According to E24 (in Swedish), Swedish cleantech companies face a dismal outlook, with only 3 out of 14 publicly traded companies making a profit last year.
A few observations could be made however. First of all, these numbers should not be taken as a representation of the whole cleantech market. Many successful cleantech companies are not traded on the public stock market. It is also important to remember that many companies not mentioned in the article work with cleantech in one way or another, but only as a part of their product or service portfolio. For instance: Sweco (consulting), ABB (energy efficiency, etc) and Alfa Laval (biofuel equipment, etc). Further on, in the long term several of the companies mentioned in the article face growing demand for their products.
To invest in a company that is yet to make a profit requires excellent market insight and at least a basic technical understanding of the products being offered. And even more so than in the case of investing young but profitable companies. Rome wasn't built in a day and many cleantech companies will need several years of R&D before being able to launch a competitive product. Ambitious innovators may become early leaders in developing markets. But without an initial knowledge, the outside investor might as well bring her or his money to a racecourse, where the gambling is equally risky but more exciting.
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måndag 12 maj 2008
torsdag 26 juli 2007
Prediction of the Cleantech Market: Looking into the Crystal Ball (II)
I have in a recent post written about my predictions for the cleantech market. In that post, I suggested that energy efficiency would be the sector that will get the most attention in the near future from investors. In this post, I will develop the issue, including suggestions of the companies that would benefit from such attention.
Energy efficiency is low-hanging fruit when trying to reduce GHG emissions. Both in industrial and domestic sectors, there are huge gains to be made/wastes (naturally, the cost of capital may vary). In many cases, it is easier to implement these measures than that to replace fossil fuel sources with renewables as a way to reduce CO2 emissions. There is a large potential for companies that provide energy efficiency a key issue in their product offer and perform well, since the concept is yet to take off on a grand scale. Considering that potential, some of them might be undervalued today. Further on, as the world economy grows, and new groups adapt to Western consumption patterns and standards, the need for energy efficiency will increase.
Good performance in the EE area may not show in the stock price however, if energy efficiency is a small part of the companies activities.
Some of the companies and sectors suggested in this post might not be thought of as "energy efficient" at a first glance, but they will profit from providing efficient products and services. Citing Tom Konrad, there is no Vestas of energy efficiency. Energy efficiency isn't a clearly defined sector, but rather a philosophy that spans across several sectors. A common characteristic however, is technology. Through technology the use of energy will diminish: power technology, engine technology, building & infrastructure technology, information technology and so forth. Energy efficiency is about making components and appliances lighter yet stronger, wasting less energy and resources.
Power monitoring and regulation
It is quite obvious that companies that work directly with energy efficiency are bound to benefit from an energy efficiency wave. Especially companies for monitoring and regulating power at a large scale are interesting. These companies may be found in the software, microelectronics & power engineering sectors.
Example of companies in these sectors:
enerNoc: Energy and power management for utilities
Energy connect: Supply and demand based power management
Comverge: Power management & Metering
IT, data management & computing efficiency
Stationary and server computers waste a lot of energy in the form of heat. In addition, because of this heat the computers need to be cooled to avoid break-downs, causing further energy consumption. With ever increasing server parks, this is becoming a significant factor. Google has together with Intel launched a program for increasing energy efficiency in computing, and setting performance targets. The initiative includes tech heavyweights such as Dell and eBay. In addition to improved management, using innovative materials may reduce power consumption. Information technology obviously also offers opportunities for reducing energy consumption, such as remote working, video conferencing etcetera.
IBM: processing data for peak-hours calculation, server management software
Google: efficient information management
Norstel: low energy semi-conductor materials
Cisco & WebEx: remote office solutions
Western Digital: a new line of energy efficient hard drives
Lighting
Increasing the use of LED for lighting will reduce energy consumption drastically, according to Peter Svensson, energy consumption from lightning represents 22%, and with a higher use of LED lighting that consumption could be reduced by 50%. They are already more efficient than CFL bulbs ("low energy bulbs"). Further on, CFL bulbs contain mercury. Still they seem to be the mainstream choice for years to come. More countries are bound to follow in the footsteps of South Africa, Brazil and Australia to phase out incandescent in favour of CFL bulbs. LED lighting would probably need larger cost reductions before making a real break-through.
