The story of General Electric (GE) and Arista Power, a pink sheet stock trading under the ticker symbol ASPW, illustrates the potential and pitfalls of investing in renewable energy or any sector where breakthroughs are both expected and necessary.
This week Arista announced a deal with GE (GE) for storing-and-forwarding energy. Arista has patents out on a "peak shaving" system that deals with peak demands so commercial customers can lower their bills.
Before this Arista Power was on its way down the drain, like so many renewable start-ups. It tried to stay alive last December with a 1:20 reverse split, which got its share price out of the "Mendoza Line" territory of $1/share but only brought it up to $3.
Under the agreement, Arista's load management technology will be combined with GE Durathon Batteries. Target markets are mainly in the northeast, where grids are strained by peak demand and customers with high needs are targeted with high rates. Durathon is a nickel-salt battery that has been pushed to computer server farms as a UPS solution.
The two companies will co-market a solution that until now Arista has been targeted at utilities as a way to deal with the intermittent nature of wind and solar power.
It's practically a meme here at Seeking Alpha whenever I write about solar energy, the next question is "What happens when the Sun goes down?" Well, one thing that can happen is systems like this can store-and-forward the power. But given the low cost of coal and natural gas right now, many utilities find it cheaper to simply add more grid power available than try and manage demand.
Arista and GE will now be going after large commercial customers, promising savings of 30-70% on power bills, enough to justify the cost.
GE's involvement also illustrates how a large company's perspective can lead a good idea to prosperity. Quality Stocks called ASPW "one to watch" last June, noting their previous name, "Wind Tamer" with a focus on wind energy systems. Mission IR thought it big news when Arista sold one of its systems to the FBI.
By focusing on large electricity users rather than renewable energy suppliers, GE has given this technology a chance to make it to market.
The renewable space remains a venture capitalist's dreamscape. That will change, and deals like GE's with Arista will help change it. So if you want to play and keep your capital, buy yourself some GE.
Disclosure: I am long GE.
