Aspire Week in Review - Week Ended December 5, 2008

Dec 05, 2008
Author: Administrator

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Oxfam International said this week that developing countries will need at least $50 billion per year to deal with the consequences of climate change, which will include upgrading flood early warning systems, planting mangrove shields along costs to defuse storm waves and growing drought-tolerant crops. The tab is expected to be greater than $50 billion if countries fail to prevent average temperatures from rising more than 3.6 degrees Fahrenheit.

And the Committee on Climate Change issued a voluminous 511-page report making recommendations to the British government on reducing greenhouse gases (GHGs) by 34% to 42% by 2020 (see report below). Amongst the recommendations were for greater use of renewable energy and Carbon Capture and Storage; using energy more efficiently, reducing transport emissions (electric cars, improving carbon efficiency of engines, developing sustainable bio-fuels) and purchasing offset credits.

Beijing's Municipal Environmental Protection Bureau said this week that it has reached its target number of "blue-sky" days this year (256) as a result of its environmental measures imposed before the Olympic games to cut emissions. Year-to-date, inhalable particular matter has decreased by 16% Y/Y, while carbon monoxide and sulfur dioxide have decreased by 20% Y/Y. In 1998 it had only 100 blue-sky days. Since then, it has invested more than $15 billion to improve air quality. Blue-sky days are determined by China's daily air pollution index, which ranges from 1 to 500, where any reading below 50 is considered good, and anything below 100 is considered a "blue-sky day."

Meanwhile, the debate continued this week in the EU on reaching an agreement on a major climate change agreement this month. On side, Germany and Poland lead an argument, much centered around protecting their industries, which oppose any scheme where rights to pollute would have to be purchased. Poland, which depends to a much greater degree on coal power, also wants special dispensations in the CO2 rules.  The prevailing EU proposals that they oppose support a percentage of emissions allowances to be auctioned, and increase to 100% by 2020, where every ton of CO2 would have to be bought.

Last year EUO nations agreed in principal on a plan that would cut CO2 levels 20% by 2020 compared to 1990.

Russia is getting about $58 million in carbon-emissions credits by performing better than required under the Kyoto treaty.

Brazil this week is denying letting rich countries offset their GHG emissions by helping save the Amazon forest through "forest offsetting."  Its representatives said that this would absolve richer countries from cutting their own emissions.

Biofuels and Biomass

With oil prices dipping below $50 per barrel the question about the viability of ethanol for U.S. refiners is becoming increasingly poignant, and POET's CEO Jeff Broin said this week that the ethanol industry could still be competitive at these levels, using $4 per bushel corn prices as a benchmark to compete with oil at $60 to $70, and stating that lower priced oil will have some effect on grain prices. Corn futures were trading in the low to mid $3 range per bushel this week.

Ethanol got further attention in Congress this week as the Big Three automakers referenced  E85 as a key factor in the industry's move towards a more fuel-efficient and environmentally friendly vehicles.

Altra Biofuels said it is not closing its doors, despite the fact that 30 of the plant's 41 workers have been laid off through December. Management plans to bring the plant back online in January.

Kinder Morgan (NYSE:KMP) announced that it has commenced ethanol transportation on its Central Florida Pipeline this week. Kinder Morgan invested about $10 million to modify the line for ethanol shipments, and it intends to invest another $90 million in ethanol and biofuel projects, including modifications for infrastructure throughout the Southeast and Pacific Northwest.

NRG (NYSE:NRG) is enhancing one of an existing unit at its Montville Generating Station to a 30MW biomass producing facility.

As expected, in U.S. Bankruptcy Court this week, the ruling came down that will allow Verasun to reject any contracts that are not economic advantageous to its business, impacting corn growers' contracts.

This week the Philippines' Sugar Regulatory Administration approved the registration of four bioethanol producers that will be allowed to use raw sugar as feedstock. San Carlos Bioenergy is testing 1,000 metric tons of sugar as feedstock and plans to commence commercial operations in January, milling 1,500MT of sugar per day, or a production capacity of  30 million liters of biofuel per year. Cavite Biofuels is building a distillery with capacity of 125,000 liters per day with plans to start commercial operations in 2010. Roxol Bioenergy is building a facility that can process up to 365MT of molasses from sugarcane to produce 100,000 liters of bioethanol per day. In October, Leyte Agri Corp. started operations of a P350 million ethanol plant that can produce up to 300,000 liters of biofuel per month.

What Next for Aventine?