LED & CFL bulb producers:
Lighting Science Group Corp
Philips
Infrastructure & construction
The have we construct and maintain buildings and infrastructure has an important impact on the energy consumption. Companies that can deliver “green buildings”, or that provides parts that lower energy consumption will benefit from this. Further on, consultants refurbishing existing buildings and infrastructure will have a busy schedule.
Johnson Controls: building energy efficiency
HySSIL Pty Ltd: light weight, high-strength concrete
Chromogenics: energy saving, "intelligent" windows
ITT Flygt: pump systems awarded for their efficiency
Efficient power generation, transformation & operation
General Electric & Sensicast Systems: remote motor management through wireless networks
Power Efficiency Corp: technology for managing electrical motors & increasing efficiency
ABB: a large number of products & services increasing efficiency
Energy efficiency is not only for the philantropic investor, it is a necessary measure and as such a sound investment opportunity.
Energy efficiency is low-hanging fruit when trying to reduce GHG emissions. Both in industrial and domestic sectors, there are huge gains to be made/wastes (naturally, the cost of capital may vary). In many cases, it is easier to implement these measures than that to replace fossil fuel sources with renewables as a way to reduce CO2 emissions. There is a large potential for companies that provide energy efficiency a key issue in their product offer and perform well, since the concept is yet to take off on a grand scale. Considering that potential, some of them might be undervalued today. Further on, as the world economy grows, and new groups adapt to Western consumption patterns and standards, the need for energy efficiency will increase.
Good performance in the EE area may not show in the stock price however, if energy efficiency is a small part of the companies activities.
Some of the companies and sectors suggested in this post might not be thought of as "energy efficient" at a first glance, but they will profit from providing efficient products and services. Citing Tom Konrad, there is no Vestas of energy efficiency. Energy efficiency isn't a clearly defined sector, but rather a philosophy that spans across several sectors. A common characteristic however, is technology. Through technology the use of energy will diminish: power technology, engine technology, building & infrastructure technology, information technology and so forth. Energy efficiency is about making components and appliances lighter yet stronger, wasting less energy and resources.
Power monitoring and regulation
It is quite obvious that companies that work directly with energy efficiency are bound to benefit from an energy efficiency wave. Especially companies for monitoring and regulating power at a large scale are interesting. These companies may be found in the software, microelectronics & power engineering sectors.
Example of companies in these sectors:
enerNoc: Energy and power management for utilities
Energy connect: Supply and demand based power management
Comverge: Power management & Metering
IT, data management & computing efficiency
Stationary and server computers waste a lot of energy in the form of heat. In addition, because of this heat the computers need to be cooled to avoid break-downs, causing further energy consumption. With ever increasing server parks, this is becoming a significant factor. Google has together with Intel launched a program for increasing energy efficiency in computing, and setting performance targets. The initiative includes tech heavyweights such as Dell and eBay. In addition to improved management, using innovative materials may reduce power consumption. Information technology obviously also offers opportunities for reducing energy consumption, such as remote working, video conferencing etcetera.
IBM: processing data for peak-hours calculation, server management software
Google: efficient information management
Norstel: low energy semi-conductor materials
Cisco & WebEx: remote office solutions
Western Digital: a new line of energy efficient hard drives
Lighting
Increasing the use of LED for lighting will reduce energy consumption drastically, according to Peter Svensson, energy consumption from lightning represents 22%, and with a higher use of LED lighting that consumption could be reduced by 50%. They are already more efficient than CFL bulbs ("low energy bulbs"). Further on, CFL bulbs contain mercury. Still they seem to be the mainstream choice for years to come. More countries are bound to follow in the footsteps of South Africa, Brazil and Australia to phase out incandescent in favour of CFL bulbs. LED lighting would probably need larger cost reductions before making a real break-through.
