Old Wizard

Battery Investing for Beginners, Part 2

John, The subsequent comments stenghten my assertion, I think, that China and Asia will lead in the lithium battrery race. The subsequent comments raise the environmental and raw material issues to a more formidable level than what I asserted and indirectly bring in the cost of labor as well. This is part of the reason I believe that our Government is ignoring the reality of their push to phev's, and that their investment strategy is muddled at best. It would be just another Government blunder if the deficit spending was not so great, but at worst it can be disasterous for the future well-being of our country.

Battery Investing for Beginners, Part 2

John, Thanks for the comprehensive article. I have profited from your articles in that I have a much greater appreciation of the whole energy storage evolution. I will disagree with your conclusion that the Chinese battery companies will not play a big part in our world. It is a fact that both GM and Ford are either negotiating with or have chosen asian battery makers over those in the US. Isn't it a familiar story that we invent, often start production domestically and when the product takes hold, the production goes off-shore, usually to asia or other low cost labor places where environmental and other regulations are not so stringent. As a case in point, First Solar's large production expansion has been in Malasia and off-shore. It's latest large contract is in China and the statement from the company spokesman was that such a project would not be possible in the USA because of the difficulty in tranmission and linkage to the grid.

PHEVs and EVs: Plugging into a Lump of Coal

John, Another good article that drives the reader to the application of applied analysis as opposed to myth and heresay. A couple of points: the graph you present shows gas from waste[ I presume this is methane] is a carbon dioxide saver, while natural gas is a contributer. This seems contradictory. The global warming hysteria and fanaticism has permeated the administration and combined with the arrogance it has displayed in other areas, appears to reject reasoned analytical arguments and favor exaggerated claims while ignoring obvious counterexamples to their position based on questionable and unverifiable evidence of man-made global warming. Be as it may, the so called energy plan upon which they have embarked has no coherence, no sense of urgency and no evaluation of unintended consequences. The investment in Petobras, the sponsering of the bill in Congress by Reid to fund some natural gas conversions and the claim that clean coal is the ultimate solution, while forcing the electric car solution and ignoring nuclear, shows that at minimum there is no focused plan. Not having goals that reduce the current account appreciably in 5 and 10 years should be considered more dangerous to the health of the American citizenery than any imminent global warming crisis and those interested in a cleaner environment should not buy the palliative of providing 15% of our electrical energy from wind and solar[ which requires a doubling of our existing capacity every three years to get there by 2022] by 2020. Analyasis of a coordinated and comprehenive plan that results in a detailed energy program with measureable 5 and 10 year milesones, measures of performance that include less negative operating cash flow, significantly less importation of oil, significant new jobs for americans and less carbon dioxide emissions is sorely needed. We, collectively, have the ability to produce such a program, and, as I have suggested to Fitz, I believe that a group of Seeking alpha contributers and commenters could do a pretty good job of putting one together that is actionable in less than 6 months.

How PHEVs and EVs Will Sabotage America's Drive for Energy Independence

Most of the green folks just don't get it. The most telling info was the statement from the Gov. that electric cars could account for 24% of vehicles by 2030. This still will leave over75% of the presumably mostly gas consuming cars on the road. With a current account that will approach a negative 1 trillion per year and with us still highly dependent on imported oil and possibly batteries from China and Japan, it would seem that the path the country is on will not solve our fundamental economic problem- the production of goods and services that we and the world wants to buy. For sure not much hope even at the 2030 time frame at which we may be approaching bankruptcy as a nation. The issue is not whether the technology can be made practical, but what will make a significant impact to the country's operating cash flow in the near term[5 and 10 years]. John, we need not only to teach our congress how to use a calculator, but also provide it with new glasses so that they can see the real problem.

Obama Announces List of Grant Recipients, Recognizing Significance of Hybrid Markets

John, through my own sources, I was reminded that GE has a big investment in A123. As your table reveals, A123 received one of the largest grants from the Government's 2.5b program. Since A123 is probably going to have an IPO soon, it appears that GE will stand to gain a substantial return from its investment. Further, it is also true that the head of American Superconductor was a former principal in A123 and this firm is also a possible recipient of a Gov. grant. I have not verified whether GE has an interest in AM. SUP.. You are right about the political climate, but did not comment on the Buffet point. On the above, a jaundiced observer might conclude that it pays to back the winner politically, especially when the winner has the power to make such large investments in your business' well being.

