24/7 Wall St. » CPN

Top Analyst Upgrades & Downgrades (AKS, ALTR, BRCM, CPN, CTL, DELL, EW, JDSU, MRVL, NMR, STLD, GWW)

Administrator — Thu, 02 Feb 2012 13:32:39 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Thursday morning.

AK Steel Holding Corp. (NYSE: AKS) Cut to Underperform at BofA/ML.
Altera Corporation (NASDAQ: ALTR) Cut to Underperform as Bear of the Day at Zacks.
Broadcom Corporation (NASDAQ: BRCM) Started as Buy at Canaccord Genuity.
Calpine Corporation (NYSE: CPN) Started as Overweight at JPMorgan.
CenturyLink, Inc. (NYSE: CTL) Cut to Neutral at Goldman Sachs.
Dell Inc. (NASDAQ: DELL) Raised to Overweight at JPMorgan.
Edwards Lifesciences Corporation (NYSE: EW) Cut to Neutral at Credit Suisse.
JDS Uniphase (NASDAQ: JDSU) Cut to Neutral at UBS.
Marvell Technology Group Ltd. (NASDAQ: MRVL) Started as Buy at Canaccord Genuity.
Nomura Holdings Inc. (NYSE: NMR) Raised to Outperform at Credit Suisse.
Steel Dynamics, Inc. (NASDAQ: STLD) Cut to Neutral at BofA/ML.
W.W. Grainger, Inc. (NYSE: GWW) Maintained Outperform as Bull of the Day at Zacks.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: AKS, ALTR, BRCM, CPN, CTL, DELL, EW, GWW, JDSU, MRVL, NMR, STLD

24/7 Wall St. Closing Bell (HD, GMCR, NFLX, STP, RIG, CPN, AEO, JOSB, SDRL, ARO, KKD, ZOLT, AATI, PCX, AVL, JASO, SFLY)

Paul Ausick — Wed, 30 Nov 2011 21:07:58 +0000

Strong reports from the Chicago purchasing managers index and pending home sales juiced the equity markets this morning, and the gains held up throughout the day. Part of the bounce is due to a lowering of China’s capital reserves requirements on its banks and to a weaker dollar. Crude oil prices rose nearly 2% this morning, but the EIA report of a large inventory increase sent prices back down by mid-morning. WTI crude is trading at $100.27/barrel, after posting a high this morning of $101.75/barrel. Gold is up sharply, at $1,745.30, a rise of nearly 2%. The three major indexes have all been trading more than 3% higher for virtually the whole day.

The unofficial closing bells put the DJIA up nearly 489 points to 12,044.55 (4.23%), the NASDAQ rose nearly 105 points (4.17%) to 2,620.34, and the S&P 500 rose 4.33% or nearly 52 points to 1,246.94.

There were several analyst upgrades and downgrades today, including Home Depot Inc. (NYSE: HD) reiterated as ‘buy’ with a $46 price target at Argus. Other ratings actions included Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) reiterated as ‘buy’ with a $94 price target at Canaccord Genuity; Netflix, Inc. (NASDAQ: NFLX) cut to ‘underperform’ at Wedbush; Suntech Power Holdings Co. Ltd. (NYSE: STP) reiterated as ‘hold’ at Argus; Transocean Ltd. (NYSE: RIG) cut to ‘hold’ at Argus; and Calpine Corp. (NYSE: CPN) cut to ‘hold’ at Jefferies. See our story on Transocean’s stock offering and proposed debt offering.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: American Eagle Outfitters Inc. (NYSE: AEO) is up 3.3%, at $13.87; The Fresh Market, Inc. (NASDAQ: TFM) is up 5.7%, at $38.73; Jos. A. Banks Clothiers, Inc. (NASDAQ: JOSB) is down -6%, at $48.09; and SeaDrill Ltd. (NYSE: SDRL) is up 6.3%, at $34.82. After markets close today, Aeropostale, Inc. (NYSE: ARO) and Krispy Kreme Doughnuts Inc. (NYSE: KKD) will report earnings.

Several other standouts from today are as follows…

Zoltec Companies, Inc. (NASDAQ: ZOLT) is up 41.5%, at $8.11. The advanced materials maker reported better-than-expected earnings after markets closed yesterday.

Advanced Analogics Technologies, Inc. (NASDAQ: AATI) is up 32.5%, at $5.75. The power management chip maker is being acquired by Skyworks Solutions Inc. (NASDAQ: SWKS) for $258.6 million, or about $6.05/share.

