Alternative Energy Storage: Cheap Continues to Outperform Cool 67 comments
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The next couple months are shaping up as a time of extraordinary change in the energy storage sector. Events that will drive the change include:
- Press reports indicate that the Department of Energy will be ready to announce it's preliminary decisions on the allocation of $2 billion in ARRA battery manufacturing grants sometime this week;
- We've seen numerous reports on automaker's plans to begin manufacturing PHEVs and EVs in limited volumes for testing and demonstration purposes;
- New tailpipe emission standards in Europe and accelerated CAFE standards in the U.S. will effectively compel the widespread adoption and rapid roll-out of stop-start and mild hybrid technologies by all major automakers;
- Advanced Battery (ABAT) acquired manufacturing facilities for electric two-wheeled (E2W) vehicles and is diversifying its operations with a sharper focus on the Chinese market;
- Beacon Power (BCON) received a conditional commitment for a $43 million DOE loan guarantee that will be used to complete a 20 MW flywheel energy storage project in New York; and
- A123 Systems filed another amendment to its SEC registration statement, which indicates that they're still on track for an IPO sometime in September.
So now seems like a good time to update the relative performance of the individual energy storage stocks I've been writing about for the last year.
The following table provides comparative price data for the short-list of pure play energy storage companies I track. It shows closing prices on November 14, 2008 and July 31, 2009, calculates the percentage of change over the last eight months, and calculates current market capitalizations based on recent SEC reports.
| 14-Nov | 31-Jul | Percent | Market | ||
| Cool Emerging | Symbol | Close | Close | Change | Cap |
| Ener1 | HEV | $6.75 | $6.38 | -5.48% | $723.96 |
| Valence Technology | VLNC | $1.88 | $1.83 | -2.66% | $228.58 |
| Altair Nanotechnologies | ALTI | $0.87 | $0.97 | 12.14% | $90.36 |
| Beacon Power | BCON | $0.82 | $0.76 | -7.32% | $90.62 |
| Cool Sustainable | |||||
| Maxwell Technologies | MXWL | $6.50 | $14.16 | 117.85% | $328.26 |
| Advanced Battery | ABAT | $2.13 | $4.28 | 100.94% | $247.47 |
| Ultralife | ULBI | $9.08 | $6.42 | -29.30% | $108.88 |
| China BAK | CBAK | $1.99 | $3.31 | 66.33% | $190.95 |
| Hong Kong Highpower | HPJ | $3.50 | $1.41 | -59.71% | $19.12 |
| Cheap Emerging | |||||
| Axion Power International | AXPW.OB | $1.30 | $1.25 | -3.85% | $44.53 |
| ZBB Energy | ZBB | $0.93 | $1.30 | 39.78% | $13.80 |
| Cheap Sustainable | |||||
| Enersys | ENS | $6.86 | $19.79 | 188.48% | $951.70 |
| Exide Technologies | XIDE | $3.38 | $4.87 | 44.08% | $367.78 |
| C&D Technologies | CHP | $1.94 | $2.00 | 3.09% | $52.59 |
| Active Power | ACPW | $0.40 | $0.74 | 83.75% | $48.85 |
Between November 14, 2008 and July 31, 2009, a $1,000 index investment in the Dow Jones Average, the Nasdaq Index and the S&P 500 would have resulted in an average portfolio appreciation of 17.2%. The following table summarizes the portfolio gain or (loss) that would have resulted from an investment of $1,000 per company in each of my four groups.
| Tracking | Percentage |
| Category | Gain (Loss) |
| Cool Emerging | (0.8%) |
| Cool Sustainable | 39.2% |
| Cheap Emerging | 18.0% |
| Cheap Sustainable | 79.9% |
Equity markets are driven by a combination of greed and fear, emotional reactions that are often at odds with fundamental economic realities. Over the past few years, both cool groups have been driven by headlines that highlight opportunities while both cheap groups have been driven by headlines that highlight problems. Since headlines invariably feed the greed and fear cycle, the cool groups were driven to relatively high valuation levels while the cheap groups were driven to relatively low valuation levels. If the last eight months are any indication, the pendulum is moving back toward a more balanced position where cheap group valuations will eventually catch up with cool group valuations. As the following summary valuation metrics show, they still have a long way to go.
