May 2008 Archives

Top 5 Gainers

Western Wind Energy Corp (Tier2) TSX:WND Wind 21.26%

Energy Conversion Devices (MM) NASDAQ:ENER Solar 16.05%

Xethanol Corp. AMEX:XNL Bioethanol 14.35%

Edenenergy Fpo ASX:EDE DiversifiedAltE 13.51%

Solar2 Ag XE:S2R Solar 13.16%


Top 5 Losers

Eop Biodiesel O.N. XE:E2B Biodiesel -11.83%

Verbio Ver.Bioenergie On XE:VBK Biodiesel -11.36%

Helius Eng LSE:HEGY Biomass -8.70%

Dyesol Ltd Fpo ASX:DYE Solar -7.69%

Jackgreen Fpo ASX:JGL DiversifiedAltE -7.14%

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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.

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Top 5 Gainers

Dynetek Industries Com Npv TSE:DNK EnergyStorage 14.86%

Ausbiodesl Fpo ASX:ABJ Biodiesel 13.33%

Satcon Technology (MM) NASDAQ:SATC DiversifiedAltE 7.78%

Jackgreen Fpo ASX:JGL DiversifiedAltE 7.69%

Finavera Renewables Inc. (Tier2) TSX:FVR DiversifiedAltE 5.26%


Bottom 5 Losers

Renewable Energy NK 1 XE:R3Q Solar -17.26%

Yingli Grn Engy Adr NYSE:YGE Solar -11.02%

Trina Solar Ltd Adr NYSE:TSL Solar -9.55%

Evergreen Solar (MM) NASDAQ:ESLR Solar -9.41%

Hydrogenics Corp Com Npv TSE:HYG FuelCells -9.30%

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Top 5 Gainers

Beacon Power (MM) NASDAQ:BCON EnergyStorage 17.65%

Run of River Power Inc. (Tier1) TSX:ROR DiversifiedAltE 15.38%

Dynetek Industries Com Npv TSE:DNK EnergyStorage 10.45%

Renesola LSE:SOLA Solar 9.10%

Distributed Energy Systems (MM) NASDAQ:DESC FuelCells 8.33%


Bottom 5 Losers

Schmack Biogas NA O.N. XE:SB1 Biogas -17.30%

Pacific Ethanol - Commonstock (MM) NASDAQ:PEIX Bioethanol -12.86%

Green Plains Renewable Energy (MM) NASDAQ:GPRE Bioethanol -10.47%

Sichuan Minjiang H 'a'cny1 SHX:600131 Hydro -10.05%

Finavera Renewables Inc. (Tier2) TSX:FVR DiversifiedAltE -9.52%

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Top 5 Gainers

Solco Ltd Fpo ASX:SOO Solar 13.73%

Green Rock Fpo ASX:GRK Geothermal 10.00%

Dyesol Ltd Fpo ASX:DYE Solar 7.26%

Torrens EN Fpo ASX:TEY Geothermal 5.88%

Carmanah Techs Cor Com Npv TSE:CMH Solar 4.30%


Bottom 5 Losers

Sichuan Minjiang H 'a'cny1 SHX:600131 Hydro -10.00%

Eop Biodiesel O.N. XE:E2B Biodiesel -8.84%

Repower Systems Ag XE:RPW Wind -8.22%

Biopetrol Inds Inh.SF 1 XE:B2I Biodiesel -7.52%

ECODIESEL ON NM BOV:ECOD3 Biodiesel -6.52%

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Apart from regretting the terrible loss of life, some are now starting to wonder if China's massive hydrpower expansion plans - an additional 170 GW by 2020 - will be scaled back in the face of the earthquake. No dams have actually burst, but cracks were found in one major dam in Sichuan province and allegedly, according to this wiki, 391 other dams. It seems to be the smaller and possibly older, dams that  are most vulnerable.

China's hydropower plans may be small compared to their coal-plant construction - an addtional 91 GW last year alone. Yet their vast hydropower expansion is completely without precedent in the history of the world. If you look round the globe, it tends to be that the ideal sites for hydro assets were originally created by tectonic activity - i.e. mountain ranges with deep gorges. Today of course, you just want those locations to be dormant. A quick look at this map of Quake Epicentres in 1963 - 1998 tells you that China is far from quiescent in earthquake activity. And at 7.8 on the Richter scale, this was their largest earthquake in 58 years.

Ultimately, all dams can potentially fail, because it is impossible to build something that can last forever. So repairs to cracks in the concrete structure has be factored in at some point in the future. I suspect this happens quite often and we don't hear much about it. The bottom line is, cracks in dams are - and have always been - a problem for the hydropower industry. But they are not an  insurmountable one. And my guess is that China's thirst for at least some clean power is simply too great to scale back the hydro programme in favour of coal.

