Tom Konrad CFA

Plummeting oil prices, global economic weakness, and the Republicans’ win in the US midterms have delivered a triple-whammy to clean energy stocks over the last few months.  Many of the stock declines are justified more by headlines than fundamentals.  My 10 Clean Energy Stocks for 2014 model portfolio has suffered, especially the riskier growth stocks.  The strong dollar has been a further drag on the six foreign stocks.

Since the last update at the start of October, the model portfolio is down 4.6%, for a loss since its December 27th, 2013 inception of 3.8%. In local currency terms, it would have returned a slight gain of 0.5% since inception.  For comparison, the most widely held clean energy ETF, PBW, lost 12% since the start of November, and is down 14.9% since the portfolio inception. My broad market benchmark, IWM, is up 2% and 4.2%, respectively.  Individual stock performance is shown in the chart below.

Because I believe the declines of most clean energy stocks are not justified by fundamentals, I personally will not be selling any of these stocks at current prices.  That said, many clean energy stocks have declined even more drastically than these and now present better values than some in my 2014 list.  To keep my 2015 model portfolio manageable, I have to drop some to make room.  In this article, I will discuss the four stocks I am considering dropping from next year’s model portfolio, and why. 

Individual Stock Notes: Sad To See Them Go

(Current prices as of December 19th, 2014.  The “High Target” and “Low Target” represent my December predictions of the ranges within which these stocks would end the year, barring extraordinary events.)

2. PFB Corporation (TSX:PFB, OTC:PFBOF).
12/26/2013 Price: C$4.85.   Low Target: C$4.  High Target: C$6. 
Annualized Dividend: C$0.24.
Current Price: C$4.44. YTD Total C$ Return: -3.5%.  YTD Total US$ Return: -10.9%

While I’m very optimistic that green building company PFB Corp continue the recovery it has staged from its mid-October low, I’m dropping the company from the model portfolio because its low liquidity and Toronto listing makes it difficult for many US investors to buy.  If you already own it, I suggest you keep it.  Although PFB may face headwinds from a slowing housing market, the company benefits from low oil prices, which drive the price of the chemicals used to make the expanded polystyrene in its building products.  If oil prices rebound, that should benefit the Canadian dollar, which should provide a tailwind for US based investors.

4. Primary Energy Recycling Corp (TSX:PRI, OTC:PENGF).
12/26/2013 Price: C$4.93.   Low Target: C$4.  High Target: C$7. 
Annualized Dividend: US$0.28 (suspended after buyout announcement.)
Current Price: C$6.27.  YTD Total C$ Return: 31.4% .  YTD Total US$ Return: 21.3%

On December 19th, a consortium led by Fortistar completed the acquisition of waste heat recovery firm Primary Energy Recycling for US$5.40 per share (approximately C$6.27).  It was partly because I thought such a buyout was likely that I included Primary Energy in this year’s list. 

8. Power REIT (NYSE:PW). 
12/26/2013 Price: $8.42.  Low Target: $7.  High Target: $20.  Dividend currently suspended.
Current Price: $8.65 YTD Total US$ Return: 2.7%

The fate of solar and rail real estate investment trust Power REIT still hinges on the outcome of litigation with the lessees of its rail asset.  This case will likely go to trial in the first quarter of 2015.  While I believe both that the facts of the case favor Power REIT, and that, even if the case goes entirely against the company after a lengthy and expensive trial and appeals process, it will not be catastrophic for Power REIT.  The lessee’s goal in the case is to maintain the status quo when Power REIT attempted to foreclose. 

Power REIT’s CEO tells me that the judge was hard to gauge during the most recent hearing, and I have no reason to change the rough valuation I gave for Power REIT during the last update.  That conservatively gave PW an expected value per share of about $10.75.

I was thinking about dropping Power REIT from the 2015 list mostly because of illiquidity, which causes large swings such as the recent decline for very little reason.  Since the last couple months have seen such a decline, I’ll probably keep it in the 2015 list unless a Santa Claus rally brings it closer to my valuation.

