Why Geothermal Energy Stocks Deserve Your Portfolio Attention Right Now

The renewable energy landscape is shifting, and geothermal power is emerging as a compelling long-term opportunity. While geothermal currently represents just 5% of renewable generation, the sector is poised for significant growth. The appeal is straightforward: geothermal energy boasts exceptional efficiency, with turbine friction being the primary energy loss factor—a remarkable advantage over intermittent renewable sources.

Industry experts have signaled a turning point. Observers note that geothermal energy has transcended niche status and is becoming genuinely scalable across multiple regions. With oil majors preparing their largest geothermal investments in three decades, institutional capital is flowing into the space at unprecedented levels. For investors seeking exposure to this emerging opportunity, three geothermal stock candidates warrant consideration.

Ormat Technologies: Growth Through Strategic Expansion

Ormat Technologies (NYSE: ORA) stands out as a pure-play geothermal operator with tangible growth catalysts. The stock has corrected significantly from its February 2021 peak of $128.87, opening June 21 at $65.84—presenting what many view as an opportune accumulation point.

Recent developments underscore management’s commitment to expansion. The company deployed $377 million to acquire operating geothermal assets in Nevada, including the Dixie Valley geothermal power plant—among Nevada’s largest facilities. On the organic front, ORA targets capacity growth to 1,182–1,202MW by 2023, translating to annual expansion of 27–29% over the next three years. The company currently has 10 geothermal and four solar projects in development.

From a balance sheet perspective, ORA maintains $493 million in cash and equivalents, providing considerable financial flexibility. Management guidance projects $400 million in adjusted EBITDA for the year, indicating strong cash generation capacity that supports ongoing investment programs.

Polaris Infrastructure: Undervalued Income Stream

Polaris Infrastructure (OTCMKTS: RAMPF) trades at a compelling trailing-12-month P/E of 11.14, making it an overlooked option within geothermal equities. The stock offers a 3.9% dividend yield, backed by substantive operational cash flows.

The company operates 72MW of geothermal capacity in Nicaragua alongside hydroelectric facilities in Peru. First-quarter 2021 operating cash flows reached $9.4 million, implying annualized OCF of approximately $40 million—sufficient to sustain current dividend levels. RAMPF closed Q1 2021 with $109.7 million in cash, strengthening its position for strategic moves.

Management is actively pursuing portfolio diversification through targeted acquisitions while divesting non-core assets. This focused approach positions the company to unlock additional revenue and cash flow upside in coming quarters.

BP: Large-Scale Energy Transformation

BP (NYSE: BP) offers a different angle on geothermal exposure through a major energy producer undergoing substantial renewable transition. The company benefits from rising oil prices in the near term while simultaneously building renewable capacity.

In February 2021, BP participated in a $40 million investment alongside other major energy players in a Canadian geothermal technology firm. The investor community should view this as preliminary activity; BP has committed to a tenfold increase in low-carbon investments by 2030, targeting 50GW of net renewable capacity across solar, wind, and geothermal. Geothermal represents a logical component of this energy transformation.

The Bigger Picture for Geothermal Stocks

The U.S. commands 3.7GW of global geothermal capacity—24% of worldwide total—yet geothermal remains vastly underexploited. As technology advances and capital availability increases, the sector could evolve into one of civilization’s primary energy sources. To contextualize the opportunity: just 0.1% of Earth’s thermal energy could sustainably meet global energy needs for 2 million years.

These three geothermal stock candidates represent different risk-reward profiles for investors betting on the sector’s expansion. Whether seeking pure-play exposure, income potential, or indirect involvement through energy majors, the options above merit consideration as geothermal transitions from curiosity to cornerstone renewable resource.