Solar Sector Could be Brighter
By
Victor Bivell
Eco Investor,
November 2008
For many people
solar energy has always been the quintessential renewable energy, but
despite Australia being very good at innovation it has so far failed to
produce an investment grade solar energy business. None of Australia's
seven listed pure or mostly pure play solar energy businesses could be
described as substantial and safe investments.
Given the great
deal of solar technology innovation in Australia over a long period of
time, it is a wonder that only seven companies have emerged.
Fortunately,
below this small group, there is a cauldron of innovative businesses that
both indicates the extent of Australia's past achievements and augurs
well for future technical progress and investment options.
For example,
the ASX has a number of companies with very interesting intellectual property
and projects, but where these form only a minor part of their business.
Among these
is Origin Energy and its international award-winning Sliver photovoltaic
technology; engineering firm WorleyParsons and its plan to build a giant
advanced solar thermal power plant in the Australian desert; ocean power
developer Carnegie Corporation which is testing a solar thermal system
for low cost energy storage; and uranium enrichment and electronics developer
Silex, which is also developing a solar energy conversion cell.
Even more is
happening among unlisted companies with innovations like the Sun Lizard
system that uses natural air movements and solar energy to heat and cool
homes; Green and Gold Energy's Sun Cube which is claimed to be the world's
first twin axis tracking solar concentrator; and Solar Systems which together
with TRUenergy is to build a huge solar plant in Victoria using its world
leading high concentration photovoltaic technology.
One local solar
energy business that has grown to be quite substantial is Solahart. Having
begun developing its solar thermal hot water systems in 1953, the Solahart
business was an early world leader, but in 2001 it was sold to Paloma
of Japan. Australia is also doing well with related technologies that
can store solar and other renewable energies. These include Battery Energy's
long life Gel batteries for extreme climates; Ecoult's UltraBattery for,
among other uses, remote area and off-grid renewable energy storage; and
Vfuel's Vanadium Bromide Redox Flow battery for grid-scale storage of
renewable energy.
Another well-known
example of Australian solar innovation is the development of Crystalline
Silicon on Glass (CSG) technology that was conceived by University of
NSW professors Martin Green and Stuart Wenham with graduate student Dr
Zhengrong Shi.
Dr Shi is also
famous for going on to form the China-based, NASDAQ-listed Suntech business
and as an Australian citizen becoming our first solar energy billionaire.
In 2004, Pacific
Solar, which held the CSG technology, sold the worldwide rights to the
CSG technology to German company, CSG Solar AG, but will receive royalties
and dividends when the panels are commercially produced.
Also heading
down this well-known path where Australians invent it but overseas investors
commercialize it and make the serious money is solar thermal company Ausra.
The company's technology for large scale solar thermal generation of solar
power was developed by its founder Dr David Mills. An Australian, Dr Mills
found his first big financial support from Californian venture capitalists
and California is where Ausra is now building a 180 megawatt power plant.
In a new twist
on the commercialized overseas theme, Australian venture capital firm
Starfish Ventures participated in Ausra's latest funding round, and hopefully
will bring home some of the anticipated success.
Despite all
the technical success, Australian investors looking for investment grade
solar energy companies need to look to overseas stock exchanges.
At home, the
seven solar companies listed on the ASX offer good prospects for medium
term technology investors, despite their higher risk.
They also have
a wide and interesting range of technologies:
* Dyesol Ltd
and CBD Energy Ltd: solar photovoltaics
* Quantum Energy
Ltd: water heaters that extract energy from the ambient air
* Solco Ltd:
installation of solar energy systems and solar pumps
* Skydome Holdings
Ltd: skylighting products
* Advanced
Energy Systems Ltd: solar electronics
* EnviroMission
Ltd: a giant solar tower that will use heated rising air to generate power.
Supporting
these technologies is a lot of high quality intellectual property. Notable
is Dyesol's world leading dye solar cell technology that does not need
silicon to produce energy; Quantum Energy's heat pumps for extracting
energy from air, even very cold air; CBD Energy's graphite block technology
for storing renewable energy; and Skydome's Fluorosolar technology for
capturing daylight and distributing it around buildings.
Unfortunately,
the high quality of the technology is not, or not yet, supported by the
financials of the businesses.
All of the
companies are small, with the largest, Quantum Energy, having total assets
of $34 million. But Quantum has net assets of only $4.6 million, and some
of its assets are tied in with its medical devices business. The company
with the most net assets is Dyesol with $24.3 million.
All of the
companies are also higher risk investments. In 2007-08 only one, Solco,
made a profit, its first and very small, and only one other made a profit
after one-off adjustments, Quantum Energy. So, dividends are not yet on
the menu.
But most of
the companies expect their results to continue to improve, among them
Quantum Energy, Solco, Dyesol, Skydome, and CBD Energy.
Most have enjoyed
recent shareholder support and have cash for the short to medium term.
This is fortunate as most also have large upcoming capital requirements
to fulfil their business and project plans.
This article
was also published in The Australian newspaper
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