Patriot Coal Corp. (NYSE: PCX) is up 18.7%, at $10.30. This coal miner, like virtually all its competitors, is down about -40% for the past 12 months. There’s no news to justify today’s price jump, but the company’s thermal coal does sell well in cold weather.

Avalon Rare Metals Inc. (AMEX: AVL) is up 20.3%, at $3.26. The rare earths miner made this big move on no news, but competitor Molycorp Inc. (NYSE: MCP) did a deal with two Japanese companies to manufacture very powerful magnets in Japan for use in wind turbines and other high-tech products.

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is up 16.6%, at $1.80. The solar PV maker is among several Chinese solar companies moving up today, no doubt as these are considered the most likely to survive a shakeout in the solar manufacturing sector.

Shutterfly, Inc. (NASDAQ: SFLY) is down -12%, at $27.02, after posting a new 52-week low of $26.93 earlier today. The social media company is facing intense competition for its on-line photo products.

Stay tuned for Thursday. Here’s a list of other noteworthy events scheduled for tomorrow(all times Eastern):

8:30 a.m. – New unemployment claims
9:45 a.m. – Bloomberg consumer comfort index
10:00 a.m – Industrial Supply Management manufacturing index
10:30 a.m. – EIA natural gas weekly report
4:30 p.m. – Federal Reserve balance sheet
4:30 p.m. – Money supply report

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AATI, AEO, ARO, AVL, CPN, GMCR, HD, JASO, JOSB, KKD, NFLX, PCX, RIG, SDRL, SFLY, STP, ZOLT

Top Analyst Upgrades & Downgrades (AMR, CAB, CPN, ERTS, GT, GMCR, HD, LEAP, NAV, NFLX, EDU, NMR, OVTI, STP, RIG, WSH)

Administrator — Wed, 30 Nov 2011 13:25:29 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Wednesday morning.

AMR Corporation (NYSE: AMR) Cut to Sell at Citigroup.
Cabela’s, Inc. (NYSE: CAB) named as Bull of the Day at Zacks.
Calpine Corporation (NYSE: CPN) Cut to Hold at Jefferies.
Electronic Arts Inc. (NASDAQ: ERTS) Raised to Buy at Citigroup.
Goodyear Tire & Rubber Company (NYSE: GT) named as value stock of the day at Zacks.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) Reiterated Buy with $94 target at Canaccord Genuity.
Home Depot Inc. (NYSE: HD) Reiterated Buy with $46 target at Argus.
Leap Wireless International Inc. (NASDAQ: LEAP) Raised to Outperform at RBC Capital.
Navistar International Corporation (NYSE: NAV) Raised to Neutral at Goldman Sachs.
Netflix, Inc. (NASDAQ: NFLX) Cut to Underperform at Wedbush.
New Oriental Education & Technology Group (NYSE: EDU) Started as Outperform at Credit Suisse.
Nomura Holdings, Inc. (NYSE: NMR) Started as Neutral at Credit Suisse.
OmniVision Technologies Inc. (NASDAQ: OVTI) maintained Buy on valuation but cut target to $12 at Canaccord Genuity.
Suntech Power Holdings Co. Ltd (NYSE: STP) Reiterated Hold at Argus.
Transocean Ltd. Co. (NYSE: RIG) Cut to Hold at Argus.
Willis Group Holdings, Plc (NYSE: WSH) named as Bear of the Day at Zacks.

JON C. OGG

Filed under: Analyst Calls Tagged: AMR, CAB, CPN, EDU, ERTS, GMCR, GT, HD, LEAP, NAV, NFLX, NMR, OVTI, RIG, STP, WSH

New US Push into Geothermal Energy Possible, But Not Likely (CVX, CPN, GOOG, ORA, GE, OGFGF)

Paul Ausick — Wed, 26 Oct 2011 15:54:50 +0000

Click image for larger map

The first large-scale geothermal electricity generating plant in the US was developed in the 1960s in northern California. Unocal, now part of Chevron Corp. (NYSE: CVX), did the initial work and the complex, known as The Geysers, is now mostly owned and operated by Calpine Corp. (NYSE: CPN). Calpine generates about 725 megawatts at the plant, around half the total generation capacity.

