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To all Alternative Energy Investors

Himanshu Pandya — Mon, 25 Feb 2008 08:32:04 +0000

American Council on Renewable Energy (ACOR) recently sent a letter to House Speaker Nancy Pelosi, House minority leader John Boehner, Senate Majority leader Harry Reid and Senate Minority leader Mitch McConnell to extend the renewable energy tax credits before March 1, 2008.

Some of the signatories on the letter included employees from Google, Applied materials, Fuel Cell Energy, GE Energy, Evergreen Solar, Kyocera Solar, Sharp Solar, SunPower.

Read the letter here on ACORE’s website.

WSJ: Big Oil curbing the growth of Ethanol

Himanshu Pandya — Tue, 03 Apr 2007 02:46:20 +0000

There is a very interesting story in the front page of today’s Wall Street Journal about how Big Oil is proving to be an obstacle to the growth of Ethanol. The story can also be found online here.

However, before I get into the story let me first post my views on Ethanol:

If you have been following FinancialNirvana.com then you know that early last year I was very enthusiastic about ethanol, both as an investor (did pretty well with PEIX) and as an environmentalist. However, for a while now I just don’t think ethanol is the answer. There are too many shortcomings with ethanol (corn based) to be used as a fuel and let’s not get into cellulosic ethanol because I just don’t know when it will be feasible to be mass produced. Ethanol as an additive to gasoline is fine and should be promoted but filling up E85 at your local gas station just doesn’t make sense to me right now. Corn has turned into a cash crop and every farmer now wants to grow corn. Politicians (both sides) are behind it because they get votes from farmers and they can go on campaigning that are helping United States get rid of its addiction to Mid-East oil. The big three automakers (are they still big three?) in Detroit are behind it because they produce trucks and SUV’s that run on E85 and it doesn’t take any kind of technological marvel to produce automobiles that run on ethanol. How many people are really willing to pay extra for a gallon of E85? Now there is a need for ethanol but if people really think that one day we won’t need to import oil because of ethanol then they are just dreaming. Maybe it will be possible with cellulosic ethanol but we don’t know yet. The best way to utilize ethanol now is as an additive to make gasoline burn cleaner and this is already a practice in a lot of states. If the politicians are really serious about ethanol then pass laws at the federal and state level that make it mandatory in every state to add 10% ethanol in every gallon of gasoline. This way there won’t be a need for special infrastructure created to serve ethanol directly to consumers. Ethanol will be mixed with gasoline at an early stage by oil companies and then sent to gas stations for consumers to fill up. Once that’s done, do some independent studies and based on the results keep increasing the 10% limit.

Now forget about what I think because no matter what I think the story in today’s Wall Street Journal about Big oil doing it’s best to be an obstacle to the growth of ethanol is kind of sad.

Following is the summary of the WSJ article titled, ‘Fill up with Ethanol? One obstacle is Big Oil’ by LAURA MECKLER.

Oil company policies are making it almost impossible for service stations to carry E85 ethanol (85% ethanol and 15% gasoline).
The article also touches on the fact that the demand might not be there for E85 because it costs more and would limit service-station owners’ enthusiasm for spending on the equipment needed to offer E85 even if the policies of the oil companies were not a factor.
Service Station franchises are required to purchase all the fuel from the oil company and since oil companies don’t offer ethanol the service stations can’t sell them either.
Contracts sometimes limit advertising of E85 and restrict the use of credit cards to pay for it. Some require that any E85 pump be on a separate island, not under the main canopy.
Exxon Mobil Corp.’s standard contract with Exxon stations bars them from buying fuel from anybody but itself, and it doesn’t sell E85.
A ConocoPhillips memo to franchisees says the company doesn’t allow E85 sales on the primary island, under the covered canopy where gasoline is sold. Stations must find another spot.
A Chevron Corp. agreement with franchisees also appears to discourage selling E85 under the main canopy.
Chevron’s agreement with station owners recommends they install new pumps and tanks at their own expense if they want to stock E85. This is an additional cost for gas station owners.
BP (so called the most environmentally friendly Big Oil) has guidelines for stations that carry the company name bar any mention of E85 on signs on gasoline dispensers, perimeter signs or light poles. The stations also can’t let buyers use pay-at-the-pump credit-card machines.

I don’t have a position in any ethanol or Oil company

Ethanol Stocks locked-and-loaded in anticipation of the State of the Union Address.

