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Most of the time, this blog focuses on big listed companies. And yet, whilst they tend to be the most relevant to alternative energy investors, in so doing we are missing out on something crucial; innovative small companies that just might one day deliver the game-changing invention that will BE BIG. It may be a cliche, but my admittedly partial anecodatal evidence is that when alt. e. companies become large blue chips, the corporate culture takes over and the innovation goes out of the window. The question is why?
Arguably, because they have a much greater fear of failure. Silly really, when if you've read Why most things fail: evolution, extinction and economics by Paul Ormerod, you understand that failure is the natural order not only of the economy but of the biosphere. You have to budget for failure to succeed. Roughly 99.8% of all species and companies that have ever existed do not do so today. But that's ok because we have superfecundity - as Eric Beinhocker argued in a similarly excellent book, The Origin of Wealth: Evolution, Complexity and the Radical Remaking of Economics, i.e. a surplus of players in the biosphere and the marketplace who are destined to fail but in so doing provide competition, and a learning mechanism for the survivors. So after that rather long introduction, I'd like to introduce you to three players who have emerged into the light over the last few weeks, who have very novel innovations to their name. First of all, Broadstar Wind Systems who have developed a turbine that looks like it fell off the back of a paddle steamer called the Aerocam.  This is potentially exciting not only for the aesthetics (!), or even for the lower avian mortality rates, but more seriously because Broadstar believe they can deliver this technology at an overnight capital installation cost of $1 per watt - roughly where it was a few years ago before the ramp up in steel prices, construction costs and various supply constraints kicked in. I've tried squinting at the power curve (can't they and everyone else just give us the underlying numbers so we can overlay them with others on the same chart?) on this machine compared to a conventional horizontal axis turbine with inconclusive results - you may do better. It has the added advantage of requiring shorter towers and a possibility to infill on existing wind farm sites. All that' s quite exciting, novel and still has a high risk of failure because as far as I can see, there is as yet, no working example, displayed on their website. Here's another wind turbine which is vertical axis - quiet revolution - and beautiful to behold.  On the face of it, it looks pretty expensive but that's not a reason for it not to succeed, just look at Ferrari. If you fancy a trip to a less desirable corner of London some time - Elephant and Castle - you can see one of these perched on top of a block of flats at the opposite end to a conventional Proven wind turbine and draw your own conclusions on the horizontal axis versus vertical axis wind turbine debate.Finally, Raw Solar. Students at the Masachusetts Institute of Technology have come up with this;  basically a concentrated solar thermal device, which creates steam for say, a food processing plant or district heating. Nothing immediately radical there except, in Raw Solar's own words; RawSolar's patented design flexes flat mirror into precisely the right shape without any special tooling or skilled labor, acheiving incredibly high performance, long lifetime, and at a very low cost. Which in principle sounds great, although I worry a bit about companies that keep talking about low cost without giving us any prices to indicate the true cost of their product at all. Perhaps I'm unkind and this is something they can only divulge to their investors, or they're not really sure of the numbers until they know how big the investment can be. Fair enough. So, the long and short of this is, keep an eye on the little tiddlers - everyone has to start somewhere. Biomimetic nano-technology is not a term often heard in the context of renewable energy – except in the rapidly developing field of dye-sensitised photovoltaics. Image: the stuff of future flexible cells, ruthenium dye in preparation in Dyesol labs  Dye Solar Cells (DSCs) are the most advanced of the new generation of ‘non-silicon’ solar cells that are rapidly emerging from research efforts around the world into commercial solar products. DSCs are made with cheap materials, can be easily manufactured as flexible products and have very useful performance attributes such as being able to generate electricity in very low light long after silicon cells have stopped. As a result, in real world conditions, such as in tropical climates and smoggy cities, DSC is capable of outperforming even high quality silicon products on the basis of annual kWh produced per square metre of product. DSC mimics nature in the sense that it uses a dye and a two step process for generating electrons, very similar to the process in plants where that green dye called chlorophyll captures photons and produce sugars and oxygen. In DSC a porous layer of nano-particles of titania dioxide – the common white stuff used in toothpaste and white paint - is sandwiched with quite rare manufactured dyes, such as ruthenium dye. The atom thin layer of dye absorbed onto a layer of titania dioxide causes the titania to become photosensitized. Light striking the dye excites electrons which are absorbed by the titania. This process generates an electric current many times stronger than that found in natural photosynthesis This handy sub-atomic event is turned into a photovoltaic cell when the dye-doped titania is laminated between an electrolyte and a conducting base, something that is starting to happen in a great number of forms. 