Aventine Renewable Resources (NYSE:AVR) has seen its stock fall from $12.99 at the outset of 2008 to $0.56 as we write this on Friday. It is currently trading 0.01 price-to-sales (ttm), at 0.07 price-to-book (ttm), with an enterprise value of 0.14 (ttm). Clearly the markets continue to bet against the business. Last month it halted construction at its Aurora, Nebraska biorefinery and it pushed out its remaining construction schedule at its Mount Vernon Plant. Its gross profit turned negative in the Q3 (-1.1%) over Q2 (5.5%). As of September 30, its cash and cash equivalents were about $36 million, and cash flows from operations in the first nine months (ex cap-ex) were $56.6 million, so it looks likely the business is going to have to tap its borrowing facility (about $132.9 million) pretty quickly.

Here is what industry analysts are saying:

• AmTech Research rates at NEUTRAL (10/6/2008)
• Ardour Capital rates at HOLD with $6 price target (8/4/2008)
• Lehman Brothers rates at UNDERWEIGHT (7/28/2008)
• Friedman Billings rates at UNDERPERFORM with $4 price target (7/18/2008)
• UBS rates at BUY (7/18/2008)

Brazil

At a biofuels conference in Brazil this week, FAO's Secretary of Intergovernmental Group on Grains, Abdolreza Abbassian, said that while he thinks the increase in food prices in the U.S. was related to corn biofuel production, he didn't see any similar influence in Brazil related to sugar cane ethanol production.

Petrobras President Alan Kardec Pinto said at the same conference that he expects the Obama administration to promote a tax reduction over the Brazilian ethanol imported to the U.S. In addition, he also said expects ethanol production in Brazil to increase from 25 billion liters, currently, to about 70 billion liters in 2020. The forecasted increase in production factors in cellulosic ethanol technology. Pinto added that he expects Petrobras' investment in the biofuel area over the next five years to reach $1.5 billion.

And Manuel Vicente Bertone, Brazil's Secretary of Production and Agro Energy of the Ministry of Agriculture said that Brazil is the only country to present a clear economic viability for sustainable biofuels production which doesn't threaten environmental preservation or food production.

Brazil gets the Indy sponsorship, is tariff next? In the ongoing debate about Brazilian ethanol and whether to open up the U.S. markets, the Indy Racing League has set the first precedent, naming Apex-Brasil as a sponsor to the league after the U.S.-based Ethanol Production Information Council let its sponsorship lapse.

ETH Bioenergia SA CEO Jose Carlos Grubisich, said he wants his company to be one of the consolidators in the Brazil ethanol industry.

Clean Technology, Carbon Reduction and Energy Recovery

The Confederation of British Industry called on the government this week to accelerate its efforts to develop Carbon Capture and Storage (CCS) technology.

Toshiba is building a pilot plant for carbon capture technology, with construction scheduled to begin in the spring of 2009, as Sigma Power Ariake Co.'s Mikawa Power Plant. The plant will be designed to capture 10 tons of CO2 per day from the boiler flue gas of the coal fired thermal power plant.

Electric Vehicles, PHEVs and Hybrids

The buzz around electric vehicles, PHEVs and hybrids got louder this week as the Big Three automakers drove to Congress in the next generation of their respective company's vehicles to make a point - that they are embracing a greener business model.

In a stepped up effort to show it is pushing ahead with electric vehicles, Ford announced details of its plans for EVs, including an electric van projected for commercial fleet use in 2010 and an electric sedan ready to hit the road in 2011. It further said it is going to invest about $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency.

Chrysler is taking the opportunity while it is a high-profile situation in Washington D.C. to display its EV technology on Capitol Hill for each of its brands - Chrysler, Dodge and Jeep.

Quantum Technologies'; (Nasdaq:QTWW) affiliate Fisker Automotive announced the Fisker KARMA will be showcased at the North American International Auto Show. The base price of the KARMA is $89,000. Equipped with Quantum's Q-driver powertrain, the KARMA can accelerate from 0 to 60mph in 5.8 seconds and can reach a top speed of 125mph. The first KARMA will be delivered to customers in late 2009, with yearly volume expected to reach 15,000 units per year.

In London, however, electric cars are hitting speed bumps as the Nice Car Company, one of London's two EV distributors, is going bankrupt. Sales of EVs are down by 58% in the January through October period, as opposed to the same period last year. That being said, the numbers are so small (156 cars) and the market is so nascent, it shouldn't create too much concern about the future for EVs in the UK.

Enel and Daimler's brand, smart, are launching an e-mobility campaign to develop the EV market. Daimler will supply and maintain more than 100 EVs for customers in Italy, while Enel will provide the development, implementation and operation of the infrastructure supporting more than 400 recharging points and central control system. Enel is talking to vehicle manufacturers across Europe about supporting the development of EVs.

