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June 17, 2013

Income From Hydroelectric Power

by Debra Fiakas CFA

niagara1[1].jpg Are you an investor hungry for current income?  Is there a green line of global warming fear running through your investment selections?  I have stock that fulfills both requirements.  Brookfield Renewable Energy Partners (BEP:  NYSE) is a renewable power producer with assets in Canada, the U.S. and Brazil.  Brookfield generates over 5,900 megawatts of power each year from plants running on river water, wind or natural gas.  Another 2,000 megawatts is apparently under development in Canada and Brazil.

What Brookfield does best is hydroelectric production.  The company claims over 170 hydropower stations across the U.S., Canada and Brazil, diverting river water through turbines to generate very clean energy.  Hydroelectric power generates less than 5% of the greenhouse gas emissions from coal-fired power plants, which can spew out as many as 900 tons to 1,000 tons of carbon dioxide per gigawatt hours of electricity produced.  More details can be found from the Global Reporting Initiative provides information on the greenhouse gas emissions from various power sources.

If Brookfield’s hydroelectric power is green enough for you, then let’s move on the company’s generation of income for its shareholders.  Since Brookfield shares began trading in October 2001, the stock price has climbed steadily to a level 230% higher than its debut price.

Brookfield started paying a quarterly dividend in December 2011.  Management has pledged to distribute between 60% and 70% of funds from operations as well as to grow distributions by 3% to 5% each year.  The current quarter dividend is $0.3625 per share.  At the current price that represents a very attractive forward dividend yield of 5.1%.  Does Brookfield have the cash to fulfill its dividend pledge?

Brookfield has reported net losses in two of the last three years.  Yet, investors looking only at net income will not get the full answer to the dividend policy question.  Indeed, the company consistently generates significant positive cash flows.  In the last twelve months Brookfield converted $1.33 billion in revenue to $395.0 million in cash from operations.  Brookfield’s sales-to-cash conversion ratio of 29.7% stands out among power producers.  What is more Brookfield has $227 million in cash on its balance sheet.  That is a good nest egg, but we do note the company has $7.2 billion in debt on the balance sheet as well.

Despite the debt, Brookfield is an attractive holding for income-seeking investors.  The icing on the cake is a beta measure of risk at a tepid 0.40. If the stock as it trades on the Toronto (BEP.UN:  TSX) or New York exchanges (BEP:  NYSE) appears a overpriced, there is several series of preferred stock that also trade on the Toronto exchange.

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. 

May 03, 2011

Administration Lays the Groundwork for Hydropower Boom

Tom Konrad CFA

The US Department of the Interior, the Department of Energy (DOE), and the US Army Corps of Engineers are quietly laying the groundwork for a renewable energy boom that you might not expect.  What they've done is announce a memorandum of understanding to work together to support environmentally sustainable hydropower.

They're not talking about building new dams, which have questionable environmental benefit, but rather to remove barriers to developing cost-effective hydropower at existing dams and waterworks. 

Hydropower does not get much attention from investors.  In large part, that's because of the lack of growth.  As Energy Secretary Steven Chu said, "While hydropower is the largest source of renewable electricity in the nation, hydropower capacity has not increased significantly in decades."  This new initiative won't bring US hydropower growth up to the levels we've recently seen in wind or solar, but it should provide an opportunity for nimble renewable energy developers with some experience in hydropower to build profitable installations on Federal dams.

As I discussed in my overview of hydroelectric power in 2008, the main barriers to new hydroelectric facilities are complex environmental studies, permitting issues, and water laws.  That's what makes this new inter-agency cooperation so important.  With the three relevant Federal agencies working together to remove barriers to development on federally owned facilities, hydroelectric developers can be reasonably confident that their investments in planning will eventually bear fruit in new hydropower generation, and not be blocked at the last minute by unexpected red tape.

I see this as part of a pattern of the Obama administration promoting renewable energy by administrative means now that legislative action looks unlikely.  Other manifestations of this trend include the Administration's recent short-list of renewable energy projects to be given priority in the environmental review and public participation process, and the DOE's work marking out National Interest Electric Transmission Corridors.

Quite often, the barriers to clean energy are not financial, but rather the bureaucratic red tape put forward by a system that was designed for an outmoded energy paradigm.  In an era of limited budgets, attacking these important non-financial barriers makes both environmental and fiscal sense.

Not So Small Hydropower

It's not just the Feds who are pushing to tackle red tape for hydropower.  Colorado Governor's Energy Office (GEO) has a partnership with the Federal Energy Regulatory Commission (FERC) to streamline the permitting of small hydro projects in existing conduits in Colorado. The GEO expects that the first application to FERC will be filed in late April 2011, and the first permit will be issued by FERC in late July, and end after 20 applications.  FERC and the state of Colorado will then assess the outcomes and look for ways in which the lessons learned can be implemented in FERC’s regular processes.

Despite the name the potential for small hydropower in the US is quite large.  A 2006 Idaho National Laboratory report [PDF] found that approximately 5400 sites could be feasibly developed, enough to increase hydropower generation in the US by 50%, or an average production of 18GW, about the same as the total non-hydro renewable generation in 2010 (EIA data).

Stocks

A couple stocks that might potentially benefit: AECOM Technology Corp., (NYSE:ACM) which I previously wrote about here, and Plutonic Power (TSX: PCC), which I recently wrote about because of their likely merger with Magma Energy (TSX:MXY).

DISCLOSURE: Long PCC,MXY.

This article was first published on Tom Konrad's Green Stocks blog at Forbes.com

Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

April 03, 2011

The Magma/Plutonic Merger

A Great Deal for Plutonic Shareholders, Not bad for Magma

Tom Konrad CFA

As a shareholder of Magma Energy Corp. (MGMXF.PK), I'm reading through the joint information circular [PDF] on the proposed merger of Plutonic Power Corp (PUOPF.PK) and Magma to form "Alterra Power Corp." I'm not thrilled with the merger, although I plan to vote for it, now that it's arranged.

Overall, I think the merged Alterra will be a stronger company than either company alone. Both companies are in capital intensive niche Renewable Energy industries, so the added scale and diversification of Alterra should better enable the merged company to borrow money to finance projects at lower rates. Obtaining financing at favorable rates is essential to the profitability of renewable energy projects.Statistics

My misgivings about the merger arise from the price. Magma shareholders will have a controlling stake of 66.5% of the merged company, with current Plutonic shareholders owning the balance. Plutonic shareholders are being paid a 32% or 17.5% premium, based on pre-merger market capitalization or book value, respectively. That would be a normal buyout premium, except that Magma was a much stronger company, and so Plutonic shareholders also gain more as part of the merged entity. Although the two companies work in different renewable energy industries, their projects have much in common. In addition to raising finance, environmental permitting, grid interconnection, and negotiating with utilities are crucial to the success of any renewable power producer, and a larger company with more projects may be able to make more effective use of employees with specialized local knowledge or skills in these areas.

