Queue for Fed Funds May Point the Way to Interesting Greentech Companies

It’s not easy to find out which green, alt-energy and electric-car companies have lined up at the federal trough to try for free money (grants);  cheap money (loans); or old-fashioned tax breaks, all of which are provided in the recent spate of stimulus bills.  The main reason is that there does not appear to be a master list of those companies who are applying that is published by the government. 

The spending bill that was passed yesterday in the Senate allocated $410 billion (those numbers seem less unusual than they did last fall, don’t they?) to the EPA, DOE, NIST and the USGS to dole out for solar energy, climate change studies, cleaning up diesel emissions, weatherization, etc.  The contents are ably reported this morning by Josie Garthwaite in Earth2Tech (http://earth2tech.com/2009/03/11/whats-in-the-410b-omnibus-bill-for-climate-energy/).  

But if you wanted to spot the companies where you as an investor might catch some of the coin falling out of the Washington sky, the task is not an easy one.  Some companies have announced that they have applied for money, and some are acting as though they already have it, planning factories, introducing new car models in theory, forecasting sales figures, etc.

Meanwhile a trickle of good news has encouraged the market a bit, and it has to be said that not all of the environmentally responsible activities of US business are a direct result of Washington prodding or paying.  We note that AT&T announced this morning, for instance, that it will buy and put into service 15,000 alt-energy vehicles, including the largest corporate buy of CNG vehicles to date (http://www.greenbiz.com/news/2009/03/11/att-accelerates-its-green-vehicle-fleet-15000).  But AT&T does not fall within our scope, and what we like to do is to ferret out those smaller, sexier companies that our readers might find interesting, as SmallCapWorld implies.

So, in no particular order, you might first look at Reno-based Altair Nanotechnologies (Nasdaq: ALTI, http://www.altairnano.com/), which this morning’s news tells us has applied for ARRA funds (American Recovery and Reinvestment Act) — and in this case they are looking for funds to help them apply their Lithium-ion battery technology to the task of buffering the electric power grid (http://www.greencarcongress.com/2009/03/altair-nanotech.html).  Sounds a bit unlikely based on cost, but AEP has been using batteries that are even more expensive than Li-ion in its pilots.  ALTI is trading at $0.66 this morning vs a high of 2.94, but perhaps the news has not been widely disseminated yet.

While we’re on Li-ion, it’s worth noting that two of the most visible Li-ion companies, NYC-based Ener1 Inc (Nasdaq: HEV, http://www.ener1.com) has been very out front about its application for $480 million from the ATVMLP (Advanced Technology Vehicles) to expand the manufacturing capabilities of its Indiana-based EnerDel operation.  HEV has fallen fast and hard recently, trading at $2.73 this morning, after a fairly fast decline recently and a 52-week high of $9.49. 

The seeming nemesis of Ener1 is privately held A123 Systems, which has tried to go public, but not been received well by the sour markets of the last many months.  They have applied for $1.8 billion to improve manufacturing of their li-ion batteries.  As far as we know, neither Ener1 nor A123 is supplying batteries yet to any production vehicle, though both seem to have participated in lots of pilots.  Both have signed deals with Norway’s Th!nk Electric, and Ener1 made an emergency investment in Th!nk last fall to keep it from going glub-glub.

John Petersen, a frequent contributor to SeekingAlpha and AltEnergyStocks, bases his recent article on “Why Energy Storage Stocks Should be an Easy Double for Investors” on federal stimulus dollars (http://www.altenergystocks.com/archives/2009/02/why_energy_storage_stocks_should_be_an_easy_double_for_investors_1.html)>, and suggests that investors ought to look at a series of them: Austin-based Active Power (Nasdaq: ACPW, $0.55 vs a high of $1.96,  http://www.activepower.com); New Castle, PA-based Axion Power* (EBB: AXPW, $0.90 down from $2.75 high,  http://www.axionpower.com); Tyngsboro, MA-based Beacon Power (Nasdaq: BCON,  $0.39 vs a high of $2.18,  http://www.beaconpower.com);  San Diego-based Maxwell Technologies (Nasdaq: MXWL, $5.27 today vs a high of $14.75,  http://www.maxwell.com) ; Ultralife Corp (Nasdaq: ULBI, $8.81 vs $14.43, http://www.ultralifecorp.com); and Menomenee Falls, WI-based ZBB Energy (Amex: ZBB, $0.90 today vs a high of $4.54,  http://www.zbbenergy.com).  Petersen also discusses some larger companies that do not fall in our grouping, like Enersys and Exide.  And if predictions in Josie Garthwaite’s article of March 9 are correct, battery sales in these categories will hit $51 billion by 2013 (http://earth2tech.com/2009/03/09/charging-ahead-battery-market-to-hit-51b-by-2013/).

According to various reports, more than 70 companies have applied for DOE’s Advanced Auto Loan program, though the only way to find them is to Google the loan programs themselves and pick the information up from press releases and fed filings of the publicly traded companies.  They include the back-and-forth duo of privately owned Zap Motor and Integrity Manufacturing, whose Kentucky project to build Zap cars seems to be on-again, off-again.  They have applied for $200 million in DOE-administered low-cost loans. 

Privately owned Tesla has asked for $400 million in one report, and $450 million in another (http://www.autobloggreen.com/tag/atvmlp/)  to build its Model S sedan, and Bright Automotive is looking for fed funds to build the EV it is planning to introduce its “light-weighted” car with a reduced battery pack.  Bright says that if it gets the funds it has applied for, it will build 30,000 in the first year, and 50,000 in the second year (http://news.cnet.com/8301-11128_3-10165562-54.html)

As always, we do not recommend stocks; we just report on companies that we think are interesting in their spaces. 

*Client of Allen & Caron, publisher of this blog.

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