ginchinchili

Another Reality Check for Energy Storage Investors

Thanks for clarifying that, John. EnerSys has had a rather remarkable run-up in 2009, and I have actually sold off some of my own position. I do plan to hold what I have left and add to in the coming year as I see fit.

I apologize if my tone seemed to imply some nefarious intent on your part. Subjectivity is an inevitable human condition for us all, but you have always striven to be open and honest and to back your positions with facts. It's immensely appreciated. Your articles have helped me to be more knowledgeable about the battery industry and have made me a better investor. Thanks.

Another Reality Check for Energy Storage Investors

John, as I've stated many times I appreciate and respect your many articles on batteries, however, I take issue with the way you've presented "two of the three largest lead-acid battery manufacturers in the world," offering us Johnson Controls and Exide, and in the same breath, Axion, while failing to mention EnerSys. What bothers me about this is that I am aware that you have closed out your position in EnerSys and hold large positions in Exide and Axion, two companies now in close partnership and to which EnerSys now represents direct competition to your investment dollars.

You had always confined your discussions to pure plays, of which Johnson Controls is not, but EnerSys is. If your focus here is on auto batteries alone, please clarify that because in the past when you did own shares of EnerSys you always included them in your discussions on motive batteries and it looks bad when they are suddenly left out of your excellent articles precisely after you have sold your shares.

Alternative Energy Storage: Cheap Continues to Outperform Cool

jerrydd, just what are my "just rewards" and why? Seems like a crappy attitude, but I wouldn't immediately assume it's deserving of jail time. Besides, haven't I made it clear that I don't buy stocks on other people's recommendations? But thanks just the same.

On Aug 04 12:34 PM jerrydd wrote:

On the other poster about my descriptions of Exide as crappy, it's
shorthand for unethical business practices so bad the officers went
to jail and their batteries are poor quality and a low margin one.
Please invest in it so you get your just rewards. Same for Valance,
their products are way too expensive and fail quickly so yes they
suck. Maxwell is hype as is Unisolar/ERNR. Please invest in them for the same reasons.

Alternative Energy Storage: Cheap Continues to Outperform Cool

Mayascribe, if there's one thing I've learned about investing it's that the talking heads should be ignored. If they get something right it's usually more coincidence than anything else, because for every pundit whose prediction is correct, there are 20 others who get it wrong. And who's right one day will be wrong the next.

My investing skills decidedly improved when I started focusing on learning as much as I can about a company; a product; an industry; investing techniques; etc., ignoring the pundits, and analyzing your information with a big helping of common sense and a heaping spoonful of caution. I'm not saying don't listen to the pundits, because they have good information, too. Just ignore them when they start pointing you to certain stocks. And don't think this is a backdoor way of taking a swipe at John P. Personally, I don't put him in that talking head catagory, but I do take the same approach as I mention above. John's a wealth of information and I've learned tons about the battery industry from his articles. I know he has particular favorites that he discloses to us, and I even weight that to a certain extent, but I wouldn't encourage you to invest in a company because John Petersen has done so (No offense, John.) He has his reasons for doing so, and they're not your reasons. Plus, he doesn't have a crystal ball, nor do you, nor I, nor even Goldman Sachs. Knowledge, analysis, common sense and instinct. And I agree with your tendency toward long term investing. Just stay up on the company and industry and don't be afraid to make changes if you deem it necessary.

Alternative Energy Storage: Cheap Continues to Outperform Cool

jerrydd, in your brief analysis of the battery industry relying primarily on modifiers such as "suck" and "crappy," I noticed you left out EnerSys, for neither praise nor criticism. In fact, EnerSys doesn't often get discussed one way or the other in public forums, which surprises me.

Of course, John always includes it in his charts and discloses it as one of his battery investments. Last week Tom Conrad wrote an article for Seeking Alpha about clean tech stocks (seekingalpha.com/artic...) in which he mentions that he has several stock lists that he has compiled. I looked at his "Electricity Storage" list and found EnerSys missing. I posted a comment pointing this out to him and he acknowledged it was an oversight and that he had since added it to his list.