10. Alterra Power Corp. (TSX:AXY, OTC:MGMXF).
12/26/2013 Price: C$0.28. Low Target: C$0.20.  High Target: C$0.60. No Dividend.
Current Price: C$0.33   YTD Total C$ Return: 17.9% .  YTD Total US$ Return: 8.8%.

Renewable energy developer and operator Alterra Power has delivered well in 2014, despite the weak Canadian dollar.  Although I think it is still considerably undervalued, I am considering dropping it from the list simply because its advance and other stocks’ declines make it relatively less attractive, but I’ll keep it in my own portfolio because I think it has farther to run.

Conclusion

With the recent sharp declines by many big name clean energy stocks, now is a great time for people with money to invest in the sector.  Although it’s always nice to see bargains, it can be a bit painful to sell other stocks which may have also fallen to invest in the new opportunities.  Fortunately, followers of my annual model portfolio will have at least some cash from the buyout of Primary Energy to deploy next year.

As for the other three stocks I may drop from the 2015 list, I plan to hold them and will probably write about them again, even if I’m no longer covering them in my monthly updates.

Disclosure: Long HASI, PFB/PFBOF, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC, MIXT, PW, AXY/MGMXF.  

DISCLAIMER: 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.

The post Ten Clean Energy Stocks For 2014: Out With The Old appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

Last week RDX Technologies, Inc. (RGDEF:  OTCQX or RDX: TSXV) announced an agreement to supply renewable diesel to the Tyson Farms’ Temperanceville Facility in Virginia.  The Energy Division of RDX sells three grades of methyl ester fuels that can be used in boilers and small generators.  RDX did not disclose the value or size of the Tyson Farms contract.  However, the contract apparently is for one year with a second year option.

RDX operates renewable fuel plants in Missouri and California.  Waste streams are aggregated at the two plants by truck and processed using technology developed by RDX CEO Dennis Danzik and his colleague Vincent Meli.  The company describes its process as ‘water mining’ wherein contaminants are separated from the water with electrochemical and photochemical techniques.  Waste polymers from the water have energy value and are converted to methyl ester fuels.

Selling fuel is not the only way RDX Technologies plans to generate revenue.  The company also wants to franchise its technology and sell water treatment equipment to aspiring fuel producers.  Called the RDX BlueDot system, the company recently announced a contract with Pontus Energy, LLC. to set up sixteen franchise locations in Ohio, Michigan and Kentucky. The contract was valued at $19.2 million

The company recently signed the Environmental Engineering and Science Department of Stanford University to use the RDX BlueDot system for further development of water treatment solutions.  RDX management expects the Stanford deployment to support subsequent franchising efforts in commercial markets where water treatment is an important or even more important than renewable fuel sources.

In the twelve months ending June 2014, RDX Technologies reported a loss of $10.0 million on sales of $36.7 million in sales.  That seems like a dangerous loss, but cash used to support operations was a significantly smaller amount $176,620.  The company has approximately $4.9 million on its balance sheet, which should support operations for a while longer if cash usage is kept under control.

The wisdom of a distributed power generation solution appears to be catching on and local communities are anxious to find smart ways to upgrade waste.  Of course, water is in short supply everywhere.  Technologies to clean up water are becoming even more critical.

RDX Technologies is still a developing company, but some of the technological risks appear to have been eliminated with the first commercial deployments.  There does appear to be a fair amount of execution risk left, but the stock is still worth watching for all investors interested in a stake in the waste-to-energy market.

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.

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Garvin Jabusch

Kam Mofid has a more long-term vision than most CEOs. His emphasis on the next earnings per share (EPS) report and his obsession with short-term focus are minimal relative to America’s typical boss. He’s not primarily managing to the next quarter.

His company, RGS Energy (ticker symbol: RGSE), is a solar-module installer, mainly in the residential vertical. RGSE doesn’t directly compete with most solar panel manufacturers. Instead, it provides residential rooftop installation distribution for them. It then captures lease payments and revenues from selling excess electrical generation to the grid (in states that allow it). Whereas First Solar (FSLR), Canadian Solar (CSIQ), and Sun Edison (SUNE) are primarily engaged in module manufacturing and commercial and utility-scale installations (although not exclusively this is a fast-evolving area), RGS Energy and its larger competitor SolarCity (SCTY) are all about home/residential installations. For now, only three residential installation players have national reach: SCTY, RGSE, and Vivint, Inc. (Vivint is privately held and not discussed here).

