Electric Grid

Net metering describes the requirement that an electric utility buy electricity from any of its customers that generate their own electricity (usually with some sort of renewable energy, such as solar or wind) at the same price that they sell it to the customer.  That seems fair, doesn't it? The Utility Perspective It doesn't seem fair to the utility.  Utilities do more than just generate and sell electricity to customers.  They also are responsible for transmission (delivering the electricity) and reliability (making sure that the lights work when you flip the switch.) Taking just the reliability requirement, suppose that...

by Debra Fiakas CFA Electric power companies need plenty of generating plants and distribution works to bring electricity to our doors.  Electric utilities are very good at generating electricity and managing relationships with the families and businesses that use the power, but building all that infrastructure  -  drawing up plans, hauling in materials and fastening girders  -  is not necessarily a power company’s strong suit.  Enter Quanta, Inc. (PWR:  NYSE) with a full menu of design, engineering and construction services for electricity generation and distribution infrastructure. Solving problems for electric utilities is good business for Quanta.  The...

Paul Schwabe Among renewable resources, one of the most valuable attributes of geothermal electricity is the baseload characteristic of the energy resource. That is, geothermal electricity generators are able to deliver a stable level of power production over time. Yet for better or worse, this baseload characteristicalong with other notable factors such as size constraints and varying market segmentsreveals that interconnecting a geothermal plant to a transmission or distribution system poses unique challenges compared to other renewable energy technologies . A recent report by NREL, "Geothermal Power and Interconnection: The Economics of Getting to the Market," delves...

By Harris Roen The modernization of the electric grid is an exciting investment opportunity that promises to be one of the biggest energy investment stories of the early 21st century. Smart Grid systems will provide large growth opportunities for many companies around the globe. This is being accomplished through a combination of updating existing technologies along with the creation of new systems aimed at improving the quality of the electric grid. By understanding how the dream of a smart grid will become a reality, an informed investor will be in a very good position to...

John Petersen The electric power system in the U.S. is dirty, antiquated, stupid, unstable, and a security nightmare. After years of discussion and debate, consensus now holds that the generation, transmission and distribution infrastructure will need hundreds of billions in new investment to reduce emissions, improve reliability, minimize waste and inefficiency, improve security, and facilitate the integration of wind, solar and other emerging alternative energy technologies. Commonly cited capital spending estimates range from $200 billion globally by 2015 to $2 trillion overall. In his November 2008 report, "The Sixth Industrial Revolution: The Coming of Cleantech," Merrill Lynch strategist...

Tom Konrad CFA A NASDAQ listing could bring a quick profit to investors who buy now, but beware the business risk. Ambient Corp. (ABTG.OB) offers an Internet Protocol (IP) smart grid communications platform to electric utilities.  So far, they have exactly one customer: Duke Energy (DUK).  Duke selected Ambient's X-series communication node solution, which flexibly gathers data from multiple smart meters and relays it to the utility.  For instance, in some cases Duke is using Ambient's nodes to gather data from both Echelon Corporation's (ELON) smart meters using data over powerline technology, and Badger Meter's (BMI) smart...

Paul Denholm, a Senior Analyst at the National Renewable Energy Lab (NREL), sees an upcoming struggle between renewable sources of electricity such as photovoltaics (PV) and wind with low-carbon baseload alternatives for space on the low carbon grid of the future.  These baseload alternatives are nuclear and Internal Gasification Combined Cycle coal plants with Carbon Capture and Sequestration (IGCC w/ CCS, refereed to by advocates as "Clean Coal). This may come as a shock to advocates of the idea that Global Warming is such a big problem that we will need all forms of low carbon electricity, because the...

Tom Konrad, CFA General Cable (BGC) is a strong grid stock that's suddenly looking a lot cheaper.  Time to buy? General Cable is not only one of my Ten Clean Energy Stocks for 2010, it was also holding it's own in my list of "strong grid" (that is, electricity transmission) stocks that have strong financials.  About 59% of the company's revenues come from what I would consider "strong grid" markets: their "electrical utility" and "electrical transmission" segments.  I published the most recent version of that list on February 11.  In both these articles I cautioned that I...