I just find it a bit curious because I think EnerSys is probably in the best position of all the battery companies. They are certainly the giant among industrial battery producers and set up for mass production of their primary money makers, lead acid batteries, but also produce nickel and lithium batteries, and has recently been increasing their investments in research, development, and production of lithium products. I'm impressed that they aren't just trying to crank out as many lithium car batteries in, what would be, a questionable quest to corner the auto battery business, but instead seem to be focused on applications where battery weight and size are most relevant. (I suspect this is one of the reasons John is attracted to this company as an investment; it reflects his thinking.) They also have a well-defined global distribution network, which will prove big in coming years.

Yes, this is a plug for EnerSys, but it think it's warranted and deserved. All I can think of is that EnerSys comes across as kind of boring, but I think they will quietly grow to become one of the most successful players in the battery industry. The following is a link to a press release that was issued last week which touches on some of EnerSys's business pursuits that I mention above: phx.corporate-ir.net/p...=

As always, thank you, John, for sharing your research and helping to educate us about the battery industry. I don't care if people agree or disagree, but I don't think people should get upset with you just because they disagree with something you write. Personally, I don't agree 100% with anyone, including myself (?), but if I tried to pick a fight with everyone I disagreed with, well, life would be a real bummer. Thanks John.


On Aug 03 09:44 AM jerrydd wrote:

>
> Here John keeps bashing Lithium batteries yet he has no evidence
> in the short term to back up his points and his longer term argument
> of not enough Lithium is weak. Nor has he put any evidence that Lithium
> would cost more as Li already has costs down to $.30wthr at 1/2,
> 1/3 the weight of CL batteries.
>
> Lithium is in a more Advanced stage of development now being produced
> compared with his favorite of carbon/lead batteries which little
> is being produced. And his niche for them, start-stop and mild hybrids
> is not from my studies going to be big or will for the short time
> it is here, CL will not be ready vs Lithium which is now.
>
> Due to soon higher oil prices and the low cost of mass produced EV's
> by their natural simplicity, in 5 yrs they will take over the economy
> transport market.
>
> Since Axion won't release info and their hype has nothing to be based
> on other than other CL companies have done good lab tests, I'd be
> very careful.
>
> Warning on Maxwell as their ultracaps are far, far too expensive,
> complicated systems to use them make them not viable. Price a system
> out and you'll be amazed at 10x's a Lithium battery system or more.
> Their power/energy/lb ratio is terrible too.
>
> Valance Li batteries suck!! Every one I've seen used has died rather
> fast.
>
> Exide is a cut corners, crappy company that has low margins and not
> likely to go up much.
>
>
> United Solar Ovonic LLC
> UNI-SOLAR, a product innovation of Energy Conversion Devices, Inc.
> (seekingalpha.com/symbo...) (NASDAQ: seekingalpha.com/symbo...),
> is the leader in building integrated rooftop photovoltaics, ...<br/>uni-solar.com/interior...
> - Cached
>
> Has this company or it's earlier versions going back 30 yrs every
> produced a profit from a product?? They are another hype company
> I'd run from, not to.
>
> C+D tech seems to be in almost every cell ph tower in the country
> and has good products. But it could like any battery company get
> overtaken by tech advances. I use them in one of my EV's and happy
> with them.
>
> Zenn and EEstor looks more and more like hype and no substance.<br/>
>
> A123 is about the only solid battery play when it goes public I see
> other than BYD as both have proven products and orders for them.
>
>
> I want badly to see batteries become better as I see EV's, plug in
> hybrids as the future being 3x's as eff as gas/diesel and they use
> US made electricity, not imported oil which next yr will hit $4-5/gal
> again as soon as the world economy comes back as there is not enough
> supply. Because of this they will be by far the cheapest transport
> means, fuel, making EV drive the way to go.
>
> But I've seen way too many battery company hype machines, scams before
> and there are many in this list. These are just the ones who I know
> about. The other may or may not be good as I don't have enough info
> on them.

