Dave Huntsman

Compressed Natural Gas: Key to American Energy Independence?

The article ends with

<i> Now all we need is for American capitalism to follow up and take advantage of this opportunity.</i>

I don't think that will happen - in a timely manner (which would be, now) - without the government taking the lead jump-starting the fuel infrastructure chicken-and-egg issue. (Sort of like how the Ports of Los Angeles and Long Beach are jump-starting things at the Port, banning all 'old' diesel engine trucks in a few years; and replacing them with 8000 cleaner diesel - and 8000 LNG/CNG trucks; all paid for by a current levy of $70 per container).

A logical Federal jump-start for the nation would be:
- Set the national goal of having the following with a CNG/LNG fueling stations <i>in 5 years</i>:
- every airport;
- every port;
- all interstates, which are the arteries of the nation.
- all municipal bus fleets.


- Start off with an executive order that all Federal government domestic business, including civil service/military travel, is to: use only ng powered cars now, where available; and use NG cars, only, post 2012. This requirement alone - plus the knowledge that refueling stations <i>were</i>... coming - would be enough for all rental car agencies in the country to have some in stock


Along with whatever other incentive programs would be in place to encourage creating the stations (tax breaks et al), these mandates would be sufficient to jump-start the rest of the country. Knowing that fueling is available at every major airport; at every port; and along all interstates, would be enough to enable the whole nation into having ng vehicles.

Airport, port, and even municipal bus mandates would not be hard, at all; after all they all get Federal money; in addition, that's where much of the leadership in natural gas vehicle use is already being shown. In short, there already forces going in that direction; and a mandate from the Feds, with tax breaks et al behind it, would be enough to galvanize them all across the country. (Including vehicle producers; the failed American car companies are now deciding to get into the ng act).

It's the interstates - or arteries of the nation - that would require the most creativity and work. But even there, working with the states already heading in that direction, such as California, first, and with the proper incentives, it can be done. And unlike 10 years ago, high-quality ng engines now exist; as well as much of a basic fuel transportation infrastructure (natural gas pipelines). This is much more doable than any mandates for things that don't really exist- yet; ie, cost effective biodiesel, or cellulosic ethanol, or clean hydrogen. Unlike those, there is absolutely no technological hurdles remaining; one reason it really can be jump-started for the whole country in only five years. Something both Barack Obama and John McCain could jump on and both agree on, if either of them understood energy issues.

Jump-starting the shift to ng as a fuel, replacing oil imports with something that is cleaner, less-greenhouse warming, cheaper, and domestic (ie more US jobs), also, (he says, cheekily) removes more and more oil demand from the world which would reduce the subsidies to Vladmir Putin from invading countries; Caesar Chavez from wrecking South America; and lessen the small percentage of monies being syphoned off in the Middle East to support islamic extremism. Not bad.

jp

Diversa Corp: T. Rowe Price Opposes Celunol Merger Agreement

Interesting. I think they have some good points; and some wrong points.

Clearly, they prefer the safe (or, safer) approach DVSA was previously on. There is definitely something to be said for that (one of the reasons I liked it when the company changed direction under a new CEO in 2005). There is no question, in my mind, it was finally on a path to be profitable sooner, rather than later; and was in a position to be an industrial enzyme supplier to everyone: corn-based ethanol producers; waste-based ethanol producers; cellulosic ethanol producers; as well as the other industries they were supplying (feedstocks, nutrition, industrial processing, etc).

The T.Rowe assessment is wrong to imply that going the Celunol route automatically means lower returns. It could, if the whole thing failed. But, in focusing on cellulosic ethanol, they were/are aiming for a long-term home run. Back in the early days of Microsoft, for example, only an idiot believed it was 'safe' to focus solely on providing software for such a stupid thing as desktop computers. But there were people at the time who went further to say that there would be no returns in it, even if it succeeded. That was going to far; it was wrong by a few light years, in fact, since that single-minded focus on a new future yielded the greatest fortune in human history.

So for T.Rowe to go the next step - beyond safety, into also implying automatic lower returns - is just a dumb thing to say; since if the DVSA transfer to Celunol were successful, it would hardly be true.

While I understand why accountants would consider cellulosic ethanol 'immature' - or too immature to bet on - I disagree. Going away from oil is a given; increased biofuels is a given. Corn-based biofuels - just using the grain - simply can't go beyond providing 15% of current USA fuel use, even if every single grain of corn in the US were to go into the gas tank (which can't and won't happen). Also, cellulosic ethanol is one of the few areas where even this Administration is serious; putting several hundred million dollars into it just in the past two weeks alone. (Though the question remains unanswered: why didn't DVSA/Celunol get one of these awards, as well, if they were so advanced? I've written the company asking for clarification; they've refused to answer this shareholder, something that disturbs me greatly).

I do agree that the terms of the deal are rich, in Celunol's favor; something current management hasn't explained. It gives the impression - I hope falsely - that there's something else going on behind the scenes. An investigation might be called for unless the company is more forthcoming. The deal appears to have the aspect of paying Celunol to take over a company that has been years, hundreds of millions of $$, and hundreds of patents in the making. In fact, they want to borrow money to pay Celunol to take the very real asset that is DVSA. The question is, why?