Optimal Energy, of South Africa, said this week it expects to begin production of its EV, the Joule, in late 2010.

Energy Management, Energy Efficiency, Demand Response and the Smart Grid

Comverge (Nasdaq:COMV) entered into multi-year contracts with Austin Energy for the purchase of additional energy management devices and installation of the devices in residential and commercial properties throughout Austin's coverage area. The contracts are expected to generate about $20 million over a five-year period.

Echelon's (Nasdaq:ELON) LonWorks(r) Control Networks platform received ISO/IEC standardization.

The Pacific Northwest National Laboratory was awarded a $500 thousand grant to develop strategies between the U.S. and China to make China more energy efficient. According to Senator Maria Cantwell, half of the world's building construction in the next decade will be in China, whose market for energy efficiency is worth about $220 billion.

GridPoint continues to turn out very cool technology. This week it demonstrated its "smart charging" technology at the Electric Drive Transportation Association conference. The technology simultaneously manages the power flow to a fleet of plug-in vehicle resources and a pool of simulated EV resources. The timing and pace of charging can be adaptively controlled to meet the needs of drivers  and the grid, charging vehicles with renewable energy with demand on the grid is low, and during peak periods, controlling the rate of charging to reduce demand spikes on the grid.

Energy Storage

Earnings

China BAK Battery (Nasdaq:CBAK) reported Q4 and FY08 results with Q4 revenues of $72.7 million, a Y/Y 66.2% increase,  on gross margin of 15.8%. Net income was $1.5 million, as compared with a loss of $2.3 million last year, and diluted earnings per share came in at $0.03, compared with a loss of $0.04 per dilute share last year. For the year, it reported revenues of $245.3 million, a 68.2% increase Y/Y, on gross margin of 12.6%. CBAK reported a net loss of $7.9 million, compared to net income of $483 thousand for FY07, and a net loss of $0.15 per diluted share, compared to earnings of $0.01 per share last year.

Geothermal

The World Bank's private sector arm (the International Finance Corp.) has signed a 15-year,  P4.1 billion loan agreement with the Energy Development Corp. to acquire more geothermal assets and to improve efficiency in the geothermal sector in the Philippines.

Ormat (NYSE:ORA) announced the completion of phase two construction at the Olkarioa III geothermal power plant in Kenya, adding 35MW of base load capacity to the existing 13MW plant.

Raser Technologies (NYSE:RZ) has retained Calyon Securities to explore strategic relationships designed to accelerate its development goals.

Hydro

Andritz VA Tech Hydro has received a 250 million euro (US$317.2 million) contract to supply turbine-generators and voltage regulating systems for the 3,150MW Santo Antonio hydroelectric project on the Madeira River in Brazil. Bolivia's water minister announced the government will initiate construction of the 120MW Misicuni multipurpose hydroelectric project in December regardless of whether it receives Italian financing. Utility group GDF Suez reported the completion of construction of the 243.2MW Sao Salvador hydroelectric project on the Tocantins River in Brazil's Tocantins State.

The head of Mozambique's Hidroelectrica de Cahora Bassa says the state-owned hydropower operator will begin building the 800- to 1,200MW Cahora Bassa North hydroelectric project in 2009. A unit of the World Bank said December 2 that construction of the 750MW Kafue Gorge Lower hydroelectric project would be delayed several months due to the global financial crisis and technical difficulties with the initial project site on Zambia's Kafue River. Manitoba Hydro has awarded a C$289 million (US$230 million) contract for general civil construction of the 200MW Wuskwatim hydroelectric project on Manitoba's Burntwood River.

Norway's Ministry of Petroleum and Energy gave approval November 28 for Norsk Hydro to divert water from Holsbruvatn Lake to increase generation by 74 gigawatt-hours at the 375MW Tyin hydroelectric project. And the Scottish government has approved two new hydro projects, including a 3.5MW project owned and operated by RWE Npower, and a 2.4MW project being developed by Scottish and Southern Energy.

Thailand's second largest contractor, CH. Karnchang Public Co. Ltd., has signed an agreement with the government of Laos to develop the 1,260MW Xayaburi hydroelectric project in Laos' Xayaburi Province.

The Asian Development Bank has approved a US$570 million energy sector investment program for Afghanistan that includes funding for mini-hydropower projects in rural areas of two provinces.