And one final point. It's erroneous to believe that hydropower is uniquely vulnerable to earthquakes.  Japan's experience of  an earthquake-damaged nuclear reactor last year created a spike in the price of Liquefied Natural Gas for some time in the Pacific Basin market.

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Ok, sorry I've been a bit remiss with posting the last couple of days. I'm in France - the Nogaro circuit - having just witnessed one of the unusual events in the alternative energy world, the Shell Eco-marathon. A competition, on a race track, between tiny 4 wheeled vehicles to see who can get the greatest mileage out of 1 litre of fuel.

The surprise to some of you will be that you can actually go a long way. The record is a staggering 3,400 km. The trick, obiviously, is to reduce weight to an absolute minimum.



















And to say that these vehicles, noddy cars really, are flimsy, is an understatement. What you are looking at here is a very thin plastic body shell.

Still, if the main emphasis of motor manufacturing moves from crash survival to
crash avoidance, then getting rid of a lot of weighty safety features creates masses of energy efficiency. And don't think that a lot of progress is being made towards this. I was suprised how few people at the event, had heard of the Loremo, going  into production in 2010, a car that promises 120 mpg.






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Pacific Ethanol, for some the 2005/06 poster child of the ethanol boom, complete with a few famous investors like Bill Gates, has turned in much better than expected Q1 results and the market likes it. PE today rose by 10% and a staggering 60% yesterday.

According to Forbes, for the first quarter of 2008, PE lost $35.2 million, or 90 cents per share, compared earnings of $3 million, or 5 cents per share, a year ago. However, excluding a one-time impairment charge of 96 cents, the company posted an adjusted first-quarter profit of 6 cents per share.

What's interesting is how Verasun and Xethanol have done well too. Xethanol can point to some recently improving results and Verasun seems to have been dragged off the bottom by the groundswell of Pacific Ethanol sentiment.

The thing is though, it's hard to see this powerful US mini-rally of ethanol stocks sustaining. Nothing that much has really changed vis a vis the uncompetitiveness of corn-based ethanol to other alternatives. A very useful  and succinct post here on Motley Fool by Toby Shute - Pacific Ethanol: Not Dead Yet - is well worth a read.

The odds are that this might be more of a bounce than a comeback.

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Hansen Transmissions International, the Belgium-based manufacturer of wind turbine gearboxes, has just turned in an 18% growth in full-year earnings. As has just been reported on Reuters, in the year ended March 31st, the company's earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 61 million euros and revenue rose 26 percent to 421 million euros. Actually, whilst that's good, I'd say that that was a rate of growth in line with the global wind industry.


Where they start to look much more impressive is in their projections for next year. The company said it has a strong order book until December 2009 and is targeting revenue growth of about 50 percent in the 2009 financial year. I doubt that wind industry will be growing that fast in the next 12 months, so how are they going to achieve that kind of revenue growth?


Belgium may not be the world's most exciting country, but since its acquisition by Suzlon, Hansen has become a a company with the finances to think big. Of note in particular, are their expansion plans in China and India - something most West European wind firms have been slow on the uptake with.  Hansen, or rather Suzlon Energy, has made - and is making - big  investments to expand capacity as measured in megawatts of gearboxes, both at home and abroad;

In Lommel, Belgium

Hansen has just finished is expanding the facility’s manufacturing capabilities to up to 6,000MW from 2,200MW.

In Coimbatore, India

By April 2011, this new site will have a yearly production capacity of 5,000 MW of gearboxes

In China

by April 2011, Hansen's plant is expected to have a yearly production capacity of up to 3,000MW.

Margins in European wind turbine manufacturing are quite high at the moment, until the strong euro starts to bite into those exports. But Hansen's USP is that it is in the sweetspot of a component shortage for which there are very few competitors. That's why Suzlon's purchase of Hansen looks smarter and smarter as times goes on.

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THE GAINERS

Millennium Cell Inc. (MM) NASDAQ:MCEL FuelCells 37.61%
Powerfilm Regs LSE:PFLM Solar 26.54%
Renova LSE:RVA Bioethanol 17.39%
Renesola LSE:SOLA Solar 17.29%
Hydrogenics Corp Com Npv TSE:HYG FuelCells 15.28%
Jackgreen Fpo ASX:JGL DiversifiedAltE 13.40%
Spire (MM) NASDAQ:SPIR Solar 12.14%
Yingli Grn Engy Adr NYSE:YGE Solar 11.71%

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A lot of excitement over the last couple of days on JA Solar - as picked up on this post by Motley Fool. JA Solar stands out because;

i) it's making more profits than anticipated
ii) it has done well to secure adequate supplies of polysilicon
iii) it is a relatively low-tech, easily understandable solar play - based in China

Anyway, I'm always struck by how little of a following there is in the anglosphere of stocks not listed in English-speaking markets. A case in point has to be solar stocks, most of which tend to be listed in Germany, the world's leading market for the industry. Yet there's next to no discussion of them outside of the super niche world of globally thinking alternative energy investors. In the ideal future - and I think it will come - the transaction and bureaucratic cost of buying or selling a stock anywhere in the world will be near identical and close to zero. But we're not there yet. That's why I'm launching our first solar stocks screener - just click on the link here.

