Aspire Week in Review - Week Ended October 31, 2008

Oct 31, 2008
Author: Administrator

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Another week of volatility characterized the session for renewable energy and clean tech stocks:

• Concerns mount whether solar, geothermal and wind projects will be jeopardized by tighter credit markets and customers backing off plans to preserve capital in anticipation of a global recession.
• Biofuels companies continue to feel the strain as well, faced with margin pressure amidst higher feedstock prices and critics about the industry's impact on food prices.
• Solar stocks have been under pressure recently amidst concerns about continued government support through subsidies and feed-in tariffs, and commoditization upstream. Downstream, concerns have been related to whether the benefits of the ITC extension will be realized in the near-term as traditional investors in tax equity have backed off in participation.

To be sure, there will be a slowdown in terms of project expansion for renewable energy projects, but we think the growth will remain strong. Governments will continue to support production of renewable energy for all of the reasons that we are all familiar with - climate change issues, energy independence, rising energy costs - and because to slow support would be to stem economic and job growth created by growth in the renewable energy and clean tech sectors.

Unfortunately, there is no silver bullet for the biofuels industry in the U.S. which will continue to struggle with margin pressure as expectations for rising feedstock prices were release by the USDA this week (see below). The promise of next generation biofuels produced from Jatropha, energy-cane, algae, sweet sorghum, etc. is compelling but companies developing these technologies and building demo plants are still years off from mass commercialization.

The fundamentals in Brazil remain outstanding for biofuels, and ethanol, in particular, but even companies there have been challenged lately by declines in the national currency and tighter credit markets which will curb planned expansion in the near-to-mid term. Companies in Brazil that are able to find sources of capital should be able to benefit from the climate through acquisition, and will emerge stronger-than-ever, when the Brazilian economy gets back on track and the currency strengthens.

The good news, we think, is that investment into renewable energy and clean technology remains strong. Ernst & Young announced this week that VC investment into clean tech reached a record $1.6 billion in the third quarter of 2008, up 55% Y/Y. $990 million poured into solar during the quarter, and $1.7 billion has been invested in solar year-to-date. In addition to the long-term visibility and stability that it will provide the solar industry in the U.S., we have noted in previous commentary that Navigant Consulting expects the renewable of the ITC to result in more than $230 billion invested into solar between now and 2016.

We expect investments into energy efficiency to surge on a correlative basis with global energy demand. Reduction in energy demand from improvements in efficiency is the most basic and easy way to relax pressures on global energy demand.

The drivers for renewable energy and clean tech are solid, and the growth prospects for these industries are staggering. As we noted above, there are risks in the near term to growth, but we think that the risks have been more than priced into so much of the market.

Biofuels & Biomass

The Illinois Corn Growers Association released two studies that conclude production of corn-based ethanol leaves a smaller carbon footprint than gasoline and has substantial room for growth without affecting corn supply to the food and feed sectors:

• The Potential Role for Corn Ethanol in Meeting the Energy Needs of the United States in 2016-2030
• The Global Warming and Land Use Impact of Corn Ethanol

Probably not the most unbiased reports, but then again, some of the largest opponents of corn-based ethanol are funded by the oil industry.

The Good

U.S. ethanol imports for August rose 41% from July levels, according to the DOE. And the EIA reported that ethanol storage in tanks rose 1.696 million bbl, or 12.8% in August to 14.882 million bbl. U.S. domestic production rose 1.017 million bbl, or 5.07% to 20.059 million bbl in August.

The National Science Foundation will give the University of Illinois $2 million to study transportation and other required infrastructure required to support the Midwestern biofuels industry. And the Kansas Bioscience Authority has awarded $10 million to programs including $1.5 million to NOW Technology to help commercialize technology that extracts fuel oil and mineral salts from municipal wastewater, and $1 million to ICM for the development and commercialization of cellulosic ethanol.

Australia's government will invest $15 million on a new program for researching second gen biofuels. And Kenya expects $500 million in foreign investment into its biofuel crop production in the next two years. Kenya's secretary in the agriculture ministry said he expects more than 100,000 jobs would be created through an initiative earmarking 500,000 acres for companies to plant crops such as Jatropha, croton, sweet sorghum and sugar.

Biofuels Power (OTCBB:BFLS) said it is going to manage a project to use wood chips and other refuse from Hurricane Ike cleanup activities to fuel a pilot scale power gen and carbon sequestration project that will be connected to the ERCOT grid to provide to 4MW of power to Houston.