LED & CFL bulb producers:
Lighting Science Group Corp
Philips
Infrastructure & construction
The have we construct and maintain buildings and infrastructure has an important impact on the energy consumption. Companies that can deliver “green buildings”, or that provides parts that lower energy consumption will benefit from this. Further on, consultants refurbishing existing buildings and infrastructure will have a busy schedule.
Johnson Controls: building energy efficiency
HySSIL Pty Ltd: light weight, high-strength concrete
Chromogenics: energy saving, "intelligent" windows
ITT Flygt: pump systems awarded for their efficiency
Efficient power generation, transformation & operation
General Electric & Sensicast Systems: remote motor management through wireless networks
Power Efficiency Corp: technology for managing electrical motors & increasing efficiency
ABB: a large number of products & services increasing efficiency
Energy efficiency is not only for the philantropic investor, it is a necessary measure and as such a sound investment opportunity.
onsdag 20 juni 2007
Risk för cleantechbubbla? Knappast. Däremot för enskilda företagsbubblor
Dagens Miljö skriver idag om risken för en cleantechbubbla. Visst, på kort sikt kan enskilda företag och delsektorer att sjunka i värdering, till föjld av uppskruvna förväntningar. Detta kan tillfälligt drabba hela sektorn. Men cleantechsektorn som helhet har större potential, särskilt om man sprider sina ägg.
Jag har redan skrivit om detta här, och om att nästa "boom" kommer inom energieffektivisering.
"Boomen" vi sett är i stort sett logisk och marknadsmässig.
Självklart kommer enskilda företag av olika skäl inte klara sig i konkurrensen, och vissa företag är säkerligen övervärderade redan idag.
T.o.m. hela delsektorer kan komma att krascha. Marknaden kommer till exempel så småningom att straffa t.ex. etanolsektorn p.g.a. lågt energiutbyte för vissa former av etanol (majs&spannmål), och externa kostnader för andra typer (jatropha). En eventuell rekyl inom en delsektor kommer att drabba hela sektorn, dock tillfälligt.
Cleantechsektorn som helhet kommer på lång sikt snarare bara öka, eftersom fler blir varse om de externa kostnaderna i ett icke-hållbart samhälle. Förnyelsebar energi behövs inte bara p.g.a. klimatförändringar, utan också av säkerhetsskäl och för energioberoende. Även andra delar av cleantechsektorn kommer att gynnas i takt med att länder blir rikare och efterfrågar en renare miljö. Dessutom har investerare dotcom-bubblan i färskt minne och kommer att vara mkt mer kritiska i granskningen av förhållandet mellan nuvarande vinster & värde.
Jag har redan skrivit om detta här, och om att nästa "boom" kommer inom energieffektivisering.
"Boomen" vi sett är i stort sett logisk och marknadsmässig.
Självklart kommer enskilda företag av olika skäl inte klara sig i konkurrensen, och vissa företag är säkerligen övervärderade redan idag.
T.o.m. hela delsektorer kan komma att krascha. Marknaden kommer till exempel så småningom att straffa t.ex. etanolsektorn p.g.a. lågt energiutbyte för vissa former av etanol (majs&spannmål), och externa kostnader för andra typer (jatropha). En eventuell rekyl inom en delsektor kommer att drabba hela sektorn, dock tillfälligt.
Cleantechsektorn som helhet kommer på lång sikt snarare bara öka, eftersom fler blir varse om de externa kostnaderna i ett icke-hållbart samhälle. Förnyelsebar energi behövs inte bara p.g.a. klimatförändringar, utan också av säkerhetsskäl och för energioberoende. Även andra delar av cleantechsektorn kommer att gynnas i takt med att länder blir rikare och efterfrågar en renare miljö. Dessutom har investerare dotcom-bubblan i färskt minne och kommer att vara mkt mer kritiska i granskningen av förhållandet mellan nuvarande vinster & värde.
onsdag 13 juni 2007
The uranium price boom
The subject of this post is somewhat related to nuclear power, a controversial issue among renewable energy proponents. Uranium price is increasing, which will make the price of nuclear power increase. The price of uranium has increased from the 2001 bottom of $6.70 to $130. That's a 2000% increase. This might not look very spectacular considering the general price increase of metals and other commodities. According to some, the prices are inflated because of speculation. There are however underlying geopolitical reasons for the uranium price boom, with obvious connections between the price of oil and the price of uranium.
