Tuesday, July 28, 2015

Energy Storage Restart

A few years ago General Electric (GE:  NYSE) built out a manufacturing facility in Schenectady, New York for its sodium-ion batteries.  CEO Jeff Immelt declared the company a contender in the energy storage industry.  He projected that the company could ring up $500 million in annual sales by 2016, and build to $1 billion a year by 2020 by providing energy storage to utility-scale alternative energy projects.  Reality has been a bit different than Immelt's vision.  GE ended up shuttering the plant in the Fall 2014, and all but fifty employees were finally laid-off or reassigned in early 2015. 

GE’s foray into the energy storage market appeared to be over before it began.  Energy industry watchers began an autopsy on GE’s sodium-nickel-chloride battery chemistry that had been used in large train batteries.  Others focused on the poor economics of distributed solar and wind power compared to the persistently low prices for centralized natural gas powered power plants. 
Then to my surprise, what did I see on GE’s web site in early July 2015  -  recruiting notices for forty-eight new jobs in Schenectady, New York!  Is this GE’s restart in the energy storage industry?

Friday, July 24, 2015

Spinning out of SunEdison

Two weeks ago TerraForm Global, Inc. filed yet another amendment to its S-1 registration statement as the SunEdison, Inc. (SUNE:  NYSE) spinout grinds forward with its initial public offering.  TerraForm is a collection of SunEdison’s renewable energy properties, primarily its solar, wind and hydro-electric power generation facilities around the world.  The current portfolio sums up to over 1,400 megawatts in total generating capacity, of which over 900 are spoken for through power purchase commitments that cover the next 19 years.    On a pro forma basis, the assets produced $298.9 million in total revenue, providing $44.1 million in net income.    

This will be SunEdison’s second spinout of renewable assets.  TerraForm Power, Inc. (TERP:  NYSE) was spun out of SunEdison a year ago, gaining 48% from its IPO price of 25%.  Even at its present elevated price, the stock offers a dividend yield of 3.3%.  The success of SunEdison’s first ‘yieldco’ is likely to influence the pricing and trading of the international properties now up for grabs if the SEC can be appeased.

Tuesday, July 21, 2015

Electric Utility Wants to Charge Up Your Car

New Jersey-based NRG Energy, Inc. (NRG:  NYSE)  NRG serves about 2.8 million customers in the northeastern U.S. with electricity generated from a mix of conventional and renewable power sources  - 95 fossil fuel and nuclear power plants, 14 utility-scale solar power plants, and 35 wind farms.  It has been good business for NRG, raking in $16.2 billion in total sales in the twelve months ending March 2015.  NRG converted $1.4 billion of those sales to operating cash.  That helps support a dividend payout policy that will put $0.58 per share in holders’ pockets next year. 

Friday, July 17, 2015

Charge Up for Investors

Earlier this week, the quieter half of Tesla Motors (TSLA:  Nasdaq) founding team and the company’s chief technology officer, JB Straubel gave a speech at a solar energy conference in San Francisco.  He is largely responsible for Tesla’s innovative battery technology, so it should be no surprise that he thinks that eventually all vehicles will be powered by batteries.  As profound a this view might seem, let’s remember that if hammers could see, the world would look like a nail.
Nonetheless, I thought it worthwhile to take Straubel at this word.  This is a man who is building a factor big enough to produce a half million batteries per year to charge Tesla all-electric car.  Yet, batteries only provide a solution to store energy for on-demand use in  the vehicle.  Once that energy has been depleted, the battery and the car are stranded alongside the road.

Is there an investment opportunity in electric car charging?