Iberdrola Renewables said the Sacramento Municipal Utility District (SMUD) purchased the entire output of a 55MW biomass cogeneration plant under construction at a Washington pulp and paper mill owned by Simpson Tacoma Kraft Company. Iberdrola will provide transmission and logistics, managing delivery into California.

Drax Group is planning to build three biomass plants across Yorkshire and North Lincolnshire which will cost about £2 billion. The facilities will each have capacity to produce 300MW of electricity to the country's grid, and construction is scheduled to start in 2010 with the facilities becoming operational in 2014. Drax intends to pay for the facilities through a cut in its dividend from 2010.

Guangdong Yuedian is building a 100MW biomass power plant in Zhangiang Guangdong Province.

The Bad

The USDA lowered its estimates for corn, soybeans and other crops this week, which will result in higher prices for commodities. Cost to producers of corn is expected to rise to a range of $4.25 to $5.25 per bushel on a reduction of 167 million bushels for corn production to 12 billion bushels. Soybean prices are expected to rise to a range of $9.70 to $11.20 a bushel on a reduction of 45 million bushels to 2.94 billion bushels.

Xethanol Corp. said this week that it is changing its name and shifting its focus from cellulosic ethanol to methane from landfills. CEO David Ames said the ethanol market is too difficult due to falling prices. The new company is called Global Energy Holdings Group.

Forscot Limited has scrapped plans to build a £1 billion biomass plant in Scotland because it wasn't able to secure funding.

And the Ugly

VeraSun's shares plunged this week on Wednesday, down 56% from $1.05 to $0.46 on a report that a Chapter 11 filing is imminent. VeraSun's stock started out this year trading at $15.56. Its stock is rated Neutral by AmTech Research (10/6/2008),  Hold by Citi (with a price target of $1.85 on 9/22/2008), Perform by Oppenheimer (9/17/2008) Underweight by Lehman Brothers (7/28/2008), Hold by Friedman Billings (with a price target of $5, on 7/18/2008), Buy at UBS (7/18/2008), and Sell by Piper Jaffray (7/10/2008), amongst others. VeraSun got hammered this summer after paying a premium for corn only to see corn prices drop significantly.

Regulatory Approvals and Dis-Approvals

BlueFire Ethanol's (OTCBB:BFRE) $30 million proposed bio-refinery which will convert 170 tons-per-day of bio-waste into ethanol was given preliminary approval this week by the Los Angeles County Board. BlueFire was granted a $40 million grant to build the plant, which is the first of three that it plans to build.

The Minnesota Pollution Control Agency voted on Tuesday to postpone a decision on whether a proposed ethanol plant would consumer too much groundwater, as well as whether its discharge would affect a nearby creek and whether its operation could contaminate deeper, cleaner water supplies. The decision on MinnErgy's $133 million, 55 million gallon ethanol plant will be postponed until next month. A second phase of the project will expand its capacity to 75 million gallons.

Brazil

The Brazilian biofuels markets are feeling the credit crunch, which is exacerbating pressures that have increased in the last year on margins. The consensus opinion at the annual Datagro Sugar and Ethanol Conference in Brazil held this week in Sao Paulo is that while the long-term outlook for the industry remains bright, driven by strong internal fundamentals, the near-term will be challenging. The reals depreciation relative to the dollar is adding to the near-term challenges, and compounding losses. The current dynamic will undoubtedly curb previous forecasts for $33 billion in investment into new Brazilian mills over the next five years.

Earnings

The Andersons (Nasdaq:ANDE) cut its 2008 earnings outlook to a range of $3.50 to $4 per share, down from a previous estimate of $5 to $5.40 per share. The primary catalyst for the lowered guidance is declining fertilizer prices which will result in lower margins.

Aventine Renewable Energy (NYSE:AVR) reported Q3 revenues of $599.5 million, basically flat on a Y/Y basis, and net income of $2.5 million, or $0.06 per diluted share, compared with a net loss of $1.9 million, or $0.05 per diluted share last year.

Higher corn and conversion costs  were attributed to poor margins. However the company did post gains on hedging activities for the quarter.

Clean Tech, Energy Efficiency and the Carbon Markets

Australian Prime Minister, Kevin Rudd, warned this week that if Australia doesn't move quick enough to introduce a carbon reduction plan, other countries would impose larger tariffs as a penalty.

