Beacon: Powering Up 13 comments
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This is an exciting time for Beacon Power (BCON), a small company with a $125MM market cap that was relatively unknown to the street. Kaufman Bros analyst Theodore O'Neill recently discovered the company and recommended to "buy" the stock just two months ago when it was trading at 28% above the current price. He set a $3 price target on the stock.
Beacon makes energy storage devices, specifically of the "flywheel variety." Flywheel-based energy storage systems, unlike lead-acid batteries, are sustainable "green" technology solutions that do not use hazardous materials for production, nor create them during operation. Unlike batteries, flywheels operate reliably for many years with little or no maintenance. Their life cycle cost benefits and ROI have proven to be far superior to those of lead-acid batteries.
Recent legislation in States like California, Florida and Massachussets not only recognize fly-wheel energy storage as an "alternative energy generating source," but they also take steps to promote it.
Beacon has been in the red for several years while it was pumping funds into R&D and into securing a patent for it's technology. It recently overcame the regulatory hurdles, and its Smart Energy Matrix is now going into production following approval for use in three of the country's five open-bid regulation markets. It will be in commercial production by the end of this year, with the first installation in Stephentown, New York. Also, Beacon was awarded a subcontract to provide a flywheel energy storage system in support of a wind integration R&D project sponsored by the California Energy Commission.
What does all this mean for Beacon? It means two things:
- The market has validated Beacon's product as being worthy of installation and use, and
- The company can expect R&D expenses to be offset by a dramatic increase in top-line revenue growth.
I've reviewed the numbers and the outlook for the company is great. There is no reason that the company should be trading at these levels. Unlike many other alternative energy plays, this company stands to benefit regardless of the type of energy baseload source selected, whether it be wind, solar, or otherwise. Its ancillary services are applicable across a broad spectrum.
Given the strong outlook for this company now in a growth phase, the current stock price of $1.41 doesn't reflect the prospects. Stock price could very well double over the next 6 months.
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This article has 13 comments:
It could be that better times lie just over the horizon for BCON, and that a flood of windmill/solar-related sales will occur, or even that rising brownouts will spur sales in their products for use as UPS backup units in businesses.
But it could also be that the cost of their flywheel-based products is not now, and never will be competitive with diesel generators or batteries as backup devices, and that flywheels will simply not scale up in an economic manner to provide large scale storage of power from wind farms and overnight storage of solar energy.
If they had a refrigerator-sized unit that could be tucked into a typical garage or basement and could be used to store power from rooftop PV solar panels overnight (or better yet, for a week), and could be manufactured and sold at a price that made sense to be incorporated into individual home installations, then one might see a bright future for these sort of devices. But so far as I am able to determine, such devices cost about a hundredfold more than would be practical, especially when competing with battery technology.
BCON has a long way to go, and they may never get their heads above water.
I'll await the expectation of revenue to be fulfilled before diving in.
They are specifically building for the much needed Frequency Regulation needed on our power grids. By "our", I mean the world population, not just the US.
They have finished years or difficult research, development, testing, and demonstrating. They have the backing of several ISOs (those who manage our power grids), including the largest, the CA ISO.
Looking at their financials at this juncture is missing the point of the article.
Why is flywheel technology ideal for this application?
How about no degradation in power capabilities over the entire life of the device... some 20 years?
How about the fact that to increase capacity, they simply need to speed up the flywheels. The increase is exponential, so a doubling of speed would be quadrupling the capacity.
How about the fact that their 20MW plant can dump or absorb power at that rate for 15 minutes straight. (more than several lifetimes needed for frequency regulation)?
It goes on and on.
By some of the comments here, I see many didn't even bother to look at Beacon's web site or research what their doing. The Sandia Labs, KEMA, all have much information.
How did anyone think they would garner the funds for R&D without selling stock? That's hardly a criticism when you see that they are out of R&D and working on three FR sites right now.
The 1 year, 3 year, and 5 year returns have all been in the green up until June of this year and they're not even providing FR service yet!
(the five year is over 300%; 3 year: 27%)
Feel free to add your expertise to our basher-free Forum, where the only rules for free membership (anyone may read, but you must be a member to post) are: (1) No disrespecting of any other member, and (2) No fact-less pumping or bashing of ANY company.
Respectfully, Gesherabten, the Forum's founder (more than two years ago), also known in the below Forum as Gesh
vitesseinvestor.com/fo...
There are 3 possible sites, ABC. Beacon plans to have 5 MW by end of the year in two of the 3 sites, it could be AB or BC or AC, depending on how things develop. The 3 sites are Tyngsboro, Stephentown, and OHIO (undisclosed industrial zone site).
There are 3 legs (of a stool) needed for each site:
1) Must have site permit or building permit in place.
2) Interconnection approval from ISO.
3) Tariffs must make sense.
For Tyngsboro, very close to having all 3 legs of the stool in place. The vote this week was a recomendation from one committee to another, there are one or two more steps that are required. Once the final steps are done, Beacon will issue a PR. The full approval of the Pilot plan would mean all 3 legs of the stool are in place. This would be a REVENUE generating pilot program, it would not be a demonstration project.
They are building 1 MW (per pictures we have seen) under roof. There is space there for about 1 more MW under roof. They have also cleared the grass of an area outside at the Tyngsboro site where they could also fit some more flywheels. Recently, National Grid came in and installed transformers, in preparation to connection to grid.
In ST, first leg is in place, must have resolution on legs 2 & 3.
In OHIO, this is an undisclosed location, they will make announcement when they have something concrete to report. They are very pleased with MISO tariff and are using it as a model to try to get other ISO's to use them.
Once again, Beacon plans to have 5 MW by end of the year in two of the 3 sites, it could be AB or BC or AC, depending on how things develop. It is possible Tyngsboro and OHIO, and not ST by year end.
There are now 55 people working in BCON, 25 or 26 of them are engineers. They just hired 4 new employees which have experience in electronic assembly, and they have caught on very quickly - they will be assembling flywheels.
There are parts on order for 50 flywheels for this year. The rims are not a bottleneck anymore, and parts in general are not an issue any more.
They are in the process of completing the 1 MW matrix, the container with all the electronics is being assembled. More and more electronics modules are being put into the container. Cables have been wired that go from the pits to the container, but no flywheels have been put into the pits yet. The flywheels can be put into the pit in a matter of hours, and just connect 3 cables. They prefer to have assembled flywheels outside, where they are running tests on them. They recently completed a test where the magnetic bearings were rendered inoperable; the test was a success and it was an important step for them internally. There is progress every day, every week, but cannot put a PR on many advances that are made, unless they are a milestone or something concrete. They do have an internal schedule, but are not giving any guidance as to when the full matrix will be complete.
Is there a Gen5 being developed? There are designs out there, but the focus right now and for 2009 will be in bringing up several sites and getting commercial revenues. Eventually, the Gen5 will have two characteristics, higher speed and lower cost.