Energy Storage

John Petersen One of the most fervently debated and poorly understood topics in energy storage is the subject of battery recycling. What percentage of the raw materials that go into a battery can be economically recovered from used batteries with existing recycling technology and infrastructure? While the details are quite complex, this article will offer a high-level overview of the economics of battery recycling for energy storage investors. Lead-acid batteries are the most recycled products in the world. The process is both straightforward and cost-effective. When batteries arrive at the recycling plant, they're put through a shredder...

John Petersen Hardly a day passes without some talking head breathlessly describing electric vehicles as the opportunity of the decade. The fine point most investors miss, however, is that the decade they're describing won't begin until 2020 and for the next seven to ten years electric vehicle manufacturers like Tesla Motors (TSLA) and lithium-ion battery manufacturers like Ener1 (HEV) and A123 Systems (AONE) will hemorrhage cash as they try to traverse the trough of disillusionment that runs through the cruel black heart of the valley of death. The following graph is a stylized view of the...

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...

John Petersen Sometimes I think bloggers like me are the real dummies. We spend so much time delving into the minutiae of a stock or sector that we manage to obscure the big picture with too much detail. I've certainly been guilty of that particular flaw over the last couple years and want to offer an apology to readers I've confused rather than enlightened. Yesterday a reader sent me a copy of a presentation that Exide Technologies (XIDE) used in its December 2010 Investor Meetings. The slide on page 6 of the presentation did a great job...

John Petersen Industrial subsidies have been an important feature of the American economic landscape since the late 19th century for one simple reason – they work. After the steam locomotive proved its ability to quickly and cheaply move people and cargo long distances, the government launched a massive effort to span the country with steel rails and bring the benefits of a rapid, safe and reliable national transportation system to all its citizens. After electric lighting proved its merit, the rush was on to build a national infrastructure and bring the benefits to all. After the internal combustion...

John Petersen Most readers know I'm a lawyer who works in small company finance. Clients come to us in their earliest development stages and upgrade to a larger law firm when they need more comprehensive service than a boutique firm like ours can offer. As a result, I've spent over 30 years guiding entrepreneurs through the "Valley of Death," an exhilarating, treacherous and often terrifying period in the life of every business that begins with the signing of incorporation documents and ends when cumulative cash flow turns positive. Most companies that enter the valley of death don't...

John Petersen In November 2008 I wrote an article titled "Alternative Energy Storage: Cheap Will Beat Cool" where I created a short list of 13 pure play energy storage companies that I divided into two classes; companies with cheap chemistries and companies with cool chemistries. My premise was simple, the best affordable technology always wins out over best available technology and companies that cater to the masses have greater profit potential than companies that cater to the elite. The following graph compares the performance of my original groups and the Dow since the date of that article. ...

John Petersen Vinod Khosla, the founder of Sun Microsystems and an icon of cleantech venture capital investing, is famous for bluntly telling audiences that "Economics matters, NOTHING that defies the law of economic gravity can scale." This principle is a simple yet self-evident adaptation of Newton's law gravitation to the human condition. An equally self-evident characteristic of the human condition is explained by Newton's laws of motion, which state: First, that a body at rest will remain at rest, and a body in motion will remain in motion with a constant velocity, unless acted upon...

John Petersen Last Friday I received my copy of the presentations from September's European Lead Battery Conference in Istanbul. Most of the presentations were written for a technically astute audience and don't offer much in the way of concrete guidance for investors, but an overview presentation from Ricardo PLC, a global leader in engineering solutions for low carbon, fuel-efficient transportation, included three slides that merit serious investor consideration and show why I'm convinced cheap will beat cool for the next decade of vehicle electrification. I've posted a copy of the Ricardo presentation here. Technology Timeline The...

John Petersen In December 2008 I went hunting for opportunities in the energy storage sector and selected six pure-play stocks that seemed seriously undervalued. I bought Enersys (ENS) at $6.00, Exide Technologies (XIDE) at $2.00 and Active Power (ACPW) at $0.26. While Enersys and Exide have been fabulous performers with appreciation to date of 442% and 397%, respectively, Active Power has been the runaway champion with appreciation to date of 923%. My other three picks have performed poorly. C&D Technologies (CHHP.PK) is down 96% and finalizing a restructuring that will give 95% of its equity to...

John Petersen Last week Energy Secretary Steven Chu addressed the United Nations Climate Change Conference in Cancun. After watching the video presentation several times I can't help but wonder whether the Secretary didn't politely caution his audience that lithium-ion batteries are a dead-end electric drive technology. I could be misinterpreting Secretary Chu's remarks, but if you own stock in a lithium-ion battery developer like A123 Systems (AONE), Ener1 (HEV), Valence Technologies (VLNC) or Altair Nanotechnologies (ALTID), or are considering any of these companies for your portfolio, the discussion that starts 25 minutes into the following video could be...

John Petersen After seven years of cautious disclosures about the development status, performance and market potential of its serially patented PbC® battery technology, Axion Power International (AXPW.OB), in conjunction with BMW (BAMXY.PK), has finally released impressive performance test results that show why the PbC battery is a superior choice for automotive stop-start applications. Concurrently, Axion released a white paper that discusses stop-start battery requirements in detail and offers some hints about the PbC battery's potential for use in other emerging energy storage markets. The presentation and the white paper do not show small, incremental gains like you...

John Petersen Last week Lux Research published a report titled "Micro-hybrids: On the Road to Hybrid Vehicle Dominance" that forecasts micro-hybrid vehicle sales of three million units this year increasing to 34 million units annually by mid-decade. Lux sent me a courtesy copy of their report and will host a webinar to discuss their findings on November 16th. While I'm very excited about Lux's conclusions respecting micro-hybrid implementation rates, it's critical for investors to understand that batteries for micro-hybrids will merely be upgrades of batteries that would have been sold in any event. Therefore, the benefit...

John Petersen On November 6th I published Lesson #1 in this series, which provided a quick side-by-side comparison of Ener1 (HEV) and Exide Technologies (XIDE). Yesterday two more companies that I track, A123 Systems (AONE) and Enersys (ENS), reported results for the September quarter. The quick summary is that Enersys handily beat street estimates while the bleeding at A123 continued unabated. To follow up with the format I introduced last week, the first graph is a simple market performance comparison of the two companies over the last year. The second graph comes from my...

by Debra Fiakas, CFA Most investors, if they have heard of Hydrogenics Corporation (HYGS: Nasdaq) at all, consider them a fuel cell producer. However, about two-thirds of the company’s revenue comes from the design and manufacture of hydrogen generation products based on water electrolysis technology - a somewhat unique, but valuable electrochemical technology that could make important contributions to the world’s future energy base. Electrolysis or the splitting of water molecules using an electric current produces hydrogen and oxygen - two elements that have market potential in a variety of industrial and power markets. It stands in...

John Petersen I frequently observe that market valuations in the energy storage sector have been wildly distorted by electric vehicle hype that has nothing to do with business fundamentals. Last February I wrote an article that compared Exide Technologies with Ener1, but obviously didn't quite get to the meat of the matter. Since both companies reported earnings on November 4th, this seems like an opportune time to be more direct in the comparison and present a brief primer on valuations in the energy storage sector. Since a lot of investors never get beyond stock price movements, the...