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April 26, 2017

Vanadium Flow Battery Stocks: Barely A Dribble

by Debra Fiakas CFA
 
The previous post “Investing With The Flow Battery” introduced a series of articles on flow batteries for grid-scale energy storage.  Investors focused on renewable investments should at least consider the implications of storage requirements in evaluating renewable energy technologies even if storage developers are not considered portfolio-worthy.  Owners of grid-connected solar and wind power systems must design a network that can meet the highest peak load of the year even if a large part of the generating capacity sits idle for extended periods.  Storage technologies convert electrical power into chemical or mechanical energy and then send it to the grid when as needed.

Batteries, of course, fall into the category of chemical solutions.  According to the Department of Energy about 20% of the energy storage solutions in place today rely on batteries.  Total capacity is just over 300 megawatts.  Lithium ion technology represented the vast majority of this installed battery capacity.  Fast response time makes lithium ion batteries popular.  Unfortunately, they do not hold up well under repeated charge and discharge cycles.  Lithium ion batteries must be replaced frequently, increasing cost of operation.

The deficiencies of lithium ion battery technology have opened a door for flow battery technologies.  Flow batteries have a long battery life and tolerate as many as 10,000 charge and discharge cycles.  Additionally, the liquid electrolyte can be replaced, making it possible to extend the life of the battery through a refurbish cycle that delays expensive replacement.

Flow batteries are composed of two chemical components dissolved in liquids and separated by a membrane.  The liquids or electrolytes are pumped through a stack of electrochemical cells thereby converting chemical energy into electricity.  Ion exchange occurs through the membrane as the two liquids circulate in their respective cell.  This provides for the ‘flow’ of electric current. Energy capacity is determined by the electrolyte volume and the surface area of the membranes.

There are several flow battery developers that are using vanadium material -   a hard, silvery metal  -  for the electrolyte.  Vanadium is attractive to battery developers because it oxidizes into four different valence states, all four of which can be used for a flow battery.  On its own vanadium is tough to find.  It is almost always a by-product of another mining or minerals process.  China and Russia extract vanadium from slag produced by steel smelters.  It is also a by-product of uranium mining.

Most of the companies using vanadium materials for flow batteries are private.  Imergy and UniEnergy Technologies are two examples that cast something of a harsh light on the challenges of an early stage industry.

Indeed, Imergy’s story already has an ending and it is not a happy one.  In July 2016, the company filed for bankruptcy and is liquidating its assets, including the flow battery intellectual property.  Imergy’s success was in part the beginning of its end.  In 2015, the company has been tapped by SunEdison to provide vanadium flow batteries for an ambitious rural electrification project in India.  Unfortunately, Imergy only installed two systems before SunEdison’s own financial problems forced it to declare bankruptcy.  Having already extended its operations to meet the demands of a large order, Imergy was unable to land on its feet with the loss of that customer.  Venture capital backers abandoned Imergy and it was forced to close its doors.  There has been no public report of what entity might have gained control of Imergy’s flow battery technology.

UniEnergy Technology has managed to find success AND stay in business.  The company targets multiple markets, including utilities, microgrid, commercial, and industrial applications besides renewable energy systems.  The company differentiates itself from the other flow battery suppliers with a small footprint and user-friendly controls.  Perhaps the most compelling competitive advantage that UniEnergy has is its longevity and experience. UniEnergy has licensed flow battery technology originally developed over a decade ago at the Pacific Northwest National Laboratory run by the Department of Energy.  UniEnergy has been adding additional improvements in design since its inception in 2012, culminating in a demonstration project in 2015.  Most recently the company installed a 8-megawatt hour system on the grid in Snohomish County in Washington State.  While small in comparison to some lithium ion battery systems, the Snohomish system is the largest containerized flow battery system in the world.

On the other end of the spectrum there are very large companies in the flow battery space.  Through its subsidiary Gildemeister Energy Solutions, DMG Mori AG (GIL: GE or MRSKY:  OTC) offers vanadium-based flow batteries in 130 kilowatt and 200 kilowatt capacities.  Scalable systems of various sizes can be assembled through parallel connections of multiple CellCube units.  Gildemeisters has successfully installed several of its systems, but its financial profile is buried so deep in the financial reports of Gildemeister’s  parent company DMG Mori, it is not clear if it is a profitable venture.

