Tom Konrad, CFA
NiMH battery company that’s going to “make coal and oil obsolete” sleuthed out.
I can’t help but chuckle at the hyperbole of some promoters of alternative energy stocks. We can wish that coal and oil will be obsolete tomorrow all we want, but it ain’t gonna happen. That’s just what Nick Hodge was claiming in a recent teaser for Highpower Technology (HPJ).
How do I know it’s Highpower that Hodge is hailing as the answer to all our hopes? Because Travis Johnson, the Stock Gumshoe told me so. Travis is the same guy who sleuthed out Magma Energy (MGMXF.PK) for us in a guest article a year ago, and that the “Sunless solar” stock Green Chip Stocks was using to stir up the interest of potential subscribers was New Energy Technologies (NENE.OB).
NiMH to save the day?
I’m actually a fan of looking at the stocks of companies using battery chemistries other than Li-ion, since they’re less likely to be overpriced because they get less hype (at least until now.) But I doubt a few improvements to Nickel-Metal Hydride (NiMH) technology are going to allow it to become an economical way to store solar power. The Gumshoe may claim to not know much about battery technology, but I think he’s spot on when he says, “It’s hard to believe that Sanyo or Panasonic or even China BAK or BYD is quaking in its boots.”
If you want to know more about Highpower’s advances in NiMH technology (or just want a chuckle), here’s the full article on StockGumshoe.
You can also look in the comments here for AltEnergyStocks’ battery expert John Petersen’s answer to my question:
John, what’s your opinion on Highpower’s technology? Will it make EVs affordable and oil obsolete?
DISCLOSURE: None.
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NiMH is a very good battery chemistry and has proven itself over a decade of use in the Toyota Prius. However, the only place it would make sense to store solar power in batteries for use at night would be an off-grid installation. In any other application the economics wouldn’t work.
I’ve been following Highpower for a couple years. It’s a solid performer that trades at 8.5x earnings, a figure that would be low in the states but is comparable to other Chinese battery producers.
The big risk to NiMH battery companies is a looming rare earth metal squeeze because the “M” in NiMH is the rare earth metal lanthanum. As a Chinese producer Highpower would presumably be near the front of the line when it comes to getting a reasonable lanthanum allocation, but any time critical materials get tight profits get squeezed.
I haven’t been able to figure out what it costs Highpower to make a kWh of storage capacity or what they might charge a customer for a kWh of storage capacity, but the range of possible costs that Sandia estimated in 2008 for NiMH range from a then current cost of $800 per kWh to a 10-year forecast price of $350 per kWh, which doesn’t compare all that favorably with $150 to $200 for lead acid.
A couple days ago I showed that plug-ins currently require about twice as much capital outlay per gallon of annual gas savings as HEVs. If somebody is able to drive battery costs down to $250 to $300 per kWh, that disparity will disappear and plug-ins will reach parity with HEVs. From there it’s all a matter of gasoline prices and payback periods.
I can’t say that it’s impossible, but without solving the lanthanum constraint issue and seeing some very hard data on manufacturing costs and selling prices I’d be inclined to put the Highpower potential in the same class as the lithium ion battery potential – I’ll believe it when I see it.