Himanshu Pandya — Tue, 23 Jan 2007 02:53:58 +0000

I have been tracking the alternative energy stocks in anticipation of the State of the Union address tomorrow 23rd of January, 2007. I recently wrote an article on this and thought I follow up on it.

Ethanol stocks stood out today:

Solar stocks and other alternative energy stocks didn’t enjoy as good a day as Ethanol stocks. We still have the rest of the day tomorrow to see if the interest will last. I am very curious to see how the stocks react after the State of the Union address.

* At the time of this writing I did not own any of the stocks listed in this article. I do own ESLR and STP which are both Solar stocks.

2007 State of the Union Address – A boon for Alternative Energy Stocks?

Himanshu Pandya — Thu, 18 Jan 2007 04:22:27 +0000

Last January, I wrote an article on this very subject about how President Bush will focus on Alternative Energy and Nuclear Energy in his 2006 State of the Union Address. President Bush did touch on Alternative Energy and America’s addiction to Oil and gave his support for Ethanol. Unless you had been hiding under a stone last year you couldn’t have missed the boom in the ethanol stocks and of course you couldn’t have missed the bust either.

I was big into Pacific Ethanol (Nasdaq: PEIX) (started my position in the low teens) at that time and wrote a bunch of articles and even interviewed Tom Koehler (Vice President of Government Affairs and Communications). I did make a pretty good profit as well but sold at different stages after first reporting the huge insider selling.

Pacific Ethanol wasn’t the only ethanol stock that enjoyed a tremendous roller coaster ride. You can’t forget Xethanol (Nasdaq: XNL), Andersons (Nasdaq: ANDE), Green Plain Renewable Energy (Nasdaq: GPRE) and Archers Daniels Midland (NYSE: ADM). I can’t even begin to explain how amazing it was to see these stocks go up and up before they finally came tumbling down.

The ethanol story has since died down but there is still some hope from Cellulosic ethanol, but as of now it is still a hope. If you have been reading my blog you will notice how I have changed focus from Ethanol to Solar and other Alternative Energy stocks. I just don’t believe in the whole ethanol story anymore. I just don’t think it’s a long term answer. However, it seems pretty likely that President Bush will again bring up Ethanol. So the question is are these ethanol stocks worth a quick trade at this point? Are we going to see the markets going crazy again and send these stocks to the stratosphere? Highly unlikely but you never do know.

Let’s look at what the media is saying on what President Bush will focus on in his 2007 State of the Union Address:

It is expected that President Bush will talk about Global Warming. The policy on Global Warming will be laid out but the administration is not expected to go as far as putting mandatory limits on greenhouse-gas emissions.
President Bush will call for a massive increase in US ethanol usage. Bush’s speech could call for over 60 billion gallons (227 billion litres) of ethanol to be mixed into US gasoline supplies each year by 2030.

This whole article is based on speculation and I think the following stocks could benefit from the State of the Union address. Also, let’s not forget that we have a Democratic congress which tends to be more environmentally friendly and with 2008 Presidential Elections coming up both parties and their respective Presidential candidates will use environment and global warming as major issues to address.

The American Solar companies:

Sunpower Corp (Nasdaq: SPWR)
Energy Conversion Devices (Nasdaq: ENER)
Evergreen Solar (Nasdaq: ESLR)
First Solar (Nasdaq: FSLR)
MEMC Electronics (NYSE: WFR)

Ethanol Stocks:

Pacific Ethanol (Nasdaq: PEIX)
Archer Daniels Midland (NYSE: ADM)
Green Plains Renewable Energy (Nasdaq: GPRE)

Wind Energy:

American Superconductor (Nasdaq: AMSC)
Zoltek (Nasdaq: ZOLT)

Pollution Control:

Fuel Tech (Nasdaq: FTEK)
ADA-ES Inc. (Nasdaq: ADES)

Fuel Cells:

Ballard Power (Nasdaq: BLDP)
FuelCell Energy (Nasdaq: FCEL)

Liquid Coal:

Syntroleum (Nasdaq: SYNM)
Rentech (AMEX: RTK)

You can always buy PowerShares WilderHill Clean Energy Portfolio ETF (AMEX: PBW)

What do I like out of all of these?

I like the solar sector and the profitable companies in this sector such as Sunpower Corp (Nasdaq: SPWR), MEMC Electronics (NYSE: WFR) and Suntech Power (NYSE: STP). All of these have been on quite a run lately so proceed with caution. Long term I love the Solar sector.

I like the pollution control plays such as Fuel Tech (Nasdaq: FTEK). Fuel Tech also has a huge opportunity in China. ADES is also worth a look but I don’t have an opinion on it yet. It trading volume is very low but seem intriguing and is profitable.

