that it has agreed on key business terms with Total for
restructuring its fuels joint venture to open the way for proceeding
with commercialization of its jet fuel technology over the coming
years. Following the restructuring, Total would own 75% of the joint
venture with Amyris.
In conjunction with this transaction, Amyris has also agreed on
terms with Total and Temasek, another major stockholder of Amyris,
under which, and as part of a plan to strengthen the balance
sheet, these stockholders would exchange an aggregate of $138
million of convertible debt for Amyris common stock at a price of
$2.30 per share, with an additional $37 million of outstanding
convertible debt being restructured to eliminate Amyris’s
repayment obligation at maturity and provide for mandatory
conversion to Amyris common stock.
In September 2014, KLM
tipped that it intended to fly on Amyris-Total renewable jet
fuel, as soon as it receives favorable advice from their
independent Sustainability Advisory Board. Amyris noted that is
producing commercial product “for our launch partners (which
include GOL), and that a 10% blend of Amyris-Total jet fuel can
reduce about 3% of the particulate matter from aircraft engine
Last November, news
filtered out of California that ASTM has revised the D7566,
the Standard Specification for Aviation Turbine Fuel Containing
Synthesized Hydrocarbons to include the use of renewable farnesane
as a blending component in jet fuels for commercial aviation.
With that news, Amyris and Total said that they will now prepare
to market a drop-in jet fuel that contains up to 10% blends of
Cowen & Company’s Jeffrey Osborne wrote:
This conversion has a tangible
effect on the ownership stake that both Total and Temasek has in
the company. According to Thomson the companies own a combined
~24 million shares, which is around 30% of current shares
outstanding. With the creation of 60 million additional shares,
the combined ownership of Total and Temasek would be 84 million,
or 60% of AMRS’ post-converted outstanding shares. We see this
as confirmation that both companies see strong long-term
potential for Amyris.
The reduction of convertible debt
also improves Amyris’ balance sheet. Total debt, including a
current portion of $18 million, was $242.5 million as of March
31, 2015. Upon the conversion of $175 million in debt the
company will have reduced its total debt by 72% to $67.5
million. This should give Amyris greater flexibility as the
commercialization of its various products continues to gain
We see both of these updates as signaling a strong fundamental
change in the company’s financial standing, as well as a solid
validation of the viability of its jet fuel bioproduct. The terms
of the restructuring are subject to standard closing procedures,
including any approvals from the board or other internal
requirements, as well as regulatory approvals.
Raymond James’ Pavel Molchanov wrote:
In aggregate, [it’s] $175
million of debt relief, equating to 72% of the company’s total
debt burden as of 1Q15. If only Greece was able to get a deal
like that! Naturally, there is no free lunch, and
Amyris is giving up some future project economics. Specifically,
Total will own 75% of the fuels joint venture with Amyris, up
from the previously envisioned 50/50 split. But since this JV
does not entail any meaningful revenue now, or even for the
foreseeable future, Amyris gets the full deleveraging benefit
upfront, with reduced JV economics only out in the distant
* In conjunction with this, Total has confirmed that it will
proceed with commercialization of jet fuel under the JV. There
is no real detail yet as far as the timetable, capital
investment plans, or what the target economics might look like –
all of those remain important question marks that will need to
be addressed by management in due course. But it’s still a
surprising move on the part of Total – surprisingly bullish,
that is – considering the context of the oil and gas industry’s
current period of austerity…Nonetheless, as a practical matter,
we wouldn’t expect any production scale-up until around 2020, so
it’s far too early for us to change estimates.
was originally published.
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Tom Konrad CFA
The first half of 2015 saw a mild advance in the broad market, but
concerns about rising interest rates and the ongoing Greek debt
drama sent income stocks, clean energy, and most non-US currencies
down decisively. My Ten
Clean Energy Stocks for 2015 model portfolio has heavy
exposure to not only clean energy, but income stocks (6 out of 10)
and foreign stocks (4 out of 10.) Despite this the stormy
market for all three, the portfolio delivered admirably.