Before the merger, I considered Magma shares a good buy, but I would not have bought Plutonic shares, because the company would have needed to either do a deal like this or raise money in the next year or so. This put Magma in the stronger bargaining position, and so I would have liked to see a smaller premium paid for Plutonic shares. That said, since two thirds of Plutonic shareholders will need to vote for the merger in order for it to be a success, this premium is probably necessary to gain sufficient support. Passage by Magma shareholders is a virtual certainty, since the owners of 38.7% of Magma shares have already committed to vote for the deal, and only 50.01% support is needed.

As a Magma shareholder, I think the deal is acceptable, and will be a way for Magma to pursue opportunities for growth beyond Geothermal power, part of the company's current strategy. I also like Plutonic's Run of River and Pumped Hydroelectric assets, although until this proposed merger, I was unwilling to buy the company's shares because I felt its balance sheet wasn't strong enough.

Overall, I'm in favor of the deal. Too bad they couldn't have come up with a better name. Apparently "Alterra" means "Other Earth" or "Other land" in Latin, but it doesn't do much for me. I liked both Plutonic and Magma better.

Plutonic shareholders will gain an instant 32% premium on their shares, while the shareholders of both companies can look forward to steadier growth.

DISCLOSURE: Long MGMXF.

Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

March 10, 2011

Must Renewable Energy Be Diversified?

Dana Blankenhorn

Most renewable energy companies specialize.

Solar companies do solar. Wind companies do wind. Geothermal companies do geothermal. Biomass companies do biomass.

But a small Canadian merger challenges that assumption.

Magma Energy (MGMXF.PK), a geothermal company, said it will spend about $100 million in stock to buy Plutonic Power (PUOPF.PK), which has wind and hydropower projects, and ambitions to get into solar. The combined companies will go by the name Alterra Power.

Both companies are based in Vancouver.

Size really does matter, crowed Magma CEO Ross Beatty on a conference call announcing the deal. Their merger presentation calls the resulting company "a dominant renewable power developer in Canada."

True, but is this truly size?

Plutonic has only two projects operating at present, with three more under construction. The solar play is, for now, an ambition.

What the deal may really speak to are the prospects of the geothermal industry. "Geothermal is a small energy sector and has real limits to its growth since it only occurs in specific places on earth and many of the world's best geothermal assets are already developed," Beatty said on that same conference call.

Is that true? Last time I heard the Earth was round, and its thermal assets are beneath all of us.

What Beatty is doubtless referring to are the current requirements of geothermal plants. They need to be relatively close to warmth, so they can reach it at low drilling cost, but they can't be so close that the ground they are drilling through will be unstable, prone to earthquakes.

The question I'm asking of my friends in the business today is, then, are these limits absolute? We can drill miles down into the Earth, and slant that pipe so it goes horizontally. We already do this for natural gas. Why not for heat? And I know you don't want to tap directly into magma (despite the company's original name) but aren't there ways to tap heat that don't require absolute stability?

The floor's yours on this one.

There's a second question asked by this merger. Should renewable energy companies specialize in one form of energy, or is consolidation in the whole space inevitable? What is really gained by combining wind, solar, hydro and geothermal assets under one corporate umbrella, other than financing power?

Good questions for this week of the Renewable Energy World show in Tampa.

DISCOLSURE: No positions.

Dana Blankenhorn first covered the energy industries in 1978 with the Houston Business Journal. He returned last month after a short 29 year hiatus because it's the best business story of our time. In between he covered PCs, the Internet, e-commerce, open source, the Internet of Things and Moore's Law. It's the application of the last to harvesting the energy all around us he's most excited about. He lives in Atlanta.

October 18, 2009

What A Portfolio Approach To Climate Policy Means for Your Stock Portfolio

Portfolio theory can lend insights into which carbon abatement strategies policymakers should pursue.  If policymakers listen, what will it mean for green investors?

Good Info, Not Enough Analysis

I've now read most of my review copy of Investment Opportunities for a Low Carbon World.  The quality of the information is generally excellent, as Charles has described in his reviews of the Wind and Solar and Efficiency and Geothermal chapters.  As a resource on the state of Cleantech industries, it's generally excellent.  As an investing resource, however, it leaves something to be desired.  Each chapter is written by a different expert in a particular field, which means that the information is up to date, and comprehensive, but this approach means that there is little attempt to compare the potential of the different investment opportunities presented.  What is the point of in-depth research into carbon abatement technologies if we do not then take the next logical step and emphasize the technologies with the greatest potential for carbon abatement and investment returns?

A Portfolio Approach

The most useful attempt at investment decision-making is buried in the otherwise uninspiring last part of the book. A summary of a 2007 report from the London Accord, A Portfolio Approach to Climate Change Investment and Policy is buried among self-promoting chapters from companies such as Nissan (NSANY)and BP (BP) promoting their (real) investments in clean technology,   The report uses a Monte Carlo implementation of Modern Portfolio Theory to determine low-risk mixes (portfolios) of carbon-mitigation strategies, and was written by Professor Michael Mainelli of Z/Yen Group, and James Palmer.

While intended primarily for policy decision-makers, A Portfolio Approach attempts to determine which portfolio of carbon reduction technologies is likely to produce a desired level of climate change at the lowest cost (or highest investment returns) at the lowest risk of failing to achieve the reduction goal.  Phrased this way, it is easy to see why portfolio theory is an appropriate tool, since it is designed to minimize systematic (overall) risk even when all individual strategies in the portfolio have significant risks of achieving the expected returns and carbon reductions.

Data

The data on various carbon reduction strategies came mainly from the 2007 IPCC Working Group report, "Mitigation of Climate Change."  This report is not complete, omitting some technologies with significant CO2 reduction potential, in particular solar thermal collectors such as solar hot water heaters and larger installations for process heat in industrial processes.  "Solar," as referred to in the report, refers solely to solar Photovoltaic and Concentrating Solar Power (CSP.)

One decision I found questionable was to ignore the carbon reduction potential of investments with "negative abatement costs on the basis that these investments should be undertaken under any business-as-usual scenario, and are not strictly investment measures as a response to climate change." (p5/22)  This is circular logic.  For an investment with negative cot to exist, there must be a market failure.  Almost by definition, in a well functioning market, all investments with negative cost will have already been made.  Simply saying that these investments "should" be made assumes that these market failures will correct themselves without any effort on the part of policymakers.  Why should energy market failures correct themselves in the future if they have not already?  

