When it comes to energy stocks most investors are focused on the major players such as Origin Energy (ASX: ORG), Oil Search (ASX: OSH) and Woodside Petroleum (ASX: WPL). This is of course understandable given their diversified asset bases and strong long-term market positions. However investors with a higher appetite for risk may choose to look beyond the leading industry and instead attempt to seek out the emerging leaders.
Here are 3 emerging energy companies which presented at the recent Australian Microcap Investment Conference and could be worth further investigation by less risk-averse investors.
1) Infigen Energy (ASX: IFN) is a specialist renewable energy business and can boast of being Australia's largest owner of wind farms. Infigen has a market capitalisation of $210 million and has built up an impressive suite of assets which comprise interests in 24 wind farms across the USA and Australia that represent an installed capacity of 1,600 megawatts – that's enough capacity to power over 500,000 households per year. Infigen also has 2 solar projects in development in the USA and has completed a solar demonstration facility in Australia.
2) Geodynamics (ASX: GDY) is a leading geothermal exploration and development company with a market capitalisation of $37 million. The firm is currently developing its energy technology via a pilot plant in South Australia's Cooper Basin. The dynamics of the Australian energy market mean it could be some time before the full potential of the Cooper Basin's geothermal resource is realised by Geodynamics and in the meantime the firm is actively pursuing projects throughout the Pacific Islands which have the potential to provide nearer-term returns to shareholders.
3) Leaf Energy (ASX: LER) is developing a process which would have applications for the production of biofuels. The technology in development is a form on 'pre-treatment' of waste biomass which would allow for a more cost effective and efficient way to breakdown biomass into its constituent parts for conversion into higher value products such as biofuels. Although a young company and with a market capitalisation of just $3 million, Leaf Energy believes it will be in a position on begin commercialising its technology during 2014.
Foolish takeaway
Despite the current Australian Government's plans to repeal the carbon tax, governments around the world are mandating in different ways for cleaner energy. While displacing oil and coal is not going to happen overnight, the above 3 businesses are each developing businesses which can be profitable independently of government policy but which also stand to gain from future moves to address fossil fuel concerns.
Looking to add some high-octane energy to your portfolio? Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."
More reading
Motley Fool contributor Tim McArthur owns shares in Origin Energy.