| Shares | Price/ | Price/ | Price/ | Book Value | ||
| Cool Emerging Group | Symbol | (000s) | Earnings | Book | Sales | Per Share |
| Ener1 | HEV | 113,474 | 8.63 | 48.38 | $0.74 | |
| Valence Technology | VLNC | 124,905 | 8.39 | -$0.55 | ||
| Altair Nanotechnologies | ALTI | 93,153 | 2.48 | 16.39 | $0.39 | |
| Beacon Power | BCON | 119,239 | 3.67 | 519.28 | $0.20 | |
| Group Average | 4.93 | 148.11 | $0.20 | |||
| Cool Sustainable Group | ||||||
| Maxwell Technologies | MXWL | 23,182 | 5.41 | 3.79 | $2.65 | |
| Advanced Battery | ABAT | 57,821 | 14.31 | 2.88 | 5.04 | $1.47 |
| Ultralife Batteries | ULBI | 16,959 | 12.64 | 1.19 | 0.41 | $4.92 |
| China BAK | CBAK | 57,688 | 1.19 | 0.82 | $2.74 | |
| Hong Kong Highpower | HPJ | 13,563 | 10.85 | 1.14 | 0.28 | $1.23 |
| Group Average | 12.60 | 2.36 | 2.07 | $2.60 | ||
| Cheap Emerging Group | ||||||
| Axion Power International | AXPW.OB | 35,625 | 7.25 | 42.09 | $0.17 | |
| ZBB Energy | ZBB | 10,618 | 1.74 | 15.24 | $0.74 | |
| Group Average | 4.50 | 28.67 | $0.46 | |||
| Cheap Sustainable Group | ||||||
| Enersys | ENS | 48,090 | 11.56 | 1.49 | 0.49 | $13.43 |
| Exide Technologies | XIDE | 75,519 | 7.49 | 1.09 | 0.11 | $4.37 |
| C&D Technologies | CHP | 26,296 | 1.11 | 0.15 | $1.81 | |
| Active Power | ACPW | 66,458 | 2.24 | 0.91 | $0.30 | |
| Group Average | 54,091 | 9.53 | 1.48 | 0.42 | $4.98 |
I have long argued that every energy storage decision boils down to a cost-benefit analysis and the bulk of the incremental sales revenue will flow to companies that serve the mundane needs of the average user, rather than the extreme needs of "power users." Based on his recent statement that lithium-ion batteries are overhyped, it appears that Vinod Khosla, one of Silicon Valley's most active cleantech investors, agrees with me.
While I believe fundamental market drivers will result in rapid and sustained growth across the entire spectrum of energy storage companies, I’m convinced the superstars will be the manufacturers of objectively cheap products that can serve the needs of average users at a reasonable price. Until cheap group valuations approach parity with cool group valuations, I will continue to believe that investors who want to maximize portfolio performance in the energy storage sector should focus on the cheap groups instead of the cool groups.
DISCLOSURE: Author is a former director Axion Power International (AXPW.OB) and holds a large long position in its stock. He also holds small long positions in Exide (XIDE), Enersys (ENS) Active Power (ACPW) and ZBB Energy (ZBB).
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As for the talking heads, I've banned myself watching Cramer. In fact, more and more I am tuning out CNBC all together.
My musings above are the results of studying this market--and it's history--60 to 70 hours a week for about a year and a half.
Thanks for the comment!
I don't list, though, my day trades, which usually are a blend of banks, miners, shippers, and of course, ETFs. Today, for instance I'm riding Excelon Shipping (EXM).
As for the talking heads, I have banned myself from watching Cramer--insert expletive, as he has cost me way too much money--and more and more am tuning out CNBC all together. Just too much noise and outrageous opinions that I used to find intriguing, even humorous, but now I find to be a waste of precious time.
I will stand firmly, though, with my rant about Goldman Sachs.
Thanks for the advice and comment!
On Aug 04 02:50 PM Don Harmon wrote:
> John, I would have to agree here. In fact I will give you something
> that I probably shouldn't but our best projected price per Wh right
> now would be $1.20. How these other posted estimates are calculated
> makes me wonder indeed? Notice they are never tied to a specific
> Lithium-ion battery company - certainly not one here in the U.S.,
> which after all is the whole reason we are all waiting for what Biden
> announces tomorrow!
>
> NOTE: The price above includes a complete battery system with CAN
> Bus interface.