China said it wants developed countries to commit 1% of their economic worth to help developing nations fight global warming and it is pressing for an international framework to increase adoption of "green" technology worldwide. A Chinese official for climate change said that the current funds being committed to fight climate change are "virtually nothing." The Kyoto Protocol, which Washington has refused to ratify, will expire in 2012. Chinese Premier Wen Jiabao will be giving a keynote speech this week to underscore its commitment to the demands it is making and it will also issue a "white paper" on climate change.

The UK passed the Climate Change Bill this week which will require companies to report on their GHG emissions from 2012. The bill also includes an amendment to increase the UK's GHG reduction target for 2050 to 80% compared with 1990 levels, up from a 60% target. 

Power Efficiency (OTCBB:PEFF) provided a progress report on its digital single phase motor controller, which is targeted at energy savings for motors in appliances and light commercial equipment. It is in its third redesign on the product, which management believes may be the most effective way for manufacturers to qualify their products for the valuable Energy Start rating. After tests on various types and sizes of single phase motors, it has demonstrated savings as high as 60%. Management reported that the technology is receiving considerable interest from several large OEMs of appliances, residential AC and related applications.

Electric, Plug in Electric and Hybrid

British Prime Minister Gordon Brown called for a conference focused on how to accelerate the adoption of low carbon and electric vehicles on a mass scale. The conference was hosted by the UK's Department for Business, Enterprise and Regulatory Reform. Transport Secretary Geoff Hoon iterated the government's next steps to invest £100 million into the push for greener vehicles. Motor manufactures will be invited to bid for the opportunity to participation in a £10 million project to run EV and ultra-low carbon vehicle demo projects, which will be overseen by the Technology Strategy Board. Up to £20 million is committed to UK research into improving technology that could make EV and ultra-low carbon vehicles more practical and affordable. 10 companies have been shortlisted to bid to provide EV and ultra-low carbon vans to public sector organizations as part of a £20 million program.

Duke Energy is partnering with Progress Energy, Inc. and Advanced Energy for a trial of new vehicle-to-grid (V2G) technology. The goal is to enable vehicles to charge overnight and then, at times, return power to the grid for use in peak demand hours. The interactive technology is being supplied by V2Green.

Mercedes Benze is going to sell plug-in electric Smart cars in Denmark in late 2009.

Tesla Motors' CEO Elon Musk said in an interview with Reuters this week that he expects to raise another $20 million in the next week to buoy the company's balance sheet. It hasn't been able to secure the $100 million it was seeking.

Energy Management

Power Integrations (Nasdaq:POWI) introduced five new members of its TOPSwitch-HX family of AC-DC power conversion of integrated circuits.

PowerSecure (Nasdaq:POWR) said Walgreens will purchase its EfficientLights LED lighting technology for refrigerated cases in the majority of store openings in 2009. The lighting technology is expected to reduce energy use by 70%.

Earnings

Itron (Nasdaq:ITRI) reported Q3 revenues of $485 million, up 12% Y/Y and net income of $7.7 million, or $0.21 per share, compared to a net loss of $3.4 million, or $0.11 per share for the same period last year. New order bookings for the Q3 were $894 million, compared with $440 million Y/Y. The increase was largely attributable to $470 million related to its Advanced Metering Infrastructure contract with Southern California Edison. Total backlog at the end of the quarter was $1 billion. In terms of guidance, management expects FY2008 revenues of $1.91 billion, diluted non-GAAP EPS in a range of $3.35 to $3.45 and adjusted EBITDA in excess of $280 million.

Energy Storage

EnerSys (NYSE:ENS) announced a $19.8 million buyback of its common stock at $11 per share, totaling 1.8 million shares. Management further iterated that its liquidity position remains strong with $55 million in short-term investments and more than $200 million in available and unused borrowing capacity as of September 28, 2008.

SK Energy is investing $159 billion won ($110 million) to expand its lithium-ion battery production. It is developing high energy density power batteries for hybrid electric, plug-in electric and electronic vehicles.

Earnings

Ultralife Batteries (Nasdaq:ULBI) reported Q3 earnings of $4.65 million, or $0.27 per share on revenue of $67.9 million, up from $33.2 million last year. In terms of its outlook, it expects revenue and operating income in the second half of 2008 to be in a range of $130 million and $10 million, respectively. FY operating income will be in a range of $22 million on revenue of about $270 million. Management also reiterated guidance of $250 million for FY 2009.

