Friday, July 21, 2017

Solid Play in Solid Waste

The last article “Advanced Disposal Services:  Hauling a Heavy Load” on July 18th inspired a closer look at the solid waste management sector in which it competes.   The solid waste industry is growing at a good pace between 1.6% and 2.0% per year, largely on population growth and the human penchant for consumption and waste.  In the U.S. solid waste collection is still populated by many localized, family-owned businesses, despite the emergence of several large consolidators that now command as much as 55% of the revenue in waste handling and disposal.  Fragmentation creates ample opportunity for the incumbents to ratchet up growth rates.
Advanced Disposal Services is the most recent in the sector to enter the public capital markets with an initial public offering of stock.  There are several seasoned securities in the sector and that begs the question, what is the best stock to own in the group.  

Tuesday, July 18, 2017

Advanced Disposal Services: Hauling a Heavy Load

Shares of regional waste handler Advanced Disposal Services (ADSW:  Nasdaq) have provided shareholders a 29.2% return since the company’s October 2016 initial public offering.  Since ADS does not pay a dividend, the price appreciation is all shareholders get.  Many who took a position in the highly leverage waste business may be surprised at the strong reception.   

Friday, July 14, 2017

Two More Energy Storage Plays in Massachusetts

Last month the Massachusetts Department of Energy Resources set a new target for 200 megawatts of energy storage capacity by the year 2020.  The state is following through with its Energy Storage Initiative with a $10 million funding commitment to support energy storage companies.  A total of $4.7 million in funding has already been award to nine projects, of which five have objectives related to energy storage.  The last article “Energy Storage in the Bay State” on July 11, 2017, discussed two projects demonstrating peak demand technology solutions in Massachusetts communities.  The state is also thinking ‘big’ with grid-scale energy storage.

Tuesday, July 11, 2017

Peak Demand Solutions in the Bay State

As a part of its new Energy Storage Initiative , the Massachusetts Department of Energy Resources set a new target for 200 megawatts of energy storage capacity by the year 2020.  The state has also made a $10 million funding commitment to support energy projects in the state.  A total of $4.7 million in funding has already been award to nine projects, of which five have objectives related to energy storage. 
Public programs like the Energy Storage Initiative are a good place to look for private investment and public stock investment opportunities.  In this post we look at two projects aimed at perfecting technology solutions for peak demand issues.  Both received funding from the Massachusetts program.
The first is a peak demand technology demonstration at Kohl’s department stores.  Peak demand is typically 4% of total energy used, but can account for 40% of electricity costs.  Reducing peak demand usage can deliver significant savings for both consumers and utilities. 

Kohl’s is a good place to test peak demand solutions.  To properly serve customers big box retailers like Kohl’s must operate long hours, spanning peak demand hours.  In addition to a variety of conservation programs, Kohl’s has adopted solar energy solutions.  By mid-2016 the company had installed solar systems on 162 retail, warehouse and office locations in thirteen states, delivering as much as 40% of the company’s electricity needs.  Its largest solar installation is in Maryland at a ecommerce fulfillment center where 8,000 solar panels produce 3 million kilowatt hours of energy every year. 
The Kohl’s project is a joint effort by eCurv, a developer of software for energy demand management, and Advanced Microgrid Solutions, an energy storage provider.  The two companies will work with the utility company Eversource to demonstrate their integration of software and hardware.
The peak demand technology demonstration will be conducted at both Kohl’s solar-enable and non-solar retail stores.  First up will be eCurv’s QPAC demand management service that is designed to save customers as much as 40% in annual peak demand charges.  QPAC, which stands for Queued Power Access in the Cloud, reduces electricity bills by restricting random access to power during peak demand periods when costs are the highest.  The patented QPAC system monitors each device on the system and shifts its power usage to the optimum lowest-cost timing.  The Kohl’s sites will also receive behind-the-meter energy storage technology from Advanced Microgrid to store excess energy not used during off-peak periods.  Advanced Microgrid’s Armada analytical software provides system operators with critical data to better manage the system.
Total funding for the Kohl’s project is $179,500.  It is not a large sum of money but the grant provides invaluable exposure for both eCurv and Advanced Microgrid Solutions.  eCurv is a relatively young company, founded in 2011 by an electrical engineer with experience in cellular communications.  The company completed a Series A round in June 2014, raising $2.5 million in new capital. Exelon's (EXC:  NYSE) venture capital arm, Constellation Technology Ventures, led the deal.

Advanced Microgrid is also privately held, but has several high-profile projects under its belt already.  The company already has a sales presence in four states.  Its track record includes what the company calls Hybrid Electric Building projects at California State University and Morgan Stanley, among others.  Advanced Microgrid may have used its win in Massachusetts to impress investors in a Series B funding round just completed in early July 2017.  Energy Impact Partners, a utility-funded investment firm, led the deal.  DBL Partners, which led an $18 million Series A round in 2015, also participated. 
Image result for massachusetts nantucket images
The second project to receive funding from the Massachusetts fund is also a peak demand reduction solution based on thermal energy storage.  It will be deployed at residential sites in Nantucket, small island in Cape Cod. Nantucket is home to about 11,000 people year round.  However, during the summer months the population soars as vacationers fill the island’s famed beaches and restaurants that line its celebrated cobblestone streets.  Nantucket business need solutions to manage peak energy usage.  
Genbright is leading the Nantucket project with its Distributed Energy Resources program called DER for short.  Distributed energy comes from small power projects usually operated by a diverse group of private project owners, including residential power producers.  This energy can be aggregated and reallocated to the electricity grid, but that requires both equipment and energy management tools.  Genbright provides solutions that include capacity management tools and asset management services. 
Genbright will also install Ice Energy’s proprietary distributed thermal energy storage solution called Ice Bears.    An alternative to conventional air conditioning units, the Ice Bear freezes water into ice at night when demand for power is low and electricity is abundant.  During the day, the ice is used to provide air conditioning instead of energy-intensive compressors.  Then Genbright will perform real-time dispatch of the Ice Bears to deliver over one megawatt of peak demand reduction.  Over 200 Ice Bears will be installed in Nantucket during Summer 2017.
Genbright is a Massachusetts-based company and Ice Energy is headquartered in California.  Like the other two funding winners, they will benefit throughout the U.S. from the publicity and experience gained in these Massachusetts projects.  The funds are not significant, suggesting both these two growing companies must be looking at the private and public capital markets.  Pacific Advantage Capital leads an investor group for Ice Energy and a PAC partner serves as co-chairman of Ice Energy.  Genbright is not forthcoming in regard to its plans to raise capital.   However, one of the elements that Genbright brings to the table in the emerging distributed energy industry is the ability to coordinate investments by third parties.  

None of these four companies likely provide immediate investment opportunity for minority investors.  However, as private companies expand geographically, it is often necessary to gather financial support as can be observed in the venture rounds recently completed for eCurv and Advance Microgrid.  It makes sense to put all four names on a watch list for that time when expansion opens the door to minority investment.  Advanced Microgrid and Ice Energy might even become ready for initial public offerings if business scales as planned.  All four companies have been added to the Efficiency Group in our Mothers of Invention Index of energy alternatives companies.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.