It shows all solar stocks listed on North American (i.e. USA and Canada) and the London Stock Exchange of which there are 25. It's also got the 10 latest stories on solar stocks for you to pick up. And it will refresh every minute automatically.

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THE GAINERS

Carmanah Techs Cor Com Npv TSE:CMH Solar 16.30%
Uqm Technologies, AMEX:UQM FuelCells 12.50%
Western Wind Energy Corp (Tier2) TSX:WND Wind 10.55%
Dyesol Ltd Fpo ASX:DYE Solar 9.83%
Geo Res Fpo ASX:GHT Geothermal 9.49%
Ausbiodesl Fpo ASX:ABJ Biodiesel 8.33%
Energy Conversion Devices (MM) NASDAQ:ENER Solar 8.13%
Verasun Energy Corp NYSE:VSE Bioethanol 7.93%
Renesola LSE:SOLA Solar 7.19%

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The dance of the utilities around alternative energy continues . . .

Energias de Portugal - a portuguese utility with substantial renewable assets, is considering floating those same assets an IPO which some analysts reckon could be worth 8.9 to 11 billion euros. It's funny how that kind of size doesn't even seem like such a big deal these days. A few years ago, when I started looking at alternative energy stocks, the largest at just about $1 billion market cap. was New Zealand's Trustpower. What's interesting here is that EDP are looking at floating only 20-25% of the unit. That tells us that they see this market as having a long way to go and they want to stay invested in it, if not raise that cash specifically for further renewable investments.

I think we're going to see a lot more action from the utilities in the renewable sector in the years to come and not only because they have the money. Utilities need to get their hands on renewable assets in order to meet rising targets for renewable energy, particularly in Europe, the United States Canada and Australia. So if you're a independent renewables firm, contemplating an IPO in testing market conditions, here's another idea; organise a private auction between cash rich national and regional utilities for the sale of your company. You might actually get more !

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A very informative piece in the Asia Times today - Wind drifts out of Japan's green vision. It makes the point that although Japan wrote the book on integrating solar pv and hosted the Kyoto Treaty, there's next to no interest in integrating wind power into the National Grid, at any real scale.  Compared to the ambitious targets most European countries and different States in the US have set themselves, Japan's goal of 1.63% production of energy from renewables by 2014 looks smaller than a piece of sushi.

The reasons for this slow uptake of wind are;

i) Japan's regional utility monopolies are demanding that any windfarm is connected to energy storage at the developers cost - tripling the installed cost per megawatt for onshore wind.
ii) In the recent past, Japan's big companies have heavily invested in solar and would rather see that home-grown technology succeed

That has not stopped though, japanese companies like Mitsubishi Heavy Industries selling turbines abroad. Still, you'd think this does not augur well for Japan Wind Development - our one and only Japanese wind play. Or does it?

The stock has bucked the trend of recent months, doubling in value since last December. As reported here not so long ago on Bloombergs, they have actually gone some way to adding battery storage, by teaming up with battery manufacturer, NGK Insulators. NGK's sodium-sulfur units cost a reported 294 million yen ($2.9 million) per megawatt. That's expensive, but the yield from battery-stored  wind electricity triples the buyout price for the power.

Battery-stored electricity is definitely a trend to watch out for in the years to come.

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An interesting piece today on alternative energy stocks in the Los Angeles Times.

It quotes a hedge fund manager who makes an arresting and salient point which I shall paraphrase;

Why does the wind industry which has built five times the capacity of solar around the globe have a smaller market capitalisation?

