermal plants in Northern California in an area called the Geysers. The company produces 725 megawatts of generating capacity here and is the largest producer in the United States.

Ormat Technologies Inc.
(NYSE:ORA) is another large producer of geothermal energy, and also manufactures and sells power generation units for use in other geothermal plants. The company has a $117 million backlog for these products as of the end of the second quarter of 2009. Ormat also has 72-84 MWs coming online in its electricity segment by the end of 2010, and another 151-168 planned after that.

The Downside Of Geothermal
One bit of bad news for geothermal came from a private company called AltaRock Energy Inc. In August 2008, the company raised a second round of financing in the amount of $26.25 million. The capital raise was notable due to the participation of the venture capital arm of Google, Inc. (Nasdaq:GOOG).

AltaRock is developing what is known as an Engineered Geothermal System, which produces geothermal energy by injecting cold water at high pressure to fracture rocks below the surface. The water then heats up, is brought to the surface and the heat is extracted to produce the energy.

In early September 2009, the company announced it was suspending the drilling of its first well at its demonstration project due to difficulties caused by "geologic anomalies." The company said it would look for other locations to drill there.

AltaRock also has other prospects and signed a deal with Weyerhauser (NYSE:WY) to explore for geothermal sources on 667,000 acres of the company's land.

Most other companies involved in the geothermal industry trade on non-U.S exchanges. Western GeoPower Corp. (TSX:WGP) is securing permits for a facility at the same field where Calpine has its plants. Magma Energy Corp (TSX:MXY) just raised $100 million CAD for its ambitious plans in the geothermal area.

The Bottom Line
Geothermal is seemingly the perfect energy source, as it does not contribute to global warming, and is inexhaustible in the aggregate. Our policymakers should orient our nation's energy policy towards advancing this alternative energy source. (Read more about geothermal and other clean energy sources in our article Clean Or Green Technology Investing.)

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