360° Coverage : Better Than Dollars Per Watt

2 Updates

Better Than Dollars Per Watt

Apr 29 2014, 8:02am CDT | by

Disclosure: Long BEP.  Short PEGI $20 and $25 puts, short PEGI $30 and $35 calls, short NYLD $40 and $45 calls. I recently sized up five renewable energy power producers using the metric that’s most...

Filed under: news

 
 
 

22 weeks ago

Better Than Dollars Per Watt

Apr 29 2014, 8:02am CDT | by

Disclosure: Long BEP.  Short PEGI $20 and $25 puts, short PEGI $30 and $35 calls, short NYLD $40 and $45 calls.

I recently sized up five renewable energy power producers using the metric that’s most often used for solar panels: Dollars per Watt ($/W).  It’s an intuitive metric, but has serious flaws both for evaluating solar installations and stocks.  Slightly better is Watts per Dollar (or W/$100 to make the numbers look nice) as shown in the chart from that article below.

The main advantage of W/$100 over $/W is that it’s additive: I can meaningfully stack the capacity contributions from various fuel sources.  (I.e. BEP has 7 Watts of wind power, 33 Watts of Hydropower, and 2 Watts  of cogeneration for every $100 of Enterprise value, for a total of 7+33+2 = 42 Watts of capacity per $100.  You can’t perform a similar calculation with the number of dollars you have to invest in BEP to get a Watt of each type of energy production.)  That said, W/$100 retains the other disadvantages of $/W, most importantly that different types of power plants are used in different ways.

Baseload plants such as geothermal run nearly constantly, while variable resources such as wind and solar produce variable amounts of power based on climatic conditions.  Dams allow hydropower to respond somewhat to demand for power, but run-of-river hydro facilities are totally dependent on water flows, and seasonal and annual flows are dependent on precipitation.

One way to account for all this is to look at annual energy production in GWh per year.  The data from the following chart is taken from each company’s 2013 annual report.  I had to drop SolarCity (NASD:SCTY) from the list because I could not find energy production data.

Ormat (NYSE:ORA) and NRG Yield (NASD:NYLD) only reported aggregate energy production for 2013, so I made some assumptions based typical capacity factors to allocate production between Ormat’s geothermal and waste heat operations, and between NRG Yield’s wind and solar farms.  Ormat’s products business which sells equipment to other geothermal and waste heat recovery operations is scaled based on the relative revenue earned by each segment, while NRG Yield’s thermal businesses provide heat or cooling, and are shown in thermal kWh, which typically have lower value than electrical kWh.

A new category which does not appear in the W/$100 chart is Brookfield Renewable Energy Partners’ (NYSE:BEP) Storage business.  This takes advantage of extra capacity in its hydroelectric dams buy pumping water back behind the dam when during times of low electricity demand, and allowing that water to flow back through the turbine and generate electricity when demand it high.

It’s interesting to note that Ormat and Brookfield look most attractive when evaluated on annual energy production, while NRG Yield looked best based on capacity.  This is because hydropower and geothermal are typically being used at closer to their potential output more of the time than solar and wind, and much more than NRG Yield’s thermal assets.   This variation is captured by a power plant’s “capacity factor,” which is the percentage of its theoretical maximum production it actually achieves.

The following chart shows the capacity factors actually achieved by these four companies in 2013:

Note that I had to guess at the relative capacity factors for NRG Yield’s wind and solar operations, since the company only provides aggregate energy production data.  In any case, NRG’s total renewable energy production is large relative to its renewable energy capacity,  so we can conclude that its wind and solar farms are in good locations for those resources.  There were no such complications with PAttern Energy Group (NASDAQ:PEGI) since all of its generation is wind power.

Final Thoughts

Annual energy production is still a very incomplete picture of the value of these company’s operations.  The value of electricity depends greatly on local market conditions, as well as the time and season.  Nor do any of these charts include the companies’ expansion plans.

Can we conclude anything from this series of charts comparing power produces by $/W, W/$100, annual kWh/$, and capacity factor? Perhaps only that it’s impossible to sum up a company’s operations in a single number, or even a hundred numbers.  Not that this will be a surprise to anyone who has cracked open a company’s annual report.

