A smart country has an “all of the above” strategy when it comes to energy production to make sure it generates reliable and low-cost electricity that its people and businesses need.
The same goes for investors who should have stakes in oil & gas, nuclear, hydro, and geothermal, as well as some renewables.
Power generation has always been important for a country’s economic growth and security and has taken on even more importance with the emergence of AI data centers, which demand an enormous amount of power.
China has built the largest power grid the world has ever seen. Between 2010 and 2024, its power production increased by more than the rest of the world combined. Last year, China generated more than twice as much electricity as America, enabling some Chinese data centers to pay half what American ones pay for electricity.
Morgan Stanley projects that China will spend some $560 billion on grid projects through 2030, while Goldman Sachs predicts that China will have about 400 gigawatts of spare capacity, about three times the world’s expected data-center power demand in 2030.
In the United States, while the re-emergence of the nuclear power industry and stocks is welcome, two other clean technologies capable of providing reliable, round-the-clock, baseload power at prices competitive with fossil fuels and nuclear energy are often overlooked.
One would be hydroelectric projects creating power by the rapid flow of water.
The other is geothermal power.
Traditionally, geothermal power comes from drilling into naturally hot, water-rich rock formations and using that heat to generate steam, which drives a turbine to generate electricity. You can think of it as hot hydro.
It’s clean, efficient, and nearly eternal. Unlike solar and wind, geothermal is highly prized for baseload power, and its operating costs are minimal.
Geothermal is so steady that utilities are starting to see it as a potential replacement for retiring coal and nuclear plants because it delivers the same baseload output, minimal maintenance and zero emissions.
The private geothermal company Fervo Energy raised $462 million from investors (including Google) to continue developing a major project in Utah.
Using technology that was originally pioneered by oil and gas fracking companies, Fervo is spending more than $2 billion in Utah to build what it expects to be the world’s largest enhanced geothermal project. The planned output is expected to help power AI data centers, electric vehicles and other industries. Fervo has now raised about $1.5 billion in equity and debt since it was founded in 2017.
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There are limited publicly traded stocks to tap geothermal power.
5 Geothermal and Hydro Stocks to Consider
Ormat Technologies (ORA) is the only pure-play geothermal power producer publicly traded in the U.S. It operates dozens of plants worldwide and is expanding aggressively.
Baker Hughes (BKR), the oilfield services giant, is retooling its drilling technology for geothermal use and offers support for geothermal companies so that they can scale.
ALPS Clean Energy ETF (ACES) is an ETF that invests in a diversified group of U.S. and Canadian clean energy companies, including those engaged in geothermal, solar, wind, and hydro power.
Polaris Renewable Energy Inc. (RAMPF) is a much smaller but interesting company that specializes in acquiring and developing renewable energy projects across Latin America. It operates a 72 MW net geothermal facility in Nicaragua and manages hydroelectric and solar projects.
On the hydro side, Norsk Hydro ASA (NHYDY) is a leading Norwegian aluminum and renewable energy company with 32,000 employees in more than 140 locations in 42 countries. Founded in 1905, it combines aluminum, energy, metal recycling, renewables and batteries. Hydro is perhaps the world’s leading global aluminum and renewable energy company.
Energy, power, electricity, call it what you will, but no doubt it will be a key strategic sector for countries and investors alike. Join the Cabot Explorer today to find out which of these stocks we recommend.
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