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New Technologies Keep Us Strong

October 9, 2012 by  

New Technologies Keep Us Strong

Technology has made steady, reliable power a necessity not only for individuals but for industry and governments as well.

Energy always has been something that Americans (and people in most other nations for that matter) consider part of our national security. We’ve sent troops halfway around the world to secure energy resources on more than one occasion. Most developed nations have done the same and will continue to do the same until energy security is less threatened.

There’s a saying: When you lose the Internet, it’s like 1979; when you lose power, it’s like 1879.

But given the frequency that major power systems have been going down around the world, 1879 is showing up more and more often.

About a year and a half ago, Japan lost its nuclear power plants, which generated 30 percent of the nation’s power. Its economy is still trying to claw its way back. There is public pressure to find an alternative to such heavy nuclear dependence, even though it will expose the country to more foreign imports of oil, natural gas and coal.

In early July, a swath of the mid-Atlantic was living in 1879 for a while. And it was ugly.

And, of course, there’s India, where nearly 670 million people lost power. Yes, 670 million people. That’s the entire United States going down and then more than another 200 million.

India’s Cautionary Tale

The Indian power grid is a patchwork grid similar to the U.S. grid. It’s old and the infrastructure was built for a bygone era when villages shared a television and landline phones were a luxury.

Obviously, as one of the top tech nations and one of the most vibrant emerging economies in the world, a rising standard of living has meant more people can afford more blenders, TVs, mobile phones, air conditioners, etc. But between generation and transmission, most of the money goes to generation because rebuilding the transmission system is a huge undertaking in any country.

Dominion Resources, Inc. (D), the utility for Virginia and some of West Virginia and North Carolina, said after the storm that hit in July that just to bury the above-ground lines to simply avoid trees tearing the distribution lines off poles would cost $1 million a mile.

And the company can’t necessarily pass those costs (some or all) along to consumers without getting approval from State regulators. Passing that cost along would be a very tough sell to consumers and businesses. We want these things but don’t necessarily want to pay for them.

But India is a bellwether for what could happen in the United States at any time. Imagine a modern industrial nation losing power to its entire grid for days. Imagine the damage to equipment and business. No stock markets or bond markets. Think of 9/11 all across the country, in every factory, in every house.

The problem in India could have been avoided entirely if certain available systems were in place and the operators acted more directly and authoritatively. Again, the system is only as good as its operators. And the politics in cutting off India’s bread basket were certainly a very difficult call. But in the end giving them what they wanted ultimately served only to deny them what they wanted.

Maybe just build a better grid?

Another U.S. Solution

While improving the U.S. grid (and those in many other nations for that matter) is a matter of necessity, there’s also another opportunity that has emerged in recent years.

New drilling technologies have made it possible to tap into massive amounts of natural gas that have been trapped under shale deposits. In the United States, these shale gas reserves are massive; they make the United States the Saudi Arabia of natural gas (see my past article on fracking for more).

And not only is that a transformative development for U.S. consumers and industry that goes a long way toward making America energy independent for decades to come, but it represents a huge opportunity to export this fuel to the rest of the world.

As noted above, Japan is buying new fuels, including natural gas, and pays four times what the market rate is in the United States. Europe is paying three times the U.S. rate. Its major supplier is Russia’s Gazprom, which is a less-than-ideal supplier.

The point is that there is global opportunity to export gas. The only way to export gas efficiently is to cool it until it liquefies. The only problem is that the United States has only a handful of liquefied natural gas (LNG) export ports. And there are only a few LNG shipping companies.

GasLog Ltd. (GLOG) owns a fleet of LNG-carrying vessels. And it’s currently one of the tightest in terms of the supply-and-demand shipping market.

GasLog has a solid slate of vessels that are booked under long-term contracts. It also has a number of new ships that are coming on line in the next two years and that will enable them to take advantage of the tight rate market that currently exists.