The model portfolio ended the second quarter up 9.7%, compared to
its broad market benchmark, which was up only 4.4%. Its clean
energy benchmark is a 40/60 blend of its growth oriented benchmark
and its income-oriented benchmark, matching the 4/6 ratio of growth
and income stocks in the portfolio. These two benchmarks are
discussed below. The blended benchmark fell 5.1%.
For the month of June, the portfolio gained 3.1%, compared to only
0.8% for the broad market IWM and a 6.2% decline of the blended
Value/Growth and Income Sub-Portfolio Performance
The four stock value and growth sub-portfolio reversed most of
its previous losses in June, up 7.4% for the month to end the
first half down only 0.4% for the year. Its benchmark, the
Powershares Wilderhill Clean Energy ETF (NASD:
PBW), fell 3.8% for the month but remains in the black with a
2.3% gain for the first half.
The six stock income sub-portfolio inched up another 0.3% on top
of its already impressive gains, ending up 16.4% year to date,
despite rising interest rates. The income benchmark fared much
worse. This benchmark was The Global Utilities Index Fund, JXI
for the first 5 months, replaced by the more clean-energy oriented Global X YieldCo Index ETF
when that began trading at the end of May. It dropping 5.3%
for the month for a loss of 7.7% year to date, despite the fact that
YLCO fared better than JXI in June.
The low and high targets given below are my estimates of the range
within which I expected each stock to finish 2015 when I compiled
the list at the end of 2014.
6/30/2015 Price: $20.05. YTD Dividend: $0.52
YTD Total Return: 44.6%.
Sustainable infrastructure financier and Real Estate
Investment Trust Hannon Armstrong started the month strong, and I
hope some of my readers took the opportunity and followed my lead
by taking some gains as it briefly rose above $21. At that
point, Bank of America broke it’s long climb by lowering
its rating to Neutral based on valuation. This is
in-line with my own assessment: I like Hannon Armstrong for the
long term, but, because of its much higher price than when it
began the year, no longer feel that it deserves to be such a large
part of my managed portfolios.
Cable Corp. (NYSE:BGC)
12/31/2014 Price: $14.90. Annual Dividend:
$0.72. Beta: 1.54. Low Target: $10. High
6/30/2015 Price: $19.73. YTD Dividend: $0.18
YTD Total Return: 33.6%.
International manufacturer of electrical and fiber optic cable
General Cable Corp. rose strongly on the news that it had sold
the rest of its Asia Pacific operations for $205
million. This was a significant step in its ongoing
reorganization, which has the goals of simplifying its geographic
portfolio, reducing debt, and improving profitability.
6/30/2015 Price: C$12.36. YTD Dividend: C$0.39 YTD
Total C$ Return: 11.1%. YTD Total US$ Return: 3.3%.
Unlike most of the other income picks, Yieldco TransAlta
Renewables fell 2% in June, deepening the undervaluation which
made me predict it would rise in the last update. The
decline was likely in sympathy with the larger, interest rate
related, decline of Yieldcos and utilities in general (down 5.3%
and 7.7%, as discussed above.)
6/30/2015 Price: C$2.99. YTD Dividend: C$0.15
YTD Total C$ Return: -1.9%. YTD Total US$
Canadian power producer and developer (Yieldco) Capstone
Infrastructure also declined 2.3% despite my prediction for this
stock. As with TransAlta Renewables, I believe the decline was
industry related, not specific to Capstone. In fact, the
company announce progress with its wind projects in Ontario, where
it received a
final Renewable Energy Approval from the Ontario Ministry of
the Environment and Climate Change for the 10-megawatt Snowy Ridge
New Flyer Industries (TSX:NFI,
12/31/2014 Price: C$13.48. Annual
Dividend: C$0.62. Low Target: C$10. High
6/30/2015 Price: C$15.48. YTD
Dividend: C$0.30 YTD Total C$ Return:
17.1%. YTD Total US$ Return: 8.8%.
Leading North American bus manufacturer New
Flyer got a very favorable write-up at Seeking Alpha,
including speculation that its Brazillian partner, Marco Polo,
might acquire the 80% of the company it does not already own in a
buy-out. I’m a little skeptical about such buy-out
speculation- I think both companies seem to be benefiting well
from the alliance as it is, but I agree that New Flyer remains an
inexpensive company with a dominant position in the North American
bus industry, which continues to rebound from a long slump.