A new report funded by a grant from Google, Inc. (NASDAQ: GOOG) from Southern Methodist University researchers estimates that the potential for geothermal electricity generation in the US is about 3 million megawatts. In addition to Chevron, which is the world’s largest supplier of geothermal energy, companies like Ormat Technologies, Inc. (NYSE: ORA), and smaller rivals are developing more geothermal generation but very slowly.

Following last spring’s earthquake in Japan, there was discussion of replacing some of that country’s nuclear generating capacity with geothermal. The difficulties, though, are long lead times and expensive construction costs. A hypothetical 1,000 megawatt plant would take up to 7 years to build at a cost of about $3.5 billion. That’s more than double the cost of an equally sized wind farm, and the lead time for a wind farm is also much shorter. Compared with a new nuclear generating plant, the time frame to build a new geothermal plant is much shorter and the price is much lower.

The accompanying map shows the locations with the best potential for geothermal development in the US. The best places include Yellowstone National Park, the area around the Grand Canyon, and southern California, where what’s left of the Colorado River empties in the Gulf of California. Most other high-potential locations include places where lots of people don’t live. That increases the cost even more for transmission lines to get the power to where it can be used.

A further problem for geothermal developers in the US is difficulty in getting financing for the high-cost projects. Virtually all of Chevron’s investment in geothermal is in Indonesia, where it may soon face competition from General Electric Co. (NYSE: GE) and other turbine makers, mainly from Japan. Australia’s Origin Energy Ltd. (OTC: OGFGF) is already developing a plant in Sumatra in a joint venture with India’s Tata Corp. Small US firms have a difficult time convincing lenders of their creditworthiness and often can’t get financing at reasonable interest rates.

The SMU research is interesting and valuable. Whether it is actionable or not is the issue. Compared with solar PV and wind power developments, geothermal remains uncompetitive in the US except for deep-pocketed companies like Chevron and GE — and they are looking outside the US to build new projects.

Paul Ausick

Filed under: Alternative Energy, Green Biz Tagged: CPN, CVX, GE, GOOG, OGFGF, ORA

Top Analyst Upgrades & Downgrades (CPN, CSC, DUK, EXC, FE, GE, INTU, MCD, MPEL, MSI, P, PAAS, PEP, TRV, EGY, WPI)

Administrator — Mon, 25 Jul 2011 12:08:24 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Monday morning.

Calpine Corporation (NYSE: CPN) Raised to Buy at BofA/ML.
Computer Sciences Corporation (NYSE: CSC) Cut to Sell at Goldman Sachs.
Duke Energy Corporation (NYSE: DUK) Raised to Neutral at Goldman Sachs.
Exelon Corporation (NYSE: EXC) Raised to Buy at BofA/ML.
FirstEnergy Corporation (NYSE: FE) Raised to Buy at BofA/ML.
General Electric Co. (NYSE: GE) Maintained Outperform but cut estimates at Credit Suisse.
Intuit Inc. (NASDAQ: INTU) Raised to Buy at UBS.
McDonald’s Corporation (NYSE: MCD) Reiterated Outperform and raised target to $97 at Credit Suisse.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) Reiterated Buy and raised target to $18 at BofA/ML.
Motorola Solutions Inc. (NYSE: MSI) Raised to Buy at Jefferies.
Pandora Media, Inc. (NYSE: P) Started as Overweight at JPMorgan; Started as Outperform at Wells Fargo; Started as Outperform at William Blair; Started as Buy at Citigroup.
Pan American Silver Corp. (NASDAQ: PAAS) Cut to Hold at Canaccord Genuity.
Pepsico Inc. (NYSE: PEP) Cut to Neutral at Goldman Sachs.
The Travelers Companies (NYSE: TRV) Maintained Underperform as Bear of the Day at Bear of the Day
VAALCO Energy, Inc. (NYSE: EGY) Reiterated Buy as Value at Zacks.
Watson Pharmaceuticals (NYSE: WPI) Raised to Outperform as Bull of the Day at Zacks.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: CPN, CSC, DUK, EGY, EXC, FE, GE, INTU, MCD, MPEL, MSI, P, PAAS, PEP, TRV, WPI

Alternative Energy Watch: LDK Solar Looks to LEDs; Wind Power Takes a Hit in Idaho; US Geothermal Outlook Upbeat (LDK, CREE, VECO, AIXG, RBCN, LEDS, ORA, CPN, HTM)

Administrator — Fri, 08 Apr 2011 14:32:24 +0000

It is time for our daily review of the alternative energy sector, and today hits LEDs, wind power, and geothermal developments. Adding to an already crowded field, LDK Solar Co. Ltd. (NYSE: LDK) will spend $40 million on a new plant in China to make sapphire substrates for used in making LED. Existing companies like Cree Inc. (NASDAQ: CREE), Veeco Instruments Inc. (NASDAQ: VECO), Aixtron AG (NASDAQ: AIXG), Rubicon Technology, Inc. (NASDAQ: RBCN), and SemiLEDS Corp. (NASDAQ: LEDS) have been struggling recently as demand has weakened and prices keep falling. Faced with declining margins in the solar PV market, LDK appears to have decided that the current slowdown in LEDs is only temporary. Time will tell.

