Raser’s Transition to Geothermal

 
Raser Technologies Inc. (RZ - Analyst Report) is gradually transiting from a developmental stage company towards a geothermal power producer. As of now, only its first geothermal plant Thermo No. 1 Plant (Hatch Plant in Utah) with an annualized capacity of 10MW is generating revenues by selling electricity to the city of Anaheim since April 2009. The company plans to add 40MW annually to its capacity over the three year period 2010 – 2012 to bring its total geothermal power generation annualized capacity to 130MW.

Raser Technologies, however, is facing financial constraints. Earlier this month, Raser’s loan guarantee application was denied by the Department of Energy (DOE). If approved, DOE would have provided 80% of the approximately $190 million project cost for Raser’s 42MW – East Thermo geothermal project. The company’s hopes now rest on governmental funding in its quest to become a commercially viable geothermal power producer. Also, Raser has a power purchase agreement with the Southern California Public Power Authority (SCPPA) that would cover the company’s next 110MW capacity expansion.

Provo, Utah based Raser Technologies, founded in 2002, functions as a geothermal power development and technology licensing company in the United States. The company operates in two segments – Power Systems, and Transportation and Industrial Technology. The Hatch geothermal power plant was awarded “Plant of the Year” by POWER Magazine in May 2009.

Geothermal power projects under development include seven projects of which three are in Nevada, two in Utah, and one each in Oregon and New Mexico. We maintain our market Neutral recommendation on the shares.