G24i, (http://www.g24i.com ) a Welsh based DSC manufacturing company has just announced an order for small flexible DSC has been sold to Kenya where they will be used to charge mobile phone batteries. Flexible photovoltaic material raises lots of possibilities for trickle charging consumer electronics and integration into clothes and bags. While g24i is the first company into the market with a novel consumer product using DSC, the company that really ‘owns’ this space is Dyesol Ltd (or homepage www.dyesol.com ), a company listed on the Australian stock exchange. Dyesol owns numerous strategic patents, has extensive practical expertise in the DSC field and has a novel business model for profiting from the explosive growth in solar technology in general, and DSC in particular. Dyesol specializes in the manufacture of the dyes and materials that go into manufacturing DSC, and produces a range of components and equipment used in DSC labs for manufacture, testing and quality control of cells. But rather than attempt to commercialise DSC products on their own, Dyesol sells the high quality DSC materials they manufacture to corporate and academic research labs around the world and engages in consulting research. They also partner with selected market leaders in particular fields and work to develop DSC photovoltaic products for that company’s existing distribution channels. In December 2006 Dyesol embarked on something akin to the holy grail of solar power - a collaborative program with the worlds fifth largest producer of rolled steel products, the UK based giant Corus. The project is working to demonstrate a continuous rolled steel coating line to produce a DSC laminated photovoltaic steel roofing sheets. Corus believes this will provide the most cost effective path to market for photovoltaic roofing and wall cladding systems. At time of writing that project had passed all the technical milestones of demonstrating the laminating process and was working on the design of the coating line itself. Dyesol has also been working with the Australian Defence Science Technology Organisation to demonstrate light and flexible cells for portable power systems. In mid-November that project culminated in the demonstration to DSTO of three different designs for light weight, waterproof, dappled camouflague flexible cells that are intended to charge equipment in the field and could possibly be used in aviation and ocean environments. All of which has implications for being able to produce long life DSC for a wide range of products. Building on its comprehensive IP portfolio Dyesol are also engaged in cutting edge proprietary research that could dramatically reduce the costs of DSC materials. “The next cornerstone technology that we believe will accelerate the widespread commercialization of DSC products, involves continuous production processes,” Sylvia Tulloch, Dyesol’s Managing Director said. “DSC first became recognized in the last decade because of the potential of nano-chemistry to slash the cost of production of solar cells. We are now pursuing another such disruptive and cost reducing production process.” Presently the dyes, gels, pastes and other materials that make up DSC are produced in batch processes. Some of them are very expensive. Dyesol sells some of the essential nanochemical ingredients of DSC research for thousands of dollars per gram. The highly controlled and proven batch processes involved have been developed over many years and provide tremendous quality control on the performance characteristics of the nano-chemical products. However they are also an area of significant cost. “Continuous production processes that deliver consistently high quality product has the potential to drastically reduce the cost of DSC materials used in the deposition of multilayered DSC devices,” Mrs Tulloch said. “The intense reaction conditions created in continuous production have a number of potentially significant advantages for manufacture of DSC materials, as long as they can be controlled.” Dyesol is working closely with the University of Western Australia’s Centre for Strategic Nano-fabrication, the Queensland University of Technology and the Swiss Federal Institute to realise this next revolution in DSC even while the first one is still unfolding. With industrial and research partnerships already underway in Thailand, Italy, Germany, the UK, Japan, China, Switzerland, Turkey and Australia the Dyesol business model is rapidly promoting the spread of the art and science of DSC. At a recent international conference in Switzerland, the 2nd DSC Industrialisation Conference, sponsored by Dyesol, more than 200 delegates from 25 countries were presented with the results of intense research efforts from around the world aimed at getting DSC into production. One outstanding paper examined fundamental work under way by a venture between Yokohama University and Peccel Technologies aimed at perfecting roll to roll production