The Competition in the Battery Segment of Energy Storage keeps on increasing with entry of new players.While established players like LG Chemicals,Panasonic are increasing capacity,there has been a raft of new startups and biggies entering this segment.Toshbia,NEC,SK Energy,Sumitomo,Samsung SDI everyone wants a piece of one of the fastest growing segments of the Electric Vehicle Sector.This has already led to a supply glut leading to a decrease in ASPs.A123 Systems has recently opening a huge factory manufacturing Lithium Cells in Michigan with the help of US government grants.With Obama aiming to capture 40% of the EV Market by US companies,more such factories are expected to come online resulting in a further supply demand mismatch.China also wants to create national champions in the Clean Transport Sector and has line up huge subsidies as well.
Algae Based Biofuels as a Green Investing Opportunity is still some years away as the technology is still quite nascent.Despite a lot of hoopla and a number of IPO’s with synthetic biofuels as business,large scale commercial production and profits are still some time away.However the promise of this technology to revolutionize the Fossil Fuel powered Transportation Sector is Huge.Large Oil and Gas is already positioning itself in a small way to take advantage of this opportunity.Shell has been the biggest investor in Biofuels with a $12 Billion tie up with Brazilian Sugar Giant Cosan.Valero has also smartly invested in a number of biofuel startups despite being one of the strongest opponents of Green Energy.Exxon has only promised huge investments without investing much till date.
Organization of the Petroleum Exporting Countries (OPEC) on its 50th Anniversary has called the Developed Nations Subsidies as “Unfair” and has referred Alternative Energy as the biggest challenge facing the Rich Oil Exporting Nation Cartel.OPEC is being a huge hypocrite as Fossil Fuels Subsides totalled $550 Billion last year which is almost 12x the Subsidies given to Green Energy.However no mention of this fact was said as these Green Subsidies were “not acceptable” OPEC.The OPEC Chief Abdalla el-Badri wanted a level playing field with this nascent Green Energy.OPEC is a 12 Nation Club formed mostly of Middle Eastern Nations who control 80% of the Global Oil Reserves and 33% of the Production.Saudi Arabia is the non-official leader of this Cartel and has been known for its opposition to Climate Change efforts.The other nations too support Saudi Arabia recently blocking a group of Poor Island Nations from accessing climate change data.These Nations have shockingly asked for Aid as Global Warming Concerns reduce the Fossil Fuel Demand.Most of the Middle East Exporters are filthy rich generating huge amounts of cash from the Export of Fossil Fuels.
Shady Management – Income Tax Raids on the company and its promoters found $1.3 million in unaccounted cash and jewelery,cash and documents were impounded.The promoters have been accused of falsifying accounts,evading tax and Registrar of Companies (ROC) and Service Tax Department have also served notices.
Expensive Valuation – The company will come out with a valuation of P/E of 30-32x which is more expensive than other listed education companies.At least Prakash Steelage with a corrupt management had the decency to come with a discount
Summary
The only thing to like about this company is the sector that it operates in.However Shady Management,Super High Valuation and Regulatory Risk makes this company a strictly no subscribe.However given the shenanigans being openly perpetrated in the Indian Stock Market don’t be surprised to see a 100% Listing Gain.
Sumitomo entered the Wind Energy Business in the US by buying a 42.5% stake in Stanton 120 MW Wind Farm in Texas.The Company already has Wind Assets in Japan and is partnering with Giant Chinese Utility Datang for building Renewable Energy Assets in China.Sumitomo has already built a 50 MW Wind Farm in Inner Mongolia with Datang and Kyushu Electric.Sumitomo is already strong in constructing geothermal plants having built a 140 MW Nga Awa Purua Geothermal Plant in New Zealand in 2 years flat.It also has contracts to build upto 530 MW of Geothermal Plants in Indonesia.In Phillipines the Company has partnered with another Japanese Trading Powerhouse Marubeni to finance Biomass and Waste to Energy Plants.However Solar Energy is strangely missing from Sumitomo’s strategy.It activity till now has been restricted to some small PV plants in Spain and trading of Solar Panels made by Sharp and others.Note other Global Conglomerates like ABB,GE,Siemens,LG,Samsung are in the process of making massive investments into the Green Industry.
Note this Hydro Plant will cost around $31 Billion which is quite costly at $15/watt if the the $31 Billion is used for the 1800 MW capacity.This is is almost 15x the cost of a typical Hydro Capacity and would need massive subsidies.Papua New Guinea is a poor country and might receive aid from Australia but the $31 Billion would make even the richest country balk at this price.Australia is not exactly energy deficient with massive resources of coal,wind and solar energy.In Renewable Energy the country has been quite slow with provinces like NSW and South Australia promoting renewable energy through regional subsidies.Hydro Power is the main source of Clean Power accounting for 90% of the Clean Energy Mix.The Project will take 10 years to build and their remains an outside chance that Oil Prices become so high that 24 hr Hydro Power at that time might make sense at $15/watt.