If any of you have been watching some of the fuel cell stocks move, you might think that they just revolutionized
the battery storage space. Rightly, you
would be asking what on earth is going on?
I put together a whiteboard diagram, you know, one of those dry marker white
boards that you and your colleagues sit down to at a kumbaya retreat and team
build.
I am an energy analyst and like to think “big picture.” With the Obama administration and the EPA are clearly
pointing towards a renewable energy path versus conventional energy one, I started laying
out all of the energy sources that I could think about. Once you put them down on the white board,
you start connecting one to another as it relates to substitutions, production,
consumption, alternatives, evolution, etc.
You also lay down the industries that would participate the most. After a few days of laying down the ideas and
allowing them to percolate, a clearer picture begins to emerge.
For me, this is neither a brilliant idea nor a novel one, the
missing link to renewable energy was the battery. Too many of the producer, consumer,
evolutionary, and revolutionary data points were connecting to battery/energy storage. When I looked at the equity universe for
ideas, I started with the venture capitalists.
I thought that they would be invested in the latest and greatest of electrical
storage technology. There were some
interesting ideas, but none investable for me.
As you know, venture capital is only available to the accredited
investor and more than likely a very high-net worth accredited investor.
That roadblock led me back to those companies that are the current fuel cell “battery
players.” I have followed these
companies as an energy and renewable energy analyst and portfolio manager and
eventually sold them and dropped them from coverage, due to their inabilities
to advance technologically. After
several quarterly conference calls of reduced earnings guidance, it was clear
to me that these companies were “before their time.”
Here we are ten years later from their previous peaks and maybe it is their time. They are on a tear. What sparked this
run? TESLA. With Tesla moving from their small,
multi-battery, battery (6,831 batteries to be exact) to a single large lithium
ion battery, the company did not have enough test miles to understand the potential liabilities. Their lithium ion
battery caught fire from a collision.
Then came the NYT articles and potential calls for a recall of the
car. The Tesla stock imploded. Elon Musk who also founded X.com (later Paypal), Zip2 and SpaceX, clearly would
resolve this issue. That got me thinking
about the battery space. When you look
at solar, sure the cost per kwh is moving rapidly toward grid parity, but it
only works when the sun shines, which is during most people’s work day. Wind, which seems to be heading towards the
setting sun mainly due to NIMBI, long transmissions lines (and significant line
loss), and heavier than expected repair and maintenance costs, also needs storage. Electric cars, in order from them to move
forward, need better battery solutions.
But something may make it different this time for these battery stocks, while Musk presses for better lithium ion results or other battery solutions. Let me turn to Hyundai. They are introducing into the California
market this spring, the Tucson Fuel Cell CUV.
Why California? It has 8 of the 9
hydrogen stations in the US, so it makes sense to start there. Initially, they will only be available on a
lease basis. Keep an eye on this vehicle
(and their videos - Hyundai has a couple of cool videos on the vehicle and refueling stations) for it will tell us if these battery stocks usher in
a new era. While they are not suppliers
to the Hyundai, they are fuel cell component manufacturers. But
buyers beware, hedge funds will be looking to short these stocks as hard and as
fast as possible. I like the battery
space - it is the linchpin to solar, wind and electric vehicle growth and earth's renewal.
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