A DMG MOri gives the investors so much more than vanadium-based flow batteries.   The company is one of Germany’s largest manufacturers of cutting machine tools, shipping its lathes and milling machines all around the globe.  The company converts almost 5% of its sales to operating cash flow, which helps support an ample dividend.  That said, the forward dividend yield is an attractive 1.7%.

Publicly traded American Vanadium (AVC:  TSX or AVCVF:  OTC) gives investors a chance for a pure play in the flow battery market.  The company has been the master sales agent in North America for Gildemeister’s CellCube.  The company has its origins as a vanadium materials producer with a focus on the battery market.  The company had mineral claims on a vanadium deposit in Nevada up through the end of 2016.  After working for years to develop a market for its vanadium materials, the company has integrated forward into batteries.  The move has the potential to capture more value from the shift in energy to renewable sources as well as the disaggregation of power systems from large grids to into smaller distributed systems.

American Vanadium made headlines with the installation of a CellCube system as a demonstration for the Metropolitan Transportation Authority in Manhattan, New York.  In early 2016, American Vanadium even made bid to buy the CellCube assets from Gildemeister, but was unable to raise sufficient capital and had to retract the offer.  Since then the company has even suspended marketing efforts in an effort to conserve its remaining capital.

Clearly along the vanadium arm of flow battery technology there are few options for investors.  A position in the healthiest company is more a stake in machine tools than flow batteries, albeit an attractive one with a regular dividend check.  The only dedicated vanadium flow battery developer is more ‘played out’ than ‘pure play’.

Debra Fiakas is the Managing Director of
Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

April 20, 2017

The Problem With Proxy Ballots

Vote With Money Instead

by Garvin Jabusch

Many people assume that engagement with public companies through proxy voting and resolution filing is the best — if not only — way to see positive environmental, social, and governance outcomes from your investments. For me, this approach misses a fundamental point of market-based solutions: you make in investments in the most compelling ideas that reflect what you think is likely to grow, where you think the economy is headed, and yes, outcomes you support. That means using investments to favor firms that are already making innovative sustainable contributions to the global economy — not trying to Frankenstein aging, destructive, legacy companies into healthy new citizens.

Consider the recent case of a major advocacy victory with ExxonMobil. After years of effort, a shareholder advocacy coalition in January succeeded in persuading the company to place prominent atmospheric scientist and climate change expert Susan K. Avery on their board of directors. The theory is that surely Dr. Avery’s appointment signifies a change in attitudes at Exxon, and her expertise will encourage the company to incorporate climate change into its corporate strategies. Meanwhile, Exxon Mobil Corporation announced in February that its “proved reserves were 20 billion oil-equivalent barrels at year-end 2016.” That’s 20 billion barrels of oil they fully intend to extract for purposes of being sold and burned. This is what Exxon is; no new board member is going to change that. Speaking to Inside Climate News, Jamie Henn, spokesman for 350.org said, "It's hard to believe this is little more than a PR stunt meant to pave over the decades the company spent deceiving the public about the crisis." A cynic could conclude that shareholder activism’s largest victory to date vs. ExxonMobil adds up to a PR coup for the firm under fire.

Further, a lot of advocacy is ineffectual. For example, State Street Global Advisors has recently made news with a plan to use their proxy voting power to encourage Russel 3000 companies to place more women on their boards. What’s the plan, and will it work? Slate Money’s Felix Salmon explored this from the perspective of a Russel 3000 company with zero women on the board: “In a year’s time …if you still have zero female board members and you can’t persuade State Street that you have made moves to get more female representation on your board, then, if and when the chairman of your nominating committee gets re-nominated for a board seat, they will vote against that individual. I mean, come on.” State Street then seems to be engaging in a symbolic form of advocacy, and not seriously expecting to effect change in corporate behavior.

I’ve written elsewhere that “[r]eal impact depends upon voting with your dollars for the future economy, for the actual catalysts of change, for the viable growth areas where we can reasonably expect to earn good equity growth in this era of rapid change. This means a higher level of due diligence that avoids the trap of thinking public equities are ‘set it and forget it’…it's not that public equity portfolios can't have impact, it's just that they usually don't” (emphasis added).