Ocean Power

Grays Harbor Ocean Energy has filed a permit application with FERC to build a wave-energy project which will cost $400 to $600 million of the Rhode Island coast. The application will likely stir controversy between FERC and the federal Minerals Management Services about who has jurisdiction over ocean energy projects.

Solar

IMS Research released a report that projects the global PV inverter market will double in size to exceed $2 billion in 2008, with Europe accounting for 80% of global revenue.

Ascent Solar (Nasdaq:ASTI) said it has achieved greater than 9.5% efficiency for its CIGs modules, and the DOE's National Renewable Energy Lab has verified that the modules have measured as high as 9.64% conversion efficiency.

LDK (NYSE:LDK) reaffirmed this week that it expects operating profit in 2009 of about $600 million, based on expected 20% gross margins and revenue in a range of $2.9 to $3.1 billion. CFO Jack Lai's guidance is based on 1.5GW of output at an average of $2 per watt. The company is stilling with its current plans for cap ex in 2009.

Yingli Green Energy (NYSE:YGE) is reaffirming its business outlook for 2009, and estimates for 550MW to 600MW in PV module shipments, with estimated gross margin of 24%. It also announced new sales contracts with IBC Solar AG for a supply of 91MW of PV modules with delivery scheduled from this month through December next year.

Spire (Nasdaq:SPIR) has been awarded a $53.9 million contract from the Department of Justice for electric wire/power distribution equipment.

Downstream

Southern California Edison completed the first of its planned 150 commercial rooftop solar installations in Southern California, and announced its next site, which is the rooftop of 458,000 square foot industrial building in Chino. The 2MW thin-film project just completed is on top of a ProLogis Warehouse. SCE announced plans last March to install solar systems expanding over two square miles of existing commercial rooftops with 250 million MW of peak generating capacity. First Solar (Nasdaq:FSLR) performed the installation.

Suntech (NYSE:STP) announced completion of two solar power plants in Spain, in collaboration with a+f GmbH, an 8.5MWp plant in Alange and a 7.4MWp plant in Alconera. The modules were installed on more than 450 SunCarrier trackers.

And this morning, San Diego begins rolling out a plan that will allow residents to pay for solar panels through their property tax bills over 20 years. The privately financed loans will carry a fixed interest rate which can be transferred when a property is sold.

Umpqua Bank and Energy Trust have created GreenStreet Lending, a low-interest financing program for energy-saving improvements and solar energy systems. The program includes a home equity loan ranging from $5,000 to $50,000 with a term of up to 15 years and an unsecured home improvement loan ranging from $1,000 to $50,000 with a term of up to 5 years. Small businesses and multifamily properties can receive a commercial real estate improvement loan ranging from $5,000 to $100,000 with a term of up to 15 years or a business term loan randing from $5,000 to $100,000 with a term of up to 7 years. 

Earnings

aleo solar AG said it beat its sales target of €330 million for the year, as well as its targeted foreign share of 40% in sales. Despite the reduction of the feed-in tariff the company is projecting that its growth will remain strong in 2009.

Solarfun (Nasaq:SOLF) reported Q3 revenue of RMB 1,275 million (US $187.9 million), an increase of 69.1% Y/Y, with gross profit of RMB 46.1 million (US $6.8 million), down 61.6% Y/Y, gross margin of 3.6% and a net loss of RMB 44.3 million ($6.5 million), or 0.08 per diluted ADS, as compared with earnings per diluted share of $1.32 for the same period last year. Management said for the Q4 it expects total shipments at or slightly below the low end of its previously stated guidance of 175 to 190MW, an improvement in gross margins over Q3 and cap ex, supply pre-payments and further acquisition payments to be about $100 million. For the FY2009 period, management expects shipment gains of 50% Y/Y, ASP erosion by 5% to 10% from Q4 which it expects to be offset by lower poly prices, and gross margins of 10 to 15%.  In addition, capacity expansion will be on hold until management gets better visibility and its funding should be sufficient to meet 2009 requirements.

Wind

Composite Technology (CPTC.OB) completed the commissioning of the 2MW turbine sold to Hilltop Power LLC. Power from the Pipestone County, Minnesota installed turbine will be sold to Xcel Energy.

Gamesa (GTQ1.BE) is investing €750 million into wind park development in Romania with capacity of about 500MW.

Econcern is partnering with China National Offshore Oil Corp to invest 863 million euros ($1.09 billion) into the development of four Chinese wind farms, which will generate about 720MW beginning in 2009.

