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October 2007 Archives
Beacon Power, has secured a commitment for $25 million in new funding from three of
the company's previous investors. Good going, considering the company has reported just under $1 million in revenue in 2006, against a $12 million loss. So you wonder why the have such faith in this company and its technology . . . why not make a relatively safe investment in global equity, with at least some non-dollar denominated assets?
Those investors may well be betting on the Smart Energy 25 flywheel pictured here  , which can be batched together to provide what Beacon Power calls a "Smart Energy Matrix" to generate megawatts of power. My general views on flywheels are (and yes, please feel free to contradict me with comments !);i) At the backup/auxiliary power level, they're closer to commercial viability than fuel cells ii) They have environmental and some performance benefits over batteries; mainly that they are non-toxic, have higher temperature tolerances and longer lifespans - perhaps as much as 20 years. iii) As modular technology, they are more scaleable - i.e. just add another and another, and another . . . iv) Their energy density as measured by watt hours per kilo is slightly inferior to a conventional lithium ion battery - 130 wh as opposed to 160 wh per kg. v) Flywheels have a cult following not unusual in certain energy technology circles - it can be summarised as; THIS IS THE ULTIMATE ANSWER TO EVERYTHING !
Over the weekend, I almost fell out of my chair on learning that at the Tokyo Motor Show, Honda announced that in 2008 the FCX - a hydrogen fuel cell vehicle was going into production and would cost approx. $100,000 a pop.
 You can view more details about the FCX from Honda's official site here. What really hit me about this news was; i) The price - there are plenty of people (especially governments) out there who will spend $100,000 on the world's most environmentally friendly car ii) The decision to go into production before the hydrogen infrastructure was in place. Said Mr Takeo Fukui, President and CEO of Honda, " . . .when the car was invented, countries weren’t full of petrol stations” and “ . . . when the demand is there it [the hydrogen economy] will happen.” iii) A new high for platinum. It came at the same time as a record spike in the price of platinum to $1,464 an ounce, a key cost ingredient in fuel cells as the catalyst used to facilitate the reaction of hydrogen and oxygen. A few years ago, I wrote a piece for the now defunct magazine, Power Economics, entitled "The Hydrogen Economy, what Price and When?" and for various reasons, didn't see any big future for hydrogen vehicles until at least 2040. It looks like I may have to eat my words . . . or will I? It occurred to me that Honda may have taken the decision to produce and sell this car at a loss, even a big one, for the forseeable future. I know of no breakthrough in fuel cell technology that has made it possible to bring down the cost of a vehicle to this kind of price. Less than a week ago, the cost of the cheapest fuel cell vehicle was estimated at $1 million. And as for the hydrogen infrastructure, I bet that the first buyers of hydrogen filling station equipment are going to be Honda dealerships. Hydrogen, especially green hydrogen, derived from the carbon free electrolysis of distilled water, is very expensive and they could cut a good margin here. Our interest though is that the FCX is a massive development for those listed companies involved in hydrogen infrastructure; Distributed Energy Systems Hydrogenics Quantum Technologies My guess is that they are poised to win quite a lot of new business. We shouldn't be surprised that Honda is prepared to sell a vehicle at a massive loss. According to Wired magazine, GM apparently took apart a Toyota Prius in their Chop Shop and could not see how they made any money on it. But cash rich, technology friendly, successful japanese car companies have a quite different investment horizon to the likes of Ford, GM or Chrysler - at least one of which may go bust in the next few years. Still, it's a big risk for Honda and just how big will their initial production run be? If the Toyota Prius is anything to go by - I'd guess 40,000 in the first year. Meanwhile the price of oil is still going up . . . THE GAINERS 1 Suntech Power Hldgs NYSE:STP Solar 16.47% THE NON-MOVERS 76 Biofutures LSE:BIP Biodiesel 0.00% THE LOSERS 126 Xethanol Corp. AMEX:XNL Bioethanol -0.02% AEI only shows stocks that generate at least 25% of the sales from alternative energy. We do not include pink sheets or OTC bulletin board stocks unless ADVFN does not cover the exchange of their primary listing.
Vestas Wind Systems, is Denmark's surprise industrial champion. Vestas to Denmark is a bit like Nokia to Finland with a 28% world market share. A few years ago, back in 2004, it looked like Vestas, along with a handful of German turbine manufacturers were about to head South into the red, with declining margins (2.4% for Vestas in 2004 after its merger with NEG Micon) and an end to the wind boom. And after all, who would bet on manufacturing continuing to succeed in high-cost Western European nations?
