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Energy Storage Companies

Who's Leading the Charge?

Last week, we talked about energy storage and how vital it is to improve it if we're ever to exploit renewable energy resources fully.


Today, we'll cover the current market sentiment about energy storage and take a look at a few companies making waves in the sector - leading the charge, if you will.


Energy Storage Gets a Jolt


The energy storage market usually isn't one to attract attention. It's chugged along quietly for some time, its only public mascots the Energizer Bunny and the less-exciting Coppertop.


Now instead of powering an army of Walkmen, batteries are being looked to as a power source for the entire grid, charged time after time by renewable energy.


After attending the industry's keystone annual event, Battcon, Piper Jaffray put out an industry note stating battery "industry experts, manufacturers, and distributors. . . view 2009 as a turning point for the industry."


The catalyst? Billions of federal stimulus dollars are about to begin flowing to the sector because, as we discussed last week, improving storage is the only way to expand our use of renewable energy drastically - a main congressional and presidential goal.


In fact, the potential for the energy storage industry is so big that if over the next decade just 1% of energy storage demand is met, the industry will be worth at least $600 billion - all of which will end up on the balance sheets of energy storage companies.


Winning Energy Storage Technologies


Compressed Air Energy Storage (CAES) is exactly what the name implies. Instead of using a resource to generate electricity, the resource is used to compress air, which is later heated to produce electricity.


So, for example, a wind turbine could be compressing air all day to be used as electricity later when the wind stops blowing. These are huge, high-cost projects with natural geological formations usually used to store the air.


As large renewable projects begin to add a storage component, CAES will be increasingly used. Leaders there include:

Alstom (PARIS: ALO) and

Dresser-Rand (NYSE: DRC).


Fuel Cells use electrochemical reactions to store energy. Since they cannot be charged and discharged quickly, fuel cells will mainly be used in lengthy back-up power applications. Though less proven and a bit further from widespread use:

Ballard Power (NASDAQ: BLDP),

Plug Power (NASDAQ: PLUG), and

Hydrogenics (NASDAQ: HYGS)


... are all pursuing solutions.


Flywheels are mechanical storage devices that take electricity from the grid and store it in a rotating wheel for later use. This well help smooth out disparities between peak and non-peak hours. In some cases, utilities will be able to store cheap excess energy and resell it during peak hours. Though less exciting, being able to quell power interruptions and voltage surges is soon to be big business.

Beacon Power (NASDAQ: BCON),

Active Power (NASDAQ: ACPW), and

Vycon (LON: VYCO)

...are all vying for a piece of it.


Superconductors and Ultracapacitors may hold the best potential because they can deliver power almost instantaneously, greatly improving grid stability and distribution. Maxwell (NASDAQ: MXWL) is the far-and-away leader here. With strong ties to the electric vehicle and wind markets, I look for this company to become a storage stalwart.


Those are all the non-battery energy storage technologies. While all the technologies will find a place in the market, all the companies certainly won't. Some will go on to greatness and some will fall off the map.


Only in-depth research can make the difference between good returns and putting your money in the next start-up to file Chapter 11.



Batteries for Energy Storage


Batteries are still the bread and butter of this industry. We use them for everything from cell phones to forklifts.


There are four main kinds, each with different uses, benefits, and profit potential.


Lead Acid Batteries are the cheapest and most widely used. They're found in automobiles, forklifts, and in many back-up power applications. The technology is well-known, and so are the companies that make it. Johnson Controls (NYSE: JCI) is the world's largest producer with C&D Technologies (NYSE: CHP) and Exide (NASDAQ: XIDE) also being worth a look.


Nickel Metal Hydride Batteries have high energy density and are rechargeable, making them highly useful in the electric vehicle and consumer electronics markets. Panasonic (NYSE: PC) is the leader here, but Hongkong Highpower (AMEX: HPJ) and the Buffett-backed BYD (HK: 1211) are making big strides.


Sodium Sulfur Batteries are causing quite a stir right now because of their huge potential for renewable energy storage. Utilities like Xcel Energy (NYSE: XEL) and American Electric Power (NYSE: AEP) are already testing them on a multi-megawatt scale. The established company here is Japan's NGK Insulators (TYO: 5333) with U.S.-based start-up Geo-Battery in hot pursuit.


Flow Batteries are unique because they have unlimited capacity. The batteries are fueled by storage tanks of electrolytes. As long as there's fuel in the tank, the battery will work. With such flexibility, these batteries can be used for cars or grid storage. ZBB (NYSE: ZBB) and Sumitomo Electric Industries (TYO:5802) are the two worthy public companies in the field, with a number of private companies recently joining the ranks.


Lithium-ion Batteries are the most well known. Lightweight and with high-energy density, these batteries are now ubiquitous in cell phones and laptops and are being developed for electric vehicle applications. Being the incumbent technology, there are plenty of companies to choose from. Ener1 (AMEX: HEV), Valence Technology (NASDAQ: VLNC), Altair Nanotechnologies (NASDAQ: ALTI), Advanced Battery (NASDAQ: ABAT), and Ultralife (NASDAQ: ULBI), in addition to others, are all making strides in the industry.


Energy Storage: The Bottom Line


It may be hard to imagine now, but energy storage is just as important as renewable energy. In fact, the expansion of renewable energy would stall without it.


This fact has largely escaped the investment and political realms as technologies like solar and wind have hogged the spotlight. As their omission is realized, billions of dollars will be spent to make up for lost time.


This is your chance to get ahead of that curve. . . to get a piece of the action before the herd realizes what's going on. This two-part series should serve as a good introduction to the need for mass energy storage and the technologies and companies involved.


But an all-in approach simply won't work here. You need to know which companies are making the biggest cost reductions, establishing the biggest technology improvements, and above all, getting new contracts.


The industry is evolving too quickly for me to provide that in a weekly letter. Becoming a member of the Alternative Energy Speculator is the only way to ensure you get personal updates on this sector, including detailed industry and company reports, and well-researched recommendations.


We've already profited from numerous energy storage and smart grid plays in addition to multiple winners in the wind, solar, and infrastructure segments. Click here to get in on the action today.


Call it like you see it,



You can download the PDF version here: Energy Storage Companies


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