Are Smart Power Companies the New Renewable Energy Play?
Companies like Itron, Inc. (ITRI), Echelon Coporation (ELON), and Titan Energy Worldwide, Inc. (TEWI) have been seeing increased interest as Obama’s smart grid build-out gains momentum, while other alternative energy companies face some difficulty.
Renewable Energy Slows Down
The outlook for renewable energy companies hasn’t been so bright in recent months amid a jump in raw material prices and the commoditization of certain technologies. This combination of events has led to tightened margins for solar companies at a time when government subsidies are beginning to slow down in many countries around the world.
RenaSola Ltd. (SOL) is one company that recently swung to a loss amid lower prices for its solar cells and weaker margins due to higher raw material prices. And while the company sees improved profit margins in the first quarter, increased competition in the sector will likely put a cap on historical growth rates seen when solar was at its peak.
Smart Electricity Powers Up
Recently, companies focused on the efficient use of electricity have been gaining momentum on the heels of an estimated $3.4 billion in grants from the U.S. government to improve the nation’s electrical grid. The overhaul is designed to pay for “smart meters” and update power transformers and other devices to make the transmission of power more efficient and reliable.
Even those companies that haven’t seen grants come in directly have been reporting strong quarterly increases in revenues and profits. Meanwhile, the industry does not rely on raw materials, but rather technological innovation and infrastructure demand to grow. As a result, margins at these companies have been improving with demand.
Titan Energy Worldwide (TEWI) reported a record third quarter with more than $3.3 million in sales – a 38% improvement over the prior year’s quarter. In fact, September sales of $1.36 million set a record for the company as it sees continued growth going into 2010. Its power distribution products continue to see strong demand from an expanding customer base.
Conclusions
Renewable energy companies may be struggling with lower pricing power and increased competition, but smart electricity companies appear to be just beginning their growth phase. The government has plans to increase spending to enhance growth that has already been increasing amid demand for more efficient solutions for private industry and government.
CONTACT: Daniel Minton, Managing Director, 406-862-5400, daniel@accelerize.com