In the authors' defense, they run one scenario (#3) in which investments with negative abatement costs are allowed, and they state "Further examination of negative abatement proposals seems in order, as it should be important to understand why these investments fail to be made under current financial conditions.  Neglected negative abatement may justify regulatory intervention by policymakers, e.g. imposing minimum building or transportation efficiency requirements." (pp.17/22 and 18/22)  

From the hedging in this statement, and the fact that they spend less time discussing scenario 3 than either of their other two, I conclude that something prevents the authors from giving market failures the attention they are due.  I find this an extremely common failing among financial practitioners, and believe it is an unfortunate and common consequence of in-depth training in financial modeling.  Most financial models contain an assumption of market efficiency, and do not produce meaningful results in cases of large and persistent market inefficiencies.  Without tools to model market inefficiencies, practitioners are prone to ignore them, convincing themselves that the inefficiencies are unimportant or will cure themselves.  Most of the critiques of "Green Jobs" programs are based on this fallacy.

Put another way, if you have a hammer (a modeling technique which assumes market efficiency, such as modern portfolio theory), you tend to see all problems as if they are nails (efficient markets.)

Results

Since the authors only look at scenarios 1 and 2 (those which ignore negative cost investments) in depth, these are the scenarios I will focus on.  I believe the results of these scenarios are still relevant answers to the question, "After negative cost investments in energy efficiency have been made, which positive cost investments should we pursue?"  Even if all the necessary carbon reductions could be achieved with negative cost investments, it would most likely be unwise to pursue such an approach to mitigate climate change: like all investments, there is no assurance that the expected reductions/returns will be achieved.  Pursuing a wide variety of carbon-reduction strategies provides the greatest chance that some such strategies will achieve the expected reductions, and others will exceed expectations, thus making up for any investments in the mitigation portfolio which do not achieve the expected reductions.

The chart below shows a series of "frontier portfolios": That is, portfolios of carbon abatement investments which achieve specified levels of carbon abatement at minimal cost.  The vertical axis is gigatons (Gt) of equivalent CO2 emissions (CO2e) reduced annually, and the horizontal axis is the annual investment needed to achieve this level of reduction.

 abatement cost.GIF

There are diminishing returns for carbon abatement, with the cost of incremental abatement increasing significantly above 15 Gt CO2e per year, and no practical increase in abatement beyond 20 15 Gt CO2e and $400B expenditure per year.  

For comparison, to stabilize the atmospheric concentration of CO2 at 350 ppm, a goal which, according to Joe Romm, will require 8 Gt CO2e (approximately portfolio 2) of reduction by 2030, and another 10 Gt CO2e (for a total of 18 Gt CO2e, or portfolio 4) by 2060.  abatement portfolios.bmpSince the model does not include negative cost investments in energy efficiency or solar thermal collectors, it is likely that these levels of abatement could be achieved at considerably lower cost by incorporating these opportunities.

The pie charts in the first column show the fraction of carbon abatement expected from each investment in the selected frontier portfolios, while the second column shows the cost of each investment.  The two columns differ because different investments produce different levels of abatement per dollar of investment.  For instance, the cost wedge for Biofuels in portfolios 3 and 4 are much larger than the corresponding abatement wedges.  This indicates that abatement with biofuels is more expensive on a per-ton basis than for the other investments in those portfolios.

I will focus on portfolios 2, 3, and 4, since those are the portfolios which deliver the necessary levels of abatement, which we will need to ramp up to over the coming years and decades.

Forestry

The most striking thing about these portfolios is that Forestry dominates CO2 abatement, as well as cost in portfolios 2 and 3.  The more aggressive portfolio 4 has three relatively large cost wedges: Building Efficiency, Forestry, and Biofuels.

Unfortunately, according to the report's authors, the carbon abatement from Forestry is very uncertain.  To make matters worse, the methodology used in the report is extremely sensitive to the expected returns (or abatement, in this case) of particular investment classes.  Small errors in the expected returns can lead to frontier portfolios which are dominated by a single investment class, in this case Forestry.  The report notes that "forestry abatement potential is highly uncertain." (p.8/22)  While we can conclude that forestry is likely to be a significant part of our carbon abatement strategy, there is a good chance that forestry will not dominate the mix as it does in the model.

For stock market investors who want to allocate part of their portfolio to forestry, I recently wrote about investing in forestry stocks and forestry exchange traded funds (ETFs). While I was focusing on the potential for forestry to benefit from biofuels and bio-electricity in the article, any marginal demand for forestry services (including carbon sequestration) should benefit this sector.

Hydropower

Hydropower is also a significant investment in these portfolios.  Much of this investment will probably take place in the developing world, but there are also significant opportunities for upgrades to facilities at existing dams in the developed world.  I looked at the potential for hydropower stock market investments last year.

Biofuels

Biofuels also contribute significantly to all the portfolios, especially in the higher abatement scenarios, although the costs are high relative to other investments.  I don't believe that this is very realistic if we are also going to have large contributions to carbon abatement from forestry.  My guess here is that the authors did not take into account the negative interactions between forestry and biofuels, where an increase in one will drive up the costs of the other because of competing land and water use.  Land used for forestry cannot also be used for biofuels, and vice versa.

Wind

We see significant contributions from wind in portfolios 3 and 4, and the costs and potential for wind are much better understood than for many of the other scenarios.  Better yet for stock market investors, investments in wind are simple, with two wind energy ETFs allowing a simple investment in the sector.  Of the two, I have a slight preference for FAN (you can see my reasoning here.)

Efficiency, in all its Forms

Finally, port folio 4 shows considerable investment in Building Efficiency and Industrial Efficiency (which we usually refer to as just Energy Efficiency), while portfolio 2 has a good slice of Transport efficiency (what we usually call Clean Transportation.)  Keep in mind that these slices are only investments that do not have "negative cost," that is they do not cost less than new investments in conventional generation.  Since efficiency dominates investments with negative cost, the total investments in all forms of efficiency are likely to be many times what we see in these graphs.  While there is not yet an energy efficiency ETF available, there is one focused on clean transportation, the Global Progressive Transport ETF (PTRP).  I also have a few stock picks in clean transport.

For industrial and building efficiency, there is no ETF, but here are five of my favorite efficiency stocks, and you can find a much larger list of energy efficiency stocks here.  It's also important to note that smart grid stocks will fall into this category as well, at least for the purposes of the report.   Here are five of my favorite smart grid stocks.

Geothermal

Geothermal also has a small slice of portfolios 2 and 4.  This is significant given the small current size of the industry: even these small slices imply rapid growth for an underappreciated sector.  I mentioned three geothermal stocks to consider here, but I have since sold my stake in Raser Technologies (RZ), and will probably not repurchase it.  Our Twitter followers saw that first.  Charles did a good run-down of the public geothermal stocks in June.   

