Oil companies may finally invest in geothermal in 2021 – Quartz
No one is better at digging holes than the oil and gas sector. Over the last century, the industry has perfected the art of extracting fossil fuels many miles below the surface.
Its future, however, may be in digging for heat. The prospects for geothermal—energy extracted from the nuclear furnace at the Earth’s core—are rising after decades in the doldrums. In 2021, oil and gas majors are poised to make the first major geothermal investments in more than 30 years, say industry experts and energy executives, as financial returns on fossil fuels tank.
Investors backed a record 98 companies generating geothermal energy last year, including many new startups, the most since private equity research firm PitchBook began keeping track about two decades ago. Globally, geothermal investments exceeded $675 million last year, six times more than the year prior.
While only one major geothermal energy firm is publicly traded, its value has soared in recent months. The market capitalization of Ormat shot up nearly 80% since last March even as major fossil fuel companies fell at least 20% below their 2019 peaks. Ormat’s rise likely reflects faith in the geothermal industry’s prospects rather than just last quarter’s financials: Though revenue declined 7% in the third quarter compared to the previous year, Ormat stands to capitalize on the geothermal power plants it builds for others, as well as the 150 plants it operates on its own. Ormat declined to comment, citing its quiet period before