Energy Storage on the Smart Grid: 99.45% Cheap and 0.55% Cool

I think your article "Smart Grid's Enabler - Alternative Energy Storage" is among your most informative. Coupled with the 2 EAC reports mentioned in that article, readers can get a good picture of smart grid energy storage requirement the government and utility companies will be looking to implement over at least the next 10 years, and certainly a lot longer. I believe this will be true not only in the US, but eventually all over the world.

So let me see if I've got this right, and please correct me if I don't. Batteries (and like serving technology) can be divided into 2 major categories: (1) motive energy storage, for transportation, and
(2) energy storage for smart grid applications. The latter category can be broken down further into 3 sub-categories: (1) generation; (2) transmission and distribution; and (3) end-user. As far as which companies do what, I think I'll leave that up to you since several of your articles, particularly the one cited above, tackle that much better than any of my primitive slicing and dicing.

It's also true that some companies' technology qualifies for both primary categories, though we're at such an unusual point of tectonic change, as the greentech revolution moves deeper into its nascent advance, no one company has a lock on which technology will be used where and for what, but that, too, will change. In fact, we're already seeing those green shoots popping up into the market place and defining their positions as the first crop of this technology moves in. It's really quite thrilling, with tremendous potential for being extremely profitable as well.

As always, thank you, John. You've helped make me a better investor and have assisted in adding another helping of excitement to my stock investing.

Auto Batteries: Short Term Revenue Growth Favors Lead-Acid by 6 to 1

That should be "periodic" diagnostic testing. Sorry.

Auto Batteries: Short Term Revenue Growth Favors Lead-Acid by 6 to 1

Hi, John, and thanks again for sharing your research. As you may be aware of, EnerSys, through their Li-Ion battery producing subsidiary Modular Energy Devices, is conducting a research trial in Quebec on the feasibility of PHEVs, in partnership with Laval University and Desjardins, Canada's mega financing conglomerate. ModEnergy will be supplying the Li-Ion battery packs and working with the University on improving performance and durability, and presumably how to improve cost efficiency since a more cost efficient Li-Ion battery is ModEnergy's marketing angle. (I don't know how accurate that is since I haven't done any cost comparisons.)

To be clear, this isn't a trial solely for improving battery performance. They will be studying the feasibility of PHEVs by way of tracking and period diagnostic testing of a small fleet of PHEVs. Obviously, ModEnergy will be focused mostly on the functions of the batteries. The trial is set to last 4 years.

I think this is an excellent idea and more such studies should be done. There are several points that this study suggests to me: 1) EnerSys believes that the market for Li-Ion energy storage will grow as suggested by their increasing investments in research, development, and manufacturing of Li-Ion batteries, batteries of all sizes for a multitude of functions; 2) though one has to be careful about drawing too much in the way of conclusions based on a study trial like this, the 4 year time span suggests to me that EnerSys doesn't believe there is any rush to try to crank out a slew of Li-Ion car batteries, particularly based on present day technology; 3) it should be stated that the vast majority of EnerSys's revenue comes from Lead-Acid batteries and though they are wisely covering their bases, there's no reason to believe that EnerSys is planning on changing their primary revenue market anytime soon. I have to assume that collectively the good people at EnerSys know more about the battery market than all of us.

Here's a link to an article regarding the study:
www.modenergy.com/news...

How Short Term Supply Constraints Will Impact Booming HEV Markets

Don Harmon writes:
"Also note again the ARRA funding specifically mentions the development of advanced Lithium-ion manufacturing capability here in the U.S. While I am sure that does not exclude funding of advanced carbon battery technology, the grant money will mostly go to Lithium-ion and that happens to be true."