I do agree with DVSA management that, if the company is to become a vertically integrated celulosic operations company, they current DVSA management aren't the ones to run it. T.Rowe says the Celunol guys aren't the ones to run it, either. Yet the only two serious cellulosic pilot plants in the world - in Japan, and the US - are Celunol's. So again, T. Rowe may - may - be overstating this part, just to make a point.

One thing that did bother me in terms of the 'merger' of the two (or, more correctly, the handover of DVSA to Celunol), was the price; which was not determined by an honest assessment of value, but through 'negotiation'. Maybe that should have tipped me that something is funny; that there was more going on behind the scenes than meets the eye.

T.Rowe is technically wrong in their assessment of cellulosic ethanol. They are right in what is the 'safer' approach; they are wrong in what has at least the potential for truly out-sized returns in the future; and they are right in questioning the terms of the agreement, whereby DVSA goes into debt to give itself to someone else.

I'm glad this discussion is happening, though.

Dave Huntsman
DVSA shareowner

Long Lasting Fuel Cell Batteries: Why I'd Buy Mechanical Technology

As a (former) shareholder in MKTY, I've gotta tell you, this 'analysis' is painfully shallow. It turns out that there is a real reason the share price is at bottom: the MKTY fuel cell product is- at the moment- vaporware. There is not a single DMFC product- anywhere- that is in any way, shape, or form operational - or that is on a clear path to become so. Not a single one. That is, in fact, the reason I sold my shares in MKTY three years ago...and went into MDTL: when it became clear that, technically, the MDTL technology and product was real - and MKTY's was not. MDTL itself has been the only one to openly acknowledge that an in-place, DMFC for lithium battery replacement is currently beyond the state of the art - for anyone. That is what lead them to the current, successfully-executing course: of a long-life, high-energy, fuel cell based portable power pack (up to 30 hours of recharge equivalent time). The current result: a couple million in orders; the pre-pilot line filling initial orders, and the first full-up line now being assembled, to be operated by Celestica in Ireland.

To promote a company while forgetting to note there is no true product - of that type, from anyone - and that the technology truly doesn't exist yet in 2007 to make it so, is just a tad off the mark, don't you think?

Time To Go Long Electricity

Two non-traditional plays on who utilities may be buying from:

- BCON - small, not profitable, and unloved, it has the most advanced flywheel technology around. It is hoping that in the demo units it is selling to a couple of utilities that it's big break will be into the market of managing the frequency hic-cups of the grid using the energy stored in the flywheels.

- AMSC: I bought this some time ago as my long-term play on grid upgrade and energy efficiency. Currently only one of their three divisions - the non-superconducting division, which sells grid-interconnect power converters for large wind turbines - is profitable. The other two Divisions are not - yet. But the Wires division is where the core high-temperature superconducting wires are made; the Supermachines Division is where AMSC then makes big, rotating machines out of those self-same wires.
They have high hopes - the key word here is 'hope' - for big marine motor business. It is clear, to me, the Navy wants to put some of these motors in some of their new ships (like later versions of the new Zumwalt-class destroyers). Since isn't totally wishful thinking; the Navy has given them $100m already to produce a 5 megawatt demo test motor; a full-size (but non-seaworthy) 37.5 MW motor (ie., destroyer size) currently being assembled by Northrup Grumman at the Philadelphia Naval Shipyard; and a similar size Generator. (The latter not from the research arm of the Navy, but from the operational end, which is significant). BUT....those Navy programs are under severe- as in huge- budget dilemmas as we speak; not sure that they will be able to buy what they want to.
But that brings us to utilities........becau... it turns out one of these big supermachines can also be plugged into the grid, and step in as a sort of 'grid shock absorber' whenever huge loads are suddenly dumped on a local grid. TVA has had problems with local grids in that regard; they paid AMSC several years ago to finalize the design of one of these - and then put one in the grid right outside a steel blast furnace in Tennessee. It worked apparently better than expected - or at least, harder than expected, as it went in just as steel demand zoomed. Based on that successful 2-year (?) demo, TVA ordered 2 operational units - each 50% larger than the demo unit - and both are being assembled now; the second one will be installed in a grid in March.
So while two commercial orders for real, HTS-grid upgrade hardware does not an industry make, this company - in existence since 1989 or thereabouts - has clearly been on an upward product trajectory; and in fact is farther along in its wire performance than it predicted it would be just a few years ago.
TVA has also committed to buy 2 more units; though their sizes are TBD.

Note also the above doesn't even include potential HTS main bus electrical cable sales. Currently a 2000-ft cable is being installed along Long Island Power's main 'spine'; to be operating in 2007, it's performance will be a key determiner, I think, of how sales of primary cable wire go for utility upgrades in urban areas.

AMSC just had its conference call the other day; it's here:
www.amsuper.com/invest...

And it will be making a presentation Wednesday this week, accessible here:

www.fulldisclosure.com...;coid=86422&amp;cl...

iRobot Back to its Old Ways

<i>I am not sure what the bottom is but it seems like iRobot needs to let us in on some of its future offerings to maybe jump start this stock again.</i>

That's as incorrect - and even illegal, in a way - as it gets: it is very explicitly NOT iRbt's job to manipulate the stock in the short term to entertain those with possibly short attention spans. Their job is to run the company - well - and strategically, for the future. iRbt has also taken on the job of changing the world while they are doing that - which makes it fun. But expending management time and energy to try to pump up the stock price temporarilly just to satisfy the bored is not how they got the company even got to this place in the first place (or how they put two robots to work in my own condo).