It's not just market capitalisation. Leaving aside what the market thinks, there are some irrefutable advantages that utility scale wind power has over solar;

i) Can operate at up to four times the load factor - 40% at best, compared to a typical 10% for solar
ii) Costs at least half as much per installed megawatt - about $1.6m compared to around $4-6m
iii) Recoups the energy spent on manufacturing in months rather than years

Ok, now let's look at it the other way round. What does solar offer over wind?

i) Small and surmountable planning hurdles, if any at all - a big problem well known to any wind farm developer
ii) No threat, real or perceived, to wildlife - either from bird/bat strikes or resonance
iii) Easier load-balancing of micro amounts of electricity at the local level rather than at grid utility scale, negating the need for energy storage or cross stabilization of grids from neighbouring countries

These are all quite important, but not winning arguments per se. Wind still offers much larger amounts of power for much less. So the question begs, why is solar still more popular with investors?

i) Arguably, far more potential for falling costs - if you believe Photon Consulting, grid parity by 2010
ii) Solar has an intangible high-tech panache - not to be underestimated amongst fashion-following investors
iii)  Geographically, solar is a little bit tied up with the China Growth Story - i.e. they make it, California and Arnold Schwarzenegger, a resurgent Germany under Merkel - wind  is about Denmark (no more wind turbines going up there and the most expensive electricity in Europe), Texas (yes, thanks to - don't mention it ! - then Governor George Bush who passed the Renewables Portfolio Standard), Spain (now looking a bit yesterday after the mother of all real estate crashes) and  Germany's lost decade of growth post-reunification under Schroeder. Ok, I admit, these last points are a bit weak. But the background narrative to solar is just more obviously appealing.
iv) The upside, could be enormous. If solar power falls to a price where you can, without subsidy, consider the deployment of solar panels on your roof as a forward purchase of electricity that will pay for itself after a few years on a yield of say 10%, the numbers prepared to do it could, no pun intended, go through the roof.

So there you have it. What investors see in solar power is future gain, not current limitations. And it is hard to see much more wind power being deployed in Germany, whereas there is still a lot of upside in solar, the world over. Where I would be cautious however is on grid parity. Wind is able to achieve - without subsidy - better than natural gas-fuelled grid parity in Texas and the Republic of Ireland.

But no one much is that excited about it and proclaiming this a new dawn, etc.

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I came in for a bit of stick from the British Wind Energy Association late last year, for daring to suggest that Offshore Wind - at current prices - offered too low a return for most investors to consider and that there would be no race to build offshore wind farms.  See my post on the subject here - Don't hold your breath for offshore wind. Well I hate to blow my own trumpet - at least, not too much - but I do feel sadly vindicated by Shell's decision to pull out of the London Array yesterday. The London Array was a planned for showcase 1 GW capacity offshore wind farm and Shell is getting out for precisely those reasons I articulated. Let's face it, if you're a global multi-billion dollar energy company, you've got any number of potential investments you can make a return on, so why not aim for the higher and less risky one, in this case, onshore wind in the United States?

Meanwhile, on the positive side, where I am confident is in the ability of Chinese mass manufacturing and lower wages to bring down the cost of wind turbines which they will then start to export by 2010 bringing down global prices. This I anticipated over a year ago and so news last month that In  2009 and 2010, Chinese  wind turbine manufacturers---Jin Feng (Golden Wind) and Hua Rui---will start to export tells me that the supply crunch in wind turbines won't last much longer than a few years.

So there you go, that's two out of two. Obviously, I would never pretend to get everything right. But unlike some alternative energy bloggers, I'll always try and tell you how it is, rather than how we wish it might be.

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First Solar, a top-performing alternative energy stock for some time, may be the first solar firm to explicitly aim to compete in the utility marketplace for electricity. According to The Arizona Republic, Michael Ahearn CEO of First Solar said;

"Our objectives in 2008 are to secure several (U.S.) pilot projects that will enable us to validate the cost and performance of our large-scale systems," Ahearn said. "Our assumption . . . is that demand for utility-scale solar power exists in the Southwest U.S. at solar-electric prices in the range of 12 to 15 cents per kilowatt hour."

He doesn't say if this is the price they expect retail or corporate customers to pay rather than the electricity market who will sell it on to them. But if it is the former and they think they can sell solar electricity to customers at 12 to 15 cents per kilowatt hour, this looks very competitive.

It would be even more competitive in Europe. Some data I've just got hold of shows that in November 2007, in the EU 25, the average price per kilowatt hour of electricity for European households was 14.66 eurocents or 22.7 us cents using an exchange rate of 1.55. And within that 14.66 eurocents is a very big range indeed; from 6.75 eurocents in Bulgaria to a staggering 24.25 eurocents in Denmark.

One of the inevitable outcomes of the race to grid parity (if it happens that quickly . . . I am a bit dubious, especially without subsidy) for solar producers is that utilities will want to start snapping solar firms up or equally, solar firms' major shareholders will look to utilities as their exit strategy. That's why  the fact that German utility giant, RWE, had to deny rumours earlier this week that they were seeking to buy a stake in the solar firm, Conergy AG, maybe a foretaste of times to come.

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