of plastic DSC materials. Prototype forms of these PDSC have already been manufactured achieving between 2% and 4% conversion efficiency in diffuse light. The Danish Technological Institute presented their work on long lived, large, light filtering DSC cells for use in building facades. In this BIPV application all of the competitive advantages of DSC potentially come together, ie enhanced energy production in low, filtered and indirect light conditions and low cost of DSC on a square metre basis. DSC integrated building products will also have significant architectural virtues that silcon based BIPV do not. This includes being able to be manufactured in various colors, be based on glass - the most popular cladding material for large commercial buildings - and of course the desirable quality of semi-transparency, or rather selective transparency, allowing in only preferred wavelengths and stopping or generating electron flows from other wavelengths.  While investigating robust sealant chemistry and other mechanical aspects of large cell production, the Danish team is also in the middle of transferring their laboratory scale DSC cell manufacture to a fully automated screen printing line, with partner Mekoprint A/S, in preparation for demonstrating commercial scale production techniques of glass based facade materials. The Institute of Plasma Physics at the Chinese Academy of Sciences reported on their DSC project which, by 2004 had reliably fabricated 450mm by 800mm cells and constructed a 500W demonstration panel that delivered greater than 5% conversion efficiency outdoors. They announced that a Chinese project for DSC industrialisation had been launched in the last year by the Chinese Ministry for Science and Technology with the singular objective of pushing DSC to commercial release in China. For their part Dyesol took the opportunity to launch a completely new range of DSC laboratory and manufacturing equipment, further reinforcing their position as one of Australia’s very few home grown 100% solar energy exporters. To service the increasing demands of their existing corporate and institutional customers, like Corus, Sony and Samsung, and to supply the rapidly growing ranks of new buyers, Dyesol is advancing plans for construction of new production facilities simultaneously in both Australia and the UK. By 2009 Dyesol plans to have the capacity to manufacture their trademark, high quality nanochemicals, pastes, dyes and laboratory equipment to supply a rapidly growing part of what will by then be a $50 billion a year global solar industry. Michael McCann is a Director of Canberra-based Energy Strategies Pty Ltd, www.energystrategies.com.au a company that has been involved in promoting sustainable energy policy, technology and practice since 1991. Like any new fast-growing industry on the stockmarket, investors can’t fail to notice that the alternative energy sector is dominated by microcap stocks, pink sheets and otc bb stocks. At AEI, we decided early on that we would not be showing these stocks. These tiny companies may not trade for days or even weeks at a time and represent for many an additional risk premium in an already speculative sector. Arguably, it’s far more useful for a risk-averse alternative energy investor to know which are the biggest alternative energy companies. That’s because with liquidity comes a much larger measure of security – it is reassuring to know you can always sell the stock at a low spread. It’s strange, but somehow the internet has amplified attention to these micro alternative energy stocks. Personally, I’m pretty fed-up with all the spam email I receive urging me to buy them or the number of cheap websites that seem only to exist to promote them. It annoys me because this is not a true picture of what is happening – there are many big players in this industry. So I decided it was time to go to the other extreme and determine just who are the biggest alternative energy companies on the planet today. After all, for investors, size does matter. Every single company below is capitalized at over $1 billion. The first 16 are pure-play alternative energy stocks. The remaining 7 are not e.g. Iberdrola, but I have as ever, left out massive blue chips such as GE whose wind turbine sales are still in the low single digit percentage range of the total business. All of the market capitalisation figures and the underlying exchange rates were taken from Friday 5th and Monday 8th January 2007. The AEI World Rankings of the 16 Biggest Pure-Play Alternative Energy Companies No. 1 Renewable Energy Corporation Sector: Solar Market Cap. $8.987 Billion Description: REC's business activities are organized in three divisions: REC Silicon, REC Wafer and REC Solar. REC Silicon covers the polysilicon activities; REC Wafer covers production of multicrystalline wafers and monocrystalline ingots, while REC Solar covers the downstream activities of producing and marketing cells and modules.