Obama Announces List of Grant Recipients, Recognizing Significance of Hybrid Markets

John, I didn't see GE in the list. Did they not get money for their new hi-powered battery initiative? On another subject, The natural gas for fuel bill that is wending its way through congress has been allocated 30m. It would seem to me that a balanced energy plan that really deals both with our critical economic and jobs problem would be more balanced. The investment in battery technology is driving toward an electric vehicle solution that will have a major impact in possibly ten years while that which can impact the country in the near term is hardly addressed. Let's look at the numbers, 3 billion for the CAC program that might save 6 to 9m/gallon on 675k cars whereas converting roughly a million vehicles to natural gas fuel for the same money would save2 to 4 times the amount of oil and have a greater immediate impact on jobs and the country's current account. Further, I believe that this battery money is still a buck shot approach that is not likely to converge as quickly and with the focus of Chinese competitors whose investment in equivalent man hours dwarfs the USA'S . Warren Buffet's alone in the Chinese company shows this to be true.

Are Energy Storage Investors Chasing Their Own Tails?

Another good article, John. I caution you not to be too exuberent about GE's announcement. Immelt's stuardship at GE has not been exactly a rollicking success. The stock price, net profit, dividend, and product market share on engines, appliances, lamps and even generators to a lesser extent has decreased during his tenure while the risk in GE capital has increased leading to a downgrading of GE's corporate bonds. Deals like the one made with Warren Buffet weren't particularly advantageous for existing stock holders. The announcement, while making some sense from their new thrust into the green energy era, seems to be playing more to the politics of the country. GE management is on the Obama team and has gotten guarantees that it can go to the Fed loan guarantee window as a back up to shore up the cash requirements in GE Capital. Given the bet Immelt has made on windmill farms, electric grid management and medical record computerization, he must support the administration programs and 100m is good pr. The only problem is that demand at this point is pretty much Gov. fostered and may or may not be real, take longer to develop so that break even can be realized and not represent what the 200k or less user wants, needs or can afford. For example, what real evidence is on the table that leads us to believe that the railroads of the world want to buy and can afford hybrid electric train engines that makes the investment viable and at what point would their new batery venture coincide with a real windmill market. The Gov.'s goal is to provide 20% of todays generating capacity from wind and solar by 2030. Is the payoff from this investment going to break even in the next ten years? If I were running the ship I would be more inclined to build train engines that ran on natural gas, but my measure of performance would be nearer term and not driven by as many unpredictable dependencies such as politics, speed of windmill facility installation, development of high temperature reliable and safe batteries, and the time horizon of when effective electric grid management from wind generated electricity of any magnitude is brought on-line.

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

John and engstudent, It's nice to find folks who genuinely attempt to do real analysis instead of picking a solution that they like and not analyzing it for its true problem solving merits. The urgency of solving the energy dependency problem is not only security, based on geopolitical considerations, but one of economic viability for our country. The country has run an increasingly negative cash flow with the rest of the world since 1991 and this negative operating cash flow is approaching a trillion dollars/yr. This does not count borrowing to satisfy our yearly domestic budget deficits. Replacing imported oil with a commodity that we have in the USA should be a no-brainer, especially if it can be done quickly. Electric cars and the discussion of the viability of lithium batteries to power them seems to be great but no one really believes that elctric cars or hybrids could make a dent in solving the negative cash flow problem in 5 or even 10 years. This is why I favor the use of natural gas vehicles as a near term solution. It addresses the cash flow problem the earliest, stimulates jobs the quickest, reduces green house gases and air pollutants and really needs no new technological or economic miracle to be cost effective. I hope the Steven Chu who responded to your comments isn't the secretary of the treasury. If it is , we are really in trouble. As engstudent has pointed out, important components for the electric car would not come from the USA. I would also point out to Mr. Chu that if the chinese are ahead of us in lithium battery manufacture it would be difficult to compete with them because of their worker pay scales and safety rules and short of massive govenment subsidies or trade tariffs or embargos, we would always be trying to catch up. Miscellaneous, GM'S eastimated cost for Volt is 40k. A 7500 dollar tax credit at a marginal tax bracket of 25% would result in less than $1900 savings, hardly enough to offset the difference in costs of its competitors. For the corvette man you can buy the new german hybrid that will fit your bill at a price of$87500. For you global warming,greenhouse gas folks, the reason the port of long beach california has required all trucks entering the port to pick up from or deliver goods to ships to be natural gas powered is to reduce air pollution. Nuff said.

