Re: GDY - Geodynamics Limited
I just hope that there is not more to the SP drop than sentiment.
Maybe when the bears are out neutral news is good enough reason to sell.
When the market is optimistic this same news would probably cause a jump in SP.
If the world and Aus gets serious about reducing CO2 (which is likely) and
GDY gets the concept working (I can only guess this probabilty) the current SP will look extremely cheap given it is :
BASE LOAD
NO EMISSIONS
CHEAP
To me that means it would be clearly the best of all energy sources.
EG I don't see clean coal being ready for a long time.
And GDY will be ready to deliver just about the time I think Aus will start really doing something about climate change.
I welcome any opinions on this.
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PETEAI
From the technical (electricity not share price) perspective:
1. Geothermal is
at least as flexible in operation as a coal or nuclear plant. It can be dispatched just like any fossil fuel plant, has mechanical intertia etc so is very "good" as far as grid operation is concerned. Since there's no minimum boiler feed to worry about, it should actually be more flexible than coal or nuclear - so it's suited to intermediate as well as base load.
2. Other than hydro, it is the only non-fossil or nuclear technology which can deliver baseload generation without the use of external storage (which is prohibitively expensive). And the geothermal resource on mainland Australia is a lot larger than the untapped hydro resource.
3. The BHP mine expansion in SA means that SA needs additional generating capacity. Only about one third of SA's current generating capacity is well suited for baseload application - so it makes sense for any new plant to be high capital cost / low running cost given that the mine will operate 24/7.
4. Other than nuclear or successful carbon capture from coal, it is the only realistic means by which total generation can be increased whilst reducing total emissions over the long term.
5. The BIG downside is the location. Cooper Basin is the middle of nowhere as far as the grid is concerned. And transmission over that distance will mean a significant energy loss and likely the use of
very high transmission voltages (possibly double that of any other line in Australia). That won't be cheap.
6. Timing is significant too. I like their plan for a real (500 MW) power station. That's about a quarter the size of a coal-fired plant - it won't run the whole country by any means but it's a "real" power station and not simply a trivial source of generation. With the BHP mine expansion and looking at the overall situation, feeding 1000 - 1500 MW into SA 10 years from now would be quite workable in that the market is there. Beyond that it will need to be sent somewhere else - into Qld, NSW, Vic.
7. My general thinking is that this is
probably a goer. If it is, then if properly managed it will be for Australia in the 21st century what brown coal and hydro were for Vic and Tas in the 20th century - the absolute engine of industry and economic growth.
8. Biggest risk I can see is that CO2 targets are abandoned. I wouldn't rule that out - the temp globally is claimed to have ceased warming about a decade ago and the issue may well be forgotten if the credit crunch ends in a major recession / depression.