Geothermal

Sierra Geothermal (SRA.V) is exploring strategic options for its business, in the face of increasingly challenging economic conditions. Management said it has sufficient cash for minimum exploration and permitting work on properties (about $4 million).

Hydropower

Electricity generator Enerjubones S.A. is seeking bids from consultants to perform further studies and definitive design of the 368.9-MW Jubones River hydroelectric complex in Ecuador.

Montenegro's Ministry of Economic Development is inviting expressions of interest from potential developers of four hydroelectric projects on the Moraca River totaling 238 MW.

Brazil's national development bank has released the first 100 million reais (US$43.2 million) tranche of 121 million (US$52.3 million) financing approved for construction of two small hydro projects by Brazilian utility holding company Neoenergia.

Ocean Power

The California Public Utilities Commission has rejected Pacific Gas & Electric Co.'s proposed contract to purchase electricity from the 2-MW Humboldt County Offshore Wave Energy project.

Smart Grid

American Superconductor (Nasdaq:AMSC) said it received an order for four distribution voltage Static VAR Compensator solutions from one of North America's largest energy companies. The systems will be used to improve pumping station performance for a major crude oil pipeline.

GE Energy announced that EDF Energy Networks is installing GE's power distribution management software system to help manage EDF's London electricity network.

The UK's government said it will require all households to have smart meters installed over the next decade. It will be presenting an amendment to present an amendment to the Energy Bill next week, which will provide the framework needed to introduce smart meters.

Solar

AVANCIS, the JV between Shell and Saint-Gobain, has begun manufacturing CIS thin-film modules at its new 20MW plant in Saxon. The CIS thin-film modules produce an efficiency level of 11%.

Renewable Energy Corp (REC.OL) broke ground on a $2 billion production facility in Singapore. The plant is expected to begin operations in Q1, 2010, and will produce 740MW of wafers, 550MW of cells and 590MW of modules by 2012.

China Sunergy signed a supply agreement for 1,472 tons of single crystal silicon ingot through the end of 2011 with Hitachi High-Technologies and an affiliate.

Q-Cells (QCE.DE) announced production guidance for FY2009 targeting production of more than 1GWp, and due to reduced production targets of silicon supplier Elkem Solar the agreed deliveries to Q-Cells will not be completely achieved. It said that it has secured additional deliveries, however, with other contract partners so its production targets remain in tact.

Solar Enertech (OTCBB:SOEN) completed the build out of its second solar production line, doubling its solar cell production capacity from 25MW to 50MW.

Yingli Green Energy (NYSE:YGE) reported that its principle operating subsidiary Baoding Tianwei Yingli New Energy Resources entered into a new credit line trade finance facility agreement with the Export-Import Bank of China that will provide it with a short-term line up to RMB 500 million in aggregate principal. Its total credit line is RMB 1 billion. The company also reported that has entered into a strategic partnership with TÜV Rheinland (Shanghai) Co. Ltd to provide a range of quality control initiatives.

Downstream

Clear Skies Solar (OTCBB:CSKH) announced a $5.7 million agreement with Achilles Chondronasios & Co. to develop and construct a 960kw project in Greece.

Envision Solar, Clean Power Systems and Kyocera (NYSE:KYO) announced a Solar Grove(tm) array of three 'Solar Rows' converting a parking lot at St. Mary's Medical Center into a 230kw solar system. The system consists of a canopy of 1,150 Kyocera KC 200GT PV modules.

Equipment

Spire (Nasdaq:SPIR) will provide a Spi-Line 30C complete turnkey factory to produce up to 30MW per year of high efficiency solar cells for Hanwha Chemical Corporation.

Earnings

First Solar (Nasdaq:FSLR) reported Q3 revenues of $348.7 million, up from $267 million in the prior quarter, and $159 million for the same period last year. Net income was $99.3 million, or $1.20 per share (fully diluted), compared with $69.7 million, or $0.85 per share in the prior quarter and $46 million, or $0.58 per share last year. First Solar remains a thoroughbred in a fast field. Management raised its 2008 sales forecast to a range of $1.22 billion to $1.24 billion and it expects sales of $2 to $2.1 billion in 2009. Its total backlog is $6.3 billion.

