Jun
6
Heads Up Investing – Classifications That Make Sense
June 6, 2008 | 2 Comments
Lux Research stirred up a lot of coverage over their press release about the energy storage market. It’s a pretty fair read by itself. We don’t pull enough revenue here to buy all the payment barriered things that can be read on the Internet and in truth, little of what the press release offers is news, but the combination of so much distilled down to a couple of pages is well worth the time to browse over it.
Storage of electrical power as the term is used in the Lux report is sure to expand, that is a given, in a world of growing demand and ever newer and better ways to use energy by more and more people who can afford it. The posturing of the big numbers quoted from the report though are simply spreadsheet trial runs from assumptions. But, some assumptions need considered.
Noteworthy is the venture capital increase of 74% in 2007 for “storage.” While its not broken out and barely discusses the reality that storage is a wide range of things including fuels if you have your language straight, the venture people do recognize that energy whether coming in a stored form or wired to us is a growing business. But to say flatly that “The market will grow by 55% over the next five years” sort of seems like hype. That’s because the market, if fed enough capital to buyers, should be much larger than that or if capital gets tight the number may be much less, too.
An interesting take on classifying is used in the Lux Report. They’re dividing the views into two, the storage markets such as transport and consumer devices that use energy from storage and the storage mediums themselves combined with energy harvesting devices as the other. But, to get a firm grip they might have been serving better with three – dividing storage from harvesting. The report seems to leave out the efficiency market for energy re-capture and conservation products, which would make four classifications. That still won’t satisfy me.
The highlights start off with transportation energy storage going to battery technology. The numbers used are compelling but miss great chunks of the world market. In the years to 2012, the vehicles using batteries will massively exceed the author’s numbers by tens of millions by counting electrically assisted bicycles in China alone. It’s true that Lithium Ion and Nickel Metal Hydride will have large roles, but the winners won’t be because they make batteries, it will be driven by technology that solves the Lithium Ion battery problems such as A123 and others racing to catch-up or get ahead.
The next highlight is fuel cells. I expect that fuel cells will become much more important than “returning from the dead.” The fuel cell’s ability to make power from a dense fuel source and is portable for anything from tiny electronic devices up to large transport vehicles at efficiencies better than most anything else but batteries and capacitors is a strong driver. The matter really depends on the fuel for the cell. Hydrogen is still dangerous, difficult and expensive to capture and make mobile for portable fuel cell use. That makes the larger molecule fuels much more practical and the potential to displace the internal combustion engine for hybrid electric vehicle charging on the go, likely more efficient. The issue is still in research across the globe, but the payoff could be immense.
Highlights then swing back to bulk electrical storage such as utilities using batteries. The press release offers that moving energy release from peak production to peak use would be the “biggest potential opportunity of all markets studied.” Not taking exception to this, there are other players involved than just huge batteries and other energy storage scenarios. Efficiency, secondary energy production and others will get adoption and consumers from huge industrial concerns to the small home owner who will be actively engaged in conservation. It seems reasonable that the user end may see more investment into conserving products than producers might see in production storage investment. Both will grow, but if light emitting diodes get to production scale and price parity or better to compact florescent, that market may shift again. There is also a lot of potential in home and small to medium sized business air heating and cooling, and water heating to exploit.
The last product highlight asserts that Lithium Ion technology will overwhelm Nickel Metal Hydride and Nickel Cadmium to the point they are “wiped out.” OK. Maybe. But the electrical storage market is pretty diffuse and the thought that capacitors and other electrolyte technologies and anode and cathode developments as well as carefully engineered combinations of technologies will be competing is a certainty. The electrical potential storage field is over a hundred years old, and a suggested great shift ignores the real economic application rules that will decide what battery technology goes where.
A final highlight is the consideration of financing in the early stages. With a view to participation by investors, the press release notes that 2007 saw the greatest level of venture capital spending to date and that initial public offerings are on the rise. The facts here are the best of the release and there is a fair certainty that many more people will get a chance to participate. But by no means have the securities laws and regulations opened up the market to any other than the very well to do. A studied hunt might turn up a mutual fund that lets in the most of us, but that may have to be found outside of the U.S. Good luck in getting your broker to help with that.
Having reviewed the press release, it really teaches that grasping the five classifications is key. Energy harvesting such as solar techniques, nuclear, and heat gathering is the source class. Devices and processes that convert energy from heat or electricity or momentum to storage are next. Storage in fuels on to capacitors, batteries, flywheels, compressed air and others follow. Then the tools to use the fuels and the stored energy come next. Lastly is keeping in mind there are trillions of dollars invested which can use efficiency improvements, conservation devices and energy recovery and secondary energy use products.
I suggest there is no silver bullet, rather to quote Doctor James Sweeney at Stanford who last week during the dinner party asserted that we need lots of little silver birdshot. I agree and offer that you give some thought to that concept, too. A lot of money is involved, so let saving and making it in many small pieces be your goals. Keep in mind that over the five classes there are hundreds if not thousands of opportunities. In shops and garages across the globe to labs in universities and big corporations, there are creative innovators and organized groups like the Lockheed Skunkworks effort targeting breakthroughs. They’ll Come – Stay Alert!
Comments
2 Comments so far
Feedburner
Reddit
Stumbleupon
[…] – bookmarked by 3 members originally found by jaymcgavren on July 12, 2008 Heads Up Investing – Classifications That Make Sense […]
[…] public links >> flywheels Heads Up Investing – Classifications That Make Sense Saved by arezus on Wed 24-9-2008 REVIEW: Schwinn 431 Elliptical Trainer Saved by vincentludenhoff […]