Battman, that's the strength of this group of readers. We all stand in our own shoes, are honest about what those shoes are and lay out the best position for our respective perspectives. I figure the only way to go is with mutual respect knowing that each of us will have our share of being right and each of us will have our share of being wrong. But crystal balls are, after all, murky things so I won't mind being wrong from time to time.
Thumbs up to everyone for agreeing to disagree and remain civil about it.
Ginchinchili wrote
jerrydd, just what are my "just rewards" and why? Seems like a crappy attitude, but I wouldn't immediately assume it's deserving of jail time. Besides, haven't I made it clear that I don't buy stocks on other people's recommendations? But thanks just the same.
JD I thought I was very clear, invest in them, Exide and Valance and reap what they will make since you like them so much. Then that will be your just reward. You are the one with an attitude and criticizing my wording. I was just putting up facts.
John P wrote
jerrydd, I know what commenters like you and davewmart tell me the prices of lithium-ion batteries are in small lots.
JD While shipping containers every month might seem small to you they are good size orders any battey company would love to have. But what does size have to do with it. In small lots they should be more than big ones so GM., etc should get better prices, No?
I also I know what the DOE says they are going to cost in the quality and lot size that OEM automakers will need. Heck, I spent hours with some of the best in the industry at Storage Week and their fondest hope is that they can get prices down to 2x or 3x lead-carbon within 3 to 5 years.
JD So do tell what prices are they saying? You keep saying things but never put numbers on them nor do you answer simple questions to prove your points. And you keep talking down to us like we don't know what we are talking about. Yet we give details and you don't Why?.
Nor have you answered the capacitor statements as CL's are chemical cells, No? Are they Capacitors? You have said so several times. What capacitive qualities does Carbon fiber/CL's have? How much/lb does CF cost? More than Lithium?
We are buying EV batteries for $.30/wthr. That's about $340kwhr. Can you beat that with CL's? BTW $.30/wthr is the target for GM, others said they needed, No? And $.30wthr is what GM is paying LG, No? SAE Magazine last month. Why has other than CAT CL batteries never been mentioned in SAE Magazine? I know of no car maker ever mentioning other CL batteries and I keep track. So you are saying CL batts are selling for $100/kwhr?
Please show me just one. In fact ship me some as I can use them at that price. But you can't, can you..
I'm not willing to argue my knowledge of what first quality batteries will cost with you or anybody else. I'm also not going to argue the incontrovertible fact that the first automotive lithium-ion battery factories cannot possibly be completed before 2012 if everything goes right - which almost never happens
JD I'm quoting GM whom I'm assuming is buying first quality batteries, No?
That would be a surprise to Hitachi, Panasonic, Yusa, A123, LG, BYD, Kokam among many others who have factories now. Sure they will build larger ones but the market before 2013 is rather small, easily done with present factories.
JD And did you read Davewmart's references on Li supplies? Some are solid so don't need evaporating. In the US is enough in one place for all the cars in the world to be Li EV's. And what kind of permits, etc would one need to get Li from seawater? While more costly it's still viable as Li batteries need so little of it. There is no shortage of Lithium.
On Aug 04 02:50 PM Don Harmon wrote:
> John, I would have to agree here. In fact I will give you something
> that I probably shouldn't but our best projected price per Wh right
> now would be $1.20. How these other posted estimates are calculated
> makes me wonder indeed? Notice they are never tied to a specific
> Lithium-ion battery company - certainly not one here in the U.S.,
> which after all is the whole reason we are all waiting for what Biden
> announces tomorrow!
>
> NOTE: The price above includes a complete battery system with CAN
> Bus interface.
As an aside, while I am not the most knowedgable on the subject, I can be pretty sure that Li salts initially produced from any technique will be a far cry from the "battery grade" material (>99.99% purity & much higher costs) that is needed to produce active materials for cells.
I do think that in the long run Li-ion will be the primary option since it is an all-around performer. Li-ion will always be (until someone in their garage comes up with a better choice) the best option for niche markets (military, aerospace, medical, etc) I also know that (as seems to be my new mantra) Li-ion will win out NO MATTER WHAT when size is a concern and cost isn't.
On Aug 04 09:40 PM jerrydd wrote:
> We are buying EV batteries for $.30/wthr. That's about $340kwhr.
> Can you beat that with CL's? BTW $.30/wthr is the target for GM,
> others said they needed, No? And $.30wthr is what GM is paying LG,
> JD I'm quoting GM whom I'm assuming is buying first quality batteries,
> No?