An industry group called the Geothermal Energy Association has issued its annual update on the state of geothermal energy development in the US. The report notes that US geothermal generating capacity now exceeds 3,100 megawatts in nine western states. Publicly traded companies that focus on geothermal projects include Ormat Technologies, Inc. (NYSE: ORA), Calpine Corp. (NYSE: CPN), and US Geothermal Inc. (AMEX: HTM).

According to the association, there are 170 active geothermal projects in 15 states developing about 5,100-5,700 megawatts of geothermal generation. The report notes that up to 772 megawatts are in an advanced state of development and should be completed in the next few years. The long project development times and the relatively limited amount of electricity available from any single project are probably the main contributors to the slow development of geothermal projects in the US.

In Idaho, the state senate has rejected an extension of the state’s alternative energy tax credit by a vote of 18-17. An apparent deal to extend the rebate and to lower the maximum energy generation level for alternative energy projects. Some legislators and lobbyists contend that the end of the tax rebate will kill wind development in the state.

Idaho legislators had already rejected a moratorium on new wind farm construction. The state had encouraged wind development in recent years, and the tax rebate helped build 400 megawatts of wind generation since 2005. Rather than institute a moratorium on new construction, which some legislators saw as reneging on past promises, the state will achieve the same result by eliminating the rebate.

Finally, the European Union’s executive body, the European Commission, is set to propose a carbon tax of about $29/metric ton beginning in 2013 on fossil fuel products like gasoline, natural gas, and coal. The Commission’s goal is to meet the agreed 2020 emissions target of reducing carbon dioxide emissions in the EU by 20% in 2020 relative to 1990 levels. The carbon tax supplements the existing EU carbon market, which has not been entirely successful in bringing down emissions.

The carbon tax faces significant hurdles, not the least of which is a reluctance by sovereign governments to allow the EU to set tax policy for member nations. And before the tax can be levied, all 27 member nations must agree unanimously on the new tax. Such an outcome is the longest of long shots.

Paul Ausick

Filed under: Alternative Energy, Green Biz, Utilities Tagged: AIXG, CPN, CREE, HTM, LDK, LEDS, ORA, RBCN, VECO

Alternative Energy Daily: Geothermal in Japan; Solar PV Standard Equipment on New Homes (MSBHY, TOSBF, ORA, CPN, OGFGF, IDKOY, RZTI, KBH, SPWRA, IRDVY, ACXIF, SRWRY)

Administrator — Thu, 24 Mar 2011 19:01:23 +0000

Here’s our daily report on developments in solar and wind power, alternative fuels, and other news related to the alternative energy sector. As Japan works to rise from the rubble, more alternatives may surface to replace the country’s reliance on nuclear power generation. One source that has been overlooked so far is geothermal, which could replace 100% of Japan’s planned nuclear expansion over the next 10 years, according to Reuters.

Japan has offered little support for geothermal generation in the past, but that could change as the country looks for safer ways to generate electricity. Mitsubishi Corp. (OTC: MSBHY), Toshiba Corp. (OTC: TOSBF), and Fuji Electric supply the bulk of the world’s supply of steam turbines and power machinery for geothermal plants. Publicly traded companies that build the plants include Ormat Technologies, Inc. (NYSE: ORA), Calpine Corp. (NYSE: CPN), Australia’s Origin Energy Ltd. (OTC: OGFGF) and Japan’s Idemitsu Kosan (OTC: IDKOY). Utah-based Raser Technologies, Inc. (OTC: RZTI) also plays in the sector, but the company filed a “going concern” letter with the SEC on March 1st. Long lead times and costly construction have hampered the development of geothermal, with a 1,000-megawatt plant (there’s no such thing yet) costing upwards of $3.5 billion to build and taking 5-7 years to complete.

