Karen Chandler opened her bag and took out a chunky strip of copper and placed it on the table. Next to it she put a slim ribbon of something else I didn’t recognise at all. The second had been made by depositing layers of substances that I had never heard of – such as Lanthanum Zirconate and Yttrium – onto a base of textured nickel tape.

The finished item is a High Temperature Semiconductor (HTS) and is apparently a ceramic rather than a metal. The important thing about it is that it can deliver one hundred times the power density of copper wire, while being much lighter and more compact.

A 100-year old discovery, but with a very bright future

Superconductive materials are not new – they were discovered almost a century ago. But despite their advantages, they have never superseded copper due to the difficulty of producing large quantities of consistent quality.

But, in an era of innovation in energy technology and climate protection, AIM-listed Zenergy Power Plc (LON:ZEN) could be on to something big. I went along to meet the company’s chief financial officer, Karen Chandler, to find out some more.

Zenergy arose from a series of mergers. It has operations in Germany, California and Australia. But however hard it must be to manage such a diverse operation, Zenergy has become a world leader in a select field that includes US companies, SuperPower and American Super Conductor and Japan’s Sumitomo.

Things are starting to move. Zenergy has identified some specific applications for HTS. It has supplied its first product, an HTS Induction Heater, to the German aluminium extruder Weseralu.

Induction heaters are used in the metal forming industry. They heat metals until they are in a malleable state. They require a huge amount of electric power and with conventional heaters much of this is wasted. But by making the electromagnetic coil out of HTS rather than copper, much less energy is required and much less is wasted.

Now that one of these is up and running at Weseralu, Zenergy has been able to measure the benefits. For the same €1.2m cost, the HTS heater will cut roughly €230,000 per year off the electricity bill and deliver productivity savings worth up to €2m annually.

Attractive cost savings are attracting enquiries

These are attractive numbers. Added to the fact that the HTS Heater is quick to install, the product should find a ready market. Karen told me that Zenergy was following up forty enquiries from September’s Aluminium 2008 Trade Fair. About nineteen hundred induction heaters are sold each year. Of the €1.2m price – which is split with its partner, Bültmann of Germany – Zenergy receives about €300,000.

Zenergy is also working on an HTS Fault Current Limiter. This absorbs the unwanted and damaging electrical power common in grid failures, without having to interrupt the steady supply of power to downstream grid users. So it can be used to avoid blackouts.

Zenergy is about to deliver one of these devices into the US power grid in a deal partly funded by the Californian Energy Commission. Zenergy has also been commissioned by the US Department of Homeland Security to work on a project named ‘Hydra’ that aims to develop power grids that can keep running, even in the event of severe weather, accidents or terrorist attacks.

A big opportunity in wind generation

The market for these firewalls for power grids is, at €5bn, more than double that for Induction Heaters. Meanwhile, another major market opportunity is for electricity generators. Here, Zenergy is working with Converteam for next generation wind and hydro generators, and is already supplying the first HTS generator to E.On for a hydro electric plant.

The bigger opportunity, though, could lie with wind generators. These large wind mills suffer from a serious technical drawback in that the generator must sit at the top of the mast. They weigh 450 tons, of which more than half is accounted for by copper. That means these wind mills need a sturdy and expensive mast. By replacing copper with HTS, the weight of the generators can be reduced to just 80 tons. HTS generators are capable of reducing by 25% the cost of wind power generation.

Zenergy seems close to cracking some large markets. It also claims to be the first manufacturer to have perfected a low cost method of volume production. Profits though, are still some way off and broker Edison believes that Zenergy may have to raise more capital before it can become self-financing. So it is no great surprise that the share price has been sliding this year.

But this is certainly a company in which I will be taking an interest in. It’s one I’ll be keeping on my watch list.

Source: Playing a Part in the Future of Energy

This from Investment U:

Under the Obama administration, I expect there to be many profitable energy investment opportunities under what will likely be a very “green-friendly” four- or possibly eight-year timeframe. Many of the opportunities will arise from his focus on energy independence and corresponding energy infrastructure.

Reducing energy bills means ultimately reducing demand and controlling its costs. Weaning the country off fossil fuels won’t happen overnight. After all, it took us over 100 years to get to where we are.

But Obama recognizes we need to get started now. His plan has several strategies that help reduce our need for fossil fuels while alternative solutions are developed. And we’ve found three companies that are perfectly positioned to help the United States “bridge” the gap.

The United States’ Energy Investment Opportunities

A quick, cheap and easy strategy to increase efficiency is simply to save energy. And one of the best solutions is to weatherize older homes. While homes built in the last few years are far more efficient than those built even 10 years ago, many older residences are huge energy thieves.

Since 1976, the U.S. Department of Energy’s Weatherization Assistance Program (WAP) has provided help to 5.6 million low-income families – enabling them to permanently reduce their energy bills. But help doesn’t come in the form of a check, which might be misused. It contracts for weatherization services on the homeowner’s residence.

Upgrading or replacing a home’s old furnace, sealing leaky heating ducts, fixing or replacing leaky windows and adding insulation reduces the average home’s heating bill by anywhere from 20% to 40%, and results in an overall annual savings of $358 at today’s energy prices. Replace old appliances and change out incandescent bulbs for florescent ones – and the savings get even more impressive.

Obama plans to expand this program, as nearly 28 million U.S. homes remain eligible for assistance. His goal under the Energy for America plan is to weatherize an additional one million homes every year.

