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
|