RGS Energy was once the idealistic brainchild of green-oriented consumer -goods firm Gaiam, Inc. (GAIA), and was then known as Real Goods Solar. Mofid joined in 2012, soon after RGSE was spun off from its parent, and quickly moved to modify the makeup of the board, diversify the shareholder base, and “move away from the hippie business mentality,” bringing on a number of individuals with practical experience and track records of delivering successful businesses.

Pragmatically, RGS Energy didn’t become a true competitor to SolarCity until Mofid joined the company. Not that Kam Mofid and his team are necessarily trying to catch SolarCity in terms of scale or market share. They believe their industry’s growth potential will generate enough market share to go around. In Mofid’s words, “there’s plenty of work to do.” Since residential installations don’t require any new land development, rooftops are effectively brownfields, and as such represent a great low-impact source of electricity. And Mofid sees many greenfield opportunities in those brownfields.

Whether via smart strategy or just good timing, Mofid and his team have had benefitted from observing SCTY’s successes and encounters with pitfalls. SCTY in many ways has paved the way in the residential installation business, and RGSE has had a bird’s eye view of the process stumbles and all.

As a result, RGSE has chosen not to directly emulate SCTY. In Mofid’s opinion, that company is taking on inappropriately high risk. In particular, Mofid thinks SolarCity is banking too heavily on its retained-value-model and being too aggressive in terms of assumed value of solar modules after 20 years of depreciation and continuing technological innovation. Learning from SCTY’s success and risks with this model, RGSE will soon no longer rely on tax-equity concepts, reflecting a belief that retained value made sense in the past but no longer applies in “2014 thinking.” Already, RGSE has incorporated lower tax value into its growth model as a risk control.

Mofid is not as sanguine as SCTY is about the retained-value-model of valuing solar panels. He also believes that SolarCity is in general too aggressive and too eager for risk not only in poor potential realization of retained value of installations but also, and perhaps more importantly, in the “deteriorating policy and subsidy environment in the U.S.,” and on a state by state basis.

In any fast-growing industry where the name of the game is to capture as much emerging territory as possible, it’s always a struggle to manage between top line growth vs. EPS. Here, RGSE, like SCTY, has chosen to invest in growth at the expense of current EPS, but in a more conservative way than SCTY. As Mofid says, “meaningful GAAP revenue is possible soon with our model.”

There is not yet a clear winner between the more and the less aggressive strategies, not that there needs to be. That two of the three largest solar installer companies in the U.S., SCTY and (the much smaller) RGSE, each employ one of these approaches means that a public equity investor can get exposure to both and not have to choose between methods. This is fortunate, because it’s possible that both the rapid and the measured growth strategies could turn out to be winners. We like both the high-growth SCTY and the measured-growth RGSE, as each brings interesting and potentially valuable characteristics. Another benefit of investing in both approaches: Not only do RGSE and SCTY employ different approaches to managing growth but they also don’t operate in many of the same states. However, for investors who find SCTY’s all-out-for-growth approach too aggressive, RGSE may represent a more temperate alternative.

The residential installation market is new and growing fast, so larger players with more access to capital have a major advantage over smaller, locally based firms, both in ability to leverage pricing, engage more projects, and have the flexibility to emphasize growth in states with the most favorable conditions for the solar installation business. This last point is more important than it may seem: Many areas, under the sway of the local public utility commission and the monopoly or near-monopoly of electric utilities, can, or have, or may at some point attempt to stall growth in solar with policies unfavorable to the industry. A national model diversifies and mitigates this risk. Ultimately, as renewable energies cause overall electricity prices to fall, sentiment will cause states and utilities to relent, which will ultimately help solar and wind all along their value chains, but until then, geographic diversity is going to be key. RGSE currently operates in 16 states.

Mofid has a goal of becoming and remaining at least the third-largest installer nationally. His understanding of the scope and depth of the solar installation market in the U.S. shows strongly here: He is content to capture 1/10th of that rapidly growing business.