Of course, the largest energy user in the country is – you guessed it – the good old Federal Government, which spent a whopping $14.5 billion on energy use in fiscal 2008.

Obama plans to lead by example: All new Fed buildings will have a 40% increase in energy-efficiency within five years. The new administration wants all federal buildings carbon-neutral by 2025 and he ultimately expects to achieve a 15% overall reduction in government energy use in just six years (2015).

Weatherize your Portfolio: 3 Energy Investment Opportunities

When looking for ways to play the energy efficiency/savings angle, the field narrows, but below are three energy investment opportunities. Adversely affected by the general housing downturn, many companies that would be a consideration under Obama’s plan are off the table.

There are a few we can consider, however:

• Apogee Enterprises, Inc. (Nasdaq:APOG) designs, services, installs and sells glass walls and window systems that make up the outside skins and entrance areas of large commercial and institutional buildings. Through its subsidiaries, it’s engaged in the design and development of numerous glass products, services and systems. Apogee’s glass will be in high demand for weatherizing the nation’s windows.Earnings have held up remarkably well, particularly in the face of the housing slowdown. It’s had little real effect on the company since its exposed more to the commercial side of the building business. At current levels, the stock has a yield of around 6%.CEO Ron Huffer had these forward-looking observations in a recent press release: “We believe that our markets offer significant longer-term opportunities, due to the increasing importance of green building, a sector demanding energy-efficient products that we supply and the overall growth in the use of value-added products in commercial construction projects.”
• A good blue-chip play that stands to benefit as well is 3M Company (NYSE:MMM). 3M is a diversified technology company engaged in industrial products, transportation, and numerous other sectors. Its industrial products division makes hundreds of items for the construction industry like window and door materials, including adhesives, tapes, films and abrasives.
• And let’s not forget General Electric (NYSE:GE), perhaps the best, safest energy and infrastructure play in the world. It has exposure to nearly every area of engineering and manufacturing that we use to build and power our country. Infrastructure and green energy continue to be focal points as spending in these sectors could jump-start the global economy back to life. GE is better positioned than perhaps any other firm to profit from this spending influx. And at prices of around $13 a share, it’s a steal – especially when you consider its nearly 10% dividend yield.

As Obama’s New Energy for America plan comes up to speed, investors could see a huge slug of cash – perhaps as much as $1 trillion – being thrown at the energy and infrastructure sectors.

And stakes in the above mentioned companies will make sure you get in on the action.

Source: Energy Investment Opportunities: Why 28 Million Customers Need These Upgrades

The oil will simply not be available in the volumes that the government, industry and people in general have come to expect. So the phenomenon of declining oil use will not be voluntary, graceful or cheap.

In fact, the decline in U.S. oil consumption will be quite painful for pretty much every American. Prices for fuel will rise, and you will wish that was the only problem. Spot shortages will turn into large scale “dry outs.”

You should anticipate that every level of government will do things to discourage using liquid fuel, from charging user fees and “congestion pricing” to higher taxes. Heck, the government might even appeal to your patriotism to drive less. And don’t be surprised to see rationing in one form or another, even with expensive fuel and costly fees and taxes.

But this is not a book review of James Howard Kunstler’s 2005 volume The Long Emergency, or his recently released (and exceedingly well-written) World Made by Hand. The point is that oil use will fall in the years to come, because world oil output is falling. You cannot use what is not there in the first place.

Setting the Stage for CTL

So this sets the stage to explain why Coal to Liquid (CTL) is about to simply take off in the U.S. The U.S. will adopt CTL, because it has to do so. There are few other large-scale industrial alternatives. Windmills, biofuels, conservation and every other energy-saving and energy-extending idea will help. But the world we live in is built to run on oil, and nothing else will cut it for some things when it comes to running a fast-transforming economy. So stand by for CTL.

According to a 2006 estimate by the National Coal Council, a robust CTL industry could produce about 2.6 million barrels per day of oil-equivalent fuel by 2025. This is about 12.5% of current U.S. daily demand. But it is tricky to draw comparisons over time frames of nearly 20 years. Certainly, a lot of things will change between now and 2025 in the realms of both demand and supply.

And a large-scale CTL program will dramatically increase the demand for coal. Can U.S. mines deliver? There are issues here, to be sure. The U.S. is supposed to have that mythical “250 years of coal reserves, at present rates of consumption.” But that estimate is 35 years old. And much U.S. coal is buried deep, in thin seams, and thus hard to mine. Plus, some 40% of U.S. coal resources are in Alaska — much of it north of the Arctic Circle. So even with coal, the U.S. needs to be wary of believing its own press releases.

Still, CTL can serve as a liquid fuel supplement for at least several decades. And CTL technology is pretty well developed, based on many decades of operational success by Sasol in South Africa. The Air Force believes that the CTL plants of the future can even be relatively “green,” based on evolving technology for removing pollutants from the coal and sequestering carbon dioxide. It will also be possible to reduce the volumes of coal in the blend by adding some types of plant-derived materials.

Thus, it is not a question of if the U.S. will adopt CTL. It is a question of when. And looking ahead, every month is precious. As I said above, we are running out of time. So it will matter greatly how much will we as a nation fool around with our national obsession of navel-gazing over ancillary issues before we get around to making a decision to bend steel.

One way or another, CTL is coming. And one way or another, we at Outstanding Investments are going to find a way to invest in the companies that will build it out.

Until we meet again…

Byron W. King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Source: The Coal to Liquid Debate Part II