A Very Smart Plan for Federal Smart Grid Grants

Lack of quantitative data is most likely a problem for many of the possibilities for alternate energy sources. I believe that this administration has already made up its mind that near term solutions which have the most quantitative data , proven technologies and carry the least risk to practical operation will be ruled out[like natural gas transportation] and is driving the country to renewal non-carbon emitting solutions. For these like wind,solar and biofuels the energy dept and administration are not addressing the whole problem which needs an appollo type focus. The problem for near term step increases for wind power generation ,e.g.first needs a near term stretch goal, a total plan that includes removal of political and legal impediments, the development of control equations, logic and software, adequate interim energy storage mechanisms, delivery transport lines with higher efficiency and sufficient funding to match the goals. Projects which support significant development, installation and initial operation of sizeable facilities and their insertion into the power grid need to be defined and funded by the government. If a 100b of the stimulus funds were dedeicated to enabling several such projects in 5 years then I believe real progress would be made. As it stands what oil import reduction does the administration believe or for that matter what do you estimate will result in 5 years? Without establishing significantly important goals that get the country to problem solution in 5 and 10 years, we will be squandering money we don't have and borrow from the Arabs and Chinese on a lot of projects while others like the Chinese make real and near term progress.

A Very Smart Plan for Federal Smart Grid Grants

John, Your being encouraged by the latest pronouncement by DOE is a little disconcerting. I see it as the typical approach of an R&D oriented mentality and not one that wants to solve our energy problem with any urgency. The numbers quoted for the Chinese goals relative to windgenerated energy are a case in point. They set the stretch goal, a massive amount of wind energy in 11 years. We talk about being independent of foreign oil by 2030. The approach that says show me your technology is worthy and raise a bunch of money and we'll give you some stimulus money is the typical R&D view with the added downside of no specific goal managed by a government bureacracy. Grid management can't only be done at the end points of a distributed system. Because our national grid is interconnected, control issues are also systemic and the addition of intermittant sources of energy that hopefully are large enough to matter, will require the synthesis of a system wide control logic with very rapid feedback mechanisms. Where is the thinking that recognizes this problem in the energy plan? Just like the natural gas issue, I don't see where this group has thought through any comprehensive energy plan , and while the program can provide gains to the investors who capitalize on the infusion of large amounts of money by the Gov., I fear a golden opportuniity[ perhaps our last opportunity] to solve the serious energy and economic dependency issue is being lost.

Axion Power: Time Is Right for Gas Guzzlers to Dual Mode EV Conversions

John, I give you accolades for thinking creatively about the joint issues of energy, jobs and solving our operating cash flow problem as a country. I don't see how this solution fairs better for all three issues collectively or individually relative to a conversion to natural gas fuel for today's gas guzzlers. Conversion costs are much less, natural gas is a commodity the USA has and the cost of natural gas should remain very competitive with gasoline. On top of those factors Co2 emmissions should be dramatically decreased if Natural gas was used for our transportaion fuel. The folks who want the emissions problem to be solved with one fallow swoop, are not facing reality and pushing the all electric solution without regard to urgency of our cash flow, jobs and strategic geopolitical issues seems to be utopian. Their time horizon is 20-30 years. I believe we urgently need to make significant in roads in solving the above problem set in 5-10 years