They also announced that they are now entering the U.S. residential market through a 5-year 100MW supply agreement with Solar City, and a $25 million investment into it. This will expand First Solar's potential customer base, and Solar City offers a leasing program to help customers deal with the up-front costs of residential. This should bode well for First Solar's expanded presence in the residential market in a credit constrained economic environment.

In addition, First Solar announced a new long-term supply agreements with Sorgenia Solar, and extended supply agreements with several existing customers including EDF Energies Nouvelles, Ecostream, Juwi and Phoenix Solar AG. In total First Solar expanded contracted module volume by a total of 525MW, which represent additional sales of $800 million. In total, Wednesday's announcements of 625MW in supply agreements represent more than $1 billion in revenue.

BTU International (Nasdaq:BTUI) reported Q3 revenues of $20.6 million, up 25% Y/Y, and net income of $0.7 million, or $0.07 per diluted share, up 29% Y/Y. Management said the results were stronger than its guidance, and the business improved its balance sheet from a cash balance perspective by about $4 million to $29 million over the nine month period. The company expects to see a decline in revenues by about 20% for the year with a net loss of $0.03 to $0.09 per diluted share.

Wind

A-Power (Nasdaq:APWR) said it received an important government endorsement for its distribution generation business and for completion of its Shenyang wind turbine assembly, from Zhenggao Chen, the Provincial Governor of China's Liaoning Province. The endorsement is helpful in light of the credibility crisis that A-Power has had on Wall Street. We have talked with several professional investors that, though there isn't any tangible evidence, there are doubts about A-Power's ability to deliver on its wind business. The company recently held a tour of its facilities for 30 government officials including Li Jia, the Vice Governor of the Liaoning Province, Li Bing, Chief Information Officer of Industry Department of Liaoning, Zheng Wei, Secretary of the Municipal Party of Shenyang, Li Yinglie, Mayor of Shenyang and Huang Kai, Director of Huannan New District in Shenyang.

Exelon Generation Company acquired the rights to purchase 198MW of output from the 398MW Twin Grovers Wind Farm in Bloomington, Ill, about 150 miles southwest of Chicago. Exelon Generations' average annual purchase of wind power is now about 1 million MWh. Its wind power portfolio is now 352MW installed, which makes it the largest wholesale wind marketer east of the Mississippi.

FPL Group said its subsidiary FPL Energy is on track to add about 1,300MW of new wind capacity in 2009, having placed 499MW into service year-to-date. But it also will be reducing cap ex involving the deferral of new wind energy projects, due to the current economic and credit environment. It had previously planned to add about 1,500MW in 2009, but now is calling for 1,100MW. 

FPL Energy remains on track to add approximately 1,300 MW of new wind capacity in 2008, having placed 499 MW into service thus far.

Madison Gas and Electric said it increased wind power capacity from 11MW to 137MW this year, after four new wind farms in Wisconsin and Iowa began production.

National Wind LLC formed Goodhue Wind LLC to develop a 78MW wind farm that will supply wind energy to the Midwestern markets. The project is expected to be operational by late 2009 to early 2010.

Nordex (NDX1.F) said it is going to build its U.S. manufacturing facility in Jonesboro, Arkansas. It is investing about $100 million to build the facility, which will have a target annual assembly capacity of about 750MW. It is planned to start by January 2010. The facility will employ about 700 people at an average salary of $17 per hour.

Sky Harvest Windpower (OTCBB:KWPW) plans to build a 140MW wind power project in the Birsay area of the province of Saskatchewan, Canada,  after its gets approval from SaskPower. The 75 turbine project will cost about $450 million. SaskPower has engaged a consultant which is conducting a wind integration study to determine how much wind power can be integrated into the provincial grid.

We Energies filed an application with the Public Service Commission of Wisconsin for authorization to build the 207MW Glacier Hills Wind Park. The current plans calls for up to 90 wind turbines and the total project cost is expected to be in the range of $340 to $530 million.

DOE Watch

The Department of Energy extended the due date for submitting applications for loan guarantees under Title XVII of the Energy Policy Act of 2005 for energy efficiency, renewable energy and advanced distribution and transmission technologies to February 26, 2009.

Upgrades & Downgrades

October 27 - Enersys (NYSE:ENS) rated BUY at B. Riley with price target of $16.50.

October 27 - Archer Daniels Midland (NYSE:ADM) initiated at BUY at Soleil with price target of $25.00.