On the solar front, US homebuilder KB Home (NYSE: KBH) is building an 88-house development in southern California that includes 1.4-kilowatt solar PV array as a standard fixture with every house. The company has offered solar as an option before, but this is the first time it has been included as part of the basic plan. The arrays are using panels from SunPower Corp. (NASDAQ: SPWRA). Home buyers can upgrade to a 3.2-kilowatt system that would likely be enough to keep the house off the grid.

In Europe, Spain’s largest savings bank (or caja), Bankia, is reported to be discussing the sale of its 20% stake in wind energy firm Genesa to Portugal’s EDP for $1.9 billion. Genesa is Spain’s third largest wind energy company, trailing Iberdrola Renovables SA (OTC: IRVDY) and Acciona Energia (OTC: ACXIF).

Germany’s Solarworld AG (OTC: SRWRY) says that it will exceed 2010 revenue of 1.3 billion euros in 2011 as a result of a stronger market in the US and an expected shift in Japan to more renewables to replace the lost nuclear reactors. Most important, Solarworld sees prices continuing to stabilize following changes to subsidies in both Germany and Italy.

Paul Ausick

Filed under: ADR, Alternative Energy, Green Biz, Housing Tagged: ACXIF, CPN, IDKOY, IRDVY, KBH, MSBHY, OGFGF, ORA, RZTI, SPWRA, SRWRY, TOSBF

Top Analyst Upgrades & Downgrades (CPN, KEX, MMM, MCP, NOK, NVTL, OVTI, TXT, WFMI, WMB)

Administrator — Tue, 22 Feb 2011 13:10:07 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Tuesday morning.

Calpine Corp. (NYSE: CPN) Raised to Overweight at Barclays.
Kirby Corporation (NYSE: KEX) Raised to Buy and $60 target at BofA/ML.
3M Co. (NYSE: MMM) Raised to Neutral at BofA/ML.
Molycorp, Inc. (NYSE: MCP) Raised to Overweight at JPMorgan.
Nokia Corporation (NYSE: NOK) Cut to Sell at RBS.
Novatel Wireless, Inc. (NASDAQ: NVTL) Cut to Underperform as Bear of the Day at Zacks. Omnivision Technologies Inc. (NASDAQ: OVTI) Maintained Buy and $39 target at Gleacher & Co.
Textron Inc. (NYSE: TXT) Raised to Buy at UBS.
Whole Foods Market, Inc. (NASDAQ: WFMI) noted as Bull of the Day with Outperform and $65 target at Zacks.
Williams Companies, Inc. (NYSE: WMB) Raised to Conviction Buy List at Goldman Sachs.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: CPN, KEX, MCP, MMM, NOK, NVTL, OVTI, TXT, WFMI, WMB

Top Analyst Upgrades and Downgrades (ARG, IRE, BRCM, CPN, CELG, CIT, DRYS, GILD, INTC, LULU, MRVL, NVDA, PG, QCOM, RIMM, TXN)

Administrator — Fri, 10 Dec 2010 13:13:38 +0000

These are some of this Friday’s key analyst upgrades, downgrades, and initiations seen in Wall Street research calls.

Airgas Inc. (NYSE: ARG) Raised to Outperform at Baird.
Bank of Ireland (NYSE: IRE) Cut to Underweight at Morgan Stanley.
Broadcom Corporation (NASDAQ: BRCM) Started as Neutral at Nomura; Raised to Positive at Susquehanna.
Calpine Corporation (NASDAQ: CPN) Started as Outperform at Oppenheimer.
Celgene Corporation (NASDAQ: CELG) Started as Outperform at Wells Fargo.
CIT Group, Inc. (NYSE: CIT) Started as Neutral at Credit Suisse.
DryShips, Inc. (NASDAQ: DRYS) Raised to Outperform at Credit Suisse.
Gilead Sciences Inc. (NASDAQ: GILD) Started as Outperform at Wells Fargo.
Intel Corporation (NASDAQ: INTC) Started as Buy at Nomura.
Lululemon Athletica (NASDAQ: LULU) Raised to Hold at Jefferies.
Marvell Technology Group Ltd. (NASDAQ: MRVL) Started as Neutral at Nomura.
NVIDIA Corporation (NASDAQ: NVDA) Started as Neutral at Nomura.
Procter & Gamble (NYSE: PG) Raised to Buy at Goldman Sachs.
QUALCOMM Incorporated (NASDAQ: QCOM) Started as Neutral at Nomura.
Research in Motion Ltd. (NASDAQ: RIMM) Reiterated Outperform and target raised to $75 at Raymond James.
Texas Instruments Inc. (NYSE: TXN) Started as Reduce at Nomura.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls, Semiconductor Tagged: ARG, BRCM, CELG, CIT, CPN, DRYS, GILD, INTC, IRE, LULU, MRVL, NVDA, PG, QCOM, RIMM, TXN