> That would be a surprise to Hitachi, Panasonic, Yusa, A123, LG, BYD,
> Kokam among many others who have factories now. Sure they will build
> larger ones but the market before 2013 is rather small, easily done
> with present factories.
>
I'm putting out some cookies and eggnog before the fireplace.
In the wee morn I going to the stock market casino ready to bet hard on the Energy Storage Sector.
Thanks for the tip, John!
Do you like fruitcake?
seekingalpha.com/autho...
The document I've been using as the gold standard guide to battery prices is a July 2008 Sandia National Laboratories report on its Solar Energy Grid Integration Systems – Energy Storage (SEGIS-ES) program. You can find it here:
www.sandia.gov/ess/Pub...
Sandia's price estimates for the quantities and volumes required by the major automotive OEMs are $1,333 per kWh for lithium-ion with a $780 per kWh 10-year target; and $500 per kWh for asymmetric lead carbon with a $260 per kWh 10-year target. Your experience with pricing on occasional container loads of batteries of unknown kind and quality from China is interesting, but the Sandia numbers are authoritative. If you think they're wrong, take it up with them.
I've previously discussed the DOE's views on the current suitability of lithium-ion batteries for use in mass market transportation products and the challenges that need to be overcome before lithium-ion batteries are ready for prime time. You can find those articles here:
seekingalpha.com/artic...
seekingalpha.com/artic...
seekingalpha.com/artic...
I've previously discussed the nature of asymmetric lead-carbon capacitors at length. They are a hybrid device that integrates a negative electrode from a supercapacitor into a lead-acid battery and results in a hybrid device with characteristics of both. The cell voltage is a bit lower at about 1.7 volts, the power is considerably higher and the charge rates and cycle-life are an order of magnitude greater. You can find those articles here:
seekingalpha.com/artic...
seekingalpha.com/artic...
The SAE may not be writing about lead-carbon yet but Sandia and others are all over the technology.
While the price GM is paying for the Volt battery pack remains cloaked in secrecy, the best estimates are in the $700 to $1,000 per kWh range. The Volt has been discussed in detail here:
seekingalpha.com/artic...
seekingalpha.com/artic...
Right now everyone who is working with lithium-ion battery packs is using cells manufactured for portable electronics, which is a lot like using 5,000 hamsters to pull a stagecoach. There is enough excess supply from existing factories to make experimental PHEVs and EVs (which is apparently what you do) but the lithium-ion battery industry is not by any stretch of the imagination ready to power the automotive industry and even if it was, an OEM automaker cannot pay the same price per watt-hour that a cellphone manufacturer can pay; which means automotive applications will always be at the bottom of the food chain from a battery manufacturer's perspective.
I haven't argued that global lithium resources are inadequate for quite a while now because the resource availability issue has been answered to my satisfaction. There is, however, an immense difference between saying you can get lithium from sea water and building a plant that can do so economically. Current production methods from brines involve an 18 month evaporation cycle because it's the only cost effective way to do the job. Seawater or oilfield brine extraction would be considerably more expensive because the concentrations are far lower. Jack Lifton has told us that the lithium mining industry will need $100 billion in new capital to develop production facilities to support the auto industry. It would cost far more to develop the plentiful deposits that you keep harping on. So far, that capital has not been forthcoming.
At the end of the day, Seeking Alpha is for individuals who are trying to a reasonably safe place to invest their money and earn a reasonable return on their money. I dig down into the technology a good deal further than most writers because it's impossible to understand energy storage without understanding at least a little about what the various technologies strengths and weaknesses are. Unless a technical aspect has some bearing on potential investment returns, it's irrelevant for purposes of this discussion.
I would love to have you as a regular commenter because I think that all perspectives are necessary, but the focus is how investors can make money in energy storage. If you're not willing to adopt that focus, I'd rather you didn't comment.
Mayascribe, I'll have the wassail warmed and ready, although it's beginning to look like this too may be a multi-day affair to maximize political mileage. Have to admit though, the 152% gain on my personal trading portfolio since November feels pretty good, and my guess is the fun's just starting.
