Cosan is also likely to benefit from the recent US EPA decision to allow a 15% ethanol blend (E15) in some US cars. That will lower US exports of corn ethanol, which have supplanted a portion of Brazilian exports, and make Brazil’s ethanol more costly. The joint venture with shell is also planned to expand into a global business eventually.
For the most part, battery technology today is not a lot different from what it was in the 19th century. As consumers got more demanding of batteries for portable devices, the technology did improve some with the development of nickel-metal hydride and lithium-ion technologies. Those were significant advances, but the challenge now is to get way better.
The market for lightweight batteries to power the latest round of mobile devices is growing, but the biggest growth appears to be in the automobile sector and the battery storage sector. Electric cars with varying battery requirements are about to hit the world’s roads. Batteries are also being designed to store the electricity generated by intermittent sources such as wind and solar. If development of these technologies continues to make progress, batteries are expected to play a big role in the future of alternative energy.
18. Advanced Battery Technologies (NASDAQ:ABAT) is a Chinese company with a modest market cap of just $270 million. In 2008, none of the company’s revenues came from vehicle batteries. In 2009, the company pulled in $21 million in revenue from vehicle battery sales, mostly for transit buses in China. In the first half of 2010 the company has garnered more than it did in all of 2009 from vehicle batteries, and the company’s total revenue for the first half of 2010 is already higher than full year 2009 revenue.
This may not seem like such a big deal, but remember, batteries are about the same as they were 150 years ago. There is no Moore’s Law that will double performance and halve the price every two years. That won’t happen soon, if ever, with batteries. So the battery companies that are posting a profit now, even a small one like Advanced Battery, are in a strong position going forward. And the Chinese battery industry, like other Chinese clean-tech companies, benefits from substantial financial support from the government.
19. A123 Systems Inc. (NASDAQ:AONE), unlike its Chinese counterpart, is not making a profit, but it is well capitalized and has a market cap approaching $1 billion. Also like Advanced Battery, A123 sells into the vehicle market, but it is focusing more effort on its grid-connected storage batteries. The transportation market accounted for three times more revenue in 2009 than in 2008, and the same was true for its sales in the grid market. Sales in the consumer markets fell by about two-thirds in the same period. This is a company that is transforming itself, and it’s not unlikely that grid storage products will jump from 15% of product revenues (in 2009) to something closer to 35%.
The market for lithium-ion batteries for electric cars is expected to grow from about $1 billion in 2011 to nearly $25 billion in 2015. That is not a misprint. A123 has a contract to supply vehicle batteries to China’s largest carmaker, SAIC Motors. That should help turn the company’s profit picture around, but like every other clean-tech company that wants a piece of the Chinese market, A123 is very likely going to have to part with some its proprietary technology to meet the Chinese government’s rules for technology transfer. A123 also has two major customers for its grid-connected batteries, BAE Systems and AES Energy Storage, which together account for about 75% of the company’s revenue. That’s risky, but if A123 can deliver, these two customers could be enough to make the company profitable next year.
20. Maxwell Technologies, Inc. (NASDAQ:MXWL) is perhaps the leading maker of ultracapacitors, a device that stores electricity and that can be charged and discharged both quickly and many more times than any battery. Ultracapacitors are used in regenerative braking devices in electric and hybrid electric vehicles, wind turbines, and consumer devices like uninterruptible power supplies.
But where Maxwell could really shine is in a stop-start mechanism for hybrid or traditional gasoline engines. Stop-start technology turns off the car’s engine when the driver’s foot is on the brake and the car is standing still. When the driver’s foot is moved to the accelerator, the stop-start system starts the engine again. Start-stop technology is a prime candidate for near-term inclusion on all new cars because it helps meet government mileage requirements and reduces emissions. Because batteries alone can’t deal with the hundreds of thousands of starts and stops, an ultracapacitor could easily and cheaply take on that role. Ultracapacitors could also play a significant role in grid storage, where their ability to discharge rapidly could be used to smooth electricity transmission.
A precise definition of the smart grid is nearly impossible, but a reasonably comprehensive description includes advanced metering infrastructure, AMI; distribution automation, DA; home area networking, HAN; and smart enterprise. The primary reason to build out a smart grid is to reduce peak demand for electricity. That means fewer power plants would need to be built and fewer emissions would be poured into the atmosphere.
One research firm estimates the total US market for smart grid technologies will grow from $5.6 billion in 2010 to $9.6 billion in 2015. The firm also forecasts the largest growth will come in the DA market and that 48% of the 140 million US electricity consumers will AMI (smart) meters installed.
Smart meters will allow two-way communication between customers and the utility, but the full capabilities of that function are still some years away. Distribution automation refers to the ability of the national grid to heal itself in the event of a fault. Because the US grid is so old and dilapidated, this capability is essential to maintaining electricity service. Other distribution automation devices will help smooth out and regulate the power on the distribution lines. The costs for these improvements will fall to utilities and, ultimately, their customers.
Home networking includes appliances with enough brains to talk to the smart meter and figure out when electricity is cheapest for a particular customer task. Think of a washing machine where the clothes are tossed in at some point during the day and washed at night when electricity is usually cheaper than during the middle of the day. This bit of the smart grid will take longer to implement and be more costly because it includes so many industries and depends on consumers being willing to spend the extra money to buy smart appliances and other household items.
The smart enterprise piece of the puzzle is already well under way and won’t show much growth. Businesses have already begun adopting advanced metering and other technologies because the payback is established. No business wants to pay more for electricity than is necessary.
The US electric power grid has been called the engineering wonder of the 20th century. Bringing that grid into the 21st century may well be in the running for this century’s engineering wonder.
21. Itron, Inc. (NASDAQ:ITRI) has been in the utility metering business for more than 125 years. The company estimates that there are about 1.3 billion electricity meters installed globally, of which just 9% are automated. Of the estimated 175 million meters installed in the US, some 47% use automated meter reading technology, and Itron claims that its technology is installed on about half those meters.
The company also makes natural gas and water meters, which also use technology to measure usage and communicate with the central utility. Itron’s water meters, for example, can detect leaks that might otherwise go unnoticed for a long time, helping to keep customers’ bills down and reduce water usage. The company claims nearly 8,000 customers worldwide and received about 17% of its total revenues in 2009 from its 10 largest customers.
Itron’s free cash flow has been around $40 million in the last three quarters and the company’s quarterly earnings growth in the June quarter was nearly 76% year-over-year. The company has also entered a joint development agreement with Cisco Systems to create a reference design for smart grid network communications using IPv6 protocol, the newest version of the Internet Protocol. Itron will also embed Cisco’s technology in its meters and will sell Cisco equipment with its smart meter products. This could well be a trial marriage, given Cisco’s penchant for acquisitions.