Vestas (VWS.DE) is in discussions to receive $12.5 million in incentives form the city of Portland, Oregon to expand its operations there and build a $250 million facility. It would add about 850 white-collar jobs to its Portland work force by doing so. It also announced that it received an order for the 300MW Thanet Offshore Wind Farm consisting of 90 3MW turbines. The order came from

Vattenfall Wind Power and includes the design, supply, construction, testing and commissioning of the turbines and a 5-year operation and maintenance contract. In addition, it announced an order to 19 3MW unites for the Boggeragh Mountains project in County Cork, Ireland. Green Energy Company placed the order, which includes supply, installations and commission of the turbines, as well as a long-term service agreement.

The 750MW Gwynt Y Môr wind farm development, the world's second largest, received approval this week. The wind farm will have 250 165-meter high turbines build off the coast of North Wales. The UK now has about 4.5GW in offshore wind farm developments in the pipe.

Pakistan's fist wind turbine was installed this week, in Jamphir, Sindh by Zorlu, which is building a 50MW wind farm. The first phase consists of one 1.2MW turbine with four additional turbines to be commissioned later this month, bringing total capacity to 6MW. The second phase will include the installation of 29 turbines with 44MW of capacity, which is expected to be completed by the end of 2009.

Earnings

American Superconductor (Nasdaq:AMSC) affirmed its 2008 outlook, expecting to post a loss of $0.30 to $0.35 per share on sales of $175 to $185 million, with a profit in the Q4. In FY2009, it expects revenue of more than $225 million, and expects to be profitable, but didn't provide specifics.

Zoltec (Nasdaq:ZOLT) reported Q4 sales of 51 million, compared to 43.6 million in the same period last year. For the FY08, sales were $185.6 million, an increase of 23% Y/Y. EBITDA for FY08 was $36.5 million, and net income was $7.4 million or $0.22 per share, an increase from a net loss of $2.5 million, or $0.09 per share last year. Management attributed longer sales cycles related to large volume agreements as being the principal factor contributing to lower than expected sales for FY08. It didn't provide any particulars, but management did say it expects sales volume to increase in 2009.

Transmission

The U.S. Federal Energy Regulatory Commission has approved rate incentives for two power transmission projects which include the $500 million, 170-mile, 765kV Tallgrass Transmission project in Oklahoma and the $600 million, 230-mile 765kV Prairie Wind Transmission project.

And Electric Power Co. said it is planning to develop a $5 to $10 billion transmission project to support wind farms in the Upper Midwest. The project would be built in stages over a 10-year period.

DOE Watch

The Department of Energy selected six cost-shared research projects for the development and demonstration of alternative vehicle technology projects which total up to $14.55 million over three years (subject to annual appropriations). Private sector contributions would increase the amount to up to $29.3 million. The money will be invested in three areas:

• Battery materials and manufacturing (3 projects up to $13.9 million) - 3M Company will get up to $2.7 million; BASF Catalyst LLC will get up to $5 million; and FMC Corp will get up to $6.2 million.
• Thermoelectric systems (2 projects up to $13 million) - Ford will get up to $8.4 million and General Motors will get up to $4.6 million. 
• Aerodynamic trailers (1 project up to $2 million) - Navistar.

Another Reason to Be Down on Nuclear

That nuclear energy gets brought up as a viable and attractive solution to our clean energy needs, especially in light of the fact that the industry still hasn't delivered a viable long-term storage solution for spent fuel rods is amazing. Moreover, the industry has continually been chastised by non-partisan organizations like the Government Accountability Office for its failure to property establish, and then oversee quality and safety standards. Well, this week we got another incidence of the same.

The DOE issued a Preliminary Notice of Violation to Bechtel National for nuclear safety violations at the Hanford Site in Washington. The PNOV cited several violations, which even after Bechtel was made aware of the problems back in 2004, it failed to take corrective action. But then, it had the Bush administration and its EPA to run cover at that point. To be sure, a Nuclear Friendly McCain administration would have provided more of the same.

In a somewhat related development, Senate Majority Leader Reid said this week that is won't support an Energy secretary through the Senate that supports building a nuclear waste dump at Yucca Mountain.

Politics, National and State-Driven News

The Florida Public Service Commission has approved Gulf Power Co's proposed solar thermal water heating rebate pilot program which will start January 1 providing a $1,000 rebate to qualifying customers.

Hawaii's Governor Linda Lingle said this week that the state will become the first in the country to roll out electric vehicle infrastructure on a state-wide basis, which will help it meet its state goal of cutting fossil fuel use 70% by 2030. Shai Agassi's project Better Place is getting the nod to build the car recharging stations and to supply recharged batteries, purchasing its power from the Hawaiian Electric Company. Better Place expects to have stations open by 2011 and will build between 50,000 to 100,000 charge spots across the state by early 2012.