"Right now everyone who is working with lithium-ion battery packs is using cells manufactured for portable electronics, which is a lot like using 5,000 hamsters to pull a stagecoach. There is enough excess supply from existing factories to make experimental PHEVs and EVs (which is apparently what you do) but the lithium-ion battery industry is not by any stretch of the imagination ready to power the automotive industry and even if it was, an OEM automaker cannot pay the same price per watt-hour that a cellphone manufacturer can pay; which means automotive applications will always be at the bottom of the food chain from a battery manufacturer's perspective."
True, John especially as ascribed to the extremely low prices that some are posting here. However, there are companies out there like LiFeBATT who are producing "large format" LiFePO4 Cells which means fewer needed to produce the requirements for advanced EV's. I think those lower price quotes are the commodity 18650 format cells from China and it takes 10 of them to make the equivalent of one of our large format cells. Sure, they are cheap but they are also not safe because they are LiCo2 cells, which unless elaborately protected, can explode or catch fire. People quoting $ 0.30 / wH are likely using these as their source of cost?
Your hamster analogy isn't far off - Tesla uses these 18650 format Lithium- ion cells in their roadster and it takes over 6,000 of them to build their battery pack. The cells are cheap, but the battery management system and the special cooling required - well look at the price of their car!
One of the biggest logical fallacies that people who have not studied the history of the battery industry fall into is that cheap suppliers for today will always be cheap suppliers. That appeared to be the case in the 1990s when Asian imports killed off a large segment of the domestic lead-acid battery industry. Fast forward to 2009 and imports are few and far between because home country demand in the former exporting countries has grown to the point where manufacturers are selling their products at home instead of exporting them.
In the case of cheap Asian lithium-ion batteries, I keep going back to the fact that China made 23 million electric bikes and scooters (E2W) last year and those vehicles used the battery power that we would have used for about a million PHEVs. As a matter of industrial policy China will always prefer giving mobility to 23 million of its citizens over giving mobility to 1 million wasteful Americans. As a matter of pure supply and demand 23 Chinese can afford to pay more per watt hour for the small amount of batteries they need than one American can pay for the massive amount of batteries they want for a status symbol.
I know everybody wants EVs to save on precious oil resources that are presently being wasted. However the single minded view that oil is the only precious natural resource on the planet has to be smashed. There are six billion people that want a small piece of the lifestyle that 500,000 million of us enjoy. To complicate the issue, modern communications has put the 6 billion in a position where they know that there is more to life than subsistence farming. Our greatest challenge over the next 50 years will be finding relevant scale solutions to water, food, energy and every commodity we can imagine. The idea that we can fight the waste of oil resources by encouraging the waste of other resources is terribly short-sighted.
can you lay out your core thesis on why you are Long ACPW in a post or a comment?
On Aug 03 09:20 AM Davewmart wrote:
According to the mining companies Chemetall and SQM, lithium reserves are currently estimated to be between 14 and 17 million tonnes.
I have to challenge these reserve figures.
A quick check on Wikipedia comes up with 11m, and figures from my 2005 link come up with *13.4m.
These include lithium that is unobtainable for extraction with current know how , but does include the Bolivian reserves that are not currently available.
I also have to challenge you with the claims of $32 a kilo for lithium from seawater. It is claimed that it's $95 from present sources. Seems a no brainer at those prices were to get it from.
I accept future technology may open up presently unavailable lithium, it's just that we are in the here and now.
It could be that Meridian International Research are unreliable and there report is wortless, but here it is. I found it an interesting read.
The chart is on page 2.
* tyler.blogware.com/lit...
Digger, I worried about lithium reserves for quite a while because of the Tahil reports, so was Jack Lifton. Earlier this year, Keith Evans wrote an article on why lithium resources are adequate to cover demand. Since Jack tells me that Evans is the global authority on lithium resources, I'm inclined to accept the idea that there is enough lithium on earth to provide the required supplies.
seekingalpha.com/artic...
While I am no longer worried about resource availability, I am very worried about supply constraints because the world's existing mines do not appear ready to meet short-term demand increases and 30 years experience in natural resource development tells me that it costs 100s of millions and takes up to a decade to turn a known mineral deposit into a producing mineral deposit. While increasing production from an existing mine can be a bit cheaper and a bit less time consuming because changing old permits can be easier than getting new ones, all of the other work is essentially the same. Since mine expansions take years if not decades and there are no large-scale expansions presently underway, there will be a bottleneck of indeterminate duration while new facilities are permitted, designed, built and brought online.