So how do we measure the impact of a portfolio if not by activism? I say it’s about looking at the economic impact of your investments. Invest in the firms that are earning more revenue from creating environmental and social solutions, employing more people, and gaining market share from riskier and less efficient competitors. While this may be harder to quantify than tallying up shareholder proposals, these business and economic factors have dollars behind them, and that means they equal impact at scale. At the end of the day, an economy driven by products and services that address the environmental and social risks confronting the global economy has much greater positive impact than an economy of ExxonMobil’s touting their lone climate scientist board member. The traditional metrics of business are the metrics for a reason: they measure real results. Investing in solutions providers exhibiting the best of these metrics is simply the most powerful message we can send.

Clearly, it’s more environmentally, socially, and economically meaningful to vote with dollars rather than proxy ballots, but it also has greater financial potential. Today, business-as-usual investing in S&P 500 companies means buying a flat 12 month forward earnings per share (EPS) estimate average, paired with a high average price to book valuation. On the other hand, many solutions –like renewable energy, organic farming practices, and water management are growing EPS more rapidly, yet many of them remain undervalued. Investors can send the market a powerful signal about which investments matter and have quantitatively better odds at superior returns by opting for these solutions-creators, rather than the overvalued companies of the old economy. Faster growth at a cheaper price? This is what investment managers are supposed to be seeking, but is almost absent from major benchmarks.

It’s easy to keep investing in stalwarts of the old economy like the S&P 500, then reassure ourselves that shareholder engagement will solve our problems. But it won’t. Let’s be honest with ourselves: we know it is time is stop making lazy and, ultimately, destructive investment decisions based on the inherited wisdom of indexing or for fear of not tracking our benchmark, and then justifying those investments by citing engagement. Addressing systemic risks – like climate change, resource scarcity, and widening inequality – means buying companies that are solving big risks and avoiding firms contributing to risk. This sends the markets a strong signal about the economy’s evolution, and also means that there’s a lesser need to engage these companies in the first place.

Shareholder advocacy can certainly have positive impact, but there’s an important caveat to remember. In the end, companies only care about shareholder proposals when they identify ones that already align with the firm’s self-interest and end goals. Limiting fossil fuel use and climate change is not in ExxonMobil’s self-interest, and no number of resolutions, proxy votes or polite letters is going to change that. As such, shareholder engagement can initiate positive change within the existing goals and structures of a company but not in a company’s fundamental reason to exist. Thus, advocacy is most effective when practiced on firms already engaged in a business that lends itself to the goal favored by the activist. You can work with a solar company to help them improve their supply chain or to have more minority representation in leadership, but you can’t persuade an oil company not to drill. Shareholder advocacy can and does have positive impacts around the periphery of big issues like climate change, but its power is trivial next to the power of the underlying economics. And the brightest signal of the economics is markets and returns.

To illustrate, join me in a short thought experiment. Imagine you’re the CEO of an oil major, say ExxonMobil. What concerns you more: a world where everyone keeps buying index funds that bump your stock price every time they do, but occasionally people file resolutions that you largely ignore, or a world where everyone has decided simply to skip that and invest instead in what’s next, eschewing fossil fuels altogether? I know for sure which of these worlds the CEO of Exxon most fears, and that tells me all I need to know about how to have impact.

An version of this post originally appeared on worth.com.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha® Advisors, LLC. He is co-manager of the Shelton Green Alpha Fund (NEXTX), of the Green Alpha Next Economy Index, the Green Alpha Growth & Income Portfolio, and of the Sierra Club Green Alpha Portfolio. He also authors the Sierra Club's green economics blog, "Green Alpha's Next Economy."

April 13, 2017

Investing With The Flow Battery

by Debra Fiakas CFA
 
The looming threat of global warming has nearly everyone  -  except perhaps those bickering with each other in the Whitehouse  -  scrambling for lower carbon energy sources.  Intermittancy remains a stumbling block for several of the lower-carbon renewable energy sources, particularly wind and solar energy systems.  To be a serious contributor to grid-connected power systems these energy sources need utility scale batteries that can store energy when the sun is down or winds have died away.  Unfortunately, with current technology the cost of such battery capacity increases the levelized cost of energy (LCOE) of renewable systems to an uncompetitive price tag.