I like the Wind Energy sector but there are not a lot stocks to pick from. I like American Semiconductor (Nasdaq: AMSC) with their recent purchase of Windtec.

I don’t like the Fuel Cell stocks, Liquid Coal stocks and Ethanol stocks.

** I am long STP, ESLR, FTEK and Short FSLR

Democrats Win – Alternative Energy and Oil Stocks go up across the board

Himanshu Pandya — Thu, 09 Nov 2006 04:58:12 +0000

It was widely believed that Alternate energy stocks will benefit from a Democrats victory. However, not only did the Alternate energy stocks go up but Oil stocks were up across the board as well.

California’s proposition 87 was voted down by voters but that might have only stopped a much larger run-up in the alternate energy sector.

Lets look at how the various categories of stocks did in the Alternate Energy and Oil Sectors. I am attaching screen shots from my other site, DailySectorWatch.com, which is still in early beta. I realize the quality of my images suck but please bear with me.

Solar Stocks

Ethanol Stocks

Fuel Cell Stocks

Canadian Oil Sands

Oil Production

Oil Equipment and Services

Oil Drilling

Pacific Ethanol completes the construction of its first plant. Production will start October 17th.

Himanshu Pandya — Tue, 10 Oct 2006 02:58:53 +0000

It’s been a while since I have written about Pacific Ethanol (Nasdaq: PEIX) but I thought today was an important milestone for the company as it finished construction of its first plant. I used to follow Pacific Ethanol very closely and enjoyed the incredible ride up early this year. During that time I reported on its new plants, interviewed Tom Koehler, and also reported on the incredible amount of insider selling.

The stock went up about 10% on the news today after being on a tremendous slide and a recent downgrade. I think opening of the plant marks an important milestone for this company. It is no longer a ethanol stock without any production. Neil Koehler, CEO also stated, “We remain on schedule to develop 220 million gallons of production capacity by the middle of 2008 and 420 million gallons by the end of 2010.”

If you still believe in the whole Ethanol story you might want take a look at Pacific Ethanol at these levels.

Cilion the only Ethanol company creating any buzz lately.

Himanshu Pandya — Wed, 04 Oct 2006 02:45:20 +0000

Now that the buzz is out of Ethanol and all the ethanol stocks are back to earth, lets look at an ethanol company creating some buzz. I wrote about Cilion back in June when the announcement came but now more information is coming out. Cilion is a joint venture between well known VC Vinod Khosla and Western Milling.

The company recently finished successful second round of funding to raise over $200 million. One of the investors is British billionaire Richard Branson and his Virgin Group. Yucaipa Companies and Advanced Equities Inc. also participated in the second round of funding.

Cilion looks very promising:

Cilion plans to have 8 plant units in production by 2008 for a total of 440 million gallons per year capacity. The first three plants are expected to be in California
Cilion ethanol plants will have an energy balance advantage that is 2X that of gasoline.
Cilion is expected to be price competitive per mile driven with gasoline even if oil prices drop to $40 per barrel.

Cilion ethanol production process will be using technology provided by India based PRAJ Industries. Interestingly, Vinod Khosla has a stake in PRAJ as well. I am very skeptical of Cellulosic ethanol until I see it being mass produced. Xethanol (AMEX: XNL) has been talking about opening cellulosic plants but nothing has materialized there. The one thing I am really skeptical about is, “Cilion is expected to be price competitive per mile driven with gasoline even if oil prices drop to $40 per barrel”. I will believe this when I see it.

I will keep an eye on this to see what happens.

Xethanol’s luncheon presentation in Atlanta

Himanshu Pandya — Thu, 13 Jul 2006 06:48:54 +0000

Xethanol Corporation (AMEX: XNL) held a luncheon presentation in Atlanta, GA on July 11th, to discuss its expansion plans on the east coast and specifically in Georgia. I was invited by Xethanol Corp. to attend the luncheon and I obviously had a great time. Xethanol is one of the few pure play publicly traded ethanol companies and I wasn’t going to miss the opportunity to attend the presentation and meet with its executive team.

Lets look at some of the pictures I took and then I will summarize the key points from the presentation and the Q & A session that Christopher d?Arnaud-Taylor, CEO, had with the attendees.

Christopher d?Arnaud-Taylor

Chairman, President, CEO

Christopher d?Arnaud-Taylor

Chairman, President, CEO

Lucas Rice, Vice President, Operations

Following are some of the key points from the presentation and the Q&A session held by Mr. Chris Taylor.

