Comments (1) This past Wednesday, Alternative Energy Speculator's Nick Hodge spoke about smart investing in power grids. And I'd like to revisit that article and add a stock to the five stocks he mentioned here.
But first some background on why antiquated power grids must be updated.
California's energy consumption efforts have done little to prevent blackouts. From 1979 to 1999, California residents jumped from 23 million to 33 million. Today, there are 38 million and expectations for 45 million residents. In the long, hot, sticky days of summer, there will be blackouts. Greater electrical dependency from a larger population makes it difficult to say everything will be fine.
The California Independent System Operator has already warned that the "likelihood of going to a Stage 3 power emergency is 10 percent compared to 3 percent last year." Stage 3 allows the state to cut power to certain customers to prevent power system failure.
San Diego Gas and Electric saw record electricity demand in 2006. That record was then broken in 2007. And while the company has taken measures to reduce 2008 blackouts, the only way to prevent blackouts is voluntary conservation and "on-call interruptible loads."
And when the power grid can't take the pressure this year, we'll see widespread power failures.
New York, for example, doesn't have enough electricity to satisfy consumers.
As Hodge said Wednesday, Tuesday was the "second straight day New York set a record not only for high temperatures, but for electricity usage as well."
As temperatures soared, Consolidated Edison scrambled to fix failures across parts of the Bronx, Brooklyn and Queens. It affected homes and public transportation. And it's only June.
Look, if temperatures persist through the hot sticky months of summer, more strain will be put on electricity supply, resulting in further blackouts. Parts of Brooklyn saw a 45% jump in peak demand in a week's time. Again, it's only June.
And just today, a power outage caused a blackout in parts of Washington, D.C., including the White House, leaving many without power and causing major delays.
We'll likely hear similar news throughout the hot summer months, as too much demand is put on antiquated power grids. It's the reason we like Beacon Power (BCON:NASDAQ).
Beacon Power
For some background on how well this stock has moved on power outage news, check this out.
On August 14, 2003, a power failure in the northeastern USA and central Canada hit 50 million people. BCON popped from 25 cents to $1.25.
On September 19, 2003, Hurricane Isabel destroyed electricity for 4.3 million people across the United States and part of Canada. BCON popped from 60 cents to more than $1.
On September 4, 2004, five million people in Florida lost power after Hurricane Frances. BCON ran from 25 cents to 75 cents.
On August 26, 2005, 1.3 million people in Florida lost power because of Hurricane Katrina. BCON ran from $1 to $5.
The stock ran slightly in 2006 on the Queens Blackout news, and again in 2007.
And that's because of the company's potential.
This is the company with flywheel technology, which stores power. These guys can buy power from the grid at cheaper costs and sell it at higher cost.
Just the other week, they got a $340,000 contract to provide their energy storage system to support a wind integration project sponsored by the California Energy Commission. And they recently received environmental approval to build a 20-megawatt flywheel plant in New York.
Better yet, not only did Kaufman Brothers report that BCON can "likely tap into a $700 million energy storage market and post revenue from commercial clients by the end of the year," they started coverage at a Buy rating with a $3 price target.
And they just received a commitment for up to $5 million in loans that'll help fund expansion of a production facility from Mass Development's Emerging Technology Fund and the Massachusetts Technology Collaborative.
Remember, there will be more blackout news this summer. There are antiquated U.S. power grids that will not be able to handle the demand on scorching hot days.
Good Investing,
Ian L. Cooper
In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of June 9, 2008.
Precious Metals Mining Stocks: Get Out of the US Dollar Now!
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"With the subprime mortgage crisis already crippling the U.S. economy, some experts are warning that the next wave of foreclosures will begin accelerating in April, 2009."
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Here's a story from the housing world that is a perfect example of that trait. It seems that a number of upside down homeowners have decided to take matters into their own hands.
UK Recession Investments: Where To Invest As The United Kingdom Stumbles
You know the UK is in trouble when the Organization for Economic Cooperation and Development (OECD) singled out the UK economy with gloom and doom forecasts.
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