October 27 - Andersons (Nasdaq:ANDE) initiated at HOLD at Soleil.

October 28 - GT Solar (Nasdaq:SOLR) downgraded to NEUTRAL at UBS. UBS had previously rated SOLR at a BUY with a price target of $19 (9/2/2008).

October 28 -Energy Conversion Devices (Nasdaq:ENER) downgraded to NEUTRAL at UBS. UBS had previously rated ENER a BUY (8/11/2008).

October 28 - Evergreen Solar (Nasdaq:ESLR) downgraded to NEUTRAL at UBS. UBS had previously rated ESLR at a BUY with a price target of $20.00 (12/13/2007).

October 28 - SunPower (Nasdaq:SPWRA) rated at NEUTRAL at UBS.

October 29 - Ascent Solar (Nasdaq:ASTI) rated HOLD at Cantor Fitzgerald with price target of $4.25.

October 29 - First Solar (Nasdaq:FSLR) rated OUTPERFORM at Credit Suisse with price target of $150. Credit Suisse had previously rated FSLR at a BUY and price target of $350 (7/31/2008), a price target of $250 (12/10/2007) and $165 (11/6/2007).

October 30 - Itron (Nasdaq:ITRI) rated HOLD at Stanford Research. Stanford Research had previously rated ITRI at a BUY with a price target of $100 (10/14/2008), and  price target $110 (6/18/2008).

October 30 - Energy Conversion Devices (Nasdaq:ENER) initiated at SELL at Citgroup with price target of $17.

October 30 - First Solar (Nasdaq:FSLR) rated HOLD at Kaufman Brothers with a price target of $140. Kaufman Brothers had previously rated FSLR at a HOLD with a price target of $260 (5/28/2008).

October 30 - First Solar (Nasdaq:FSLR) upgraded to BUY at Merriman Curhan Ford. MCF previous had rated FSLR at HOLD (11/8/2007) and SELL (10/23/2007).

October 30 - First Solar (Nasdaq:FSLR) rated BUY at Soleil with a price target of $160.

October 31 - Ultralife Batteries (Nasdaq:ULBI) upgraded to BUY at Collins Stewart with price target of $12. Collins Stewart had previously rated ULBI at a HOLD (1/30/2008).

Finance and M&A

Ice Energy, a developer of utility-scale distributed energy resource and storage technologies, completed a $33 million tranche of preferred second round financing let by Energy Capital Partners. The investment also provides for up to $150 million in additional project capital.

Ener1 (AMEX:HEV) acquired 83% in Enertech international, one of South Korea's largest lithium-ion cell producers, for 5 million shares of common stock, 2.56 million warrants and $600,000 in cash from TVG Capital Partners, a mid-market private equity firm. The warrants are exercisable at $7.50 and have a two-year maturity.

Conergy AG (CGY.DE) completed the sale of its wind turbine generator business to Warburg Pincus. The transaction was delayed temporarily because authorities had declined to transfer to Warburg the public grants originally allocated and partially granted to Conergy. Conergy will now compensate Warburg for the cancelled public grants.

Intel (Nasdaq:INTC) is investing $20 million into thin film solar cell firm Trony Solar Holdings, and it is investing an undisclosed amount into energy storage technology firm NP Holdings. Trony will use the investment to expand its production capacity to 105MW and expand its business.

Yaletown Venture Partners closed a $65 million round on its Yaletown Ventures II Limited Partnership fund, which will focus on clean-tech and IT investments. Yaletown Ventures II is a $100 million fund which will remain open for up to 12 months.

Ballard Power (Nasdaq:BLDP) entered into an agreement with Superior Plus Income Fund to reorganize its business which will result in about C$41 million (US$34 million) in non-dilutive funding. After transfer of funds to Ballard, it will transfer all of its assets and liabilities (including proceeds from the transaction and excluding tax basis) to a new wholly-owned subsidiary ("New Ballard"). Post transaction, Ballard shareholders will have exchanged their Ballard shares on a one-for-one basis with shares of New Ballard. The Street must have liked this structure as the stock rallied from $2.19 at the open on Thursday to $2.74 by Friday morning as of the time we are writing this.

Calisolar raised $51.9 million in a Series B round, and has secured another $50 million in convertible securities. The Round was led by Hudson Clean Energy, joined by Advanced Technology Ventures and Globespan Capital Partners. The company is building a commercial plant for produce solar cells using 'dirty' metallurgical grade silicon in California.

