Four North American geothermal companies plan tie-up

Wed Jul 15, 2009 6:01pm EDT
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By Nicole Mordant

VANCOUVER, British Columbia (Reuters) - Taking advantage of investor appetite for renewable energy projects, four geothermal firms said on Wednesday they plan to combine forces to form a single, larger company that will be able to raise funds more easily to develop "green" power projects.

Canadian-based Polaris Geothermal Inc, Western GeoPower Corp and GTO Resources Inc, along with Ram Power, a private U.S.-based geothermal power developer, said they plan to combine operations and try to raise C$100 million ($90 million).

Shareholders of Polaris, which has geothermal projects in Latin America, will end up holding the lion's share of the new company, with a 54.1 percent stake. Western, active in California, will own 29.2 percent, Ram 15.4 percent and GTO 1.3 percent.

"They are looking to consolidate and provide something that compares in diversification and scale to Magma, I would think," said Greg Payne, a portfolio manager at Investeco Financial, an environmental investment company.

Magma Energy Corp, a geothermal company led by well-known mining entrepreneur Ross Beaty, listed on the Toronto Stock Exchange this month after raising C$100 million in an initial public offering that was three times oversubscribed.

Geothermal energy comes from hot water and steam produced deep below the Earth's surface. These are piped up to the surface to drive turbines to generate electricity, and are much cleaner energy sources than traditional options such as coal.

"There is the realization that renewable energy has moved into the mainstream of the utility industry," Ram Power's executive vice-president, Daniel Schochet, told Reuters.

"In the western part of the United States the renewable energy that is most sought after is geothermal," he said, explaining that geothermal energy is a constant source of power compared with wind and solar, which are intermittent.   Continued...