12/31/2014 Price: €13.60. Annual Dividend:
€0.61. Low Target: €12.
High Target: €20.
6/30/2015 Price: €16.65.
YTD Dividend: €0.61 YTD
Total € Return: 26.9%. YTD
Total US$ Return: 16.8%.
Despite Greek wobbles, bicycle manufacturer Accell Group, which
makes most of its sales in Europe, maintained its balance with the
stock up 2% for the month and 17% for the first half. The
company is a leader in e-bikes, and introduced
its own “mid-motor” (i.e. near the pedals so that the motor
can take advantage of the bike’s gears) with hardware supplied by
are a premium option, offering better balance, efficiency,
and handling than the more common hub motors, but are more complex
and come with a higher price tag.
Alone among my three predictions for stocks to perform well in
June, biodiesel producer FutureFuel did not disappoint. The
company gained 8% for the month on the EPA’s proposed
biomass-based diesel volumes for 2014-2017, which were announced
on the last trading day of May. I predicted that the
targets, which were good news for biodiesel producers, would
continue to propel the stock upward in early May. That
turned out to be the case, and the stock stayed above $13 for most
of the month before giving back some of its gains in the recent
Solar and rail Real Estate Investment Trust Power REIT’s stock
fell briefly below $5, a price at which I think it represents a good
buy despite the negative summary judgement in March.
The two remaining issues in the lessee’s civil case against it will
go to trial in August.
The lessees, Norfolk Southern (NSC) and Wheelling and Lake Erie
(WLE) claim that Power REIT and its CEO, David Lesser, acted
fraudulently when Power REIT was created and the Pittsburgh and West
Virginia (P&WV) (which owns the leased property) became its
subsidiary through a reverse merger. They are claiming damages
in the amount of approximately $3 million based on interest on funds
withheld by third parties, which NSC and WLE claim is due to
Lesser’s actions. It seems to me that if interest is owed, it
would be by the third parties. But, given my track record
predicting the court’s rulings, readers should form their own
Energy service contractor Ameresco released the usual press
releases about new contracts. Given the timing of the rally,
my best guess is that the company attracted the interest of one or
more institutional investors by presenting
at ROTH London Cleantech Day.
Dividend: $0. Beta:
0.78. Low Target: $5. High Target: $20.
6/30/2015 Price: $7.77. YTD Dividend: $0. YTD
Total South African Rand Return: 26.3%. YTD Total
US$ Return: 19.8%.
Vehicle and fleet management software-as-a-service provider MiX
Telematics published its annual report, which seems to have boosted
the stock slightly. The annual report does not contain
information which was not included in its annual results, published
at the end of May, but could have drawn the attention of investors
to its long term progress. As I discussed last month, the
annual results were very encouraging, and MiX continued to trade
at a fraction of the valuation of its developed-market peers.
The Annual General Meeting was also set for September 11th.
Last month, I predicted TransAlta Renewables, Capstone
Infrastructure, and FutureFuel would advance in June. The
sharp decline in utility and Yieldco stocks prevented the advance
and led to a small decline in the first two, but FutureFuel advanced
strongly, pulling the average gain to 1.1% for the three
stocks. Over the past four months, I’ve managed to pick 7 out
of 9 monthly winners, my average pick has advanced each month.
While I’m satisfied with both my overall track record and my monthly
picks, I don’t encourage readers to trade based on my monthly
hunches: Transaction costs would probably cost more than my market
timing would help. That said, for readers new to the list,
these monthly picks have so far proven to be among the best stocks
to buy if you have new money to invest.
Since the monthly picks have so far seemed useful, I’ll continue my
predictions. Although it did not work out last month, I’ll be
sticking with Capstone and TransAlta Renewables. Despite
rising interest rates, both are trading at excellent
valuations. Also, I feel the rapid decline of income stocks
over the last couple months is due for a pause or even a small
Disclosure: Long HASI, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC,
MIXT, PW, PW-PA, FF, BGC, RNW/TRSWF, REGI. I am the
co-manager of the GAGEIP strategy.
DISCLAIMER: Past performance is
not a guarantee or a reliable indicator of future results.