So RGSE is now beginning to take steps to accelerate growth. Primarily, this is taking the form of a financing joint venture called RGS Energy Asset Management, owned with Altus Power America Management. Goldman Sachs (GS) has agreed to provide capital access for the JV, but Mofid didn’t address the terms or scale of its involvement. (Goldman evidently likes installation diversification as much as we do: They are also major capital providers to SCTY.)

RGSE has a couple of other sources of and access to capital. First, the firm currently has no long-term debt, only a revolving line of credit with Silicon Valley Bank that it pays down to zero at the end of each quarter. Long-term debt financing does appear to be in the cards going forward, though. As Mofid says, with respect to expansion, “there will be a debt aspect”. Second, they have a $200 million mixed shelf filing reserved to fire growth (acquisitions and capital) when they perceive an opportunity.

Near-term, Mofid feels the industry has now and will continue to have access to state and federal incentives at least until 2016. After that, incentives most likely won’t go away, but may drop by some meaningful percentage. So Mofid projects the solar installation industry will have record growth through 2016, then slow a bit, which concurs with our own view of the situation.

When asked what RGSE’s key risks involve, Mofid gets more macro. Utilities pre
sent a patchwork, he says: “some good, some quite bad” (he says RGSE’s home state of Colorado, for example, is currently a tough environment), so, again, a national model is key to offset that risk. As a result, the residential installation industry will likely experience both consolidation and failures of local installer firms, providing growth-by-acquisition opportunities for all three major, multistate players.

Regarding tariff risk involved with buying modules from Chinese manufacturers, Mofid sees the additional costs as “very low” relative to his business at $0.02 to $0.05 per watt (I note here that this actually presents meaningful inflation for utility scale plant developers that depend on Chinese prices, but that’s a different discussion). Moreover, RGSE buys from multiple panel manufacturers, and most of these are positioning themselves to make and ship from plants outside of China (via possible additional manufacturing capacity in Mexico, for instance).

Manageable as Mofid sees them for now, there are definite political risks involved with being a solar installation business in the U.S., including states’ regulations, utilities’ intransigence, and national tariffs. Investors should consider their view of national and local policymaker sentiment toward renewables when assessing risks associated with an investment.

And perhaps those risks explain RGSE’s recent lackluster share performance and high short interest of late. On the latter, RGSE has recently hired a professional short interest monitoring service to report violations of shorting rules (such as naked short selling) to FINRA. This may have the effect of dissuading unscrupulous shorters, but I doubt it. I’d rather see RGSE spend capital growing, and silence the critics that way.

There’s also been bad press regarding RGSE’s recent Hawaiian acquisition, Sunetric. And not without reason Hawaii presents other risks and opportunities. The business pipeline there is mostly comprised of commercial demand, so residential firms may face declining business and ultimately attrition, potentially including RGSE. But this may also mean larger firms with geographic diversity away from the islands and some staying power may be able to consolidate market share. It’s too soon to tell.

That said, the Hawaii deal reveals some RGSE strengths. Mofid and team were willing and able to move nimbly from a cash/equity deal to an all-equity deal as the situation with Sunetric evolved. The Sunetric acquisition is interesting for another reason. Mofid says RGSE is, again, like SCTY, becoming active in the solar-to-storage space, and he thinks they can use isolated, contained-grid environment and expensive-utility bill center Hawaii as an ideal proving ground for perfecting a business model that can work. And the two residential installation firms aren’t the only ones who think the panel-to-storage model will work. As Barron’s recently reported, “Barclays this week downgrades the entire electric sector of the U.S. high-grade corporate bond market to underweight, saying it sees long-term challenges to electric utilities from solar energy… and recommends investors who can do so should underweight the electric sector versus the broader U.S. Corporate index, and rotate out of bonds issued by utilities in areas ‘where solar + storage is closer to competitiveness.'” RGSE is looking at both Hawaii and California markets for the solar+storage model, and they will look to “innovate into those services as technology comes on line.”

SCTY has a major advantage over RGSE in the storage race due to its sisterhood with Tesla Motors (TSLA) and its forthcoming Gigafactories, which may produce high-quality batteries for as little as 60 percent of the cost of other manufacturers. But this doesn’t mean RGSE can’t make significant progress with the same model, especially in states where SCTY is not present.