Description: CEMIG (Companhia Energética de Minas Gerais) distributes power to more than 5 million customers in the state of Minas Gerais in southeastern Brazil, and generates most of its power from 36 hydro-electric plants. No. 3 Vestas Wind Systems Sector: Wind Market Cap. $7.466 Billion Description: Vestas’ core business comprises the development, manufacture, sale, marketing and maintenance of wind power systems. No. 4 Verbund Sector: Hydro Market Cap. $7.465 Billion Description: Verbund was until recently known as “Oesterreichische Elektrizitätswirtschaft-AG” or the Austrian Electricity Company. More than 80 % of Verbund’s hydro power capacity are bundled in its subsidiary VERBUND-Austrian Hydro Power AG (AHP). AHP generates almost 23 bn kWh per year, covering more than a third of Austria’s electricity consumption. The total capacity of its powerplants is 6,000 megawatt. AHP is the by far largest generator of electricity in Austria. No. 5 Gamesa Corp Sector: Wind Market Cap $6.710 Billion Description: Gamesa generates electric energy of renewable origin essentially based on the promotion and running of wind farms, the manufacture of wind turbines and the providing of services to the renewable energy sector. No. 6 Suntech Power Holdings Sector: Solar Market Cap. $4.984 Billion Description: Suntech Power Holdings Co., Ltd. specializes in the design, development, manufacturing and sale of photovoltaic (PV) cells, modules and systems. No. 7 Solarworld AG Sector: Solar Market Cap. $3.563 Billion No. 8 Q-Cells AG Sector: Solar Market Cap. $3.355 Billion Description: The core business of Q-Cells AG is the development, production and sale of high-performance solar cells made of mono- and multicrystalline silicon. No. 9 Sunpower Sector: Solar Market Cap. $2.491 Billion Description: SunPower Corporation designs, manufactures and sells high efficiency solar cells and solar panels that generate electricity from sunlight for residential, commercial and remote power applications. Their proprietary all back contact silicon solar cell technology produces up to 50% more power per square foot compared to conventional solar cells. No. 10 First Solar Sector: Solar Market Cap. $1.953 Billion Description: First Solar is a thin film pv module manufacturer which are based on cadmium (not silicon) with a 9% efficiency rating - very high for thin film. They are the highest volume manufacturer of thin film solar technology. Although US-based, they have a strong presence in Germany. No. 11 Conergy AG Sector: Solar Market Cap. $1.847 Billion Description: The Group's principal activity is to develop, produce and sell system components relating to Solar Photovoltaic and Solar Thermal technologies. No. 12 Trustpower Sector: Hydro Market Cap. $1.661 Billion Description: TrustPower (sorry, no price-feed yet available from the New Zealand Stock Exchange) is New Zealand's fourth largest electricity retailer, and serves a quarter of a million customers throughout New Zealand. TrustPower owns and operates 34 power stations and produces electricity exclusively from renewable sources and TrustPower's power stations produce enough electricity for 260,000 Kiwi households. TrustPower is majority New Zealand owned and is listed on the New Zealand stock exchange. No. 13 Verasun Energy Corp Sector: Bioethanol Market Cap. $1.389 Billion Description: VeraSun Energy Corporation is the second largest ethanol producer in the U.S. based on production capacity, according to the RFA. It focuses primarily on the production and sales of ethanol and its co-products. No. 14 Ormat Technologies Sector: Geothermal Market Cap. $1.350 Billion Description: Ormat Technologies, Inc. is a vertically integrated company primarily engaged in the geothermal and recovered energy power business. The Company designs, develops, builds, owns and operates geothermal power plants. It also designs, develops and builds, and plans to own and operate, recovered energy-based power plants. Additionally, the Company designs, manufactures and sells geothermal and recovered energy power units and other power generating equipment, and provides related services. No. 15 Energy Conversion Devices Sector: Solar Market Cap. $1.303 Billion Description: ECD Ovonics portfolio of alternative energy solutions includes Ovonic thin-film amorphous solar cells, modules, panels and systems for generating solar electric power; Ovonic NiMH batteries; Ovonic hydride storage materials capable of storing hydrogen in the solid state for use as a feedstock for fuel cells or internal combustion engines or as an enhancement or replacement for any type of hydrocarbon fuel; and Ovonic fuel cell technology.