Other Thoughts

It's also worth looking at what is not in the efficient portfolios, but since this entry is already quite a thesis, I'll save that for later.

DISCLOSURE: None.

DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

September 16, 2009

Another Look at the Algonquin Power Income Fund

The Algonquin Power Income Fund (AGQNF.PK) has been one of my star performers in an excellent year.  Is it still a good investment at these prices?

 Since I recommended the Algonquin Power Income Fund (AGQNF.PK/APF-UN.TO) in January as a renewable energy income stock for 2009, the company is up 69%, in addition to the C$0.02 monthly dividend, worth approximately another 8% through August on the US$1.82 purchase price, making it the second-best performing of my ten picks (after Cree, Inc (CREE).)  However, since the major basis for my recommendation at the time was the stock's extremely cheap valuation and high yield, I thought it was worth revisiting, on the occasion of the company's Q2 update [pdf]

algonquinchart.png

Major events in the first half  were Algonquin's planned acquisition of a 50% stake in California Pacific Electric Company (Calpeco), the former California assets of NV Energy (NVE), and the fund's plan to convert into a corporation and acquire some tax loss assets through a deal with Hydrogenics Corporation (HYGS).

Calpeco

The Calpeco deal gives Algonquin some exposure to electricity transmission and distribution (in which their partner Elmira has management expertise) in addition to their current exposure to renewable energy generation.  Since I like the potential opportunities in electricity transmission, I think this was a step in a good direction for Algonquin.  Furthermore, about half of Algonquin's stake in Calpeco will be financed with an equity investment in Algonquin from Elmira at C$3.25 per unit.  Since this is only slightly below the current price, and well above the price at which I recommended the stock, the transaction will be non-dilutive for both me and my readers, and a reasonable exchange for more recent investors.

Hydrogenics

In July, a reader worried that the deal with Hydrogenics was a bad idea because Hydrogenics is a fuel cell company, an alternative energy sector neither of us is enthusiastic about.  In fact, this is a short term deal, and shareholders need not be concerned with ending up owning a fuel cell company when they thought they owned a renewable energy power producer.  Despite the legal complexity, this deal is not a tie-up with Hydrogenics, but rather a way for Algonquin to acquire corporate status, and Hydrogenics' tax loss assets at the same time.  Because Algonquin is profitable, and Hydrogenics is not, these tax loss assets are valuable to Algonquin, but not Hydrogenics, allowing both companies to benefit. Algonquin will gain the benefit of Hydrogenics previous losses in exchange for a cash payment, which will allow the cash-poor, unprofitable company to continue operations. The transaction has been approved by Algonquin unitholders and Hydrogenics shareholders, and awaits regulatory approvals.

Results

The Trust's first half revenue was down compared to 2008, which management attributes to lower natural gas prices.  Gas prices affect the trust's revenues through lower contract prices for the heat from their thermal generation units.  I find this to be a good sign, since I expect that low current natural gas prices will rebound because they do not provide sufficient incentive for natural gas companies to drill and replace the gas supply from depleting wells. Although I expect that low natural gas prices will depress revenues in the short term, Algonquin's operating cash flow and earnings should continue to be easily sufficient to fund distributions to unit holders with plenty left over to fund Algonquin's growth plans.

At current prices of C$3.32 for APF-UN.TO and US$3.07 for AGQNF.PK, with a yield of 7.2%, I consider Algonquin to be reasonably valued, and continue to hold my positions.  However, because I currently expect a market decline, I would only suggest buying Algonquin today if you also hedge your position against general market moves.

DISCLOSURE: Tom Konrad and/or his clients have long positions in AGQNF.

DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

July 09, 2009

$3 Billion For Cleantech & Alt Energy

Charles Morand

The DOE made public earlier today the amount of money that will awarded to clean power projects in lieu of the usual tax breaks: $3 billion.

This will allow project proponents to receive a direct cash grant now instead of a Production Tax Credit or an Investment Tax Credit later on. The guidance document notes the following:

"Section 1603 of the Act’s tax title, the American Recovery and Reinvestment Tax Act, appropriates funds for payments to persons who place in service specified energy property during 2009 or 2010 or after 2010 if construction began on the property during 2009 or 2010 and the property is placed in service by a certain date known as the credit termination date (described more fully below in the Property and Payment Eligibility section). Treasury will make Section 1603 payments to qualified applicants in an amount generally equal to 10% or 30% of the basis of the property, depending on the type of property."
 
This is the cherry on a sundae of cash handouts announced over the past few months for the alt energy and cleantech industries. Solar and wind installations - which account for the lion's share of alt energy investments - have yet to come back to life in any significant way. It is hoped by both government and industry people that this new measure will provide sufficient impetus in the near term to carry the sector through the remainder of the recession.

To be continued... 

July 08, 2009

Large Hydro Power: The Underloved Energy Source

Charles Morand

While browsing Cleantech News, I came across an interesting post on Energy Outlook on the lack of attention hydro power is receiving in the latest of round of policy efforts aimed at greening the U.S.' energy supply and combating climate change.

Besides having been been scuffed at in Waxman-Markey, hydro power has effectively been ignored in the ARRA, receiving a measly $32 million, peanuts in comparison to the $786.5 million awarded to biofuels, the $350 million for geothermal power and the $117.6 million going to solar. Not mention the millions of dollars that will flow into wind power as a result of changes to the PTC allowing project developers to claim a 30% investment tax credit (ITC) instead, and to obtain direct cash grants in lieu of the actual credit.

What can $32 million get you in today's large hydro power world? The latest North American project announcement that I am aware of is for a large-scale facility (1,550 MW) in the north of Canada forecasted to cost a total of $6.5 billion, or ~$4.2 million/MW installed. Since this is the north of Canada and far from population centers, suppliers of construction materials and the plants where much of the electrical hardware will be manufactured, let's assume that this project will cost about 25% more than an equivalent project closer to civilization, or ~$3.2 million/MW. At that cost, $32 million gets you a stunning 10 MW of new hydro. 

The $32 million is not for new capacity additions but rather for upgrades and improvements to existing facilities. Still, the figures above provide a rough idea of the economics of large hydro power today, and it's safe to conclude that $32 million is peanuts, and that refusing to count large hydro toward the national RPS proposed in Waxman-Markey won't exactly help.

This is unfortunate given that hydro's share of total electricity production in the US and average capacity factor have been eroding over the past decade, no doubt in part due to the fact that most large hydro installations in the US are old and in need of upgrading.