Similarly, RGSE plans to keep expanding within its existing markets. Where there is no strong local player, RGSE can establish its brand and presence de novo; where there is a local brand that is already valued by the community, there could be opportunities to acquire installers with their infrastructure, employees, trucks, and sales pipelines. Mofid mentioned twice that the residential solar installation space is still in its “constantly evolving,” “Wild West” stage, and that keeping a war chest (no debt yet, shelf filing) ready for his “best opportunities” is his approach. It’s hard to disagree with this, and yet we can’t help but wonder whether he shouldn’t be deploying his war chest a little faster; sometimes the largest risk is the one you don’t take, and residential solar installation won’t be an immature market forever.

When we asked whether sitting on the “war chest” of unused shelf offering and zero debt is itself a risk, Mofid sidestepped. While he did affirm their forward guidance, he gave little insight on a concrete path toward achieving this guidance, offering only, “we’re gonna keep doing what we’re doing.” What we can glean from regulatory filings and conference call transcripts reveals only a bit more clarity. Important components for RGSE’s roadmap include establishing new funding vehicles for project financing (that may or may not be part of the current JV), which must be an essential aspect of the plan to move away from relying on tax equity in financing and bankrolling ongoing business operations.

Mofid clearly passionately feels that the industry is compressing, and small installers will be pushed out, leaving space for companies like RGSE to move in with their larger bankrolls and resources to capitalize on the vacuum. For now, RGSE is estimating 50-55MW installed capacity in 2014, but it’s not clear if this includes the acquisition of smaller private solar firms.

In any event, “what we’re doing,” for now, also seems to include expanding installation capacity via acquisitions. The last four of the company’s buys were paid for primarily with RGSE shares; so far, Mofid seems to be taking a bet on dilution over debt. And it appears that RGSE is about as petal-to-the-metal as it can realistically be at this point: Mofid noted that the company’s final acquisition in 2013 slowed its plans down significantly as it dragged on through the first quarter of 2014. It seems that RGSE has capacity to take deals one at a time, but not faster. And evidently, this suits their temperate growth model fine.

We asked Mofid if the confluence of new efforts to grow, emphasizing states where SCTY is not already present, and having not yet taken on any debt means RGSE is beginning to position itself as a possible acquisition target. Mofid says they have no current focus on becoming part of a larger peer such as SCTY or any other potential bidder. Further, since Mofid claims “there will be a debt aspect to our growth plan,” it seems the zero debt balance sheet will at some point give way to the desire to expand. Still, while not currently courting suitors, Mofid admits that “everything is for sale.”

Between now and 2016, both SCTY and RGSE are likely to accumulate small local installers within a chaotic environment of consolidation, regulatory changes and price fluctuations. It may well be that some panel manufacturers and utility-scale players such as SunEdison (SUNE) and SunPower (SPWR) are waiting for the residential space to sort itself out before deciding to make offers for firms like RGSE, which could then act as verticals to get their panels into the U.S. residential market.

Acquisition target or not, we see no reason why RGSE should not realize market capitalization growth to about eight to 10 percent of that of SCTY. As of the time of this writing, that implies a 300
to 400 percent upside for the stock, not counting 2015/2016 growth. Thus, we feel comfortable placing a $10.00 2015 price target on RGSE. And considering the rapid growth of the industry, higher valuations than that going forward from there are Mofid’s to lose.

Background notes on Kam Mofid:

• Canadian-born, from the Niagara Falls area
• Undergraduate degree from University of Waterloo
• Was a fellow at GM Canada, sent to
• Georgia Tech for his masters
• Strong engineering and primarily automotive background
• 29 year old exec at UTC
• First non-founding president at REC Solar
• In 2011, brought over to MEMC (SUNE), just in time for the solar market crash
• In July 2012, RGSE called Kam with CEO opportunity
• RGSE at that time was controlled by GIAM, and had very low trading volume. Mofid turned over the board and diversified the shareholder base, now 17% owned by a Boston PE firm via several rounds of share issuance
• He hasn’t sold a single share of his holdings yet
• Has little professed regard for analyst/commentators who write negative things about companies he leads he feels most focus too much on short-term results at the expense of long-term shareholder benefits

RGSE Suppliers:

• Panels: CSIQ, STP, and several others. RGSE does not utilize long-term purchase requirements
• Inverters: Fronius and several others (no share with question)
• Racking: Uni-rack

– HQ Visit, May 22, 2014

Jeremy Deems, Robert Muir and Jake Raden contributed research for this post.

