Geothermal Rumblings

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In our quest for alternative energy resources, it's natural enough to try and tap the sun's radiant energy. But there's also vast renewable energy potential beneath our feet. I'm talking about geothermal energy -- the pork to solar's chicken.

I don't get to write about geothermal too often, because there aren't a whole lot of U.S. public companies active in the space. But there's been a rash of news lately, and I figured Fools could use an update on this under-reported energy source.

Last month, Google's (Nasdaq: GOOG) philanthropic arm -- the same one that invested in this spicy solar outfit -- committed a modest sum to Enhanced Geothermal Systems (EGS) research. Whereas traditional geothermal power plants like Calpine's (NYSE: CPN) Geysers facility make use of natural steam or hot water reservoir systems, EGS plants create their own reservoir by continuously pumping water through hot dry rock. While this is a more complex undertaking, EGS is the key to unlocking geothermal's massive potential.

One company receiving some Google love was AltaRock Energy. AltaRock is helmed by a veteran of Berkshire Hathaway's (NYSE: BRK-A) (NYSE: BRK-B) MidAmerican Energy, and has scored investments from the premier cleantech-focused venture capital firms. Subsequent to this financing, the young company also struck an interesting deal with Weyerhaeuser (NYSE: WY), in which AltaRock gets to explore the tree titan's vast Northwest landholdings for potential project sites. I wouldn't expect an IPO anytime soon, but this is a company to keep on your radar.

Lest you view this start-up as some quixotic endeavor, consider that Aug. 5 saw record high bidding activity at a Federal geothermal lease sale. While EGS is just seeing its first commercial application in the U.S. at Ormat's (NYSE: ORA) Desert Peak facility, there are a lot of players pursuing conventional plants today.

Raser Technologies (NYSE: RZ) is due to fire up a Utah facility next month, and Ormat has been given the go-ahead to construct a 49.5 megawatt plant in Nevada for Canadian partner Nevada Geothermal. The fact that the latter company, a microcap, was able to secure $180 million to finance construction in the midst of a brutal credit market speaks volumes about the viability of geothermal today. I can't get comfortable with the valuations afforded Ormat and Raser, but I still think investors should spend some time getting to know the space and the players here.

Related Foolishness:

• These aren't the first signs that the world's warming to geothermal.
• Why cleantech is the biggest economic opportunity of this century.
• Old-fashioned energy plays look plenty appealing today.