Clean energy is a hot topic today. However, companies in the space are still trying to find a way to build lasting businesses. That can lead to some interesting opportunities, like Ormat Technologies, Inc. (NYSE:ORA) and Clean Energy Fuels Corp. (NASDAQ:CLNE). Investor enthusiasm for a new idea, however, can sometimes mean big risks, as Tesla Motors Inc (NASDAQ:TSLA)’ rapid appreciation shows.
Harnessing the Earth’s energy
Ormat Technologies, Inc. (NYSE:ORA) designs, develops, builds, owns, and operates geothermal power plants (64% of 2012 revenue). It also designs and builds its own equipment, which it uses itself and sells to others (36% of revenue). The vast majority of the company’s equipment sales take place in foreign markets, while the bulk of the company’s electricity sales are domestic.
A geothermal plant takes water heated by the earth and uses the heat to generate electricity. It is typically a very clean source of power. Although plants tend to cost a lot to build, they have very low operating costs because of the use of naturally occurring heat. At the end of 2012, the company owned and operated 18 power plants producing a total of 575 megawatts of electricity. It has several plants either being constructed or in the planning stage.
The company’s top line has grown steadily over the past decade. Earnings have been varying, but the company was profitable in all but the last two years. A non-cash impairment charge was largely responsible for the large 2012 loss and a tax allowance caused the 2011 loss. These two items overshadowed a largely stable electricity business.
Ormat Technologies, Inc. (NYSE:ORA) pays only a token dividend, so income investors shouldn’t bother looking at this hybrid utility. The shares are well off of their all-time highs, and could be a nice long-term investment option for those seeking an environmentally friendly energy play. That said, top-line growth is likely to be slow at best.
Switching to natural gas
Clean Energy Fuels Corp. (NASDAQ:CLNE) is at the forefront of the effort to switch the United States from gasoline to natural gas. The company has a division that switches vehicles so they can run on natural gas and it owned, operated, or supplied 348 natural gas stations in 32 states at the end of 2012.
With the price of natural gas near historic lows because of increased supplies, many are calling for the fuel to be used in more and more applications. Fleet vehicles have been the first movers here, with companies like Waste Management, Inc. (NYSE:WM) slowly switching their fleets over to the fuel.
The next big segment that Clean Energy Fuels Corp. (NASDAQ:CLNE) is looking to switch is America’s trucking fleet. To that end, the company has built around 70 natural gas stations across the country’s interstate highway system. Although only a handful are up and running today, if even a small portion of the country’s truckers start using natural gas, the business could quickly gain scale.