Disclosure: Green Alpha® Advisors has current positions in RGSE, SCTY, SPWR, FSLR, CSIQ, SUNE, and TSLA. Green Alpha has no holdings in or near-term intention to buy any other company mentioned in this post.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, LLC. He is co-manager of the Shelton Green Alpha Fund (NEXTX), of the Green Alpha ® Next Economy Index, and of the Sierra Club Green Alpha Portfolio. He also authors the Sierra Club’s green economics blog, “Green Alpha’s Next Economy.”

The post RGS Energy: Tempered, Opportunistic Growth appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

One of the companies in our novel alternative energy indices is Forcefield Energy, Inc.  (FNRG:  Nasdaq).  For a time it was listed as among alternative chemical products and now is included among waste-to-energy developers, but it could be as easily included in our data base among sellers of LED lighting products.  The identify confusion is due in part to Forcefield’s own description, which includes a laundry list of capabilities and technologies.

The company lays claim to proprietary products for heat recovery and the conversion of waste heat to useful purpose.  Forcefield comes by this capability though a 50.3% interest in TransPacific Energy based in the U.S. Forcefield is also a distributor of LED lighting from LightSky, a China-based LED manufacturer.  Another China-based subsidiary is involved in the production of trichlorosilane, a chemical that is used in the production of polysilicon for photovoltaic cells.  That subsidiary was sold in February 2014.

Forcefield management describes the company as “a new force in the field of energy.”  Certainly with all these energy-related interests it seems formidable, at least until an investor looks at the company’s financial performance.  With the chemicals business out the door, revenue has been shrunk down to just $295,250 in the most recently reported twelve months and the company lost a net $2.1 million.  In the same period Forcefield burned up $3.8 million in cash to support operations.

FNRG shares are now trading at a multiple of 290 times sales  –  a valuation which is probably not sustainable.  Forcefield management has a challenge before it.  It is understandable, in the interests of building a ‘clean, green’ business model, why management would divest of a messy chemical operation.  However, neither its waste-to-energy business nor the LED lighting sales are sufficient to make up for the chemicals revenue.  New strategic relationships hold considerable promise, but none have delivered significant new revenue.

Forcefield Energy made an appearance at the Marcum Micro-cap Conference in New York two weeks ago.  It is well that management is making an attempt to bring investors up to date on the strategic changes in the company’s business model.  Management was to win new shareholders, but it might be premature to take a position in stock sitting well above its sales value.

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.

The post Force in Name Only appeared first on Alternative Energy Stocks.

by Doug Young

Just a day after the solar panel sector was hit by a new negative trade ruling from the US, Trina Solar (NYSE: TSL) gave its investors another unwanted surprise with word that it is preparing to raise more than $200 million through a combination of new stock and bond offerings. Trina joins a growing list of solar panel makers that are looking to western capital markets as confidence returns to the sector following a prolonged downturn dating back to early 2011.

The fact that Trina and others are turning to western capital markets to obtain funding is probably a good sign overall, as it means these companies are healthy enough to raise their own money rather than relying on handouts from Beijing. But western investors are showing such money won’t come cheap, with Trina’s shares tumbling after it announced its plan.

In fact, shares of all the solar panel makers fell in the latest trading session on Wall Street, after a ruling from Washington laid the groundwork for new punitive tariffs on Chinese panels. (previous post) Shares of Trina, as well as Yingli Solar (NYSE: YGE), ReneSola (NYSE: SOL) and Canadian Solar (Nasdaq: CSIQ) were all down 4-6 percent in the trading session after the news.