Minnesota's Department of Agriculture extended the application deadline for $300,000 in grants that will support further development of the states biodiesel industry to December 12, 2008.

Houston's Mayor Bill White announced the city is kicking off a project to improve energy efficiency in 271 City buildings, signing a contract with Siemens and T.A.C.The project is part of the Clinton Climate Initiative's Energy Efficiency Building Retrofit Program.

Washington's Governor Christine Gregoire's office released final recommendations on curbing climate change in the state, calling for more energy-efficient buildings, compact urban development, better collection of recycled materials, tolls to reduce driving and revision of development rules to account for GHGs. The specifics will be released in a couple weeks.

Upgrades & Downgrades

December 1 - Yingli Green Energy (NYSE:YGE) rated BUY at Jesup & Lamont with a price target of $11. Jesup & Lamont had previously rated YGE BUY with a price target of $31 (8/7/2008), a price target of $39 (2/19/2008) and $41.65 (1/17/2008).

December 1 - Archer Daniels Midland (NYSE:ADM) rated MARKET PERFORM at BMO Capital Markets. BMO had previously rated AMD at a BUY (10/20/2008) and HOLD (6/12/2008).

December 2 - Solarfun (Nasdaq:SOLF) rated SELL at Lazard Capital with price target of $3.

December 2 - Energy Recovery (Nasdaq:ERII) rated HOLD at Stanford Research with price target of $9.

December 3 - Solarfun (Nasdaq:SOLF) downgraded to SELL at Jefferies & Company with price target of $3. Jefferies had previously rated SOLF at BUY with a price target of $22 (8/28/2008) and $18 (7/17/2008).

December 3 - Ascent Solar (Nasdaq:ASTI) rated HOLD at Wedbush Morgan with price target of $3. Wedbush had previously rated ASTI at HOLD with price target of $5.50 (10/7/2008).

December 3 - Energy Conversion Devices (Nasdaq:ENER) rated HOLD at Wedbush Morgan with price target of $24. Wedbush had previously rated ENER at BUY with a price target of $52 (10/17/2008).

December 3 - SunPower (Nasdaq:SPWRA) rated HOLD at Wedbush Morgan with price target of $27. Wedbush had previously rated SPWRA at BUY with price target of $32 (11/13/2008).

December 3 - First Solar (Nasdaq:FSLR) rated HOLD at Wedbush Morgan with price target of $110. Wedbush had previously rated FSLR at BUY with price target of $175 (10/24/2008), and $350 (7/31/2008).

December 4 - Zoltec (Nasdaq:ZOLT) rated SELL at RBC Capital Markets with price target of $5. RBC had previously rated ZOLT at SELL with  price target of $13 (9/17/2008), $15 (8/12/2008), at HOLD with a price target of $28 (4/16/2008) and BUY with a price target of $45 (2/13/2008) and $55 (2/4/2008).

Finance & M&A

Thin-film battery maker Infinite Power Solutions raised $13 million in a Series B round which was co-led by D.E. Shaw Ventures and Polaris Venture Partners. Other investors included Core Capital Partners, Applied Ventures and In-Q-Tel.

Shell Global Solutions acquired 100% of the shares of Cansolv Technologies, the developer of multi-emission technology for the control of S02 and other contaminants and a CO2 process for GHG reduction. The acquisition is intended to accelerate and deepen Shell's path to developing commercially viable CCS technologies.

Enel S.p.A. denied reports that it offered Acciona Group €12 billion ($15 billion) for Acciona Group's 25% stake in Endesa S.A.

Fuel cell technology company, ACAL Energy received £3.3 million to further develop its fuel cell technology, from investors including Carbon Trust and Solvay. 

Sencera received an additional $5.2 million in investment from the Quercus Trust as a result of a successful demonstration of its 7% efficient thin-film solar cell. It is raising further capital to fund its 35MW module factory in Charlotte, North Carolina.

Monsanto announced the acquisition of Brazil-based Aly Participaceos Ltd. , which operates sugarcane companies CanaVialis SA and Alellyx SA, for $290 million.

Research & Reports

Emissions of Greenhouse Gases in the United States, 2007

The Energy Information Administration (EIA), an independent statistical and analytical agency in the U. S. Department of Energy, released the annual report titled "Emissions of Greenhouse Gases in the United States, 2007."

