Obama Budget Proposes Big Increases for Spending on Clean Energy

Photo courtesy of KMBC.com

President Barack Obama’s fiscal year 2014 budget proposal made headlines this week mainly for its changes to Social Security, but the increases proposed in US government support for clean energy spending did not go unnoticed. Reuters News Service called the increases for electric cars, wind power and other green technology “dramatic,” particularly because they arrive in the face of Republican criticism.

While many government agencies get slimmed down in the budget proposal, the Department of Energy would get an 8 percent increase to $28.4 billion next year, Reuters reported. Included are a 75 percent increase in spending on advanced vehicles to $575 million and a 29 percent increase in spending on the ongoing effort to integrate solar and wind power into the national electric grid, Reuters reported. Support for biofuels would increase by 24 percent.

“These increases in funding are significant and a testament to the importance of clean energy and innovation to the country’s economic future,” the Obama administration wrote in the budget proposal, according to the Reuters report.

While Republicans have criticized the US backing of companies like Solyndra, a solar panel maker that went bankrupt, and Fisker Automotive, a hybrid sports care maker which is struggling and laying off employees to hold off bankruptcy, President Obama has maintained that clean energy is a key to the country’s future.

Government support for the clean energy industry “has nearly doubled (the US) energy generation from wind, solar, geothermal and other renewable energy sources” since Obama took office in 2008 and maintaining this level of support “could lead to breakthroughs in the years to come,” Reuters reported.

We’ve been following several wind and solar energy companies, including:

Newbury Park, CA-based Sauer Energy (OTC: SENY, http://www.sauerenergy.com/) is a development stage company developing vertical axis wind turbines for commercial and residential uses. Formerly BCO Hydrocarbon Ltd., the company disposed of its oil and gas interests and in July 2010 purchased Sauer Energy and in May 2012 purchased Helix Wind Corp. Back on Dec. 24 it was trading for $0.24. It closed April 12 at $0.10, down 1 cent for the day. Its market cap is now $9 million and 52-week range is $0.08-$0.39.

China-based China Ming Yang Wind Power Group (NYSE: MY, http://www.mywind.com.cn/) is a wind turbine manufacturer focused on designing, manufacturing, selling and servicing megawatt-class wind turbines. Last July, MY announced it was considering a joint venture with China-based Huaneng Renewables Corp. to develop wind power and solar power projects in China and overseas markets. MY stock closed Dec. 24 at $1.21. It closed April 12 at $1.35, up 1 cent for the day. Its market cap is now $169 million and 52-week trading range is $1.06-$2.47.

Chatsworth, CA-based Capstone Turbine Co. (Nasdaq: CPST, http://www.capstoneturbine.com/) develops and markets microturbine technologies, including technologies used to provide on-site power generation for wind power. It closed Dec. 24 at $0.91 with a market cap of $278 million.CPST closed April 12 at $0.93, down 4 cents for the day. Its market cap is now 282 million and 52-week trading range is $0.73-$1.20.

San Mateo, CA-based SolarCity Corp. (Nasdaq: SCTY, http://www.solarcity.com) designs, installs and sells or leases solar energy systems to residential and commercial customers, as well as electric vehicle charging products.  It closed March 15 at $16.74 with a market cap of $406.5 million. SCTY closed April 12 at $19.97, down 41 cents for the day. Its market cap is now $1.5 billion and 52-week trading range is $9.20-$21.40.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/ ), which sells a variety of solar products, closed back on March 15 at $3.50 with a market cap of $151 million. It closed April 12 at $4.07, down 3 cents with a market cap of $176 million. Its 52-week trading range is $1.95-$5.15.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com/), which makes a wide variety of solar products and systems, closed back on March 15 at $11.80 with a market cap of $1.4 billion. SPWR closed April 12 at $11.06, up one cent for the day. Its market cap is now $1.8 billion and its 52-week trading range is $3.71-$13.88.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. Back on March 15, TSL closed at $4.11 with a market cap of $291 million. It closed April 12 at $4.19, up one cent, with a  market cap of $335 million. Its 52-week trading range is now $2.04-$7.99. 

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com/) makes photovoltaic products including cells, modules and systems. YGE closed back on March 15 at $2.47 with a market cap of $387 million. It closed April 12 at $2.12, down 5 cents, with a market cap of $324 million. Its 52-week trading range is $1.25-$4.12.

China-based Suntech Power Holdings (NYSE: STP, http://am.suntech-power.com), the world’s largest producer of solar panels, closed at $0.70 back on March 15 with a market cap of $127 million. It closed April 12 at $ 2012, and then rose to $1.87 in early January, but has been falling since. STP closed March 15 at $0.75, udown 12 cents for the day, with a market cap of $135 million. Its 52-week trading range is $0.30-$2.96.

St. Peters, MO-based MEMC Electronic Materials (NYSE:WFR, http://www.memc.com) manufactures and sells silicon wafers and photovoltaic materials. Through SunEdison, it’s a developer of solar energy products. It closed March 15 at $4.53 with a market cap of $1 billion. WFR closed April 12 at $4.76, down 6 cents, with a market cap of $1 billion. Its 52-week trading range is $1.44-$5.70.