But Trina shares fell another 4 percent in after hours trade after it announced its newest fund raising plan, meaning the company has lost nearly 10 percent of its value in the last 24 hours. Trina actually issued 2 separate announcements, starting with one detailing plans to issue $150 million in convertible bonds. (company announcement) That was followed by another announcement that it would issue 8.8 million new American Depositary Shares (ADSs). (company announcement)

Based on Trina’s latest closing price before the 2 announcements, the company could raise around $100 million from the share offering, bringing its total fund raising to around $250 million through the 2 different plans. There’s nothing else of major interest in the announcements, though Trina did say it could raise up to an additional $40 million if overallotments for the 2 plans are exercised.

Trina’s plan makes it the latest of China’s major solar panel makers to tap western capital markets for much-needed new funding. Last month Yingli raised a more modest $83 million through the issue of new shares. (previous post) But the company ultimately had to sell the shares for 20 percent less than its stock price before it announced the deal, reflecting the skepticism many western investors still feel towards solar panel makers. Canadian Solar has also raised $200 million through its own offerings of new stock and debt.

As I’ve said above, one could interpret these latest plans as a positive development because they signal a level of confidence that the companies feel about their near- to mid-term prospects. But growing protectionist sentiment in some of the world’s major markets makes these companies’ prospects look shaky at best.

The US ruling this week is just the latest in a growing series of protectionist moves against solar panel makers. China responded to earlier US tariffs with retaliatory moves against American makers of polysilicon, the main ingredient used in solar panel production. India has also taken its own recent protectionist moves, and Japan is taking similar though less obvious moves by refusing to finance projects that use non-Japanese solar cells.

Shares of the solar panel makers all staged a huge rally last year, as companies finally returned to profitability and signs emerged that the trade wars could be easing. But many shares have begun to retreat this year, and more downside is likely ahead if companies start to report they are feeling effects of all the protectionist moves happening in the market.

Bottom line: Trina’s new fund-raising plan is the latest sign of growing confidence in the recovering sector, but a fresh series of protectionist moves could put a damper on the turnaround.

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

The post Trina Joins Solar Fund Raising Queue appeared first on Alternative Energy Stocks.

by Lee Shane

When one thinks of fuel cells and fuel cell technology some names immediately come to mind.  Ballard Power (BLDP) went public in 1993 and was listed on NASDAQ in 1995. A company that made its debut in 1997 was Plug Power (PLUG), a joint venture between DTE Energy and Mechanical Technology Inc.  Hydrogenics (HYGS) is a company that has been around for 60 years, but more recently has gotten investor attention for their fuel cell technology.

Most of the technology produced by well-known fuel cell companies share common features…

1. They are based on fuel cell technology that requires hydrogen gas or a reformer that makes H2 out of the fossil fuel feed. They use a very expensive, very rare catalyst, Platinum.
2.  Portable fuel cells are based on fuel cell technology that requires a PEM, Proton Exchange polymer Membrane
3. They have all enjoyed various levels of success, but the existing technology appears to be limited to heavy vehicles (buses / forklifts) and backup power systems for specific applications.

The reality is that most of the existing fuel cell technology has never really reached the level of portability once imagined for fuel cells.

However one new entrant in the fuel cell sector may be capable of regenerating some of the early initial excitement. They have eliminated the Achilles heel, the PEM membrane, the bipolar plates, and the platinum catalyst…

That company is Mantra Energy Alternatives (MVTG) based out of British Columbia.

Recently MVTG has revealed their patented MRFC fuel cell. It is a “membrane-less” and “platinum-free” ultra-low cost fuel cell that appears to be totally unique in the market. As mentioned previously, the PEM membrane, the bi-polar plates, and the precious metals catalyst are among the most expensive and heavy parts of any fuel cell. The PEM Membrane is also one of the degrading components of PEM fuel cells, so the MVTG MRFC fuel cell is expected to have a much longer operating life, because there is no membrane to degrade. MVTG claims to have eliminated about 2/3rds of the cost of a typical PEM style fuel cell. 

