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Mark Biondetti
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I am a retired financial writer.
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  • Arista Power's Power on Demand: The Most Realistic Way to Reduce Peak Demand

    I came across an interesting column over the weekend that will give you an inkling of the tremendous potential market for  Arista Power's (OTCBB:ASPW) Power on Demand peak-demand shaving system.

    The column, titled "McKinsey Considers Next-Gen Smart Grid, Gets It Mostly Wrong,"  originally appeared on on April 18, 2011It was written by William Pentland, Senior Energy Systems Analyst at Pace University and Co-Founder and Managing Editor of Clean Tech LawBusiness.

    The gist of the column is that McKinsey & Co., a top-of-the-line management consulting firm, and many other energy analysts are missing the boat when they talk about "demand side management" of electric power. Pentland says that too many analysts argue and expect that consumers and managers of businesses will be willing and able to shift their demand for electricity during peak demand periods through load shifting and energy efficiency and conservation.

    Pentland argues that reducing peak demand at the consumer level by changing the way businesses operate is an uphill and probably losing battle. "There are many reasons why consumers tend to use power more heavily during specific hours of the day," wrote Pentland. "Most people depend on electricity to produce value. Computers, copy machines, scanners, faxes and countless other marvels of the modern workplace are engines of productivity. There are limits to how many we can turn off at any given time without having adverse impacts on productivity."

    How refreshingWilliam Pentland obviously understands the real world, in which managers of businesses fight every day to run an efficient, profitable enterpriseThey arrive in the morning and turn on lights and machinery, and that creates a spike in power demand from the gridAre we really going to them they can't turn on their machinery when they need to, or that they can't run all of their machines at one time, or that they have to stagger their employee shifts just to reduce peak electric demand?

    The real long-term solution to reducing peak demand, Pentland argues, is on-site power generation and storage -- and I agree with him.

    This is exactly what Arista Power's Power on Demand system provides and it's why I believe there will be such a huge market for this innovative new product. Utilizing wind, solar and also energy drawn from the grid during periods when energy costs are low together with custom-designed, on-site storage system, Power on Demand provides a commercial business with a power source to draw from when electricity demand reaches certain "peak" levelsIn doing so, Power on Demand reduces the sky-high demand charges imposed by electric utilities when power demand spikes, even for brief periods. Even if a commercial business requires that peak demand for only ten minutes in the course of a day, utilities will charge the customer for the capacity to deliver that peak amount of power for the entire monthIn some cases, demand charges can account for up to 70% of a commercial electric bill.

    What Arista Power is saying to large commercial users of electricity is this: you do not have to change the way you operate your business to reduce onerous demand chargesThis is a powerful argument and, as William Pentland's column indicates, it's also the most efficient, productive and realistic way to reduce peak electricity demand.

     You can read Mr. Pentland's column in its entirety

    Jul 25 11:58 AM | Link | Comment!

    Commercial electricity users who find their electric utillity bills wildly inflated by so-called demand charges will soon discover that there is a way to dramatically reduce these charges thanks to a revolutionary new system developed by Arista Power (ASPW.OB).  Arista's  Power on Demand system integrates wind and solar energy, grid power and energy storage to reduce the spikes in power demand from the grid that can lead to these onerous charges.

    The concept of a demand charge is confusing to many commercial electric users, but essentially it is a charge to reserve a certain amount of capacity based on a customer's peak usageFor example, if a business turns on its machinery in the morning and requires a surge of power from the grid for ten minutes many utilities will charge the customer for access to that amount of capacity for the entire billing cycle. The theory behind the demand charge is that customers who require the most capacity should share the cost of  building and maintaining that capacity

    Demand charges can account for up to 30% to 70% of a commercial electric bill, and they are proliferating quickly across the United States, Canada and elsewhere in the world as utility companies look for ways to pay for increasingly expensive construction and maintenance costs by imposing additional charges on customers who require the most capacity -- even if they only use that capacity for a brief time each day.

    Arista Power's  Power on Demand system is designed to utilize energy created from the Company's proprietary WindTamer wind turbine, solar panels and also energy drawn from the grid during low-usage periods combined with a storage and management system that enables the customer to draw power from its own storage system when demand reaches a certain level. By smoothing power demand on the grid and 'shaving the peak' demand spikes, demand charges are reduced and electricity bills are lowered.

    So far, Arista has sold three Power on Demand systems. The Company says its payback period for its system can be as low as 2 to 6 years, which is far below the payback period of most stand-alone renewable energy systems.
    Arista has also adapted the Power on Demand technology for mobile applications that integrate wind, solar, fuel cells and energy storage as an alternative to diesel generators at off-grid locations.. Arista has sold two of these units so far, one to the U.S. Army and one to the Federal Bureau of Investigation. The military market potential for these units appears to be very large. Recent articles in The New York Times, on and elsewhere have focused on the danger to military fuel convoys that deliver diesel fuel to generators at remote sites. The Arista Power mobile system could dramatically reduce the need for these fuel convoys.