This article contains the current opinions of the author and
such opinions are subject to change without notice. This
article has been distributed for informational purposes only.
Forecasts, estimates, and certain information contained herein
should not be considered as investment advice or a
recommendation of any particular security, strategy or
investment product. Information contained herein has been
obtained from sources believed to be reliable, but not
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The International Renewable Energy Agency (IRENA) convened roughly 60 stakeholders in June in Nairobi to finalize the concept of the Global Geothermal Alliance (GGA) and exchange views on the best way forward. GEA’s Executive Director Karl Gawell participated as a U.S. NGO representative with support from Power Africa and the U.S. – East Africa Geothermal Partnership. “The high-level policy involvement by the leadership and participants was impressive and a measure of success for IRENA’s efforts,” noted Gawell.
Prior to the Nairobi meeting, talk of an Energy Global Geothermal Alliance took the form of an Action Statement and Action Plan at the United Nations’ September 2014 Climate Summit in New York, though that development did not have official U.S. participation. As a result of the June meeting, the Executive Directors of both GEA and the International Geothermal Association (IGA) expressed willingness and interest in supporting the effort.
The meeting was conducted by Joseph Njoroge, Principal Secretary of the Kenyan Ministry of Energy; Adnan Amin, Director General of IRENA and H.E. Simon D’Ujanga, Minister of Energy, Uganda. IRENA officials said, “The Alliance aims to identify and promote different models associated with geothermal development and generation to enable and encourage investments and to integrate geothermal facilities into energy markets.”
Numerous participants reviewed the status of geothermal efforts in their countries:
· Kenya’s Geothermal Development Corporation gave an impressive presentation on their effort to prioritize geothermal development, noting Kenya is now number 8 in geothermal worldwide. But Kenya made it clear that it intends to go further, with an estimated geothermal potential of 10,000 MW.
· Sahele Fekede of Ethiopia’s Ministry presented the numerous developments underway in his country. He noted they are working with various multi-lateral and financial entities and also discussed a new Ethiopian geothermal resource assessment that estimates 2,114 MW to 10,791 MW potential with 4,200 MW as “most likely.” He said they intend to have a new geothermal framework implemented by the end of the year.
· Rainer Halcon of the Philippines Department of Energy noted that geothermal energy now makes up more than 10 percent of energy capacity in the Philippines and 13 percent of the power mix. He said that since passage of a new renewable energy law the interest in geothermal has resurged and also gave a new installation target of 1,180 MW by 2020.
· Camilo Tautiva from Columbia presented a map showing ten energy projects, adding that his country is actively working on new policy and regulatory structure for geothermal.
· Peru’s representative, Alcides Claros, presented details on 2,860 MW of potential in Peru. He said they had already granted 20 licenses for geothermal.
· About 15 percent of Costa Rica’s energy is now geothermal. The country has a new 55-MW project under construction and 2 more scheduled to be on-line in 2021 and 2023, respectively.
· Representatives from El Salvador said that the country is now 24 percent geothermal powered and highlighted efforts to develop a regional geothermal center.
· The Secretariat of the Pacific Community pointed to Papua New Guinea, The Solomon Islands, Vanuatu and Fiji as potential geothermal strong spots.
There were afternoon presentations by GEA, IRENA, Enel Green Power, IFC, French Ministry of Ecology and the African Union. GEA’s presentation centered on geothermal risk and risk mitigation points that were previously presented in a joint GEA-U.S. Department of State workshop in 2014 and was well received. Following these presentations an open discussion sought to clarify the concept of a Global Geothermal Alliance. In general there was strong support for moving forward with the IRENA effort.
The following day the group toured the Olkaria Geothermal Site. “The geothermal work at Olkaria is impressive,” noted Gawell. “Olkaria development is something Kenyans are proud of and it should give other countries a sense of what is possible for their economy if they pursue geothermal power.”
IRENA intends to make the presentations available on its Web site in the near future.
Lead image: Olkaria Geothermal Field in Kenya, June 2015. Credit: GEA.
A delegation of geothermal stakeholders visited Kenya for the Global Geothermal Alliance meeting and toured the control room of Olkaria 4 Power Plant on June 16, 2015. Credit: GEA.