Tuesday, March 18, 2014
Virginia's Winning Teams
Last week-end the University of Virginia Cavaliers slipped past the Pittsburg Panthers in an early round of the NCAA Men’s Basketball Tournament at the Greensboro Coliseum in North Carolina. On a roll, the Cavaliers went on to give the Duke University Blue Devils a good thumping. As good as Virginia is at producing winning ball teams, I wondered whether the state is as competitive at renewable energy.
The Virginia Alternative and Renewable Energy Association is sixty members strong. Apex Clean Energy is one of them and like the majority of the membership, private and out of the reach of minority investors like you and me. Based in Charlottesville, Virginia - management might have even made the drive down to Greensboro to cheer on the Cavalier’s last week-end - Apex produces electricity from a mix of solar and wind projects in half dozen different states.
Management has demonstrated an ability sell its energy to electricity distributors. In November 2013, the Western Farmers Electric Cooperative agreed to buy 100 MW from Apex. Earlier in the same month Westar Energy had signed up for 200 MW. These two deals came right in the heels of a deal with the Public Service Company of Oklahoma for 200 MW.
The Apex team can bring the ball up court. Likely the Cavaliers’ coach will tell an investor that is great but maybe not enough to win the game. A winning team also needs to sink the long shot. Indeed Apex has a few three-pointers on its score card.
Apex has built its portfolio of solar and wind projects through a series of seventeen acquisitions. In August last year the company acquired Midway Farms Wind Energy in Texas with 165 MW of capacity. Since then the company has acquired development assets through two separate deals that could support up to 1.9 GW of wind energy capacity in Texas and other locations.
Investors are likely to hear more of Apex Clean Energy. A consolidator like Apex is likely to gain the attention of a larger utility company at the point Apex has worked out the kinks in is production portfolio. Perhaps Apex will continue its acquisition spree, bulking up to a size that would support a public offering.
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.