Despite concerns over ecological impacts, hydro large and small can contribute positively to the energy mix in regions with good hydrological resources. As noted in the NYT article linked to above, the utility building the 1,550 MW installation in Canada plans to leverage this huge amount of storage capacity to help integrate into its grid 4,500 MW of new intermittent wind power coming online by 2015.

Of course, not all regions are blessed with the hydrological resource base necessary to achieve something on that scale, just like hydrothermal geothermal can only ever be developed in a few select areas. But where that resource does exist (e.g. Pacific Northwest), it should be exploited. Furthermore, expansions in transmission capacity could certainly facilitate the use of large hydro dam to store power from wind farms far away. Given the potential scale of environmental and economic impacts related to climate change, waging war on large hydro today based on concerns over fish habitat, as many high-profile environmental groups are doing, is like worrying about the air bag while driving straight for the edge of Grand Canyon.

Last April, while doing research on wood pellets, I came across a stock with material exposure to the large hydro equipment business, Andritz Group (ADRZF.PK). This company would likely be a major beneficiary of the kind of hydo revival needed in the U.S. However, $32 million is probably not going to get anyone at Andritz overly excited given that its hydro unit alone generated sales of ~$1.6 billion in 2008.

DISCLOSURE: None
 

January 13, 2009

Focus On Clean Power Income Trusts

Last week, Tom brought you a piece on the Algonquin Power Income Fund (AGQNF.PK), in which he opined that shift in investor attention away from capital gains toward yield might eventually provide a catalyst for the prices of yield-focused securities such as income trusts to rise. So-called utility trusts, or income trusts where the underlying corporation is engaged in utility activities such as power generation, are a common feature of the Canadian income trust sector (the mother of all income trust sectors). A sub-set of utility trusts is the clean power utility trust, where the power generation assets consist of technologies such as wind, small hydro, biomass and waste-to-energy (WtE). Though new tax rules have effectively made it impossible for new income trusts to be brought to market (barring certain exceptions such as REITs), existing clean power utility trusts (existing as of Oct. 31, 2006) get to operate under the old tax regime until 2011.

The clean power utility trust model is similar to the clean power Independent Power Producer (IPP, see definition) model, whereby firms are pure-play clean power generators (i.e. they own only generation assets) that sell their electricity to utilities, with the exception that the tax treatment awarded to income trusts allows them to pay higher yields by avoiding double taxation.

While changes in legislation mean that this investment vehicle is dying a slow death, Tom was correct to point out that in times where the prospects for strong capital gains are uncertain and interest rates low, income trusts provide a good way for investors to access high yields. What's more, clean power utility trusts, this most unique of Canadian investment sub-sector, allow investors (including US investors) to play North American clean power in a way that does not entail a risky bet on a technology play but is rather much more akin to a utility investment.

Clean Power Utility Trusts             

Name Ticker Related Corp. Entity (Ticker) Yield (%)* Assets
Algonquin Power Income Fund AGQNF.PK N/A 9.16 Hydro, Cogen, WtE, Wind, Water/Wastewater
Boralex Power Income Fund BLXJF.PK Boralex (BRLXF.PK) 19.77 Biomass (wood residue), Hydro, Nat Gas Cogen
Macquarie Power & Infrastructure Income Fund MCQPF.PK N/A 18.88 Nat Gas Cogen, Wind, Biomass (wood residue), Hydro, Long-term Care Home
Innergex Power Income Fund INRGF.PK Innergex Renewable Energy (INGXF.PK) 10.81 Hydro, Wind
Northland Power Income Fund NPIFF.PK Northland Power (not public) 9.44 Nat Gas Cogen, Wind
Great Lakes Hydro Income Fund GLHIF.PK N/A 8.01 Hydro

*As at close on Friday Jan. 9, 2008

One of the major risks facing income trusts is distribution cuts, something that generally happens when the fundamentals of the underlying business are severely diminished or distributions were set too high to begin with (in order to attract investors). As can be noted from the table, the yields on some of these trusts (i.e. Boralex Power Income Fund and Macquarie Power & Infrastructure Income Fund) appear to indicate that investors are anticipating distribution cuts and are demanding a risk premium. Yet preliminary screens on both funds don't uncover much evidence that distribution cuts are in the cards (caveat: these were very preliminary screens).  

While growth will be challenging as long as credit conditions remain tight (individual projects typically use over 50% debt), the underlying business model and existing assets of these funds remain largely immune from a slowing economy - they are utilities with a clean twist. Barring another major round of indiscriminate selling in equity markets, investments in one or more of the clean power utility trusts is a good way of generating returns in the form of cash yields (something that's worth a lot more than the promise of future capital gains in this economic environment) from a comparatively low-risk sector.

Some of the things to look for as red flags in assessing these trusts are: liquidity position (cash on hand; quick ratio) and ability to borrow for emergency purposes (undrawn line of credit); leverage level (debt-to-capital ratio) and the need to roll over debt in the next 12 months; any signs that operating conditions have deteriorated (e.g. for wood biomass, indications that pulp/saw mill closures related to the bad economy are decreasing fuel supply).

DISCLOSURE: Charles Morand does not have a position in any of the securities discussed above.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

August 25, 2008

Five Alternative Energy Stocks I'll Research "One of These Days"

I have more ideas than I have time to explore them, and it's getting out of hand.  I still need to write the promised articles on Evergreen Solar (ESLR) and Lithium Technology Corp (LTHU), but there are many others that have caught my attention over the last six months or so.  Since the list keeps getting longer, I thought I'd just give you a taste of some of the companies in my inbox, and why they seem interesting.  Since I may or may not ever write articles about any of these, I thought I'd give people the opportunity to evaluate the companies for themselves.

