Never underestimate the ability of the marginal exciting stuff to generate PR !

Trina Solar,  is  supplying  wing-loaded  solar cells (I never thought I'd ever write that !), for a small 2 seater electrically powered aeroplane to be built by France-based Lisa Airplanes.

See this French language site here - way better than the English one - for an idea of what it would be like. And here's a picture;



It will be called the Hy-Bird. Basically, the same aircraft with solar panel wings.

On a separate note, I've been experimenting with a plug in 1.5w solar panel on my, "ordinary-priced car" ! that connects straight into my cigarette lighter while sitting on the dashboard. The first observation is that the car starts much more quickly when I turn the key. The second is that when I remove the keys from the ignition, if the sun is still shining, the stereo keeps working !

That's why I suspect there's a lot more scope for small solar panels to become standard in vehicles tomorrow in much the same way that airbags are today, rather than an explosion of - albeit fascinating - aircraft like these.

As I reported in my newsletter last week, Tanfield Group has had a pretty catastrophic decline of late. And yet clearly, there are plenty of people snapping up shares. Today so far, it is up 40% and yesterday it was up 45%. It has probably got a lot to do with the Chairman, Roy Stanley, buying 8 million shares. 

Speaking on Al-Jazeera TV earlier today, I was asked about high oil prices, were they just about economics and what can be done about them?

I made a few points;

i) Unlike the 1970s, high oil prices today are largely demand-driven not producer supply constrained - i.e. OPEC
ii) Some new oil discoveries had been made in Brazil and there may be much more in Iraq and the North Sea, but they weren't enough to meet projected additional demand combined with declining output in older fields in good time
iii) Oil shocks in the 70s largely banished oil from power generation (although, interestingly, not in today's Iraq) - higher oil prices combined with energy security and environmental concerns this time are just starting to electrify the road transport sector

This last point is what we're most interested in. There really is some scaling up going on of hybrid vehicle production and the electric range of those vehicles is rising fast too.

But sometimes I think the price of oil has been overrated so far on its impact on alternative energy. Economists have after all, been very surprised at how resilient the global economy is to higher oil prices - just two years ago, many would have forecast an outright recession with oil at $100 a barrel. And oil when refined into petrol, is still relatively cheap even in a high taxing country like the UK. A recent 300 mile round road trip cost me all of £45 to carry 2 passengers. The rail fare would easily have cost double that, not to mention taxis and expensive drinks and sandwiches !

The Japan Postal Service, which until recently, thanks to vast savings of the Japanese non-consumer, was part of the largest bank in the world, has just made the momentous decision to go all electric with its vehicle fleet. As reported in the Guardian and on Bloomberg, this proved to be a real shot in the arm for GS Yuasa which gained 6% and Furukawa Battery Co (a stock I shall add shortly) upping by 12%.

Leaving aside the pretty much unrivalled expertise Japanese firms have in carmaking and advanced batteries, Japan is well-suited for the early arrival of electric vehicles delivering postal services for other reasons too. These are;

i) It's an island nation with no oil or gas resources to speak of and is far more vulnerable to energy security concerns
ii) It has a great deal of low carbon nuclear electrical infrastructure and relatively high solar penetration (although still tiny, a weak point really)
iii) Most of the population lives at high density in urban areas favouring short-run, low emissions, stop start slow speed delivery vehicles

So if you're in Japan electric vehicles are going to become a very common sight. It's also interesting to learn that conventional acid batteries are coming under price pressure because of the rising price of lead. The global lead-acid starter battery market it would seem is not growing that fast of all - from sales of EUR 856m today to maybe EUR 1 billion in 2014.

I quite understand why some people are dubious about the roll-out of hybrid electric cars catching on. They have memories of the fuel cell super hype that patently never materialised. After all, if one had paid attention to the experts in the late 1990s, by rights, our streets should be full of hydrogen fuel cell vehicles by now. But anyone in any doubt about the speed of technological adaptation to hybrid cars ought to read this article in the Washington Post.

Sanyo Electric and Volkswagen, the 2 behemoths of their respective lithium battery and auto industries, are joining forces to begin the mass production from 2009 of vehicle hybrid batteries. And here's how fast the market is anticipated to grow;

"By 2015, Sanyo aims to boost production capacity to 10 million cells a month, enough for 1.7 to 1.8 million cars. That would give it a share of about 40 percent of a global hybrid market that Sanyo estimates at 4 to 4.5 million vehicles by mid-decade. It includes rechargeable plug-in hybrid vehicles, which Sanyo hopes to supply from 2011."