China Solar & Clean Energy (OTCBB:CSOL) increased its ownership stake in Tianjin Huaneng Group Energy Equipment to about 92% of the shares outstanding.

NxtGen Emission Controls, a developer of a syngas-based diesel emission reduction system, closed a $15.4 million Series B investment led by Altira Group LLC.

Research and Reports

Global Wind Energy Outlook - 2008

The Global Wind Energy Outlook 2008 is published by the Global Wind Energy Council and Greenpeace International. It found that wind power could produce 12% of the world's energy needs and save 10 billion tons of C02 within 12 years. The report further explains how wind energy can provide up to 30% of the world's electricity by the middle of the century.

Energy Revolution - A Sustainable Energy Outlook

Renewable energy, combined with the smart use of energy, can deliver at least half of the world's energy needs by 2050. This report, 'Energy [R]evolution: A Sustainable World Energy Outlook', shows that it is economically beneficial to cut global CO2 emissions by over 50% within the next 42 years. It also concludes that a massive uptake of renewable energy sources is technically and economically possible. Wind power alone could produce about 40 times more power than it does today, and total global renewable energy generation could quadruple by then.

The Energy [R]evolution Scenario concludes that the restructuring of the global electricity sector requires an investment of $14.7 trillion up to 2030. This compares with $11.3 trillion under the Reference Scenario based on International Energy Agency projections. While the average annual investment required to implement the Energy [R]evolution Scenario would need just under 1% of global GDP, it would lower fuel costs by 25% - saving an annual amount in the range of $750 billion.

Commissioned from the Department of Systems Analysis and Technology Assessment (Institute of Technical Thermodynamics) at the German Aerospace Centre (DLR), the report develops a global sustainable energy pathway up to 2050.

2008 Long-Term Reliability Assessment Report

The 2008 Long-Term Reliability Assessment represents the North American Electric Reliability Corporation's independent judgment of the reliability and adequacy of the bulk power system in North America for the coming ten years.

The biofuels segment continues to drag, but it managed to gain 2% on the week, despite the 58% selloff in VeraSun's stock as rumors built surrounding the company's solvency. As we have noted elsewhere, we think the group is going to continue to struggle amidst rising feedstock prices and a challenging credit market environment. Year-to-date, the group is down 75%. 

The energy management segment closed up 19% on the week, outpacing gains set in the upstream and midstream solar sectors. Comverge (Nasdaq:COMV) gained 45%, on no news, which is indicative of the fact the stock was oversold. It started out the week trading just higher than its cash per share ($2.50). Itron (Nasdaq:ITRI) which has been the leader in the group, didn't participate in the group's rally, which should be a concern, given the fact that the stock has shed more than $50 since the beginning of September. It still looks expensive, however, on a multiple basis. Year-to-date, the group is down 67%. 

The energy storage group had a solid week, gaining 13%, led by Ultralife Batteries (Nasdaq:ULBI) which was up 39% after posting another great quarter of revenue and earnings growth, and China BAK Battery (Nasdaq:CBAK), which also posted a 39% gain, but didn't report any news. Hydrogenics (Nasdaq:HYGS), a stock we own, struggled - closing down 8%, which is a concern.Year-to-date, the group is down 23%. We remain extremely bullish on fuel cells, which are forecast to increase in industry revenues of $0.9 million in 2004 to $15.6 billion in 2016 (Clean Tech, 2007). But mass adoption of fuel cells is still probably a few years out, until manufactures can find ways to get the costs down. 

The geothermal segment closed up 8% on the week, led by Polaris Geothermal (GEO.TO), up 16% and Raser Technologies (NYSE:RZ), up 14%. It was a positive signal to see Raser participate in the broader market strength in the past couple days, in light of the fact that it has been hitting milestones of late which, in our opinion, are validating its business model. It was surprising to see that Ormat (NYSE:ORA) and Calpine (NYSE:CPN) didn't participate in the rally. Year-to-date, the group is down 62%. 

The upstream segment closed up 5% this week, led by DC Chemical (010060.KS) which got an extra lift from a stock buyback. MEMC (NYSE:WFR) continues to struggle, closing down 1% on the week, and down 80% year-to-date. We have to think at this level, the risk has been factored into the stock.