As a refresher, LCOE is a measure of the average total cost to build and operate a power-generating asset over is lifetime relative to the total energy output over that lifetime, i.e. total costs divided by total output.   Typically expressed as cost per kilowatt hour, it is handy for comparing different methods of electricity generation on a consistent basis.  The more bells and whistles a system requires to produce power  -  and meet environmental standards  -  the higher the LCOE per kilowatt hour.

Let’s get back to those batteries that could help make wind and solar ‘grid-attractive’.  Lithium ion batteries have been the most talked about battery storage technology in recent years.  Unfortunately, lithium ion batteries do not have a particularly long useful life, lasting only a few hundred charge/recharge cycles.  As a consequence, batteries using lithium ion technology could add as much as $0.33 per kilowatt hour to the LCOE for wind or solar power systems with a storage component.

Flow battery technology is considered a viable alternative to lithium ion batteries for stationary power sources.  Flow technology converts chemical energy into electricity by pumping electrolytes through a stack of electrochemical cells.    First, as tested so far, flow batteries show promise for numerous charge/discharge cycles.  Some flow batteries can last through as many as 10,000 cycles.  Second, flow batteries rely on a fluid electrolyte that can be replaced, reducing the overall cost of operation.  Thus it is expected that flow batteries will present a far lower LCOE contribution  -  a factor that makes it more appealing for wind and solar system operators.

There is a gaggle of developers with flow battery projects underway or with commercial-ready battery products.  Vanadium has been the preferred material for several years and several vanadium-based storage systems are already in operation.  Zinc bromide runs a close second. The most recent innovation is based on iron, which offers the benefits of better safety and lower operating cost.  Iron-based flow batteries are also considered to be more environmentally friendly than those relying on strong acids like vanadium.

The next few posts will take a closer look at the utility-scale battery developers and producers.

Company Name
Symbol
Flow Technology
Status
American Vanadium
Vanadium
Commercial
Arotech (Electric Fuel Energy)
Iron
Development
Gildemeister (Cell Cube)
Private
Vanadium
Commercial
Energy Storage Systems
Private
Iron
Development
EnSync Energy Systems
Zinc bromide
Commercial
Imergy
Private
Vanadium
Commercial
Primus Power
Private
Zinc bromide
Development
RedFlow
Zinc bromide
Commercial
UniEnergy Technologies
Private
Vanadium
Commercial
Sumitomo
SSUMY:  OTC
Vanadium
Commercial
Vionx Energy
Vanadium
Commercial

Debra Fiakas is the Managing Director of
Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

April 07, 2017

New Bio-Based Tacky Resins Launched With Amyris Technology

Jim Lane

In France, Cray Valley has launched new tackifying resins produced with Amyris’ (AMRS) biologically derived Biofene branded farnesene.

Tack is the measure of stickiness — vital to everything from adhesives that need to hold things in place to inks that need to stay on the printed page.

According to independent market research firm, MarketsandMarkets.com, the global tackifier market is projected to reach USD 3.56 billion by 2020. This poses a large opportunity for renewable farnesene-based tackifiers and Amyris believes it can access a large market share as its product applications within the space achieve commercial scale.

Cray Valley’s Wingtack family of tackifying resins have been manufactured with piperylene (a volatile hydrocarbon that is a byproduct of ethylene production) as a primary source. Other tackifier resins typically are derived from trees or citrus fruit sources.

The Cray Valley backstory

Total Cray Valley is part of Total’s Polymers division within the Refining & Chemicals branch. Total Cray Valley manufactures Wingtack and Cleartack hydrocarbon resins, Poly bd, Ricon and Krasol liquid polybutadiene resins, SMA® copolymer resins, and Dymalink monomers. These products are used as raw materials and additives for adhesives, rubber, electronics, thermoplastics, coatings and other applications.

The switch to biofene

Utilizing new technology has enabled Cray Valley to use farnesene as a sustainably-sourced 30% replacement for piperylene and add Wingtack EXTRA F30 to its product line of tackifiers while maintaining solid performance, particularly for use in hot melt and hot melt pressure sensitive adhesives. Cray Valley will showcase this new technology and its product line at the Adhesive and Sealant Council Conference and Expo.