Considering  that it took 10 years for the Toyota Prius to produce and sell one million units, 4 to 4.5 million hybrids a year is a big deal indeed. So keep your eyes on the energy storage stocks, who are potentially big players in this nascent market.

The findings of a very interesting study have just been released that works on the assumption that by 2025, one quarter of US cars will be plug in hybrid vehicles (PHEVs). Assuming continued growth in population and vehicle ownership in America, that amounts to at least 60 million vehicles, up from - I would guesstimate - a few dozen today.

The Oak Ridge National Laboratory Study was principally concerned with what the impact would be on electricity demand. As per their press release;

"In an analysis of the potential impacts of plug-in hybrid electric vehicles projected for 2020 and 2030 in 13 regions of the United States, ORNL researchers explored their potential effect on electricity demand, supply, infrastructure, prices and associated emission levels. Electricity requirements for hybrids used a projection of 25 percent market penetration of hybrid vehicles by 2020 including a mixture of sedans and sport utility vehicles. Several scenarios were run for each region for the years 2020 and 2030 and the times of 5 p.m. or 10:00 p.m., in addition to other variables.

The report found that the need for added generation would be most critical by 2030, when hybrids have been on the market for some time and become a larger percentage of the automobiles Americans drive. In the worst-case scenario—if all hybrid owners charged their vehicles at 5 p.m., at six kilowatts of power—up to 160 large power plants would be needed nationwide to supply the extra electricity, and the demand would reduce the reserve power margins for a particular region's system.

The best-case scenario occurs when vehicles are plugged in after 10 p.m., when the electric load on the system is at a minimum and the wholesale price for energy is least expensive. Depending on the power demand per household, charging vehicles after 10 p.m. would require, at lower demand levels, no additional power generation or, in higher-demand projections, just eight additional power plants nationwide."

So timing is everything. Even in a country like the UK, which powers most of its electricity by coal and gas, charging up overnight makes sense because when demand drops from a peak of 60 GW during the day to 20 GW at night, only the nuclear, hydro and wind power stations are still generating electricity. And because no one uses it much then, it's cheap, virtually half-price. The study also from what I gather, does not factor in the arrival of pure electric vehicles which would also want some of that demand.

Now, back to the bigger story. For PHEVs, from several dozen to 60 million in the US alone - this is a phenomenal growth curve - how could an investor get exposure to it?

Hybrid Battery Technology stocks;

Altairnano

Applied Intellectual Capital

Electro Energy

Quantum Fuel Systems Technologies Worldwide

There's also Ener1 - see here, which I don't list because it is a OTCBB stock.

and for the pure electric vehicle play . . .

Tanfield Group - UK based

Zenn Motor Company - Canada based but doing business in the States

So there aren't that many stocks and they're all pretty small. One should also be cautious as similar projections were made for fuel cell cars which everyone would now agree were ridiculous. I have more confidence though that plug in hybrids will succeed because they already work at a reasonable cost. Definitely a sector to swat up on.

I don't think anyone saw this coming. Because of tax and regulatory incentives, it has always been difficult to find a totally straightforward relationship between the price of oil and alternative energy stocks. Yet no one ever really disputed that, say, if oil prices had remained low - at $10 a barrel as they were in 1999 - there's no way we could have had the boom in alternative energy investment of recent years.

However, over the last few weeks, they have clearly been heading in the opposite direction. Oil is reaching new highs - $111 and the Wilder Hill Clean Energy Index which closed at 206.77 yesterday, is a long way off it's 2007 Boxing Day high of 297.05.

Obviously, there are a lot of investors out there who haven't read the script !

What's happening is that commodities like oil and gold, in the face of the credit crunch, have become the new defensive investments. That strikes me as pretty risky, but it seems to be working for those investors, for now.

And still there is no let up in sight to the alternative energy boom. Figures out earlier this week from Clean Edge make this clear - in 2007, a 40% increase in revenue growth for solar photovoltaics, wind, biofuels, and fuel cells to $77.3 billion. And the projections for 2017 are;

• Biofuels sales will grow to $81.1 billion by 2017 - a 319% increase
  


• Wind power (new installation capital costs) will grow to $83.4 billion in 2017 - a 277% increase
  


• Solar photovoltaics (including modules, system components, and installation) will grow to $74 billion by 2017 - a 365% increase
  


• The fuel cell and distributed hydrogen market will grow to $16 billion over the next decade - a 1066% increase
  

All projections far into the future have a habit of being wrong of course, but Clean Edge has the only annual and projected figures in town. And let's be honest, most of us would be very happy with half these growth rates. It's also worth noting that in the last few years, alt. e. growth rates have actually been faster than anticipated. If there's anything I'm overtly sceptical about in these projections, it would have to be the fuel cell industry which has been the future for a long time. I still don't see a big breakthrough in sight.