GasLog is talking about spinning off some of those vessels that are booked under long-term contracts as a master limited partnership (MLP). That would really unlock a lot of value for the company. Whether it makes that move, it’s a great company in this space.

Another one is Teekay LNG Partners LP. (TGP), which offers a really nice yield above 7 percent. The reason that yield is so high is that there’s really no contract risk per se; it doesn’t have much exposure to the near term bull market in contract prices which is why it’s kicking off such a nice yield.

A New Grid Strategy

For those who are bolder in their vision for new energy in the United States, look to buying some of the cutting-edge smart-grid companies.

High-temperature superconducting (HTSC) wire is not a silver bullet to a new grid, but it does have some significant advantages for a new grid. Many countries are looking at ways to build these HTSC systems into their existing grids and upgraded grids.

HTSC wires are to traditional power lines what fiber optic cable is to a copper telephone line. You could back up a small city on one buried HTSC cable. And because they have so much capacity, you can build in other smart systems to help keep the grid functioning and receive real time feedback, chart consumption trends, etc.

One of the pioneers in this field is American Superconductor Corporation (AMSC). The stock has been slammed in recent years because of its wind division. It had a deal with Sinovel, one of China’s largest wind companies, and then Sinovel walked, leaving AMSC short one gigantic client.

Now the company is going back to its roots and the HTSC side of the business until the global economy gets back on its feet. AMSC is split in two divisions, Gridtec and Windtec. I’ll let you figure out what the divisions do.

Revenues for the first quarter of fiscal 2012 were $28.7 million, which compares with $9.1 million for the first quarter of fiscal 2011. The year-over-year increase was driven by strong growth in the company’s wind and grid segments.

This is by no means a quick turnaround story, but if you have some long-term money that you aren’t counting on for your grandchildren, AMSC is a good buy under 7.

The second firm is Bruker Corporation (BRKR), a 50-year-old firm that’s a leading provider of high-performance scientific instruments and solutions for molecular and materials research, as well as for industrial and applied analysis.

While its instrumentation division is a compelling story unto itself, this company also has a HTSC division and is also a global player in this sector. Bruker Energy and SuperCon Division (BEST) is a leading global manufacturer and developer of HTSC wire products and devices.

In May, BEST announced a large-scale technology transfer contract for its Bruker HTS GmbH subsidiary to license and transfer know-how for second generation (2G) YBCO ceramic tape high temperature superconductors (HTS) to a subsidiary of the Russian state atomic energy corporation, Rosatom. The contract is valued at $25 million.

BEST is also very active in the U.K., Germany and South Korea. No doubt, the recent turmoil in Europe has hurt Bruker’s recent earnings. The company has lowered guidance for the rest of the year, so the stock is at reasonable levels.

Bear in mind, this isn’t a stock where you wait for its quarterly results. You check on this stock annually for the next few years and then decide whether things are working out. This is a long-term growth play that could return orders of magnitudes on your investment or leave you with a few pennies in your brokerage account. A high-risk/high-reward high tech proposition, Bruker is a buy below 15.50.

GS Early

is editor of Liberty Investor Digest™ and managing director of Fresh Eyes Media, a media management and consulting firm that develops custom content and marketing solutions for financial businesses and publishers. Gregg has been a leader in the financial publishing business for two decades and has worked on content strategies with every major publisher in the industry, as well as organizations like CNBC, Morgan Keegan, Folio Investing and Moneyshow. He is an award-winning writer and editor and has built many of the top publications available to investors today. His specialties are emerging technologies (biotech, nanotech, robotics), defense and cybersecurity. He is a graduate of James Madison University.

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  • Ray Kennedy

    The technologies are not new, but the applications are new. The strength of the US is in the ability to capitalize new innovations maintaining our productivity growth. The present environment has stopped this process and we can be achieving the same results as India soon. That is unless changes are made.

    • Robert Smith

      The grid is NOT being maintained. Evidence? The power outage in the NE almost a year ago. Many folks were without electricity for over a week.

