Prospect of ATS solar spinoff sparks media buzz
Both the Globe and Mail and National Post today had articles taking a look at the soaring stock price of ATS Automation and the reason behind it: speculation of the spinoff of its solar group.
Visitors to this blog will know that I’ve had several postings (here, here and here) over the past few months on the likelihood of ATS publicly spinning off its solar group, which includes Photowatt and Spheral Solar. Much of my own opinion has come from watching Cypress Semiconductor pursue an IPO of its SunPower unit, but also from events in Europe and my discussions with analyst MacMurray Whale at Sprott Securities, who has been way ahead of his peers on covering this issue.
The coverage today in the Globe and Post were prompted by a report from Raymond James analyst Frederic Bastien and other analysts who are catching up to Whale’s own analysis. There’s also interest because ATS’s shares have hit a 52-week high on spinoff speculation.
Not surprisingly, the Post – some of whose columnists still deny global warming is a problem — downplays the enthusiasm in solar companies and stocks, referring to their “bloated valuations” and temporary “brush with fame.”
“So what shall become of solar stocks once their latest brush with fame subsides?” asks reporter Keith Kalawsky. “The technology is environmentally friendly and might make a decent business someday, but the valuations of these stocks are prone to polluting your portfolio.”
Despite the nice play on words, I’m curious about the certainty in his comments. He goes on to compare the solar craze with the rise and fall of fuel cell stocks, but this is like comparing apples to oranges: fuel cells are still in an expensive R&D phase and nowhere near commercial reality (as my previous post shows), whereas solar is proven, is selling like gangbusters in Europe, Asia and some U.S. states, and is becoming more efficient by the day. How is a market experiencing excess demand, in an supportive policy environment where all countries are exploring renewable alternatives, a risky business destined to fall?
Kalawsky goes on: “Considering the negatives and the heady valuations of solar companies, it looks like the shorts are going to have a field day once the current obsession with alternative energy inevitably wanes.”
Obsession? Inevitably wanes? Yah, and global warming isn’t a problem, despite dramatic satellite photos of rapidly shrinking ice caps.
Tyler Hamilton is senior energy reporter and columnist for the Toronto Star, Canada's largest daily newspaper. In addition to this Clean Break blog, Tyler writes a weekly column of the same name that discusses trends, happenings and innovators in the cleantech market. This blog is a personal project started in April 2005. It is not an official blog of the newspaper. Tyler can be reached at tyler@cleanbreak.ca
October 5th, 2005 at 12:35 pm
Forget stocks, the panels themselves are one of the most stable long-term investments available if you live in a sun-soaked part of the world. Solar panels are solid-state devices. They need no maintenance aside from washing off the bird droppings. Most manufacturers will guarantee them to 80 % of their rated power for 25 years. If you live in the Southwest USA the rate of return is in the low teens amortized over 25 years.
A young person could sink $100,000 into photovoltaics now and still be making money from that investment in forty years. Anyone can run the numbers for themselves in RETScreen if you don’t believe me.
October 6th, 2005 at 7:26 am
…just curious, has anyone ever tried to get a spheral solar panel? I think these guys are super exciting (on paper/web) but the reality is that no one i know (green architects, designers, DIYers) has ever been able to get their hands on any of ATS’ solar panels (myself included). Has always made me feel that this was someohow more about business then about ecological business (as opposed to say Stan and Iris Ovshinsky… who are totally from the heart!)
=lee
October 6th, 2005 at 10:35 am
I’ve toured the Spheral Solar facility and have seen product. They haven’t done a hard launch yet, so the product that is out there is in the hands of larger customers who are testing the technology and giving Spheral Solar feedback. As this is a new approach to making solar PV panels, the company is being very cautious and wants to make sure it has perfected the process before a full rampup. From what I’ve heard most of its planned output has already been pre-sold to Europe, but I can’t be sure about that.