Global Resource Investments Rick Rule on geothermal sector situation
Toronto Stock Exchange, Toronto/ON, Canada (source: flickr/ joseph a, creative commons)
Alexander Richter
13 Eyl 2011
The founder and chairman of Global Resource Investments Rick Rule has been a long time backer of geothermal energy companies and still considers the industry as a viable investment, despite the current market situation.
A recent piece on and interview with Rick Rule, the founder and chairman of Global Resource Investments and a long time backer of geothermal energy companies, he describes his continued attraction to the alternative energy sectors of run-of-river, hydro and geothermal.
“People ask me at conferences, ‘Rick, what is wrong with the geothermal sector?’ The answer is nothing. There is nothing wrong with the sector. What has been wrong with the sector’s performance is that the management teams who have entered the sector have been, let’s say, challenged ?implementation-challenged.” Rick sees three issues plaguing geothermal: long lead time to production, capital-intensive preparation and implementation. Rule sees a light on the horizon for all three of these problems.
A number of geothermal projects are already five years into their seven-year development cycles. That is two-thirds to three-quarters of the way to completion. At some of these companies, the capital has already been spent and they are selling at discounts to book. That suggests that the cost of capital is extraordinarily low on a going forward basis because it’s already been spent. That leaves implementation and management. After a 20-year bear market in energy, precious few alternative energy management teams were left to handle the investments that have been made in the last 10 years. “All other things considered, if you have lost faith in the sector, are disgusted and looking to exit for tax losses, I strongly suggest that you do it now. But, do it with the knowledge that I will be the buyer,” he jokes.”
Source: Business Insider