Description: Nordex AG is a developer and manufacturer of wind turbines. Their products include the serial produced multi-megawatt wind turbines Nordex N90 and N80 as well as the powerful megawatt turbines Nordex S70 and Nordex S77 for onshore use. For the rapidly developing international markets they make a smaller unit, the N60. 7 Large caps and utilities with big alternative energy exposure As I mentioned earlier, there are also some very big companies that are not wholly exposed to alternative / renewable energy but nonetheless have an exposure worthy of investor’s attention. No. 1 Iberdrola SA – Sector: Diversified Alternative Energy – Market Cap. $38.202 Billion Description: Iberdrola is one of the leading private electric utilities worldwide, with its services, reaching 16 million customers -over nine million in Spain-, concentrated in generation, transmission, distribution and marketing of electricity and natural gas. Iberdrola is the largest renewable energy operator in the world. As of March 2006 it had installed capacity of 3914 Megawatts from renewable sources of which 3598 Megawatts come from wind power. IBERDROLA recently announced plans to build over 10,000 MW of renewable energy worldwide by the end of 2011. No. 2 Archer Daniels Midland – Sectors: Bioethanol and Biodiesel – Market Cap. $20.920 Billion Description: Archer Daniels Midland Company is one of the largest agricultural processors in the world. ADM processes crops to make food ingredients, animal feed ingredients, renewable fuels and naturally derived alternatives to industrial chemicals. No. 3 PG&E Corporation Sector: Hydro Market Cap. $15.687 Billion Description: PG&E Corporation is an energy-based holding company headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company. 20% of its electricity generating assets are large hydropower. No. 4 MEMC Electronic Materials Sector: Solar Market Cap. $8.960 Billion Description: MEMC is a leading global supplier of wafers to the semiconductor industry. Approx 10% of its sales (2006) are to the solar industry. No. 5 Sumitomo Titanium Corp Sector: Solar Market Cap. $3.958 Billion Description: Sumitomo Titanium Corporation's main products are titanium and silicon, the latter is a vital feedstock for the solar industry. No. 6 Avista Corp Sector: Hydro Market Cap. $1.220 Billion Description: Avista Corp. is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. As per the 2005 annual report, 54% of Avista's generating assets are hydroelectric plants. No. 7 Portland General Electric Sector: Hydro Market Cap. $1.686 Billion Description: Portland General Electric, headquartered in Portland, Ore., is a fully integrated electric utility that serves 791,000 residential, commercial and industrial customers in Oregon. The company has eight hydroelectric plants amounting to 509 MW and four thermal plants for gas and coal with a capacity of 1,466 megawatts. Conclusion Who said this was a tiny industry? Together these companies have a combined capitalisation of $150 billion – about the same size as the individual GDP of a handful of Latin American countries. Obviously, if you subtract the 7 latter non – pure plays then it comes to just $60 billion. What does fascinate me is though how quickly some of these companies have made it past the $1 billion mark. Of the top 16, at least 6 of them only took the IPO route over the last 2 years. Namely; Renewable Energy Corp (REC) You’ve probably spotted the pattern – 5 of the 6 are solar stocks. But then there’s also astonishing global diversity in the world’s largest cap. Alternative energy stocks. REC – the world’s biggest pure play – is based in Norway, Verbund is in Austria, Cemig is in Brazil, Suntech Power is in China and several are in Germany. Years ago, no one would have thought this possible. Yet the alternative energy story is not all high-tech. Hydropower – a technology well over a century old – features highly in the portfolios of many world utilities. In the case of New Zealand’s Trustpower – it is just about 100%. Hydropower will continue to have a major role because the lifespan of the plant – barring refurbishment- can be up to 200 years. It seems quite likely that 2007 should see a few more companies breaching the $1 billion ceiling whether by IPO or rising stock values. Long-term worries over hydrocarbon shortages and energy security can only work in their favour. AEI will be keeping a close eye on them all, so subscribe to our newsfeed ! Thomas L. Friedman's recent article in the NY Times lionising the CEO of Suntech Power [TimesSelect subscription required] was a wake-up call to America to the potential of Chinese alternative energy companies. China — the most population rich country in the world — is energy poor and it wants to catch up — fast. Other than dirty coal, China has next to no natural resources. And this nation of 1.3 billion people is going to require vast amounts of oil to fuel its vehicles and huge increases in electricity generation to power its new industries. It is my view that over the next 25 years, it just can't all be done without a substantial input of clean alternative energy. Fifteen years ago, the streets of China's cities were empty — bar the constant stream of bicycles. Today there are 30 million motor vehicles. Yet they only contribute to consuming just four percent of the world's daily oil output. By 2020, China's roads are forecast to be holding a staggering 140 million vehicles — a nearly fivefold increase — but still only 11% of world oil demand, and this with a fifth of the world's population.
Continue reading The Rise of Chinese Alternative Energy Companies.
Last year, the solar sector as a group outperformed the NASDAQ by more than hundredfold, increasing in average value by 134%. As we near the end of 2006, however, the solar stock performance data is anything but bright. In fact, the average loss through the first three quarters is – 11.98%, while the average gain from the leading US Indexes was up + 6.13%, according to independent Wall Street analyst Peter Lynch. Solar PV industry revenues in 2005 were up 50% and profits up 149% compared to 2004, according to Photon Consulting. (Figures for 2006 are not yet available.) Photon projects total global new solar capacity to be 2,400 MW in 2006 with an average global module price of $4.50 per watt and an average installation price of $7.93 per watt.
Continue reading Solar Forecast for 2007: More of the Same?.
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