Distributed Power: The Next Big Investment?
With today's electricity demand expanding beyond the reach of
available supply, and nationwide electric deregulation efforts
providing inconsistent results, distributed power just may be the
next big thing, according to Bear Stearns analyst Robert Winters.
With technology-laden, electricity-hungry companies popping up
every time you turn around, and blackouts and brownouts occurring
more frequently as large power grids are becoming less reliable,
the analyst points towards distributed energy services as a
possible solution, and maybe the "next big investment opportunity
for the coming decade." In Winters' 250 page report, "Distributed
Energy Services-The World's Power and Transportation Industries:
Set for a Revolution-Part 2," he examines technologies and
companies within the distributed energy services sector that might
be able to take advantage of the current situation.
"Thanks to major technological advances and energy deregulation,
a wave of new investment in the power industry has just begun. We
believe that this coming era in the power industry could resemble
the wave of investments which flooded into the telecommunications
industry following the breakup of AT&T in the early 1980's,"
"Companies and municipalities need to find ways to ensure the
availability of high quality, reliable power," added Winters.
According to his research, microturbines are the best positioned of
the "new" technologies that would be able to have an immediate
impact on electric generation.
He based his recommendation on the fact that microturbines are
small, quiet, efficient and very versatile. "They can be used as a
main power source, a back-up power source or as an alternative when
there is a spike in traditional energy prices," the analyst said.
"Microturbines can also be used in remote locations, including
developing countries, that do not have access to electricity."
Another attractive feature of microturbines is their fuel
requirements. The units often use natural gas, but can also use
several other fuels as well.
In the study, the analyst also examined fuel cells, flywheel
technology, and existing reciprocating engines technologies such as
diesel engines and Stirling engines, which he noted are enjoying a
In addition to the report, Winters initiated coverage on two
distributed energy companies. He labeled Active Power, a company
that is pioneering flywheel technology, as a "buy" and Capstone
Turbine Corp., a leading manufacturer of microturbines, as
Los Angeles-based Capstone announced late last month that it had
shipped its 1,000 microturbine unit since it began operation in
1998. The company has enjoyed sizeable growth from year to year,
selling just two units in 1998, 221 units in 1999, and over 548
units by the end of September this year.
These latest companies added to Winter's coverage are in
addition to two fuel cell companies he currently follows. Ballard
Power is currently a buy, and Plug Power is rated neutral.