It would be interesting to start seeing some figures though on the growth in energy storage technologies, particularly those in the category of hybrid electric vehicles.

Ok, let's face it, no one in alternative energy is doing anything quite as well as Moore's Law. Let's just remind ourselves what it is ...

The observation made in 1965 by Gordon Moore, co-founder of Intel, that the number of transistors per square inch on integrated circuits had doubled every year since the integrated circuit was invented. Moore predicted that this trend would continue for the foreseeable future. In subsequent years, the pace slowed down a bit, but data density has doubled approximately every 18 months, and this is the current definition of Moore's Law, which Moore himself has blessed. Most experts, including Moore himself, expect Moore's Law to hold for at least another two decades.

From Webpedia.

Ray Kurzweil of course, would go much further. Roughly each year, computers chips will not only double their power, but the bandwidth of networks will triple and most importantly, the number of computational calculations per $1,000 will double too.

Now back to the starting theme of this post. An excellent article in the Economist this week In search of the perfect battery got me thinking, after looking at the chart entitled Super store. Solar PV efficiency is increasing by around 1 percent per annum. Today, your average new solar panel can crank out 15% efficiency, so by 2015, we could be up to 22%. According to the chart however, the projected rate of increase for power density in lithium ion batteries will jump from about 180 watt hours per kg to 320 - a nearly 80% increase. 

The other bit that caught my eye. According to Menahem Anderman, "between now and 2015 . . . the worldwide market for hybrid-vehicle batteries will more than triple, to $2.3 billion" and half of hybrid cars in 2009 will be using lithium ion batteries. Granted, that's a much slower growth rate than solar (approx 17% p.a.), which  will probably grow by at least 30% a year until 2015, yielding a 6 fold increase in production.  But the sheer size of the Global automotive industry, with probably close to, I guesstimate, $800 billion in annual sales, just might point to a growth curve for automotive lithium ion batteries on a par with solar, at the back end of the next decade. Especially, if Peak Oil finally kicks in by then.

If you want to know why Quantum Technologies - or to use it's full name - Quantum Fuel Systems Technologies Worldwide - rose by a staggering 18.42% yesterday, there's just one answer;

The Fisker Karma
- as launched at the Geneva Motor Show yesterday.

This comes not long after being awarded $14.5 m by Fisker Automotive to advance and integrate Quantum's proprietary high-performance plug-in-hybrid electric vehicle ("PHEV") architecture -- known as "Q-Drive" -- for the Fisker Karma four-door sport sedan production model.

For more details about the Fisker, see their website here.

It's fascinating how many niche players are emerging into the nascent alternative energy vehicle market,with production runs in the low 1000s. Meanwhile the big automotive players, Toyota excepted, bang on about fuel cells and run endless and expensive demonstration programmes with a handful of vehicles, proclaiming a breakthrough.  Honda's FCX Clarity and BMW's 7 series edition, are both cases in point.

Following on from my post from a few days ago "Can supercapacitors close the lithium ion performance gap?" a great tour de force in this week's Economist magazine (why do their editorial staff insist on calling it a newspaper? So pretentious!) - about the rise of the ultracapacitor in energy storage. It's well worth a read for the technical detail and for an overview of who's doing what.

I hadn't heard before of the XH-150 - pictured here -
a 3 way hybrid employing a petrol engine, conventional lithium-ion  batteries and ultracapacitors, made by AFS Trinity.

What this article misses though and makes me wonder, is all the hype that was created by the Lightning Car Company
and their planned use of high performance altairnano fast recharge lithium ion batteries. Read all about it here. As they are due to deliver their cars starting this year, you wonder why there isn't more excitement about the coming launch?

I suspect there's already a degree of ennui, mostly unfair, about this sector. It's not helped by the fact that heretofore, there are more than a few players, promising lots and delivering little, much like any new industry. So as this becomes apparent, expect plenty of fallout and rationalisation. After all, in the 1920s, there were 1000s of vehicle manufacturers, now only a few - see the talk here I organised by Professor Garel Rhys CBE, the leading global academic authority on the motor industry on pages 3-9 of this pdf last year, on 21st Century Motor Industry Economics.

Meanwhile, Altairnano's technology still has a lot going for it. The relatively low energy density of batteries appears to be not quite the obstacle everyone thought it was. It's much more to do with recharge times, number of potential charge/discharge cycles and of course cost. And these metrics are all showing far better year on year improvement metrics than energy density.