Building a low-carbon economy -the UK's contribution to tackling climate change           

Climate change resulting from CO2 and other greenhouse gas emissions poses a huge threat to human welfare. To contain that threat, the world needs to cut emissions by about 50% by 2050, and to start cutting emissions now. A global agreement to take action is vital. But a global agreement will not be possible unless the countries of the rich, developed world provide leadership.

A fair global deal will require the UK to cut emissions by at least 80% below 1990 levels by 2050.The good news is that reductions of that size are possible without sacrificing the benefits of economic growth and rising prosperity. Technologies are available or with appropriate support could be developed which deliver low-carbon energy; opportunities to increase the efficiency with which we use energy are huge; lifestyle changes which will not undermine welfare can produce significant cuts in energy consumption. And many of the actions required to tackle climate change we should want to do anyway because these have economic, wider environmental and security of supply benefits.(Excerpt from Executive Summary of Report).

Increasing Feedstock Production for Biofuels - Economic Drivers, Environmental Implications, and the Role of Research

The goal of this report is to inform research recommendations to address the constraints surrounding availability of biomass feedstocks. To meet this goal, an economic assessment, which links to an analysis of the consequences for greenhouse gas emissions and sustainability, has been developed that encompasses feedstock production from agriculture and forestry sources. The boundaries of the analysis-a domestic focus on feedstocks and up to the farmgate or forest roadside-circumscribe the findings. Uncertainty about the conversion of feedstocks to biofuels, transportation of both, international effects, and consideration of displaced petroleum fuels are beyond the scope of this study. (Excerpt from Executive Summary of Report).

Aspire Clean Tech Group Indices for Week Ended December 5, 2008

As near-term uncertainty continues to cloud the markets, alternative energy and clean tech stocks subject to increased volatility base on almost daily changes in views amongst analysts, economists and investors about whether there will be sufficient funds available in 2009 to support the incoming Obama administration's stated commitment to the industry, and whether there is sufficient capital available to fund projects absent of government funding.

We continue to think that the legislative environment, both here in the U.S., and abroad, as never been better. An increasing number of states are adopting renewable portfolio standards. Leaders in alternative energy are increasing their commitments and targets over the next decade - pace California. A federal RPS is expected in 2009. Meanwhile, an increasing number of countries around the world are announcing greater commitments and supporting it with legislation for alternative energy and energy efficiency.

Conventional wisdom  as countries plan stimulus packages geared to infrastructure development, is that not an insignificant amount of monies spent to create jobs will be creating green collar jobs. And as we noted above, here in the U.S. as the auto industry humbles itself to take business advice from Congress in turn for bailout money, the buzz has never been greater and the commitment so apparent for the next generation of vehicles - PHEVs and EVs.

To be sure, the economic crisis will result in slower growth for renewable energy projects, but we don't see them grinding to a halt, or anywhere close. And that kind of cynicism seems to be more reflected, than not in stock valuations.

Biofuels companies continue to be under pressure as oil prices decline to 4-year lows. Industry insiders maintain that ethanol can remain competitive against conventional fuel at current levels, but there isn't much conviction here. Certainly, the stocks in the sector haven't had any. The segment closed down 8% this week, led by a 29% decline in Nova Biosource (Amex:NBF) and a 28% decline in Aventine's (NYSE:AVR) stock. Year-to-date, the group is down 78%. 

The energy management group closed up  3% this week, helped by a 50% increase in Power Efficiency's (OTCBB:PEFF), and a 14% gain from Comverge (Nasdaq:COMV).  We continue to think that energy management is going to get an increasing amount of attention in 2009 in an environment where reduced and more efficient energy consumption looks increasingly more attractive than the capital expense required to develop and build out new renewable energy plants. Year to date, the group is down 72%. 

The energy storage group closed up 4% this week, with Mechanical Technology (Nasdaq:MKTY) increasing its capitalization by 58%. Amongst the more actively traded stocks, Ener1 (AMEX:HEV) closed up 19%. Energy storage will continue to get more attention amidst the broader focus on electric vehicles and PHEVs, and as companies like Hyrdogenics (Nasdaq:HYGS) continue to develop storage solutions for renewable energy sources including wind and hydro. Quantum Fuel Systems (Nasdaq:QTWW) is another company to watch in this group, getting a lift this week from attention on its Q-drive powertrain which is being used in Fisker's KARMA. 