The midstream segment rallied this week, closing up 18%, with only 3 companies in our index closing lower. We aren't surprised to see this group rally as much as it did because in our opinion, it was way oversold. Sure, margins are going to get  some pressure next year due to supply issues with modules and projects may get pushed out a bit by customers who are cash and credit constrained, but the secular trends are in place and there is tremendous room for growth: 

Fast Facts on Solar

• Solar Contribution to Electric Power Sector. Through seven months in 2008, solar represented .02% (5 trillion Btu) of the total 2,378 trillion Btu that renewable energy contributes to the electric power sector. To put it in perspective, geothermal accounted for 7% (179 trillion Btu) and wind represented 11% (277 trillion Btu);
• Solar Contribution to Residential Energy Consumption. Through seven months in 2008, solar represented 13% (43 trillion Btu) of the total 324 trillion Btu that renewable energy contributes to residential energy consumption. To put it in perspective, biomass (wood) represented 82% (268 trillion Btu). Note that solar didn't even register in terms of renewable energy consumption in the Energy Information Administration's data on renewable energy consumption in the commercial sector (which totaled 68 trillion Btu); 
• Solar As Percentage of Total Renewable Energy Consumption. Through seven months in 2008, solar represented 1% (48 trillion Btu) of the total 4,440 trillion Btu of renewable energy consumption. To put It in perspective, geothermal represented 4% (203 trillion Btu), wind represented 6% (277 trillion Btu) and biomass represented 50% (2,224 trillion Btu). 
• Solar Contribution to Total Electricity Net Generation. Through seven months in 2008, solar represented 517 million kilowatthours of total electricity net generation (2,424,870 million kilowatthours). To put it in perspective, coal represented 1,169,570 million kilowatthours and nuclear represented 466,376 million kilowatthours. 
• Solar Contribution to Primary Energy Consumption. Through seven months in 2008, solar represented .048 quadrillion Btu of total primary energy consumption (59.283 quadrillion Btu). To put it in perspective, coal represented 13.213 quadrillion Btu, natural gas represented 14.630 quadrillion Btu, petroleum represented 22.024 quadrillion Btu and nuclear represented 4.866 quadrillion Btu. 
• Solar Contribution to Primary Energy Production. Through seven months in 2008, solar represented 0.48 quadrillion Btu of total primary energy production (43.179 quadrillion Btu). To put it in perspective, coal represented 13.678 quadrillion Btu, natural gas represented 12.330 quadrillion Btu, crude oil represented 6.335 quadrillion Btu, and NGPL represented 1.454 quadrillion Btu. Note that there is a marked discrepancy between production and consumption, implying that supply demand imbalances persist, which bodes well for solar and other renewables.

Source: EIA Monthly Energy Review, October 2008

Note: Renewable energy's contribution to the overall net generation of electric power in far outpaced the growth of conventional energy sources on a year-over-year basis, 87% to 2%. But there is significant room for growth, with renewable energy accounting for slightly more than 2% of total net generation of electric power in both 2007 and 2008.

The downstream solar segment closed up 18% this week, led by an 88% gain in Clear Skies Solar (CSKH.OB) after it announced a couple multi-million dollar deals. It's market cap had gotten down to less than $6 million early in the week. Year-to-date, the group is down 63%.

The solar equipment group didn't participate in the rally across the rest of the solar sector, which isn't that much of a surprise since its equipment manufacturers are amongst the first to feel the pain of a recessing economy. The group is down 56% year-to-date.

The wind segment has come under increasing pressure due to increased concerns about access to the debt markets which is undermining the economics of wind power financing. Expectations are that we will see a significant decline in turbine orders. We noted above that FPL, which is the largest U.S. operator of wind-power, said this week it is cutting its planned cap ex for 2009. We think the valuations for wind stocks have more than compensated for this dynamic, at this point, and that higher expenses for wind turbines will be offset to a certain extent by more efficient turbines for land-based projects and the extension of U.S. tax credits on wind farms (though fewer banks are able to buy the credits now then in recent past). Perhaps our opinion is validated by the fact the group rallied 16% this week.

Renewable energy's contribution to the overall net generation of electric power in far outpaced the growth of conventional energy sources on a year-over-year basis, 87% to 2%. But there is significant room for growth, with renewable energy accounting for slightly more than 2% of total net generation of electric power in both 2007 and 2008. 

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.

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