Wind Power: China Boost, Fight in Texas, Great Lakes Maybe (GE, SI, IBM, FPL, NRG, CPN, EOG)

Administrator — Mon, 24 May 2010 16:06:20 +0000

Generating electricity from wind is growing fast enough that as more wind farms are brought online, more are being built. Depending on your point of view, that is either a good or a bad thing. In China, wind development is a good thing, and the country is now getting serious about upgrading its power transmission grid. International companies such as General Electric Co. (NYSE:GE), Siemens AG (NYSE:SI), and IBM Corp. (NYSE:IBM) are seeking a toehold in developing a smart grid for China. In northern Ohio, GE is developing a 20-megawatt wind farm in Lake Erie.

Meanwhile, in Texas, wind developers like NextEra Resources, a division of FPL Group Inc. (NYSE:FPL), German power firm E.On AG, and United Technologies Corp. (NYSE:UTX) are getting some pushback from companies like NRG Corp. (NYSE:NRG), Calpine Inc. (NYSE:CPN), and EOG Resources Inc. (NYSE:EOG), all of which have natural gas-fired plants that the companies say hurt by new wind generation.

The Chinese have embarked on a $60 billion effort to upgrade the country’s electricity transmission system over the next 10 years. The state-owned power distribution company, State Grid Corp. of China, plans to begin the upgrades next year. Both Siemens and GE already have in place agreements with local governments and local divisions of State Grid that give them a solid hold on the higher technology area of smart grids. Chinese companies already manufacture equipment like transformers more cheaply than foreign companies can, so there is little incentive to compete for that business.

However, the sophisticated computer technology is needed to operate a smart grid. State Grid estimates that it can contribute to a 20% reduction in greenhouse gas emissions that the government has committed to by 2020 using smart grid technology.

China is likely to demand that it be able to purchase a stake in the companies that do smart grid work because it is a strategic national asset and no foreign company should be able to hold China’s power supply hostage. GE has already indicated that it is willing to enter strategic joint ventures with China to win this business. State Grid is also a customer of IBM, which opened a new energy and utilities research lab in Beijing in March.

The signal advantage of the smart grid is that it can help balance power distribution using technology to offset the variability of power generation by both wind and solar generators. And the variable nature of wind-generated electricity is at the heart of a dispute in Texas between wind developers and natural gas plants.

Texas already uses wind to generate more electricity than all the power plants in Utah, some 9,400 megawatts. Most people think that wind generated power will reduce the need to burn coal to generate electricity. That is not right. Coal-fired plants, and now some natural gas-fired plants, provide the baseload generation for electricity consumers. Natural gas has routinely been used as a fuel to drive peaking plants that can be made available at short notice to meet extraordinary demand.

Wind is not replacing baseload, it is replacing peaking generation. Not only that, in Texas, wind farms are exempt from rules that would force them to make payments to the system operator if they can’t deliver power when the wind stops blowing. Natural gas burners say everyone ought to play by the same rules.

A lot is at stake. The Texas wholesale electricity market amounted to $34 billion in 2009. Wind now generates about 6% of the state’s electricity and that number is expected to double by 2013. Natural gas’s share of the generation market has dropped from 46% to 42% in the last three years, exactly as much as wind power generation has grown.

Texas is not the only market looking to cool the enthusiasm for wind development. The Midwest system operator adopted rules in December 2009 ending wind’s exemption from penalties for failing to provide promised power. The wind companies have filed a protest with the Federal Energy Regulatory Commission, which has authority to regulate inter-state transmission rules. The state of Wyoming, which lives on gas and coal taxes, is considering taxing wind-generated electricity.

China’s central planning regime makes it fairly easy to set a course of action. The problems have always come in the execution. In the US, central planning exists primarily as a set of incentives to point industry at a preferred solution. The planning is almost always faulty, and is usually corrected in the execution. Neither is very efficient, but, after a fashion, both seem to work.

Paul Ausick

Filed under: Alternative Energy, China, Utilities Tagged: CPN, EOG, FPL, GE, IBM, NRG, SI