      Used to be “utilities” were the safest of regulated investments and of the most reliable services in America. Then they were deregulated and Enron kicked off the rip off of thousands. The equipment isn’t maintained, and the trees are threatening the lines.

      Some things need to be regulated for society to be its best. It’s just common sense.

      Rob

      • Vicki

        They are regulated. By the only possible source. Free Markets. When the power goes out over a wide area the power companies loose millions of dollars per min in revenue. This is a REALLY BIG incentive to keep the equipment online and working properly.

        Government can not come close to matching that kind of regulation. I offer as proof the entire socialist/communist world.

  • Deerinwater

    It’s there ~ to do ~ our nation can led the way ~ or keep refusing too ~ gridlocked in national politics.

    There are strange and wonderful things ahead of us as we take baby steps reaching for the stars.

    • Nancy in Nebraska

      Not in my back yard! The people who live near the fracking sites have tap water that IGNITES!!! Not the kind of progress I want! Not even the almighty dollar is worth that!

      • Robert Smith

        I don’t want to see America fracked either.

        Rob

      • Chester

        Nancy, believe you had best check in your neighborhood now before you pop off about all fracking sites having flammable water. What I have seen AND heard on that subject is that the few places that did happen already had problems with methane in their water supplies. If that is the case, frakking had little, if anything, to do with it. Also, when you are breaking up rocks at the five thousand foot level, it isn’t too likely to affect your water drawn from maybe the five HUNDRED foot level.

      • Nancy in Nebraska

        Chester, the methane was not previously in their water but apparently it was under the ground. Besides, I don’t care what you say, I would never trust the corporations who put profit over life OR the government who takes payoffs from the corporations who put profit over human life!!! It’s not like they haven’t lied to us before!!! They don’t give a crap if we get sick or even die. All they care about is money!!!

      • http://none Claire

        Nancy– I have a dear friend in Nebraska. She agrees with you.

      • http://none Claire

        To me, it seems the “powers that be” are hellbent on destroying everything. Go ahead, frack all you want. Then what will they do when the earth is not fit for human habitation? Just how many of you will drink the water near or around the fracking sites? I sure as hell don’t. Like Nancy said, all they care about is money. Greed does terrible things to people. And we will all pay for it one way or another.

      • Deerinwater

        They are drilling and fracking under my house and all over the area of Texas that I live in ~ been going on several years now ~ no problems yet. ~ yet I understand your concern Nancy.

        If there was a problem, I can’t think of anything that could be done about.

  • http://wildeyguns.com The Christian American

    This is nice but who’s building around our technologies? We might design, or foreigners living in America might design but the manufacturing is being done in other countries. Besides that, when the manufacturing is being done overseas, we are giving them our technology. America’s infrastructure is falling a apart while America’s unemployment is at an all time high. Before an American goes to work, an employer is faced with minimum wages, union fees, taxes and who knows what to pay. The “freebies” that are given away for the vote are pricing people out of jobs. Why should a person living at home be given the same wage as a person faced with all the cost of living a married person is? The scum is only interested in the vote and gives things that are not theirs to give to get it. Yes the American genius can do wonderous things. If functions inspite of the District of criminals, not because of it.

    • Deerinwater

      Incentives are being offered to American concerns and more is in the pipe and headed their way. ~ for now America is experiencing constipation brought on by hopeful gain of partisan politics and the upcoming general election.

      The influence of Wall Street needs to be addressed ~ 44 tried `and met great resistance from both the right and left. ~ Wall Street has the tail wagging the dog with a shell game as popular as American football that has little to do with “production”.

      How this can be done ~ I’m uncertain ~ but it must be addressed as there is more to a success story then winning battles while losing wars with short term gains.

      This “drive thu” , quick gratification mentality is destroying the nation we all love and call home.