 Since then, there has been a spectacular turnaround. As this article points out, " . . . Vestas shares, which trade on the Copenhagen stock exchange, more than quadrupled in price over the past 20 months, as the company cemented its No. 1 spot in the industry". It would be quite mistaken though to assume this happened because of the genius of the management. In fact, I do recommend reading "The Origin of Wealth - Evolution, Complexity and the Radical Remaking of Economics" by Eric Beinhocker - who reveals that quite often, that's one of the least likely causes. Margins rose because of a world-wide shortage of turbines. Together with steel shortages and a rise in construction costs, this has translated into the installed cost per megawatt rising by about 40% in 4 years. A few years ago I was convinced that wind turbine prices would keep falling. How wrong that turned out to be. This has also been made possible because the price of other energy sources has gone up too, so the ranking order has not changed. All the same, the assumption that increased production leads to lower costs can only happen if supply exceeds demand. It just goes to show one must never allow oneself to be beholden to the distortion of wishful or prejudicial assumptions. 1 Suzlon Energy Limited NSE:SUZLON Wind 12.13 THE NON-MOVERS 91 Biofutures LSE:BIP Biodiesel 0 THE LOSERS 140 Idacorp Hldg NYSE:IDA Hydro -0.06
Quite a lot of coverage today in the media about this fuel cell motorbike - a joint development between Suzuki and Intelligent Energy.
 I haven't been able to find any technical specifications for the Crosscage, pictured above, but I suspect it is closely related to an earlier model produced by IE, the ENV fuel cell motorbike .To quote this article in the Times about the Crosscage, " . . . It is believed that the cheapest fuel cell car would sell for about $1 million (£500,000). Moreover, until now nobody has managed to build a commercially viable motorbike. The Crosscage, its designers argue, therefore represents a huge breakthrough.By combining Suzuki’s capacity for mass-production and a lightweight, air-cooled fuel cell designed by Intelligent Energy, the Crosscage may offer a fuel cell vehicle that might be affordable to many people. If Toyota succeeds in its recently stated goal of producing a fuel cell car costing $60,000, Phil Caldwell, director of Intelligent Energy, said that a fuel cell-powered bike might cost a fraction of that sum." That all seems quite reasonable to me. Yet the fact that the Crosscage is being displayed as a concept in a trade show is about right. The root problem in my view, as with all hydrogen fuel cells seeking commercial viability, is the hydrogen. In my book, there are 4 types of fuel cell; i) Portable Battery Class ii) Stationary/Distributed Generation Class iii) Industrial Class iv) Vehicle Class The inescapable flaws with hydrogen as a fuel source are it that it costs a lot of money to produce, store and transport, let alone do all of these things in scale. There are however some listed fuel cell companies whose technologies run off natural gas or off the shelf fossil fuels or methanol. Those companies include FuelCell Energy, Ceres Power, Ceramic Fuel Cells, Mechanical Technology Inc, Medis Technologies, Polyfuel and Voller Energy. So as long as natural gas is fairly clean and relatively cheap, why shouldn't it be the bridging technology for fuel cells before the hydrogen era - if it ever happens ? THE GAINERS THE NON-MOVERS 63 Biofutures LSE:BIP Biodiesel 0 THE LOSERS 110 Memc Electronic Mtrl NYSE:WFR Solar -0.02% AEI only shows stocks that generate at least 25% of the sales from alternative energy. We do not include pink sheets or OTC bulletin board stocks unless ADVFN does not cover the exchange of their primary listing.
There's just one altenernative stock story today - according to Reuters, Plug Power's shares have risen 60% on news that its unit received an order from Wal-Mart Stores to provide fuel cells for use in fork trucks at one of the retailer's distribution centers. Plug Power said the GenDrive fuel cell to be provided by its unit,
Cellex Power Products Inc, will power pallet trucks used at Wal-Mart's
food distribution center in Washington Court House, Ohio.
Unless I've missed it, Plug Power's own website doesn't carry any information yet about this, less still about their GenDrive product for the small industrial vehicle market, which is what concerns us here. So here's a picture of a fuel cell driven fork truck from Proton to help you visualize it;  I'm anything but an expert of fork trucks, but a fuel cell version doesn't look any different to me. Fuel cells for fork trucks is actually an idea that quite a few companies have been looking at for a few years. Look at this pdf story of Hydrogenics from a couple of years ago. Anyway, I won't bore you by saying again what everyone now knows - fuel cells aren't going to appear any time soon in your family car. But their potential in small niche markets is still untapped. And one of those markets has to be forklift trucks (another actually, is aircraft carriers). The bottom line is that the last thing you want - in our health and safety conscious world - is a build up of exhaust fumes in your indoor working environment. That's why clean-burning fork lift trucks make sense and I wouldn't mind going for a jog around a Walmart depot, perhaps racing a fork truck . . . !
