Bill Paul's  Instablog

Posted: For the Week of November 1 through 7, 2009

At first glance, Best Buy (Symbol BBY) and Maxwell Technologies Inc. (Symbol MXWL) appear to have little in common. The latter makes ultra-capacitors, which are small battery-like devices, while the former is, of course, the giant electronics retailer.

But such is the diversity of the Smart Grid investment landscape that winners will be found in almost every investment sector.

Probably the most important question an investor can ask as he sizes up likely winners from the $4.3 billion in smart-grid grants Washington gave out last week – not to mention the estimated $200 billion a year over the next 10 to 20 years that utilities and others are expected to spend on smart grid information, communications and other technologies – is this: Does the company make or sell a product that reduces energy usage?

Hundreds of companies do, and while experts say it’s impossible at this early stage to predict with certainty smart grid’s long-term winners, out-of-the-box thinking today may pay off not too far down the road.

Thus does Best Buy look particularly interesting. Web site Gas 2.0 recently wrote that electric scooter manufacturer Brammo is rolling out test bikes at Best Buy locations as quickly as they can. Applying out-of-the-box thinking, it’s not hard to imagine Best Buy morphing into the Smart Grid’s Home Depot and leading automobile dealer rolled into one. As an “electronics” retailer, Best Buy would seem perfectly positioned to sell a multitude of new products and services – many based on saving energy, home security and green power generation – that Smart Grid’s information and communications infrastructure is expected to create.

Also, if today it’s electric motor scooters, tomorrow why couldn’t it be plug-in electric cars and trucks? Why couldn’t Best Buy become tomorrow’s service station, ratcheting up its customer base by offering to fill up people’s “electric gas tanks” for free. (The actual cost is expected to be the equivalent of only pennies per gallon of gasoline.)

Maxwell Technologies, too, has the potential to transform itself. Today its ultra-capacitors are seen generally as a complement to the lithium-ion batteries that are expected to drive plug-in vehicles, providing the quick pick-up motorists want. But as the Smart Grid build-out continues, ultra-capacitors may come to be seen as a very handy and ubiquitous way to provide end-to-end storage capability, from the power plant to inside the home. As several experts have noted, storage will be especially key to making a smart grid work.