    • Bud Tugly

      Christian-

      Same work, same pay. One’s living situation is irrelevant. Minimum wage prevents economic slavery. Unions, when they do their job properly, exchange competent work for fair wages.

  • http://none Charlie

    Tooling and pooling is the answer to staying up to speed on the Technologies Information Highway… On most jobs ,one has to tool up to complete the contracted job , so learning what “tools” are on the store shelf to do what ever job that may come up is critical to completing jobs … It’s amazing how few people have a screw driver set . Minimum hand tools are a must for Technology Equipment Maintenance …
    Pooling is seeking more knowledge from others that may have more experience or education than you have , that’s where Tech Manuals are a must have in case the PC crashes … America has many problem coming up where problem solvers (mechanics) are going to be in hi demand…………

  • Tom

    The grid was built for the availability to be able to shut down power plants for emergency work and not for power producers to sell power back and forth to each other.Our grid needs to be updated for this to work properly or we are at risk.

    • Robert Smith

      But updating costs money and that’s not good for manaement or the stockholders. It’s the consumers who are gonna get screwed because the “investors” have been looting the utilities for awhile now.

      We need to reregulate and get thigns back on track. In this incidence the free market is a failure.

      Rob

      • Richard

        Rob, the free market always does a better job than government. You will be hard pressed to find any instance where government direction has been done at a lower overall cost to our society. A sad commentary on our government, but true.

      • Chester

        Richard, that idea works fine when it is almost impossible for someone to set up a rock solid monopoly on something. When it comes to electricity, it works better as a monopoly, or else you have one outfit owning the wires, while anywhere from two to a dozen or more suppliers own the generating plants, or own futures in what those plants may put out. When it gets down to that point, it seems like everyone EXCEPT the end user makes out like a bunch of bandits. I know, that was supposed to LOWER rates, but take a good look around and see where electric rates are now. The same goes for natural gas, but that one is even harder to split up, as no one is going to lay pipeline all over town and not figure on getting all the use of it. Natural gas pipelines are there for the owner to use, not to be leased out to fifty other producers.

      • s c

        Komrade ‘r,’ your political gods and ideas are the TRUE failures in Amerika and the rest of the world. I know you’ll never admit it, but it was politicians and assorted wackos like you who manipulated free markets. If we had REAL free markets, Obummer wouldn’t be in the W H (temporarily), and you’d be at home with one or more thumbs up your opinion, re-medicating yourself with your favorite designer drug.
        Clueless. Brainwashed. Freedom-hater. Stooge. Dolt. Twit. Utopian slug. Maybe Santa will get you that brain transplant, komrade. Then, you can act just like Al ‘duh’ Gore and Motormouth Biden. Pathetic.

  • r.p.

    Untill we start envesting in zero-point energy technologies,… “we’re fracked!”

    • r.p.

      Change that “e” to an “i”.

  • Strighttothepoint!!!!!

    The big hang up to this”New Technologie ”is the long term effect it has on the.Earth; .I’ve read some where on the enter-net,that this kind of drilling was causing a pattern of small Earth quick ‘s (called and I quote ”earth quick swarms”)and had been banned in some states!!!(i would say to people that they ,should look up these kind of facts first before they get interested)

  • deerinwater

    What is needed is “ON Spot Power Generation” ~ this is doable, this is affordable. This allows each consumer to be independent of each other.

    There has always been a market for OSPG , ~ all ships, out post, offshore oil exploration has them, ~ all major hospital has them ~ all server centers has them, ~ Montgomery Ward store built in 1927 has one that ran on natural gas and diesel . ~ it’s not a new idea ~

    The Russians made some very small nuclear power generators for several years.

    Electricity is easy to generate, hard to transport and harder to store. We had made great progress in all of these area except transporting.

  • https://www.rocococamp.info/VilmaBce Colleen

    Hello, you used to write excellent, but the last few posts have been kinda boring… I miss your great writings.
    Past several posts are just a little bit out of track!
    come on!

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