Readers of this blog will know that I don't always have a lot of good things to say about fuel cells. By and large, I think they are long in development and very short on commercial success. That doesn't mean though that they don't make for interesting blog copy for alternative energy investors. Viewed in isolation, fuel cells do offer a combination of unique capabilities; near silent, highly reliable and very clean. No wonder military special forces types hanker after them.
So news that microstock Voller Energy, a firm founded by the Chief Executive, the colourful Stephen Voller, is tying up with Ballard Power Systems is news indeed. Ballard will be selling its Mark1030(TM) fuel cell stacks for integration into Voller's 1kW auxiliary power units (APUs), aimed at the leisure, marine and construction markets. Under the agreement, Ballard will deliver fuel cells to Voller in 2007 and 2008. I have my doubts about them making inroads into the construction or leisure market. But will the marine product in question, the Emerald, sell?  It ought to, but not on cost-competitive grounds. Selling fuel cells to the yachting community makes eminently good sense. The old adage that if you ask how much a yacht costs, then you can't afford it has some application to fuel cells too. If the Emerald became something of a fashion statement amongst the yachting community then sales could follow in a big way. The yachting accessories market, I suspect, is a high margin business. Meanwhile, unfortunately, both Voller and Ballard stocks are either at or near 12 month lows and like most fuel cell companies, desperately in need of some serious commercial success. At some point in the next few years, there has got to be an upside to fuel cells . . . otherwise a whole lot of these firms are going to go to the wall.  Here's a stock - Tanfield Group Plc - and a new sector - Electric Vehicles - I'm going to add to AEI shortly. Tanfield's subsidiary, Smith Electric, are unusual for an electric vehicle company because they focus on the delivery transport market, like the Newton truck above. My feeling is that this is really quite shrewd. The 2008 order book already contains orders for 600 vehicles. Tesla and Lightning cars may be getting all the publicity - sexy-looking sport cars always do, yet there's a far greater likelihood of delivery vans going electric before your average family saloon, let alone horsepower intensive sports car.The technical hurdles for an electric truck are of course far greater in terms of weight v. performance. Yet cities around the world - all of which are getting bigger - rightly or wrongly, are working hard to exclude high particulate polluting vehicles from their streets. That is helping to price in the likes of the 9 ton Newton truck. Powered by six batteries, it has a payload of 3,000kg; a top speed of 50mph and a range on one charge of up to 130 miles. Obviously they don't plan breaking into the long-distance freight business any time soon. But there are no end of large companies who take a view that for CSR reasons, they'd do well to have an electric fleet for metropolitan deliveries. And that's exactly what Sainsburys and TNT have done. So the Tanfield Group, although it has had a big run-up from 10 p a share in 2004 to 180p today, has to be one stock whose progrress we look forward to watching at AEI, for some time to come. Few disagree that with current technology and costs, there are limits - although in most cases, very far from reached - as to how big an impact wind turbines can make to a nation's electricity supply. In brief the decisive issues are;
None of that is to say that this industry will not keep on growing - it will. But global electricity demand, I'm pretty sure, is still outstripping the rate of wind power electricity consumption growth and certainly for now, the rate of technological change that could make it cheaper. So this story here "Wind fires desalination plant", got me thinking . . . has there not been too much emphasis on wind power providing electricity to the grid, when it can provide a much less time and market sensitive contribution, either pumping water or desalinating it? The latter idea has particularly caught my interest. If you follow the link above, you'll see that this wind-powered desalination plant will be in Australia - a nation that is going through the longest drought in living memory. As per the article, " . . . the AUD $1.7 billion project will demand almost one-fifth of the country's wind-generated energy, providing the biggest ever boost to the state's green energy industry . . . because the plant will need 400,000 megawatt hours per year." Global demand for freshwater is at least as great as the world's demand for energy. Friends of mine in the think tank world seem to think that the problem lies in not pricing all of the earth's freshwater and that desalination is a waste of money. Lay down big pipelines say from Scotland and Wales to London and the problem is solved - which strikes me as quite naive. If the biggest source of water nearest to you is the sea and you need it yesterday, then use it now. Don't wait for the planning bureaucrats to approve 100s of miles of pipelines up and down the country, wherever you are. So no wonder Thames Water wants a desalination plant. The point is this; growing energy and water consumption are highly linked. The average world citizen still only makes $7000 a year and more than a few of them aspire to shower twice a day and drink a few beers, whilst sitting by their own swimming pool. CNN Money - Long-Term Investors In Brazil Ethanol Unfazed By Dollar Crash