Don, I have great respect for your knowledge on Li-ion batteries and have learned a lot from your exchanges with John, but I don't think it's useful to make any assumptions about where the grant money is going among the advanced battery manufacturers, and would-be manufacturers. The DOE has asked for grant proposals from the most knowledgeable minds on battery technology and the industry that the US has to offer. It can't help but be a learning experience for the DOE and will no doubt do much to shape the decision making process on where the money goes and how the DOE sees the future of the US battery industry.

You're absolutely right in pointing out that the ARRA actually mentions the DOE's particular interest in Li-ion and from that we can safely assume that there will be government dollars going toward the advancement of Li-ion battery manufacturing, but that's about as far as we can currently take those assumptions. They have specific overriding goals that the grant money is intended to help achieve and those goals take precedence over any one type of battery or battery company and I'm sure they will want to get as much bang for the buck as possible. Keep in mind that the Act also states that there are specific requirements that must be met in order to be awarded grant money including having the matching funds (with some leeway on that) and these businesses requesting the grants have to be in a position to sustain themselves after the grant money is depleted. I don't think they want the grants to be used to pay off company debt already accumulated.

This should all be cleared up within the next few weeks. I'm just cautioning all interested parties about making assumptions regarding these grants. I think it will be profoundly interesting as we learn who gets what and why. I'm not even sure how much the public will be privy to in regards the grant proposals. Companies tend to keep mum on their near future plans. After all, as you and John both agree, this is going to be a horse race and the grant announcements will act as a kind of starting bell for this horse race. Who wants to reveal their strategy to the competition?


On Jun 21 04:34 PM Don Harmon wrote:

> My point is simply this. John and Jack both focus on an impossible
> production schedule for Lithium-ion (and NiMh) batteries to meet
> the demands of the EV market immediately.
>
> This is their whole thesis + the scare tactics they cite regarding
> the availability of "precious metals". Then John explains to us
> all how Micro-Hybrids are the first wave of the EV market and these
> vehicles only require a single battery to acheive their goal. Well,
> guess what - a single battery of ANY chemistry is not a big deal
> to supply with current production worldwide with Lithium-ion. Lead
> Acid has no advantage here. Sorry guys, I could easily line up production
> for the Micro-Hybrid market in a few weeks!
>
> Then with Mild-Hybrids, the need for more batteries increases and
> the advantages between advanced carbon &amp; advanced lithium-ion
> start to decrease according to John's argument. By the time we reach
> Full-Hybrid and Plug in Hybrid the advantages clearly go to advanced
> Lithium-ion even by John's own admission.
>
> My point is by the time this "evolution" has taken place there will
> be plenty of advanced Lithium-ion production already "in-place" to
> handle the needs of the world EV market - despite the dire shortage
> of rare metals that Jack loves to dwell on. Jack, I do respect you,
> but I just can't back your game here.
>
> What both of these esteemed gentleman keep forgetting is the ability
> of the free market and the ingenuity of the future graduates of our
> higher education institutions to rally behind the vision now being
> shaped by the new director of the DOE, Dr. Steven Chu. It is no
> coincidence that he has defunded Hydrogen research in favor of an
> Electric future that can be realized NOW rather than waste money
> on a Hydrogen future that will take way too long to matter anymore.
>
>
> See his comments at the commencement address at Cal Tech recently:
> revengeoftheelectricca.../
>
>
> Also note again the ARRA funding specifically mentions the development
> of advanced Lithium-ion manufacturing capability here in the U.S.
> While I am sure that does not exclude funding of advanced carbon
> battery technology, the grant money will mostly go to Lithium-ion
> and that happens to be true.
>
> Therefore I have disagree with both that there is NO choice but lead-acid
> technology for widespread application in transportation. Not only
> are there choices, but there is funding and very powerful forces
> fueling the trend toward advanced Lithium-ion technology that even
> the car makers cannot ignore. NO car maker has made the public statement
> that they are bringing out EV's with advanced carbon battery technology
> and I doubt any will in the near future either?
>
>