  1. AECOM (NYSE:ACM).  Astute readers of my recent Hydropower overview will have noticed I said: "AECOM Technology Corporation (NYSE:ACM) [is] a global provider of professional technical and management support services to a broad range of markets, including transportation, facilities, environmental and energy," and also that the most promising opportunities were in "suppliers of parts and services to hydropower projects."  Not only is ACM a prominent provider of services to hydro projects, they also get much of their revenue from, and, as one ACM employee described it to me, energy projects which don't involve burning something.  This includes some of my longtime favorite sectors, such as transmission and public transit.  So ACM is on my short list.  I might have already bought some, if the stock price had not been going up since I discovered the company.
  2. Kaydon (NYSE:KDN). As a wind industry supplier, I've had Kaydon as part of my portfolio for about a year.   When the company had disappointing earnings last month due to their non-wind business, my instinct was that it was time to buy more, but I wanted to dig a little deeper to make up my mind.  I still have not done that digging.
  3. Power Efficiency Corp (OTC BB:PEFF).  This company, which makes software to save energy in industrial motors and such as escalators and rock crushers caught my eye last year by advertising with us for a few months.  After an interesting conversation with the CFO, BJ Lackland, I decided to make a small investment.  It's a niche technology, yet has the potential to save a tremendous amount of energy even so, and it is already working in the marketplace.  If they can get the technology accepted by OEMs, the growth potential (from a tiny base) is enormous, nevertheless, I have not done the deeper digging I require of myself to make a larger investment than I already have.
  4. Orion Energy Systems (NasdaqGM:OESX).  Another energy efficiency company that caught my attention a couple months ago, Orion provides a suite of efficient lighting solutions to commercial businesses.  Since I expect the sector to boom in coming years, Orion seems well placed to take advantage of utility Demand Side Management programs.
  5. Texas Pacific Land Trust (NYSE:TPL).   A reader sent me this suggestion in response to my comment in my Invest in the Pickens Plan article "I'd prefer a REIT with a rural focus, but have been unable to find one."  According to the company's profile, they "owned the surface estate in 964,813 acres of land located in 20 counties in the western part of Texas" as well as some oil and gas royalties.   West Texas is typically fairly windy, but to really know if this stock would benefit from a rural resurgence driven by massive wind investment, we'd have to know how their lands line up with both wind resources and available transmission capacity... and how management feels about wind... would they sell out as soon as they saw a small price rise due to interest in wind, or would they wait for enhanced economic growth to produce long term superior returns?

DISCLOSURE: Tom Konrad and/or his clients own KDN, PEFF.

DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance.  Please take the time to read the full disclaimer here.

August 10, 2008

Hydropower: The Renewable Energy Elephant in Room

There is a form of renewable energy which accounts for approximately one sixth of world electrical generation, and unlike wind and solar has a natural form of storage which costs a fraction of any other form of electricity storage, and has black start capability.  Given all these positive characteristics, it may seem surprising that we have not yet written about it.  The renewable energy in question is Hydropower, and the reason we've not covered it before is that the facilities are typically owned and run by governments or diversified utilities.  

Until now, the only Hydropower investments I have been aware of were utilities which produce a high proportion of hydroelectric power, such as Idacorp (NYSE:IDA.)   Just as regulated utilities do not bear the full risk of escalating fossil fuel prices, utility owners are unlikely to reap the full benefits of Hydropower as we transition to a clean energy economy.  Both these risks and benefits tend to accrue to the customers of regulated utilities.  The Economist had an article on what is probably the largest publicly traded hydropower utility, Russia's partly state owned RusHydro.  Unfortunately, as we have seen from the examples of Yukos, and more recently Mechel, Russia is a very risky place for investors.

As a investor, I am interested in participating in the upside of hydropower, but am not interested in letting Putin dictate my investment returns.  To learn more about the industry in the hope of finding investment ideas, I recently attended Hydropower in Colorado, a technical seminar put on by AECOM Technology Corporation (NYSE:ACM), a global provider of professional technical and management support services to a broad range of markets, including transportation, facilities, environmental and energy.   TCB AECOM and Boyle AECOM, the divisions putting on the seminar provides planning and engineering services to dam hydropower projects, which was why they were putting on the conference, where the typical attendee was a civil or mechanical engineer working for a water utility.  I found the presentations of AECOM employees to be very informative, especially those on the real world challenges of getting a new hydropower project up and running.

Pumped Hydro storage

I've often written about aspects of electricity storage.  Among storage technologies, the 800 pound gorilla is pumped hydropower (alternatively "pump hydro") storage.  Pumped storage was built for spinning reserves (available power to meet short term surges in demand), and we have tens of gigawatts of capacity in the United States.  Despite recent breakthroughs in storage for solar, and recent small-scale demonstrations of utility scale batteries, pumped hydropower storage is an existing technology which was first deployed in the 1890s in Italy and Switzerland, and has seen worldwide deployment since the second world war.

However, the US has not seen the construction of a new pumped storage facility since the 1980s.  According to Blaine Dwyer of Boyle AECOM, there have been eleven permits for pumped storage issued by FERC since then, but none of the projects have been built, and the permits have since been rescinded.  Issues which have prevented the construction of new pumped storage most likely include the lower differentials in peak and off peak power prices due to the rapid expansion of natural gas generation, as well as an increasingly organized and active opposition to any sort of new hydro by environmental groups.

With rapidly rising natural gas prices, as well as increasing penetration of intermittent renewables, we should see rising daily price differentials, which should greatly improve the economics of new pumped hydropower projects.  According to Karl Kumli, a leading Colorado utilities and water lawyer who gave the presentation on the legal aspects of permitting, new pumped hydro projects (at least in Colorado) are likely to be limited to off-channel facilities by environmental concerns and existing water rights holders. 

Surprises

I went to the seminar to learn about hydropower, a technology I had not previously investigated.  While these have not yet become investment ideas, below are the observations I found more surprising or interesting.

  1. Hydro engineers seem surprised at the unpopularity of hydro in general, and there was a strong interest from most attendees in pumped hydro storage.
  2. There are many opportunities to add hydro generation to existing water facilities.  Even wastewater flows and agricultural ditches can be opportunities.  However, many of these opportunities will be non-dispatchable (if not intermittent), because the flows are managed for other purposes.  
  3. Monthly data are not fine enough to fully determine the feasibility of a power project; the smoothing of flows significantly overstates expected power generation.
  4. There is a wide variety of different turbines available, with varying costs and efficiencies, suited to different flow profiles.  The Francis turbine is the current workhorse of the industry, but the expected trend towards new hydro projects with smaller and less predictable/controllable flows will, in my opinion, lead to an increase in the use of Bulb turbines for fitting into existing pipes or channels, and cross-flow turbines for their low cost and ability to handle a broad range of flows.   
  5. The industry's bespoke model has left a gap for a cheap and simple low-efficiency turbine which could be mass produced for a wide variety of situations.  It's my guess that the legal challenges of permitting hydropower have led to this market situation; only projects which the government is behind and are likely to be very profitable are pursued, because only those are valuable enough to defray the legal costs.  Put another way, given high legal costs, savings from a cheaper installation can make less difference on the overall economics of a project, leading the industry to pursue efficiency of power generation with more expensive turbines.
  6. Although a single large turbine is most efficient for any given flow, Multi-unit projects can help with feasibility in situations with significant flow variations over time.
  7. Legal: Exemptions are the way to go for licensing.  Last forever, does not have to be renewed.  This will likely lead to new projects being relatively small and designed to capture wasted energy in existing channels and pipes, rather than the construction of new dams.
  8. At least in Colorado, there is a large and growing amount of money available for hydropower projects within government entities.  To date, this money is largely untapped, despite the fact that it's available at very low interest rates (2-4.5% for 20-30 yr loans.)

