Bill Paul's  Instablog

Posted: For the Week of: November 22 – November 28, 2009

Part 3 of 3

Here’s the point: the alternative energy industry is still only a multi-million-industry. But thanks to the smart grid, renewable portfolio standards, a global climate treaty and more, alternative energy is going to become a multi-trillion-dollar industry. For every First Solar (Symbol FSLR), there are a dozen small, still-unknown firms that have the potential to hit it big.

So far we’ve looked at six of them: Ocean Power Technologies (Symbol OPTT); WaterFurnace Renewable Energy (Symbol WFI); Energy Recovery (Symbol ERII); Itron (Symbol ITRI); EnerNOC (Symbol ENOC), and MYR Group (Symbol MYRG). (For more see Thinking of Ocean Power, Waterfurnace and Energy Recovery as Possible Takeover Candidates and Thinking of Itron, EnerNOC and MYR Group as Possible Takeover Candidates.)

Here are three more: Juhl Wind (Symbol JUHL); Lime Energy (Symbol LIME), and Comverge (Symbol COMV).

While this is all speculation on my part, the fact is that each of these three looks it could become a takeover candidate because it would be a nice fit for one of the corporate giants that are expected to dominate the alternative energy business in the coming carbon-constrained world – outfits such as General Electric (Symbol GE) and Siemens (Symbol SIE).

Take Juhl Wind. This company turns local property owners into equity owners in what the company calls “community” wind power projects. The company is rapidly growing a portfolio of wind projects that aren’t dependent on tie-ins to big transmission lines. That’s a big plus, what with so many other companies’ wind projects on hold waiting for new transmission lines to be sited and/or built – a seemingly endless process.

Lime Energy is a nuts-and-bolts energy-efficiency firm whose specialty is retrofitting existing buildings in order to save their owners money. While the company has suffered in the current recession, with the White House now floating the idea of “cash for caulkers,” Lime’s expertise could soon be in great demand.

Comverge’s expertise already is in demand. As with EnerNOC, Comverge is a leader in demand response technologies designed to save energey while saving customers money. Demand response is considered by many to be the “smart” grid’s first killer app

Posted: For the Week of November 15 – 21, 2009

Part 2 of 3

I suspect that it won’t be long before Wall Street realizes there are a number of small-sized, alternative-energy pure plays that make tempting takeover targets for the corporate behemoths that are going to dominate in a carbon-constrained world – outfits such as General Electric (Symbol GE) and Siemens (Symbol SIE).

Last week in Part 1, I looked at three such possibilities: Itron Inc., (Symbol ITRI), EnerNOC Inc. (Symbol ENOC), and MYR Group Inc. (Symbol MYRG). (For more see: Thinking of Itron, EnerNOC and MYR Group as Possible Takeover Candidates)

Here are three more: Ocean Power Technologies Inc. (Symbol OPTT); WaterFurnace Renewable Energy Inc. (Symbol WFI); and Energy Recovery Inc. (Symbol ERII).

Keep in mind this is all speculation.

Each of these three companies is a standout in a specific green energy sector starting to see rapid growth. Each has standout technology. Unlike many other small green energy firms, WaterFurnace and Energy Recovery are in the black, and Ocean Power Technologies looks like it will get there.

Ocean Power Technologies’ equipment generates electricity from ocean waves, a green power source that has the advantage over wind and solar of tending to be a more predictable energy source. The company just won a contract from the Australian government for a 19 megawatt installation.

WaterFurnace is an extremely cost-conscious provider of small-scale geothermal energy systems. Its business has held up during the wicked housing slump, and its prospects are buttressed by government tax credits for green energy installations.

Energy Recovery’s equipment effectively makes water desalination cost effective by significantly reducing the amount of energy required. The company just told Reuters that it sees its industry growing as much as 25% annually. The company also told Reuters that it plans to expand its operations.

Next week: Three more logical takeover candidates.