Geothermal struggled again this week, with the segment closing down 9%. The primary weight on geothermal, we think, continues to be concerns about the capital intensive nature of the business, and the time it takes to bring these projects online. Consider this: 

Nameplate Capacity Compounded Annual Growth Rate (CAGR) (2000-2007)

Wind - 30.7%
Solar PV - 29.5%
Concentrated Solar Power - 2.4%
Biomass - 1.4%
Geothermal - 0.7%

We remain bullish on geothermal, and activity continues to pick up. The GEA's most recent report identified 3,959.7MW of new geothermal capacity under development in the U.S., where, as of that report, geothermal capacity online was 2,957.94MW. In addition, the fact that geothermal is base-load capacity has certain advantages over wind and solar. But getting these projects financed so that the industry can keep up its growth targets remains an undeniable issue.

Concerns persist in solar about erosion in semi wafer and polysilicon prices. Poly is expected to decline to around $100/kg by year end, which is tempering expectations about margins and profitability upstream. Oversupply is the killer here, with global capacity of poly expected to increase from about 50,000 tons in 2008 to 150,000 tons by the end of 2010, while the PV market's expansion isn't expected to keep up. On the other hand, as the balance of system costs and installation costs fall, solar becomes more attractive on a broader scale, doesn't it?

The upstream closed down 3% this week, with MEMC (NYSE:WFR) bucking the trend, closing up 5%. Year-to-date, the group is down 55%. As poly prices come down, we also expect to see advances in technologies from companies like GT Solar (Nasdaq:SOLR) to help the producers find better efficiencies, providing a bit more elasticity in much the same way that equipment providers like Applied Materials have been instrumental in the semi industry. 

The midstream segment closed down 2% on the week, amidst concerns about erosion in ASPs, project delays an instable euro/dollar relationship and whether there will be sufficient government support to keep growth on track. While ASP erosion has been undeniable, we have seen an increasing number of companies in this group guiding towards stronger margins in 2009 as a result of lower poly pricing. YTD, the group is down 69%. 

The downstream group closed down 6% this week, led by a 30% retreat from Conergy (CGY.DE). We are bullish on installation activity remaining brisk in 2009, driven by state RPS and other incentives (pace the California Solar Incentive, and San Diego's newly launched program to finance residential installs). In addition, the group should benefit from declining prices upstream which will lower installation costs - ultimately making solar even more attractive to the consumer. That being said, on a relative basis to the midstream group, we think these stocks are still expensive. For example, Real Solar (Nasdaq:RSOL), which has negative margins, generating a little more than $2 revenue per share, with 141% Y/Y quarterly growth  is trading at 1.5x book (ttm) and  2.3x sales (ttm); while LDK (NYSE:LDK) whose margins are about 20%, generating about $14 revenue per share, with 240% Y/Y quarterly growth is trading at about 1.5x book (ttm) and 1.1x sales (ttm). 

The solar equipment/system group closed down 6% this week, with only Spire (Nasdaq:SPIR) gaining (up 4%). The group is feeling pressure of concerns about slower project growth and lower cap ex forecasts.

The wind segment closed down 4% this week, led by more weakness in A-Power (Nasdaq:APWR), which is ridiculously oversold, in our opinion, trading at 3.3x this year's expected earnings, and 1.68x management's guidance for earnings next year. Clearly there is a problem of perception with respect to creditability with A-Power, but we think any risk is more than priced in. The news in the wind sector continues to be generally positive (leaving aside Boone Picken's decision to stall on some of this projects) with more large-scale offshore wind farms in the queue, and an increasing focus on the U.S. markets from companies like Iberdrola. Forecasts for growth remain impressive, and nowhere more so than in China. So against this backdrop, we would expect market leaders like Vestas (VWS.DE) to bounce sooner than later. American Superconductor (Nasdaq:AMSC) is also well positioned, we think. 

About Aspire Clean Tech Communications, Inc.

Based in San Diego, Aspire Clean Tech Communications is dedicated to providing strategic consulting and communications services to businesses operating in the alternative energy and clean tech industries. Our commentary and outlook on the public markets and the alternative energy can be found on a daily basis at www.smallcappulse.com.

For more information about Aspire Clean Tech Communications, Inc., contact Todd M. Pitcher at 858-518-1387.

This Aspire Week in Review was sponsored by Comanche Clean Energy, Inc., a leading Brazilian ethanol and biofuel firm bringing the lowest cost and most efficient alternative energy solutions to the world, and Hayden Communications, Inc., Wall Street's leading corporate communications firm. For more information about Hayden Communications, call 646-536-7331, for more information about Comanche Clean Energy; contact Todd M. Pitcher at 858-518-1387.

The Aspire Week in Review is brought to you by Small Cap Pulse the best source on the web for financial and economic commentary, stock recommendations, and a fresh idea. To learn more about Small Cap Pulse, call 858-509-9900.

 

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