Investments

I am still pursuing my research into hydropower investments.  The underlying theme has not changed.  Since most new hydropower will be built by government entities, direct investment is not likely to be the most profitable option.  This leaves investment opportunities in the suppliers of parts and services to hydropower projects.  I do expect an increase in such projects, both small hydro and pumped hydro, so such suppliers should be able to ride the trend.  As I investigate and invest in individual companies, I will write about them further.

Tom Konrad

DISCLOSURE: None.

DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

August 08, 2008

Some Thoughts on Water, Electricity and Climate Change

Most forms of electricity generation use water.  Thermal generation (coal, natural gas, nuclear, biomass, and Concentrating Solar Power (CSP)) evaporate water for cooling, although they can substitute air cooling, but only by sacrificing efficiency.  Moving in the other direction, many dry coastal regions use desalinization to essentially convert electricity into clean drinking water.   A plant  was recently approved in Southern California, despite environmental concerns. Lack of water use is one of the less recognized advantages of wind and solar photovoltaic generation, but is a significant advantage in the arid West. 

Next week, I will be publishing an article which came out of a recent Hydroelectric power seminar I attended on Tuesday.   When a hydroelectric project requires a new dam, water will be lost due to increased evaporation, but even new hydro projects in existing channels will require consistent flows to be economic. Hydropower projects become more cost-effective with more consistent water flows, so expectations of future water flows are extremely important for planning new projects.  

The effects of Climate Change on water availability are much less predictable than the effects on temperature, and these effects are not limited to just changes in rainfall patterns, changes in evaporation, and changes in snowmelt.  According to Ken Knox, a water resources engineer at URS Corp (NYSE:URS), and former Colorado Chief Deputy State Engineer,  the largest driver of decreased water availability in Colorado (and the rest of the arid West) is not changes in precipitation, snowmelt, or evaporation, but a longer growing season due to warming.  Farmers, many of whom hold very senior water rights, are taking advantage of a longer growing season to plant more crops.  They then irrigate for much more of the year, using more of the finite water supply for longer periods.

For prospective hydropower projects, this means that new projects installed in existing irrigation ditches with senior water rights are likely to be able to generate power for longer from more consistent flows.  On the other hand, any project relying on less senior water rights is likely to see decreasing and less predictable flows, which will reduce the viability of such projects compared to how they would have performed under historical conditions.

For other decisions between renewables and conventional generation, and even when choosing between types of renewable generation, I expect availability and cost of water to be an increasingly important factor.  Nuclear generation for baseload power becomes significantly less advantageous when it must be shut down due to insufficiently cool water for cooling.  Similarly, there was local consternation in the Colorado activist community when our utility, Xcel Energy (XEL), chose to meet an Renewable Portfolio Standard requirement with a photovoltaic rather than CSP plant in the San Luis Valley.  From reviewing the regulatory filings, I became convinced that the lack of availability of water on the site made the choice of photovoltaics a forgone conclusion.  The number of  projects where the availability of water plays a large role in determining the final outcome can only increase as available supplies decrease or become less predictable.

Tom Konrad

DISCLOSURE: None.

March 04, 2007

Change Winds Blow for Renewable Energy Income Trusts

Renewable energy is still very much in its infancy, which means that companies in the space are either profitless or high-multiple startups, or divisions of much larger companies (GE Wind (NYSE:GE), or utilities such as FPL Group (NYSE:FPL) and Xcel (NYSE:XEL) which get much of their power from conventional generation.) This presents a dilemma for investors who understand the compelling drivers for the sector, but whose risk tolerance or financial needs indicate an income-based investing strategy.

Canadian Income Trusts in Renewable Energy

A few Canadian Income Trusts have historically gone some way towards filling this niche. These include the Boralex Power income trust (BPT-UN.TO / BLXJF.PK), Algonquin Power (APF-UN.TO/AGQNF.PK), and the Clean Power Income Fund (CLE-UN.TO/CEANF.PK).

The Boralex Power Income Fund owns an electricity generating asset mix of approximately 45% hydroelectric (by 2005 revenues), 32% wood residue (biomass) with some cogeneration, and 23% natural gas fired cogeneration. It is managed and 23% owned by its parent utility, Boralex (BLX.TO/BRLXF.PK).

Algonquin Power Trust owns a mix of hydroelectric generation (25% of sales), cogeneration (42% of sales), Alternative fuels (9% of sales), and infrastructure (24% - mostly waste disposal and treatment. Percentages based on 2005 data.) Alternative fuels (mostly landfill gas, municipal solid waste, and some wind) comprise the fastest growing segment of the portfolio.

Finally, the Clean Power Income Fund, which trumpets itself as "the first income fund to be certified under Canada’s Environmental ChoiceMProgram," owns a mix of electricity generation assets consisting of landfill gas (37% based on 2005 cash flow), biomass (27%), hydropower (26%), and wind (10%). They are completing the Erie Shores 99MW wind project which will increase the wind portion of the portfolio.

Disappearing Tax Advantages

While none of these have the stability of a bond fund, they have gone some way towards bridging the gap between volatile startups and predictable income, allowing a broader spectrum of investors to participate in renewable energy. However, they were all organized to take advantage of a provision of Canada's tax code which conferred significant tax advantages, similar to the advantages enjoyed by REITs and Master Limited Partnerships in the US. Those tax advantages were scheduled to be phased out over the next four years to the surprise of the financial markets in November, and while some are still fighting the tax law changes, the trust management of these three trusts have, by their actions acknowledged the reality of the changes.

Within the last week, The Clean Power Income Fund board has agreed to be acquired by Algonquin Power, subject to the approval of its unitholders, while The Boralex Power Income Fund has announced that it is up for sale, possibly to be acquired by its parent, Boralex, which currently owns 23% of the fund and acts as its manager.

Risks and Opportunities

For the traditional income investor, primarily interested in stability, all this activity and the volatility is bad news, but it presents opportunities for the risk tolerant investor interested in purchasing solid, income producing assets, something of a rarity in retail renewable energy investing. It's impossible to say what good price entry levels are for any of these funds, but they are all considerably cheaper than they were before the tax changes were announced in November.

Prospective investors should also understand the tax implications (which depend not only on the changing laws, but on the nationality and tax status of the account used) before investing.

Tom Konrad, Ph.D.is an independent investment adviser registered in the state of Colorado who helps people reach their investment goals while protecting the environment.

DISCLOSURE: Tom Konrad and some of his clients hold positions in The Clean Power Income Trust and the Algonquin Power Trust.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

April 18, 2006

Internal Hyrdo Sets Alternative Energy Unit Deployment for U.S.