The disruptive nature of Amyris’s farnesene has enabled Cray Valley to create new tackifying resins that are based on monomers from sustainable biomaterials. As a result, these farnesene-based resins are not subject to the cost and supply instabilities of petroleum-based monomers or the typical natural variabilities that affect the quality of pinene and limonene monomers.

“We are pleased to support Cray Valley in the launch of new tackifiers with excellent performance characteristics that support growth in sustainably produced resin products for the large global market for these applications,” said John Melo, President & CEO of Amyris.

The Biofene backstory

Amyris’s sugar cane-derived Biofene forms the basis for a wide range of products varying from specialty products such as cosmetics, perfumes, detergents and industrial lubricants, to transportation fuels such as diesel and jet fuel. As a tailor made pure hydrocarbon it provides numerous advantages when compared to petroleum-based oils and chemicals and is renewable, contributing to a sustainable future.

Jim Lane is editor of Biofuels Digest., where this article was originally published.  Biofuels Digest is the most widely read  Biofuels daily read by 14,000+ organizations. Subscribe here.

April 01, 2017

White House Reveals Its Own Fake News

Almost Everyone Believed It

by Tom Konrad, Ph.D., CFA

Spicer
Press Secretary Sean Spicer reveals the joke.

This morning, White House Press Secretary Sean Spicer began an epic five-hour press conference with a one-word statement from President Donald Trump:  "Bazinga!"

Spicer then launched into a detailed explanation of how the President (with help from many Republicans and conservative think-and-humor-tanks) had convinced the nation and the world how he did not believe in climate change.  In fact, efforts to roll back EPA regulations like the Clean Power Plan, CAFE gas mileage standards, and the Paris Agreement were all "fake news."

Over the course of the diatribe, Spicer became increasingly animated, gloating at the number of impossible, if not downright insane political stances and opinions he had persuaded the press to swallow hook, line and sinker. 

"In addition to a great sense of humor, President Trump is widely acknowledged to have a great mind. In fact, many people have said that he is the greatest intellect to ever occupy the White House.  His ability to get you morons to buy his the anti-science conspiracy theory rhetoric would leave you all in awe if you only had the brains to appreciate it!"

Asked about the appointment of Scott Pruitt to head the Environmental Protection Agency, which he had made a career of suing as Oklahoma's attorney general, Spicer smirked and said that Secretary Pruitt had been in on the joke from the beginning, and his legal actions were all part of the prank.  Likewise, Donald Trump's recent executive orders reversing the Obama administration's actions would all be found to have the word "NOT!" written in an organic, citrus-based invisible ink developed by the CIA.  The hidden word could be revealed by gently exposing the paper to heat from one of the old style wasteful incandescent light bulbs or a hair dryer.

Spicer concluded the briefing by saying the nation should stay tuned for an as-yet unidentified but "very big-league" solution to climate change, which President Trump would implement over the course of the following week.  The administration would also be applying to the Guinness organization for recognition of the best April Fools' prank ever.

Environmentalists Not Amused

Refusing to see the humor, Sierra Club executive director Michael Brune said in a statement, "The climate crisis is an extremely serious issue for all Americans in both red and blue states.  There is no time for joking around when we should be using clean energy technology to create jobs while safeguarding our air and water."

World Resources Institute president Andrew Steer said the Trump administration's joke was “like a fraternity prank that had gotten out of hand.” Despite his reservations about the humor, he admitted that he was excited that the President had turned his prodigious intellect to the problem of climate change, and that there would soon be no need for environmentalists. 

Steer said he looked forward to closing WRI and finding more productive work.  He said he was particularly interested in the many high paying jobs picking California produce now that such jobs would no longer be monopolized by illegal immigrants.

Asking not to be identified, another prominent environmentalist said he could see the humor in Trump's jokes about women's bodies, blacks, Mexicans, and queers, but joking about climate change "has the potential to hurt rich, white, straight men."  He said some things are just not to be joked about.

UPDATE: President Trump replied to the last quote via Twitter.  He tweeted, "No one cares more about rich, white, straight man than I do!"  We assume he was serious.

« March 2017 | Main




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