We know the significant infrastructure challenges hydrogen gas still presents for widespread commercial deployment.  It was recently reported that even now there may be less than 15 commercially accessible hydrogen fueling stations available in the U.S.  But the MVTG-MRFC fuel cell does not require hydrogen gas. MVTG has eliminated the need for H2 gas feed in their MRFC fuel cells, and instead uses non-flamable liquid formates and formic acid as fuel.  It is the H proton bonded to the back bone of a CO2-molecule (which is formic acid) that is the hydrogen fuel that the MVTG-MRFC fuel cell uses, and in that state, formate-formic acid, it is non-flammable, and is stored at ambient pressure and temperature.  The MVTG fuel cell also does not require an expensive, energy consuming, bulky, and heavy reformer like other fuel cells use to handle direct fossil fuel feeds.

The technology is the result of an impressive R&D collaboration from multiple Universities located in Canada, Japan, and the U.S.  The potential of this new fuel cell technology makes it worthy of acknowledgment.

Lee Shane works in information technology for a Fortune 500 company, and is an individual investor with over 20 years experience.  His focus is on small to mid size technology companies that have the potential to be disruptive, or offer benefits to the sectors they are targeting that legacy technology may not currently provide.  He has a strong interest in green building concepts and alternative energy and looks for hands-on opportunities in those areas

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Doug Young

China and the European Union have reached a new settlement that should formally end their ongoing dispute over solar panels, contrasting sharply from a more confrontational tack taken by the US in a similar spat. Meantime in other solar news, a looming new bond default by a mid-sized panel maker has become the latest sign that Beijing is prepared to let more of these smaller companies miss their debt payments. That approach will force these smaller firms to either leave the industry or sell their money-losing operations to larger peers, in a much-needed industry consolidation.

Let’s start with the latest China-EU settlement, which involves polysilicon, the main ingredient used to make solar panels. Beijing opened an anti-dumping investigation into EU polysilicon in late 2012, a move that many saw as retaliatory for an earlier EU probe that found Chinese solar panel makers were selling their products in Europe at unfairly low prices. The original dispute centered on complaints by both the US and Europe that Chinese solar panel makers were undercutting their western rivals after receiving unfair government support in the form of subsidies like low-cost land and cheap loans.

China and Europe settled their initial dispute over solar panels last year, in a landmark deal that saw Chinese manufacturers agree to raise their panel prices to a minimum level agreed to by both sides. (previous post) Now this latest agreement will see European polysilicon makers also agree to sell their products into China at a minimum price agreed to by both sides. (English article) The main beneficiary of this new deal is Germany’s Wacker Chemie, which is Europe’s main polysilicon seller to China.

The EU’s 2 settlements contrast sharply with the approach taken by the US, which conducted its own investigation and last year imposed anti-dumping tariffs on Chinese solar panels. As a result, China opened its own probe into US polysilicon, which ended this year with retaliatory anti-dumping tariffs against US-made polysilicon.

On the one hand, I should applaud the EU for its more reasonable and pragmatic approach to this matter, even though the setting of minimum prices has nearly the same effect as imposing punitive tariffs. But that said, I do also think the US approach sends a stronger message to Beijing that it needs to stop its practice of giving money to industries it wants to promote. Perhaps this mixed approach by the US and Europe is the best way to send the message to Beijing, providing both positive and negative incentives to change its behavior.

From that solar dispute, let’s look quickly at the latest looming bond default from smaller panel maker Baoding Tianwei (Shanghai: 600550). The company has announced that trading of 1.6 billion yuan ($260 million) worth of its bonds has been halted on the Shanghai Stock Exchange. (English article; company announcement) Tianwei has lost big money for the last 2 years, so it’s not a huge surprise that it might not be able to repay its debt. The bigger surprise is that it might be allowed to default on the bonds, since Beijing or local governments often come to the rescue of companies that risk debt defaults.

We saw something similar happen earlier this month when Chaori Solar (Shenzhen: 002506), another smaller player, failed to make an interest payment for some of its bonds, becoming the first corporate bond default in modern Chinese history. (previous post) This latest case involving Tianwei shows that Beijing is preparing to allow more such defaults on solar debt. That should ultimately force many of these smaller players to either shut down or sell their operations to larger players like Canadian Solar (Nasdaq: CSIQ) and Trina (NYSE: TSL), which are emerging as industry consolidators.

Bottom line: Europe’s latest solar settlement with Beijing will end their trade dispute in an amicable way, while a new looming bond default by Tianwei reflects China’s ongoing resolve to consolidate the sector.

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

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