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by Shawn Kravetz
In the second quarter, solar stocks were impacted by broad energy
sector declines on global macroeconomic concerns (most notably
Greece and China). This negative sentiment has continued unabated
into July exacerbating the disconnect between fundamentals and
JA Solar (NYSE: JASO)
epitomizes this dislocation.
We at Esplanade Capital Electron Partners (ECEP) owned JA Solar
prior to June 5, believing the company to be worth ~30%+ more than
the share price.
On June 5, JA Solar received a takeover offer from its Chairman/CEO
and parent company at a 20% premium.
After a short-lived, modest rally, the shares have fallen to levels
below where they were trading prior to the takeover offer.
We have added to this position, and while we continue to assess the
deal and market risks, we remain confident that JASO will yield a
33% return in roughly six months when we expect the deal to close.
JA Solar represents but one example of our robust portfolio whose
potential upside continues to grow as the dislocation between
fundamentals and market perception expands.
Shawn Kravetz is President and Chief Investment Officer of
Esplanade Capital LLC,
an investment management company he founded in 1999. The
firm manages private investment partnerships including Esplanade
Capital Electron Partners LP, launched in 2009, which intends to
be the world’s premier private investment fund dedicated to public
securities in solar energy and those sectors impacted by its
by Debra Fiakas CFA
A few years ago General
NYSE) built out a manufacturing facility in Schenectady, New York
for its sodium-ion batteries. CEO Jeff Immelt declared the
company a contender in the energy storage industry. He
projected that the company could ring up $500 million in annual
sales by 2016, and build to $1 billion a year by 2020 by providing
energy storage to utility-scale alternative energy projects.
Reality has been a bit different than Immelt’s vision. GE
ended up shuttering the plant in the Fall 2014, and all but fifty
employees were finally laid-off or reassigned in early 2015.
GE’s foray into the energy storage market appeared to be over before
it began. Energy industry watchers began an autopsy on GE’s
sodium-nickel-chloride battery chemistry that had been used in large
train batteries. Others focused on the poor economics of
distributed solar and wind power compared to the persistently low
prices for centralized natural gas powered power plants.
Then to my surprise, what did I see on GE’s web site in early
July 2015 - recruiting
Indeed, GE is looking for a mix of new employees to work at its
battery production facility in positions such as ‘senior electrical
engineer’ and ‘energy storage engineer.’ There are some
administrative job openings as well.
It appears GE never left the energy storage market. Instead,
it seems leadership took a ‘practical’ pill. In April 2015,
the company won a contract to supply Con Edison Development with an
8-megawatt-hour battery storage system at a solar project in
California. The system will incorporate GE’s Mark IVe control
system, GE’s Brilliance MW inverters and GE’s performance guarantees
(possibly the most important feature). What the system will
not include is GE’s Durathon sodium-ion batteries. GE will be
outsourcing or acquiring lithium-ion batteries for the projects.
On a roll with its new approach to the energy storage market, GE won
an order in May 2015, to supply a 7 megawatt-hour battery storage
system for the Independent Energy
System Operator in Ontario, Canada. Convergent Energy + Power
is the system integrator. The batteries will be lithium-ion
GE’s spokespersons have been careful to support the company’s
Durathon battery, maintaining it will still have a place in GE’s
energy storage business. Durathon batteries are installed at
an operational wind farm in Mills Country, Texas. Southern
California Edison is also incorporating Durathon batteries in a
field demonstration of a permanent load shifting application.
Princeton Power Systems is the integrator of the project, which is
located near Santa Anna, California.
Where will GE source the lithium-ion batteries for the California
and Ontario projects? So far, spokespersons have been
non-committal on the name. GE has had many bedfellows in the
energy industry over the years – some strange and a few
In the next few posts, we will look at both the strange and
the obvious in lithium-ion battery storage.
Debra Fiakas is the Managing Director of Crystal Equity
Research, an alternative
research resource on small capitalization companies in selected
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.
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