Xethanol is focused on the East Coast.
Xethanol will be opening ethanol plants in Augusta, GA and Savannah, GA
Most of the management team will move on down to Augusta, GA
Xethanol is also looking at some sites in North Carolina and Maine
They see southeast as an important and underserved area and the epicenter of the forest products industry. Plan is to open plants close to raw materials and save on transportation.
Looking at closed Paper mills and then retro fitting them to save money rather than constructing brand new plants.
Another option might be to co-locate with Paper mills.
Could co-produce bio-diesel with its licensing arrangement with H2Diesel, Inc.
Will be focused on small ethanol plants rather than huge ones like some other Ethanol companies are planning.
Although, they have explored California they are not looking at building plants up there for now. With the whole management team in the East coast it will be hard to focus on California.
About $40 million in the bank and cash flow positive
About $250,000/month burn rate.
Ethanol production target for the end of 2007 are as follows:

South East – 150 million gallons

Midwest – 60 million gallons

North East – 100 million gallons

To me the best part of this company is its focus on Cellulosic Ethanol rather than ethanol from Corn. For ethanol to be a viable alternative to oil we need to focus on research in the cellulosic ethanol field. Xethanol’s business model to locate small plants near major east coast cities also seems very promising. A lot of money has flowed into the ethanol sector recently but smart money has focused on cellulosic ethanol. Iogen with investments from Shell and Goldman Sachs and Vinod Khosla starting a cellulosic ethanol company called Cilion on top of his investments in PRAJ are just some of the promosing aspects of cellulosic ethanol.

I would like to thank Xethanol for inviting me to the luncheon. It was great talking to the executive team and see the excitement they showed for the future of their company and the ethanol sector.

If you have any questions leave me some comments or email me at comments@FinancialNirvana.com and I will answer them. Also, if you have any questions for Xethanol maybe I can combine them and see if I can get Xethanol to answer them.

Andersons taking full advantage of the red hot ethanol sector

Himanshu Pandya — Mon, 03 Jul 2006 01:55:32 +0000

Press Release: The Andersons, Inc. (Nasdaq: ANDE) announced that it has filed a registration statement with the Securities and Exchange Commission relating to a proposed public offering of 2.28 million shares of its common stock, of which 2 million shares are proposed to be sold by the Company.

The company hopes to raise up to $100 million via the offering to build more ethanol plants and rail cars. The former Jim Cramer pick has seen an incredible run-up in its stock and recently even did a stock split. Although, the ethanol sector has traced back from its incredible highs its still a sector to keep an eye on. There is even some rumblings about consolidation in the industry. It would be interesting to see buyouts in the sector and who the potential buyers will be.

Vinod Khosla forms Cilion to produce ethanol in California

Himanshu Pandya — Tue, 27 Jun 2006 06:42:46 +0000

PRNewswire: Super VC Vinod Khosla who is a big backer of cellulosic ethanol has formed a company called Cilion to produce Ethanol in California. This is something to keep an eye on as they are not going to use Corn to make ethanol and they are claiming that the Ethanol they produce will be cost effective with gasoline even if oil is trading at $40/barrel. It would be interesting to see if they take Cilion public anytime soon to take advantage of the Ethanol boom.

From the news release, Western Milling, California’s largest grain milling company, and Khosla Ventures, a venture assistance and venture capital firm, today announced the formation of Cilion. Cilion will operate modular, standardized 55 million gallons per year ethanol plants.

Highlights:

- Cilion plans to have 8 plant units in production by 2008 for a total of 440 million gallons per year capacity. The first three plants are expected to be in California. The ethanol production, grain handling, logistics and feed expertise of Western Milling combined with the company building and financial expertise of Khosla Ventures will provide Cilion with a unique advantage.

- According to Western Milling President Kevin Kruse, “Our technology and years of experience will allow our plants to have an energy balance
advantage that is 2X that of gasoline. In addition we expect a greater than 90% reduction in petroleum use.

- When fully operational, ethanol produced by Cilion is expected to be price competitive per mile driven with gasoline even if oil prices drop to $40 per barrel, assuming normal gasoline distribution margins.

- California Governor Arnold Schwarzenegger recently issued Executive Order S-06-06 establishing targets for the use and production of biomass
products. The executive order called for California to produce a minimum of twenty percent of its own biofuels by 2010 and forty percent by 2020. Of the 900 million gallons of ethanol currently consumed in California, only five percent is produced in California.

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