Sold! EBay Buys into Alternative Energy Fuel Cell Power

Fuel cells made headlines in the major financial publications this week with the announcement that eBay is planning to build a new data center in Utah powered by, yes, alternative energy fuel cells. The new eBay data center will use approximately 6 million watts of power generated on-site by fuel cells made by Sunnyvale, CA-based, privately-held Bloom Energy, according to the New York Times (http://www.nytimes.com/2012/06/21/technology/ebay-plans-data-center-that-will-use-alternative-energy.html?scp=1&sq=james%20glanz%20ebay&st=Search).

eBay logo courtesy of LiewCF.com

While the new center, which will also serve eBay’s payment service PayPal, will be hooked up to the electricity grid as a backup, the news is considered a major victory for alternative energy backers, fuel cell believers and the environmental industry in general which has long complained that Internet companies are too often relying on coal power to run their data centers.

The Times’s story notes that fuel cell arrays are being used by major corporations including AT&T, Kaiser Permanente and Wal-Mart but nothing of this scale. Nearly all comparable data centers now draw the majority of the power from the grid.

Bloom Energy’s version of fuel cells are “essentially large batteries whose charge is maintained by by the hydrocarbon energy contained in natural gas,” according to the Times. Since the price of natural gas has plummeted in recent years, fuel cells have become more economically competititve, the story notes. And since the charge in the Bloom Energy cells is maintained by chemical reactions, not combustion, important efficiencies are gained. Another advantage is the fuel cells generate energy on-site, meaning no energy is dissipated as it travels along transmission lines.

All great news for environmentalists, Bloom Energy and, hopefully, eBay. But does it translate to hope for the mostly struggling small cap fuel cell companies? Based on investor reaction to the news, there seemed to be little benefit, at least initially.

Lathan, NY-based Plug Power Inc. (Nasdaq: PLUG, http://www.plugpower.com/) manufactures fuel cell systems for industrial off-road markets and stationary power markets. The PLUG stock, which was as high as $9 in early 2011, has traded much lower in recent months. Its 52-week trading range is now $1.11-$2.71 and its market cap as of June 21 was about $44 million. Roth Capital cleantech analyst Phillip Shen initated coverage of PLUG a year ago with a buy and a price target of $4. PLUG stock closed June 21 at $1.12, down 2 cents for the day.

Danbury, CT-based FuelCell Energy Inc. (Nasdaq: FCEL, http://www.fuelcellenergy.com/) makes a variety of fuel cells and its stock trades actively, more than 2 million shares a day on average. But apparently its second quarter numbers showing revenues down 15 percent from a year ago has soured investors. Its 52-week trading range is $0.80 to $1.95 and it closed June 21 at $1.06, up 2 cents on the day.

British Columbia-based Ballard Power Systems (Nasdaq: BLDP, http://www.ballard.com/) manufactures and sells fuel cells and fuel cell materials for the automobile and other markets. News from Ballard included business partnerships with Brazilian and European bus companies. But the company this week announced a revision in 2012 revenue and adjusted EBITDA downward due in part to contract negotiaations with a Brazilian customer. The stock, which was a high as $2.42 in April 2011 has dropped in recent months. It closed June 21 at $1.12, down 5 cents. Average daily trading volume is now about 124,000 shares.

Ontario, Canada-based Hydrogenics Corp. (Nasdaq: HYGS, http://www.hydrogenics.com) designs, develops and manufactures hydrogen generation and fuel cell products based on water electrolysis technology and proton exchange membrane technology. HYGS recently announced a significant order for a “power to gas” project for energy storage in Germany. The 52-week trading range of HYGS is $4.47-$7.10 but the stock trades lightly, about 7,500 shares a day. Its market cap is about $38 million. HYGS closed June 21 at $5.85, down 42 cents for the day.

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