    Arista Power has a seasoned executive and engineering team that previously served at Ultralife Corporation (ULBI), a large and well-known energy storage company. By combining their expertise in energy storage with Arista's WindTamer wind turbine, solar energy and fuel cells, Aritsa appears to have hit upon a winning combination.
    Demand charges are increasingly becoming a hot topic of conversation as more utilities impose them and a growing number of large electricity users are beginning to understand what they are and how and why  they are imposed. Until Power on Demand came along, these electricity customers have had no alternative other than changing the way they run their businesses, by staggering shifts, or trying to use their machinery at different times in attempt to avoid the brief but costly demand spikes. Power on Demand is a game-changer in that it allows the customer the freedom to run its business as it sees fit, rather than changing its methods of operation in an attempt to reduce demand charges.

    In Power on Demand, Arista Power appears to have come up with precisely the right product at precisely the right time.  



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Long ASPW.OB
    Jun 20 12:29 PM | Link | Comment!
  • The Elephants Are Running In The Right Direction For General Growth Properties (GGP)

    Wall Street's large institutional investors have been compared to a herd of elephants, and if you are an individual investor it's usually desirable to be moving in the same direction as the elephants. In a stock market dominated by hedge funds, investment banks and other mammoth investors who control huge pools of capital it often pays to position yourself in stocks in which these dominant market players have, shall we say, a rooting interest in a stock's positive performance.

    But if the big hedge funds and investment banks are elephants, what would you call China Investment Corporation, the sovereign wealth fund responsible for managing a portion of the People's Republic of China's foreign exchange reserves? As of the end of 2009 the fund's assets were estimated to be worth $322 billion.

    The reason I bring this to your attention is that China Investment Corporation has taken a roughly 7.8% stake in the "new" General Growth Properties (NYSE:GGP), the real estate company that on November 9, 2010 emerged from the largest real estate bankruptcy in U.S. history.  After 19 months of bankruptcy proceedings, General Growth has spun off its "non-core" (some would say riskier) assets, including planned communities and development parcels, as a separate company named Howard Hughes Corporation. The "new" General Growth, which now owns 183 shopping malls, completed a public offering on November 19, selling 155 million shares at $14.75 apiece. In addition to China Investment Corporation, the Future Board of Guardians, an investment manager for Australian Government pension funds, purchased a 6.4% stake in GGP.

    What makes these investments interesting is that both China and Australia have seen their currencies rise in relation to the U.S. dollar. Both countries are resource-based and both are managing their monetary policies in a more conservative manner than the U.S. Federal Reserve, which continues to peg short-term interest rates at zero and which continues to create trillions of dollars out of thin air in an attempt to push long-term interest rates lower to jolt the economy back to life.

    The Fed's policy of flooding the world with new dollars is not playing very well with our trading partners, who view it as a blatant attempt reignite inflation, which the Fed apparently sees as a far lesser evil than the dreaded spectre of a 1930's-style deflation. China, in particular, has been highly critical of the Fed's policy of reflating the U.S. economy out of its doldrums. But a number of other U.S. trading partners have also been critical in part because these countries hold massive amounts of U.S. dollars in foreign exchange reserves. Not only are these dollars losing value in relation to their own currencies, it's difficult to generate any meaningful investment return on them because U.S. debt securities offer ridiculously low interest rates.

    Viewed in this light, the decision of China Investment Corp. to buy a stake in General Growth Properties could be viewed as a logical way to protect a portion of its foreign exchange reserves by investing in U.S. assets that could increase in value if the Fed's ultra-loose monetary policy eventually touches off rising inflation.  There were even reports that a bidding war of sorts emerged from other sovereign investment funds eager to invest in General Growth's public offering, possibly a sign that other governments view GGP's massive real estate portfolio as a hedge against rising U.S. inflation.

    In addition to the governments of China and Australia, who purchased their stakes through the Bronfman Family's Toronto-based Brookfield Asset Management, General Growth's other major shareholders include Pershing Square Capital Management, Morgan Stanley, BNP Paribas, Credit Suisse, the Canada Pension Plan Investment Board and Paulson & Company, a list which definitely qualifies as a herd of elephants.

    General Growth plans to start selling off certain properties to reduce debt, and has hired a new CEO, Sandeep Mathrani, former Vice-President at Vornado.

    On Wall Street, the elephants tend to get their way and something tells me that General Growth's powerful group of shareholders and underwriters (which include Goldman Sachs, Deutsche Bank, Wells Fargo Securities, RBC Capital Markets, Barclays, UBS. Morgan Stanley and others) will tilt the odds towards GGP turning into a winning investment over the next few years. Already, Goldman, RBC and Deutsche Bank have issued buy recommendations on the stock. As General Growth implements its strategy of selling assets and paying down debt, do not be shocked if each transition is greeted with positive reviews, new buy recommendations and rising target prices from the Wall Street analytical community.

    I think there is a real possibility that international investors, including sovereign government funds, could increasingly come to view General Growth Properties as a means of hedging against what many of them view as an inevitable rise in U.S. inflation rates. If nothing else, Wall Street knows a marketing angle when it sees one and this should be an irresistible sales pitch for investment banks who want to do business with them.

    In other words, as far as General Growth is concerned, the elephants are running in the right direction.

    Disclosure: No positions
    Tags: GGP, GS, MS
    Nov 30 9:31 AM | Link | Comment!
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