Energy Storage: Chrysler - A123 Alliance Likely to Spark Interest in Sector

Speculawyer, Labeling someone a fan of T Boone obfuscates the issue. I earned my living in systems analysis and engineering. I learned early in my worklife that one cannot solve a problem unless, they first properly define it. I have followed the financial morass we as a country are in very closely and have come to the conclusion that the country can not continue to be prosperous when its operating cash flow is increasingly negative over 19 years. The problem results from the importation of energy, trade imbalances primarily with China and other Asiatic countries and a shortfall in the net profits of investments abroad and foreign investments here. To solve this problem we need to import less energy and make more things here that foreign countries will buy. The problem needs solutions that make an impact quickly and with a sense of collective urgency. This has led me to the natural gas solution. 51% of our electricity generation is from coal -fired generation facilities and less than 1% from wind and solar. Electric plug in cars will require more electrical generation and take the better part of a generation to replace even 60% of our gas-powered vehicles. On the other hand, Over 40% of our daily oil usage goes to gas-powered vehicles. Further, we have the domestic natural gas resources and can use them to more quickly power autos,hybrids, buses and trucks. That is why I am a proponent of the natural gas solution. I also believe that we should be more heavily invested in wind, solar,tidal and geothermal as a country and am disappointed at the small part of the stimulus devoted to these areas. Again, in any solution set, the measure of performance should be the reduction of the current account negative balance with a goal of driving it to zero in 10 years or less. If we as a country don't do so, our future becomes increasingly hampered and our economic well being severely hindered.

Energy Storage: Chrysler - A123 Alliance Likely to Spark Interest in Sector

John, The euphoria over battery-powered cars is more an outgrowth of The new president,s oratory and his popularity than one which has facts and rational logic behind it. The fact is that the structural problem with the US's economy has to do with the ever increasing negative current account which is now approaching a negatve one trillion/yr. Electric cars cannot solve this problem soon enough, for the country to have a prosperous future. The deal with Chrysler is between an unhealthy company and a wanna be whose product may or may not be viable. Tre move certainly panders into the president's rhetoric and a constituecy which probably won't buy electric cars in sufficient quantities for the forseable future, and may be more an indicator of those companies' present status than anything else. That is why, I subscribe to focusing on natural gas-powered vehicles as the most important energy intiative there should be. My analysis is that nothing can make a sufficient impact on our current accout more quickly, create jobs that last, reduce green house emissions and make us strategically stronger. While I believe that alternate energy intiatives should continue, including electric cars, we can't lose sight of the more pressing problem that needs a quick solution lest we run out of tme and our economic and strategic weakness make the longer range alternatives impossible.

Why Pure Play Energy Storage Companies Could Double for Investors

Firfly, It's not just the solar cell farm, the intermediate storage, the storage mechanisms, it's also the right away for the transmission lines, the type of transmission lines, the insertion into the existing grids and the ability of the grid to control itself efficiently when subjected to impulses in demand that constitutes the system problem that must be addressed. Unless the gov jump starts the whole system with large enough[ I refer to them as pilot projects] progress will bog down in interminable legal, technological and cost-effective semi conjectural arguments. The Cape wind project is a case in point;it's been in the works for over 5 yrs and has gotten only 3 of the required 11 permits to proceed. Our technology for alternative energy is far more advanced to accomplish significant alternate energy in less than 10 years than was our technology to go to the moon and we did it in 8.5 years.

Why Pure Play Energy Storage Companies Could Double for Investors

John, I think it will take 20 years with the approach being taken for solar and wind to change much in the way we create relaible energy. The new president states that he wants to double today's capacity to generate electrical energy by renewables, particularly, wind and solar in 3 years. Today the alternative sources account for something less than 1% of our electrical capacity. I believe that our new energy secretary is a smart man, but my fear is that he is an R&d academician and is not geared to the implementation of complex systems. The need to replace 6.5 million barrels of oil/ day we import from unstable and in several cases unfrendly regimes requires a greater sense of urgency. If we are going to allocate over 100b dollars of investment, it should be focused on large scale pilot projects for alternate energy that would provide the forcing function and direction for componet development and deployment. Establishing a bigger goal to be achieved in 5 years would lead to your witnessing some of the unimaginable progress sooner and be a wiser investment strategy for the future well being of the country.