Offshore Wind Power Industry Getting Boost from Obama Administration

Photo courtesy of treehugger.com

President Obama has always been a champion of offshore wind energy, as his administration’s comprehensive National Offshore Wind Strategy demonstrates. This month, the fledgling U.S. offshore wind energy industry got a boost with the announcement that the Obama administration would help finance seven offshore wind projects in Maine, New Jersey, Ohio, Oregon, Texas and Virginia.  The money, about $4 million initially for each project and $47 million over four years (subject to Congressional approval), will be used to launch these projects by financing the engineering, design and permitting efforts as the initial steps to eventual offshore installations.

According to a recent report commissioned by the U.S. Department of Energy, offshore wind is a viable, sustainable, abundant and largely untapped clean energy resource. The report notes that the investment in the offshore wind industry could generate and support up to 200,000 jobs in areas such as construction, manufacturing, operations and supply chain services throughout the country.

The report suggests that offshore wind could be as successful at generating jobs and clean energy as the onshore wind energy industry has proven to be.  During 2011, 32 percent of the additional electric capacity in the U.S. was generated by land-based wind power. In addition, the wind power industry is generating jobs at home for U.S. companies, based on the fact that 70 percent of the equipment installed at U.S. wind farms – things like wind turbines, gears, blades and generators.

Large cap companies like GE, Honeywell and United Technologies are investing in the wind industry, but, so far at least, the number of publicly-traded small cap companies focused on wind power is limited. We have been following several small caps, including

Newbury Park, CA-based Sauer Energy (OTC: SENY, http://www.sauerenergy.com/) is a development stage company developing vertical axis wind turbines for commercial and residential uses. Formerly BCO Hydrocarbon Ltd., the company disposed of its oil and gas interests and in July 2010 purchased Sauer Energy and in May 2012 purchased Helix Wind Corp. Its stock is languishing. In late August SENY was trading at $0.26 with a 52-week trading range of $0.10-$0.95. In late October is was trading at $0.25. It closed Dec. 24 at $0.24, no change for the day.

China-based China Ming Yang Wind Power Group (NYSE: MY, http://www.mywind.com.cn/) is a wind turbine manufacturer focused on designing, manufacturing, selling and servicing megawatt-class wind turbines. In July, MY announced it was considering a joint venture with China-based Huaneng Renewables Corp. to develop wind power and solar power projects in China and overseas markets. MY stock is also stuck in a narrow range. It was trading for $1.21 in late August,  $1.32 in late October. It closed Dec. 24 at $1.21, down 2 cents for the short trading day.

Chatsworth, CA-based Capstone Turbine Co. (Nasdaq: CPST, http://www.capstoneturbine.com/) develops and markets microturbine technologies, including technologies used to provide on-site power generation for wind power. The stock continues to trade very well, about 700,000 shares a day but is stuck around $1.00. On Aug. 23, CPST shares crossed their 50-day moving average and closed the day at $1.05 with 2.8 million shares sold. By late August it was trading at $1.01, by Oct. 31 it had moved down slightly to $0.96. It closed Dec. 24 at $0.91 with a market cap of $278 million.

Naperville, IL-based Broadwind Energy (Nasdaq: BWEN, http://www.bwen.com/) announced Aug. 23 that it was reducing its manufacturing footprint and shifting its “capacity and marketing focus to non-wind sectors.”  BWEN closed Aug. 27 at $2, Oct. 31 at $2.30 and Dec. 24 at $2.11 with a market cap of $30 million.

Surge of Students Seeking Science Studies

Is it the impending doom of global warming? The popularity of President Obama? The advent of environmentalism? The enormity of the global economic crisis? More likely, experts say, it’s a confluence of all these events that has prompted what they call a “surge” of students toward “clean energy” careers. The rush of our best and brightest into science and engineering studies is being compared to the late 1950s, when the Russian Sputnik satellite prompted a similar swelling of those ranks, according to the Los Angeles Times (http://www.latimes.com/news/nationworld/nation/la-na-energy-students29-2009mar29,3,2984851.story).

No doubt many of these students would have opted for lucrative business school degrees and Wall Street jobs just a few years ago. But the Obama administration is banking on the idea that federal aid included in the stimulus package will help stoke the interest in innovative clean energy concepts. The package includes $20 billion to support basic science research, according to the Times.

While this doesn’t precisely translate into a boost for smallcap stocks, it does prompt a look at some innovative small companies in various clean energy fields. Two unique solar energy companies are Marlboro, MA-based Evergreen Solar (Nasdaq:ESLR, http://www.evergreensolar.com), a pure solar play known for its “string ribbon” technology using thin strips of multi-crystalline silicon that is cut into wafers that make up solar panels. Or Littleton, CO-based Ascent Solar Technologies (Nasdaq: ASTI, http://www.ascentsolar.com), a maker of thin film, flexible solar modules.

An interesting battery maker is New Castle, PA-based Axion Power International* (EBB: AXPW, http://www.axionpower.com), which has developed an advanced version of the traditional lead acid battery the company believes can play an important role in the burgeoning electric and hybrid car markets. Details on Axion’s PbC battery technology was recently covered in The Economist (http://www.economist.com/science/tq/displaystory.cfm?story_id=13174459). Another smallcap is Tampa, FLA-based UTEK Corp.* (Amex: UTK, http://www.utekcorp.com), a consulting firm that tracks innovations around the globe for a variety of high-profile clients and a leader in the modern “open innovation” movement.

*client of Allen & Caron, publisher of this blog