"Providing incentives for energy-efficiency and clean energy are the right thing to do for our future, because the nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation..."

-- Barack Obama, President of the United States of America --  State of Union address, January 27, 2010

Smart grid spending powers ahead in Asia

March 2010

 

Japan, South Korea and China are investing about $9 billion this year in infrastructure and information technology to make electricity networks more efficient, creating lucrative opportunities for niche technology and equipment providers.

The "smart grid" system, through computerized monitoring of electricity flowing through a power grid, allows utilities to automatically manage electricity usage in a way that is more reliable and flexible.

Asia's spending on smart grids is expected to outpace the United States, with China alone seen investing $7.3 billion in the sector this year, according to Zpryme, a market research firm based in Austin, Texas.

"China is pursuing smart grid as aggressively or more aggressively than any other country in the world right now," said Brad Gammons, vice-president of IBM's Global Energy & Utilities Industry, told Reuters in an interview.

"They're very focused and have a very strong commitment to move in that direction," he said.

IBM along with companies such as Cisco and Microsoft are investing in the smart grid market in China.

The focus on smart grids will benefit businesses in the whole power distribution system, from makers of pole transformers to electricity meters and software providers to storage battery manufacturers.

Osaki Electric Co, which makes electric measuring devices in Japan, and South Korea's LS Industrial Systems, which owns power transmission and distribution technologies, are examples of companies that could get a boost from smart grid development.

"Osaki Electric have been developing a smart meter which is a positive catalyst for the share price going forward," said Japan invest analysts in a report.

Despite a two-third rise in its share price in the past year, LS Industrial trades at 15 times estimated earnings, much lower than Osaki at almost 50 times and the sector average of about 54 times, according to Thomson Reuters data.

Little-known Chinese companies including Zhuzhou CSR Times Electric Co Ltd, which makes electric converters and control systems, and maker of electric meters, Wasion Group are also popular among analysts.

Both stocks have more than doubled in the past year and trade at below sector average PEs, at 33 times and 15 times estimated earnings, respectively.

GOVERNMENT SPENDING

Analysts said government spending will go a long way to driving regional demand for smart grid equipment and technology, helping create bigger businesses in the sector.

China alone could spend over $100 billion upgrading its power distribution over the next 10 years, said Yuanta Securities analyst Min Li.

Japan and South Korea, which are a step ahead of China in the building of intelligent power distribution networks, are also ramping up smart grid investment. Both are ear-marking spending of more than $800 million this year, according to a Zpryme report released in January.

South Korea aims to spend 27.5 trillion won ($23.7 billion) by 2030 on smart grids to help meet its emissions reduction target, and is building the world's largest smart grid test-bed in Jeju island, in the south of the country.

As future distribution networks could eventually go wireless, the upgrade of Asia's power distribution network also could benefit mobile operators such as SK Telecom.

"Smart grid itself is a combination of electricity equipment and IT infrastructure," said analyst with Kim Min-ho at E*Trade Securities. "As it is highly possible that metering will be made through wireless communication, there will be increasing demand to borrow wireless networks."

Analysts see challenges ahead.

Incentives that would further bolster private investment are lacking in Asian markets including South Korea, while the United States and Europe are making separate moves to shape the standards for smart grid deployment worldwide.

"If the United States or Europe move first to set up global standards, Asian firms will have to spend a lot to develop technologies and systems to meet those standards," said Kim Ik-sang, analyst at Hi Investment & Securities.

"It is important for Asian companies to work with their U.S. and European counterparts and participate this early in the development of these standards," he said.

/////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

CALIFORNIA VENTURE CAPITAL BULLISH ON CLEANTECH

SAN FRANCISCO, Jan 30, 2010 - Fears the United States will lose a battle with China to create clean technology for a climate-changing world don't fly with Silicon Valley venture capitalists.

The California financiers have an impressive track record, having funded small companies that eventually turned into Google, Yahoo and scores of other giants that shaped the internet revolution. After a sharp drop-off in the wake of the 2008-09 financial crisis, VCs expect to be more active this year and anticipate a much stronger flow of clean tech acquisitions or public offerings.

Perhaps not surprisingly, most also believe the United States remains overwhelmingly the best place to launch a clean tech business and market new goods and services -- and they are putting their money where their mouth is.

Those are some of the takeaways of a recent survey of 41 clean tech investors by Thomson Reuters.

DOE TO FUND $366M IN ENERGY INNOVATION HUBS

 

 

 

 

 

 

 

 

 

 

 Dec. 2009

Described by many as the ultimate transport solution, solar fuels will finally receive a significant financial investment as the US Department of Energy (DOE) announced plans to invest up to $366 million to establish three new Energy Innovation Hubs.

The Hubs will focus on three key areas including developing an effective solar energy to chemical fuel conversion system. Each will be funded at up to $122 million over five years and will bring together a team of researchers in an effort to speed up scientific discovery to technological development.

With basic research already providing significant advances in the understanding of the photochemistry associated with the natural photosynthetic system, the DOE admits that there has still yet to be sufficient knowledge ascertained regarding the design of solar fuel generation systems with the required efficiency and sustainability for economic viability. 

The Fuels from Sunlight development push will focus on solar fuels systems that operate at efficiency benchmark (to be defined) and produce fuel with sufficient energy content to enable transition to proof of concept prototyping.

Among the critical issues that will be examined are:

1) the understanding and designing of catalytic complexes or solids that generate chemical fuel from CO2 and water;

2) integration of all essential elements from light capture to fuel formation; evaluation of existing solar fuel systems currently under development; and

3) improving energy efficient building systems design.

The DOE is expected to provide $22 million in 2010 (the first year for the establishment of each Hub), and an additional $25 million per year for each of the following four years to support operations...