Here is a short background for the price fluctuations of uranium:
- interest in nuclear power declined somewhat in the 80's because of environmental and other concerns. This lead to a certain over-capacity in uranium exploration, and to falling prices.
- falling prices reduced the incentives for new exploration, with several producers leaving the business.
- interest in nuclear is increasing because of the fear of climate change and the need to reduce CO2 emissions from power generation from fossil sources.
- fear of dwindling future sources makes the price go up even further
Of course, the higher price allows exploring companies to re-open old mines and reconsider projects that were not economically feasible some years ago.
Nuclear power is still cheaper than power from solar or wind resources, in most cases (especially when not counting different types of subsidies). And in Europe and elsewhere there is certain aversion to large-scale hydro power projects because of environmental concerns.
The soaring uranium prices could make power generation from renewable sources more competitive - as well as fossil based generation, ironically enough. But will this happen anytime soon? Probably not. The reason for this is the low effect of the cost of uranium and the price of power. Uranium only counts for about 5% of the price of power. This means that if the price of uranium increases with 100%, the price of power would only increase with 5%. As a comparison, the price of power generated from fossil sources is more price sensitive, and so is the price of many biofuels. For instance, the price of feedstock represents 75%-80% of the price of ethanol.
Thus, the price of uranium could soar even more - but nuclear power would still be more competitive than renewable power, price wise. For uranium being as expensive as oil, considering the price of the power, the price uranium would need to increase even further. Thus, the price of nuclear power will stay relatively low despite the uranium prices, and decreasing inventories won't change that. The competitiveness of nuclear power and it's weak relation to uranium prices is a challenge for proponents of power from renewable sources.
Ps. The uranium boom and the space for further price increases may be an eye-opener for persons looking for investment opportunities. It should be mentioned however that this doesn’t necessarily leads to uranium mining stocks booming. A 100% increase in the price of uranium does not automatically translate to a 100% increase in profit for there mining company, or soaring share values. And there will be differences between individual companies.
Here is a short background for the price fluctuations of uranium:
- interest in nuclear power declined somewhat in the 80's because of environmental and other concerns. This lead to a certain over-capacity in uranium exploration, and to falling prices.
- falling prices reduced the incentives for new exploration, with several producers leaving the business.
- interest in nuclear is increasing because of the fear of climate change and the need to reduce CO2 emissions from power generation from fossil sources.
- fear of dwindling future sources makes the price go up even further
Of course, the higher price allows exploring companies to re-open old mines and reconsider projects that were not economically feasible some years ago.
Nuclear power is still cheaper than power from solar or wind resources, in most cases (especially when not counting different types of subsidies). And in Europe and elsewhere there is certain aversion to large-scale hydro power projects because of environmental concerns.
The soaring uranium prices could make power generation from renewable sources more competitive - as well as fossil based generation, ironically enough. But will this happen anytime soon? Probably not. The reason for this is the low effect of the cost of uranium and the price of power. Uranium only counts for about 5% of the price of power. This means that if the price of uranium increases with 100%, the price of power would only increase with 5%. As a comparison, the price of power generated from fossil sources is more price sensitive, and so is the price of many biofuels. For instance, the price of feedstock represents 75%-80% of the price of ethanol.
Thus, the price of uranium could soar even more - but nuclear power would still be more competitive than renewable power, price wise. For uranium being as expensive as oil, considering the price of the power, the price uranium would need to increase even further. Thus, the price of nuclear power will stay relatively low despite the uranium prices, and decreasing inventories won't change that. The competitiveness of nuclear power and it's weak relation to uranium prices is a challenge for proponents of power from renewable sources.
Ps. The uranium boom and the space for further price increases may be an eye-opener for persons looking for investment opportunities. It should be mentioned however that this doesn’t necessarily leads to uranium mining stocks booming. A 100% increase in the price of uranium does not automatically translate to a 100% increase in profit for there mining company, or soaring share values. And there will be differences between individual companies.
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