John Petersen I have a new favorite word AGGREGATION! At the risk of sounding like a reporter, I’m going to summarize a pre-holiday news story you might have missed but need to know about. In late November the PJM Interconnect, the largest of nine regional grid system operators in the US, announced that it had begun buying frequency regulation services from small-scale, behind the meter, demand response assets in Pennsylvania. The first resources brought on-line by PJM were variable speed pumps at a water treatment plant and a 500 kW industrial battery array...

Tom Konrad CFA A somewhat delayed index to my Year of the Strong Grid series, looking into electricty transmission and distribution (T&D) or "Strong Grid" companies. Part Subject / Description Stocks mentioned I Introduction: Why Electricity Transmission and Distribution is a good investment. None II Comparing the financial strength of eletricty T&D companies ABB AMSC CPTC.OB CVT.TO BGC JST MTZ MYRG PIKE PWR RSSYF.PK SI VMI WCC III EMCORE Group (EME) and AZZ Incorporated (AZZ) ...

by Debra Fiakas CFA Last week Badger Meter (BMI:  NYSE) joined a building fraternity:  companies reporting strong year-over-year sales growth, but delivering weaker than expected earnings.  However, the Badger Meter actually increased earnings by a greater magnitude than it grew sales.  The Company reported $83.5 million in net sales, representing 16.3% growth over the same quarter last year.  Net income grew by 59.3% year-over-year to $4.6 million or $0.32 per share.  As impressive as these results appear to be, the consensus had been for earnings per share of $0.41.  The stock declined sharply as investor registered their displeasure...

Two weeks ago, I brought you the first of a series of two articles on how you can play the clean infrastructure build-out that could come as a result of an Obama victory today. In that article, I made the point that the political and economic ideology that had prevailed in America over the past 30 years, economic laisser-faire, had been severely undermined by the recent credit meltdown and what now looks like it will be the worse economic shock in a generation or more. I further argued that the increasing sidelining of the "small government" discourse in...

We have discussed on several occasions the investment opportunities related to power regulation and renewable energy. I have also recently written about the value approach to investing. I came across a stock today that I believed fell into both categories: power regulation (transformers) and value. The stock is Hammond Power Solutions (HPS-A.TO or HMDPF.PK), a firm that makes transformers for a number of applications, including wind turbines. While revenue and earnings have been ramping up quite nicely over the past four years, the stock price has been trending mostly laterally (albeit in a volatile manner) over the...

Value Investing A few months ago, I discussed my encounter with Warren Buffett, and promised that I would eventually analyze a stock using the value investing (VI) approach. While I can`t say that I qualify as a hardcore value investor, there are many things about the VI approach that have influenced my thinking. For instance, I tend to stay away from very high PE stocks and momentum plays. While I take positions in firms with no earnings, they are generally relatively "unknown" or are past star stocks that investors have moved on from. I like the idea...

On February 26, 2008, a drop in wind generation by about 1400 MW over ten minutes, coupled with an increase in demand of 4412 MW due to colder weather, and lower-than scheduled production from other power suppliers, led ERCOT, the Texas grid operator to cut 1100 MW of power to interruptible customers for about 90 minutes.   Misconceptions All these facts come from a Reuters article misleadingly titled "Loss of wind causes Texas power grid emergency."  I was dismayed a few weeks ago when this misleading reporting led the generally insightful Master Resource Report to conclude "This is a clear...

Tom Konrad CFA Power and automation giant ABB, Ltd. (NYSE:ABB) was named Cleantech Corporation of the Year at the Cleantech Forum in San Francisco. The company has been focused on acquiring start ups in the cleantech space for the last couple of years, with two significant ones in 2010: Ventyx, a provider of IT systems to utilities, and Baldor Electric, the premier supplier of high-efficiency motors in the US. I very much like ABB's approach to cleantech. I'd even written about Baldor as a good way to invest in energy efficiency earlier in 2010 just a couple months before...