On the other hand, I never know what I’ll find when I decide to look at companies using a new metric.

 
Update
2

4 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing th ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

4 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of M ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Thai scientists discover antibody to cure Ebola
Bangkok, Oct 2 (IANS/EFE) Thai scientists Thursday announced the discovery of a new antibody against the Ebola virus and claimed that it is "more effective" than those that now exist.
 
 
Newly discovered deviant ant species!
Washington, Oct 2 (IANS) People often say that what you are looking for is usually right in front of your face. Researchers from the George Washington University in the US faced the same predicament when they discovered an ant species, Cephalotes specularis, hiding in plain sight.
 
 
Specific network exists in brain for using tools
London, Oct 2 (IANS) Scientists in Munich, while examining the parts of the brain that are responsible for planning and executing complex actions, have discovered that there is a specific network for using tools and utensils.
 
 
Short, intense workouts boost memory
Washington, Oct 2 (IANS) An intense workout for as little as 20 minutes can enhance episodic or long term memory about previous events by about 10 percent in healthy young adults, say researchers.
 
 
 

Latest from the Network

George Clooney praises his wedding singer
George Clooney asked an unknown singer to perform at his wedding. The 'Monuments Men' actor and his new wife, human rights barrister, Amal Alamuddin, decided against asking a well known pop star to sing at their...
Read more on Celebrity Balla
 
Jennifer Love Hewitt's daughter does Zumba
Jennifer Love Hewitt's 10-month-old daughter goes to Zumba classes. The 35-year-old actress takes her baby girl Autumn most places with her and the tot joins in when she participates in the dance-based exercise. Autumn...
Read more on Celebrity Balla
 
Iran suspends sentences for participants in 'Happy' video
Tehran, Oct 2 (IANS/EFE) Iranian authorities have suspended for three years the tough sentences handed to seven Iranian youths who filmed a video dancing to Pharrell Williams' "Happy". The sentence, which included...
Read more on Politics Balla
 
Inderjeet wins men's shot put bronze at Asiad
Incheon, Oct 2 (IANS) India's Inderjeet Singh took home the bronze medal from the men's shot put final at the Asian Games here Thursday. The Indian's best throw of 19.63 metres came on his fifth attempt, out of six,...
Read more on Sport Balla
 
Stefan Lofven voted new Swedish prime minister
Stockholm, Oct 2 (IANS) Stefan Lofven, head of the Social Democratic Party, was Thursday voted by parliament to be the new Swedish prime minister. Lofven got 132 "yes" votes in the 349-seat Parliament, with 49 "no"...
Read more on Politics Balla
 
Indians finish 4th, 5th in men's 10 km final
Incheon, Oct 2 (IANS) Indian runners Rahul Kumar Pal and Suresh Kumar set their personal best times to finish a creditable fourth and fifth in the men's 10,000 metres final at the Asian Games here Thursday. Bahrain's...
Read more on Sport Balla
 
Surfer loses arm, other hand in shark attack
Sydney Oct 2 (IANS/EFE) A 23-year-old surfer lost one of his arms and his other hand in a shark attack Thursday at a beach near Esperance in Western Australia, official sources reported. The youth was attacked in the...
Read more on Politics Balla
 
Indian boxers Vikas, Satish settle for bronze medals (Third Lead)
Incheon, Oct 2 (IANS) India's campaign in Asian Games boxing ended Thursday with Vikas Krishan and Satish Kumar settling for the bronze medals after losing their respective semi-final bouts to Kazakhstan pugilists at...
Read more on Sport Balla
 
Arpinder, Renjith finish 5th, 9th in triple jump
Incheon, Oct 2 (IANS) Indian athletes Arpinder Singh and Renjith Maheshwary failed to secure any medal from the men's triple jump final, finishing fifth and ninth respectively, at the 17th Asian Games here Thursday....
Read more on Sport Balla
 
India's Inderjeet wins men's shot put bronze
Incheon, Oct 2 (IANS) India's Inderjeet Singh clinched the bronze in the men's shot put final at the Asian Games here Thursday. Saudi Arabia's Sultan Abdulmajeed Alhebshi won the gold with a best throw of 19.99 metres...
Read more on Sport Balla