How Short Term Supply Constraints Will Impact Booming HEV Markets

John, you present a very convincing argument, particularly in this piece. However, something that has struck me as I read about the American Recovery and Reinvestment Act is that it actually mentions the government's intentions to place a lot of emphasis (I assume that translates into $dollars$) on the development of advanced lithium ion batteries. Isn't it implicit in your position that this money would be better spent elsewhere? Is this just another example of our government not thoroughly weighing all sides on an issue and are placing their bets on a horse that can't win? Do you think they're position on where best to invest the advanced battery grants is better informed and developed now that they've been analyzing the battery companies' grant proposals?

White House Report: GM Volt Is Not Ready for Prime Time

I'm not intending to be political here, but the following analogy works in this context. I was against the invasion of Iraq because I felt that it was a monolithic gamble and that we could not afford to gamble on the lives of our military personnel, nor the trillion plus dollars it will eventually cost us. I'm not here to debate the success or failure of this undertaking, but I think it's safe to conclude that if we used the invasion of Iraq as a blueprint for our foreign policy and repeated implementation of that policy in other areas around the globe then our country would soon be bankrupt in a way that makes our current financial situation look like a kid deprived of one week's allowance.

By the same token, we likely have one real shot at this effort to turn our economic base into cleantech industries because it will be a long time, if ever, before our government will be able to invest this kind of money into our industrial complex. We have to make this work.

As far as the energy storage piece of this industrial revolution goes it would be foolish to gamble on focusing on the development of Li-ion batteries for large scale energy storage like cars and alternative energy storage like wind, geothermal, solar, etc. Thus, my analogy; it's a gamble we can't afford to make at this juncture.

If I understand him correctly, John isn't against Li-ion technology. In fact, he praises the technology. Nor is he saying we shouldn't be trying to develop that technology, and that's not a point I'm trying to make either. The onetime tremendous financial push that the government is prepared to implement has to go toward something that we know can work for us now, and then as the technology is helping us move forward in this incredible social/technological sea change we can continue full bore on improving all forms of energy storage, lead-acid, Li-ion, fuel cells, ultracapacitors, and every other potential form of energy storage, even some we haven't thought of yet. But we disparately need what works for us now.

Correctly me if I'm wrong, but it's my understanding that EnerSys, has fairly recently developed a Li-ion battery and yet the engine that continues producing strong profits for them is the lead-acid battery. My point is, they continue to improve energy storage batteries, but in a way that allows them to produce the necessary revenue to fund their R&D. Compare that to, say, Valence Technology, that has a negative cash flow and a very heavy accumulation of debt. I ask, which of these 2 companies are in a better position to fund battery development through their R&D departments? After this initial stimulus funding from our government the rest will have to come from the companies themselves. We can't afford to gamble our country's future on a risky venture, and that's what we would be doing if too much of this stimulus money goes to building plants for small Li-ion companies.

A Very Smart Plan for Federal Smart Grid Grants

Thanks for the education on energy storage, John. I've learned a lot from your series of articles. As an investor, I've found the current advent of this cleantech revolution both exciting with opportunity and challenging. This article helps to relieve some of that anxiety, at least regarding battery companies, because it looks like our government has just improved the odds for all battery companies.

So much of the diverse cleantech industry is a roll of the dice for investors. As always, DD is necessary, but now with battery companies part of that research should include a company's R&D goals; an idea of the money a company invests in R&D; the feasibility of their projects; and, ideally, some track record of R&D spending and results. I'd appreciate any comments you have regarding this.

I will add that one of the investments decisions I've made in my attempt to invest in clean technology while reducing investment risk is power cable, because nearly every major alternative energy goal in the works involves a lot of power cable, of all kinds. Just a thought. Thanks again.