Internal Hydro International Inc. (IHDR) announces that it will be field testing production units of the Energy Commander V 30 Kw small hydro product. These EC V untils are able to supply a constant 30 kilowatts of constantly available electricity via the natural flows of water from dams, water pipelines, streams and rivers. [ more ]

March 23, 2005

Green energy seen as $100 billion market in decade

Renewable energy like wind and solar power and hydrogen fuel cells could blossom into a $100 billion a year global market in less than a decade as technology costs fall, according to a study.

The combined market for "green" sources of energy has already grown 68 percent since 2002 to more than $16 billion last year, according to Clean Edge, a research and publishing firm based in California. [ more ]

You can view and download the complete Clean-Energy Trends report at the following link. [ more ]

March 14, 2005

ENDESA Will Invest Euro 286 Million in New Wind Farms and Mini Hydro Plants in 2005 with a Total Capacity of 277 MW

ENDESA (ELE) has received authorisation to build and start up new wind farms and mini hydro plants this year, requiring an investment of Euro 286 million. The start-up of these projects, part of ENDESA's Strategic Plan, will add 277 MW to ENDESA's generation capacity, 252 MW in wind (for a Euro 250 million) and 25 MW in mini hydro capacity (for an investment of around Euro 60 million).

Facilities already under construction and expected to come on stream in 2005 include the wind farms at Pena Ventosa and Chan do Tenon in Galicia, Las Hoyuelas in Castilla La Mancha and P.E. Saso Plan in Aragon, representing an investment of Euro 144 million and overall capacity of 146 MW. [ more ]

November 10, 2004

Internal Hydro International Inc. Announces Purchase Contract of $2,250,000 for 100 Energy Units and Follow On Revenues

Internal Hydro International Inc. (IHDR) announces that the Company has entered into a purchase agreement with El Tigre Development Inc. (ETIG) for the purchase of 100 Energy Commander Units. The purchase price of the 100 units will be $2,250,000.00 for placement by ETIG in the United States and elsewhere. The agreement calls for IHDR and ETIG to share in revenue generated from each unit beyond the purchase price.

The Energy Commander technology uses IHDR's patented low impact hydro technology utilizing water or gas flow from any source where pressure is present. The technology uses water or gas pressure from man made sources such as industrial or municipal flows, or natural sources such as streams or rivers wherever pressure is present and wasted. IHDR is now entering into the deployment phase of units under its business plan. [ more ]

November 03, 2004

Internal Hydro International Inc. Enters Phase II of Operations

Internal Hydro International Inc. (IHDR) is now entering the Second Phase of its business plan, which will be deployment of the company's patented energy production technology, called the Energy Commander IV (EC IV). The Company has entered into a sales agreement that will place ten units in applications in the Southwest United States, while placing other units in the Eastern United States in various areas of use. [ more ]

October 15, 2004

BT gets behind renewable energy

British Telecom has announced a three-year plan to get all of its energy needs from renewable sources - the biggest such project in the world. The electricity used, worth hundreds of millions of pounds, could power a city the size of Nottingham. Renewable sources of energy include wind, wave and solar power, rather than using fossil fuels like oil or coal. [ more ]

October 01, 2004

Construction of Shihwa Lake Tidal Power Plant Begins Next Month

This November, the construction of the world’s largest tidal power plant will begin at Ansan City’s Shihwa Lake in Gyeonggi Province, and next year, the construction of an experimental current power plant will start in Haenam County at Uldol-mok. [ more ]

As an aside, this website has a great feature that allows you to listen to a text-to-speach version of this article in either a male or female voice.

September 23, 2004

New York to rely more on renewable power

New York will dramatically boost its reliance on renewable energy sources like wind and water over the next nine years under a policy approved by state regulators Wednesday.

Clean energy advocates and state officials said the action by the state Public Service Commission places New York among the leaders nationwide in the development of renewable energy. It comes 20 months after Gov. George Pataki first called for a statewide standard that would encourage the production of environmentally friendly energy. [ more ]

August 30, 2004

Newsweek Special Report

"Experts generally agree that our current reliance on fossil fuels is unsustainable. Already oil is near $50 per barrel, and the great millions of Chinese and Indians destined to take to the road in the next decades have not yet gotten behind the wheel."

This week Newsweek has written several special reports about alternative energy in all its forms. All of these reports can be found at the following link. [ more ]

Hydropower project tested on Merrimack

Privately held Verdant Power is developing technology for a new type of hydropower that, unlike conventional hydropower, does not involve the use of dams. Instead, it seeks to capture ''kinetic energy" from the moving water found in tidal streams, rivers, and the ocean, and in human-made facilities such as aqueducts and irrigation canals. This project will be developed on a section of the Merrimack River in Massachusetts. [ more ]

August 27, 2004

Campaign for renewable energy begins

Colorado House Speaker Lola Spradley, R-Beulah. and U.S. Rep. Mark Udall, D-Eldorado Springs, co-chairs of Amendment 37—the Renewable Energy Initiative—kicked-off their statewide campaign Thursday with stops throughout Colorado.

Amendment 37 would require 10 percent of Colorado's electricity be generated from renewable energy by 2015. The program is scaled beginning with a 3 percent requirement by 2007, 6 percent by 2011, and 10 percent by 2015. [ more ]

Wave machine supplies power to national grid

British engineers have succeeded in supplying electricity generated from wave power to the national grid for the first time.

A machine off the coast of Orkney has been generating electricity for a week. Its performance is being monitored by scientists at the European Marine Energy Centre. [ more ] also more about this story at [ msnbc.com ]

August 24, 2004

Internal Hydro International, Inc. Enters Into Discussions To Acquire Worldwide Licenses For Turbine Electric Power

Internal Hydro International, Inc. (IHDR) has entered into discussions with a USA corporation, Turbine Electric Power, Inc. for the purpose of structuring an LOI between the companies.

Turbine Electric Power, Inc. holds the 'exclusive worldwide rights' to install, sell, market and distribute a new 'high tech' micro turbine electric power generator on all electric powered vehicles.

This new micro turbine will provide 'on board' continuous electric power to recharge battery systems and additional 'on demand' power directly to the electric motors of all electric powered vehicles. This turbine charging system will preclude the necessity of electric powered vehicles stopping to recharge the battery systems, thus giving these vehicles much greater range and performance with the added benefit of environmental friendly power systems the world is demanding today. [ more ]

August 18, 2004

Tidal flow to power New York City

Verdant Power plans to plunge six electricity turbines into the East River. If the $4.5-million project is successful, the generators will form the first farm of tide-powered turbines in the world.

The plan is to attach the machines, which look like small wind turbines, to concrete piles hammered into the bedrock nine metres below the river's surface. As the tide surges in and out, the heads pivot to face the current and the blades spin. [ more ]


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