An interesting piece about how the fall of the dollar against the Brazilian Real has barely made an impact on the Brazilian ethanol investment boom. The long-term ethanol story for Brazil is almost entirely positive. The feedstock - sugarcane - is the cheapest and you can go long on the demand curve too. According to the chief executive of state-run oil firm Petroleo Brasileiro SA ( PBR), " . . . Brazilians will consume more ethanol than gasoline by 2020 when flex-fuel cars will dominate the country's car fleet." We hear a lot about ethanol in Brazil but need to be reminded that although flex-fuel cars now represent 85% of Brazilian new car sales, they are still only 12.8% of the entire light-vehicle fleet. Brazilians love to see themselves as exceptional and they're not wrong. Arguably this is the first country in the history of the world to attempt an agricultural-based industrial revolution. So looking out over the next decade, Brazilian ethanol and crucially, the Brazilian Real, look like a good place to be. But can anything stop Brazil's ethanol juggernaut? I think there are two technological and one regulatory threat; i) The emergence of low cost celluloscic biofuels ii) The arrival of high mileage plug-in hybrid vehicles iii) The Brazilian government decides at some point to no longer mandate the ethanol content in gasoline I don't see i) happening in the next 5 years and certainly not scaleably so in the next 10. ii) is a real possibility, the technology is already available, but mass production of these vehicles will be still at least 5 years off. iii) doesn't look likely at all in the next 10 years. This 5 megawatt wind turbine, the world's commercially largest available made by Repower Systems . . .
will before long be eclipsed by a 7.5 MW monster, to be made by Clipper Windpower. Who said wind turbines had reached their maximum physical size? A 50% increase in theoretical peak power is a big deal and these new giants will almost certainly only be placed out at sea. I have heard that plans were drawn up for the contruction of a 10 MW model, a few years ago and we are only just now scaling up in size again after a good 5 years of stagnation. A more sceptical reading of this story though would suggest that Clipper Windpower is tapping into what many in the UK regard as one of the softest touches for nearly free money - a tax funded Regional Development Agency. The quango in this story is called One North East. I'm always suspicious of companies seeking money from government bodies, particularly in my home country, Britain. And isn't Clipper in cahoots with BP, an oil major hardly short of cash - why can't they fund this turbine's development? Still, business is business and I don't doubt that Clipper thought about this new partnership very hard. All investors worth their salt intuitively understand that capital generally flows to where the return is highest. Yet we all to readily overlook that businesses will always seek capital where the cost is lowest; low regulation stockmarkets, junk bonds and I suspect, in this case, government-funded quangos. Conergy AG, down nearly 9% today, has for a German solar company some astonishing news; According to Forbes, "under Conergy's blueprint, 500, 2 megawatt turbines will be placed near the hamlet of Silverton, New South Wales, from 2009". Conergy is taking two bets here; 1) Australian Conservative John Howard will lose the forthcoming general election - a pretty safe bet. As remarked on this blog previously, the opposition Labor party is far more willing to throw subsidies at alternative energy and no doubt will. And now for the point that Forbes did not pick up 2) Australia pretty much has the cheapest electricity in the world, thanks to its vast coal reserves. But the price of coal has been rising very fast, even in Australia. This is apparently all to do with supply bottlenecks, fed by the vast demand created by China - currently building 70 gigawatts of coal-fired power generation every year yet not enough coal to fire them. So of course, the price of coal is going up - and that starts to make alternative energy a lot more viable, especially if you go in big, like Conergy, right from the start. Let's face it; the record on conventional biofuels as a carbon-reducing, environmentally friendly, energy security-enhancing, cost-effective solution has come in for an absolute battering in recent months. And that's not altogether unfair. Food prices have risen because the feestocks are not quickly scaleable, the rainforests in Borneo are being decimated to grow palms, no one will ever be oil price independent from instability in the Middle East (especially a WMD exchange between Israel and . . . take your pick) and oil prices are still going up. So enter the slimy, green stuff.
When I look at this, I see a failed pond. Oxygen poor, virtually lifeless. But algae likes that. Alternative energy enthusiasts are intrigued because the energy density of algae is much greater than crude. Algae can also be refined to make petrol, diesel, jet fuel, and chemical feedstocks for plastics and drugs. There is as yet though, no listed stock - according to AEI criteria - in the business of algae. Just this OTC stock, Global Green Solutions, which is mentioned in this article here. I suspect that will change in the next few years. And the dream is to connect a coal plant's CO2 emissions to an algae pond - this project here in New Mexico believes a 1 acre algae pond can absorb between 258 - 450 tons of carbon dioxide a year. It does seem though that we need a lot more enhanced genetic engineering of the enzymes to make this a large scale commercial reality. |
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