The Alternative Energy Market
The energy market is large and expanding exponentially due to a number of factors. According to Bank of America Securities analyst Ali Agha, the short term US power market outlook is 135b and could reach 250 billion per year in a decade. The question really is how much of that market can be captured by these new technologies. The analyst further estimated 5% to 10% market share over the next decade which amounts to 13.5b (short term) and 25b long-term for Alternative Energy Company’s.That’s a pretty sizable revenue base for these companies, which are essentially starting from scratch today. Bank of America is one of the major banks to define and initiate coverage in this new sector setting 12 month returns up to 1000% 0n select companies in the industry. The recommending analyst Agha received a bachelor’s degree from Harvard University and recognition in various research analyst surveys including the Wall Street Journals “All star analysts” survey and Institutional Investor’s “All-America Research Team” survey. Bank of America is the largest bank in the United States.Driving the demand for Alternative Energy technology equipment and solutions are a number of trends going on in the market today. The key trends are as follows:
Long Term Rising Oil and Gas Prices
Goldman Sachs recently raised forecasts to $105 per bbl for oil and $7 MMBtu for gas and predicted a “Super Spike”. Rising E&P cost structures due to increased geologic maturity in many of the traditional areas of oil supply as well as service and materials cost inflation have driven an increase in long-dated WTI prices. Turmoil in key oil exporting countries coupled with populist rhetoric in many of these same places that keep foreign oil companies from developing host country resources in a timely manner has limited supply growth from areas. Most of the world’s oil reserves are controlled by countries that will profit from the oil shortage to the expense of Western Nations and other net oil importers such as China.
The World is Running out of Oil
Opec spare capacity essentially gone refineries are running at over 90% apacity. The cost of exploration is increasing exponentially thus the primary cost driver for price of Oil as Oil and Gas deposits become more and more scarce. It is estimated that based on consumption trends, the Worlds (known) Oil reserves will be depleted within 30 years. Energyquest will create Synthetic Natural gas as a substitute for Oil and Gas. According to Petro Consultants U.K. Ltd. “Despite this tremendous expenditure, the industry has been consistently finding fewer new hydrocarbons on an annual basis.
World Demand for Energy Outstrips Supply
Sharp economic growth in China and Asia are expected to drive world wide demand at an increasing rate. China surpassing the United States as the World’s largest energy consumer. This trend is expected to increase as giant populist 3rd world countries become industrialized and seek energy to fuel growth. For example, China’s breakneck economic growth is causing a dangerous shortage of its most important energy source coal, with potential consequences for the entire world, state media warned. China is aggressively pursuing alternative energy to convert more non-traditional sources of energy (such as wood and agricultural waste) to power. Scarcity is so severe officials even worry aloud that it could cause social instability among the 1.3 billion Chinese, the China Business Weekly reported.
The market for Energyquest’s technology has become differentiated by scale as opposed to large players such as the US government, General Electric, Shell Global Solutions and Conocco who have all tested clean energy gasification plants and are spending over a billion dollars per plant and plants take a decade to design, plan and build. Energyquest has taken a different approach by building small scale “cookie cutter” portable plants, the units can be delivered to the fuel supply in a short period of time, energy can be produced, and given the small scale, the units are affordable, allowing a two to three year payback on investment. Larger installations consisting of multiple units allow scalability that other technologies lack, allowing clients to start small and add on as need or demand dictate