Ross Beaty of Alterra Power disillusioned about geothermal

Mariposa, well 03, Chile (source: Alterra Power)
Francisco Rojas 1 Jul 2014

Ross Beaty founder and chairman of Alterra Power and Lumina Copper provides insight about his personal experience in the geothermal industry and the frustrations that his company had to endure, especially early stage development and exploration.

In a recent article following discussions on a new hydro dam and geothermal opportunities in British Columbia, Canada, Ross Beaty founder and chairman of Alterra Power (previously Magma Energy) talks about his frustrations in geothermal energy development.

Referring to his experience, he states that “Geothermal energy is free, global and almost limitless – in fact, the heat in the first couple of kilometres below the earth’s surface contains enough energy to supply the world for over 100,000 years!” he writes in an unpublished report.

“So in 2008 I started a renewable energy company focused on geothermal power production, thinking that my geology and resource-development background and my experience in the same rocks and countries that geothermal power was located in might offer an advantage. After a couple of years and investment of about $150 million from my shareholders, I became quite disillusioned about the ability of geothermal power to be anything other than a bit player in the world energy equation.”

The geothermal industry has seen a number of approaches by companies and investors from different sectors coming in. While not all of them, but quite a few have failed to replicate their success, like in the case of Ross Beaty in the mining sector.

With expectations of a commodity business, like oil or metals, many find the slow development pace and the high up-front capital cost frustrating. This might also be the case for Ross Beaty and Alterra Power. The challenge is also, and this has been raised again and again, that geothermal developers, particularly those in early stages, should maybe not seek a listing on stock exchanges. The expectations of stockholders is simply too impatient for geothermal development. At the same time, the market is not valuing development activities and progress that does not result in immediate cash flow.

In the case of Alterra Power, the purchase of Icelandic geothermal plants and the difficulties surrounding power prices bound to aluminium prices has proven challenging and the stock market has not valued the cash generating plants as much as Ross Beaty had hoped for. The same can be said about a number of other geothermal developers on the Toronto Stock Exchange, of which most are actually now degraded to penny stock and have not held up to expectations.

Source: Business In Vancouver Website