William: "The gist of what you seem to be saying is that ERC's superior fc technology will ultimately triumph."
I am sorry it came out that way to you, but that is not what I was trying to say. First of all, nobody knows at this stage who will ultimately triumph in the stationary power fuel cell world. Much is still up in the air.
Secondly, even if ERC did not exist, and even if there were no such thing as high temperature, higher efficiency fuel cells like carbonate and solid oxide, I still think there is plenty of reason to be skeptical about the prospects for small fuel cells installed in each house, as opposed to larger units used to generate power for the grid.
I have given many reasons in previous posts, which I won't repeat, but one that I don't think I mentioned that is a killer is the fact that one can get away with installing much less capacity to handle the peak power needs of a group of homes, than one would need if each home has to handle its own peak needs. This is because not every home is using its peak requirements all at the same time. Given that the biggest stumbling block to fc usage will be its high initial cost per kW, serving the same number of homes with much less capacity investment makes a lot of sense.
So even if all fc's were PEM, I think larger units, such as the 250 kW ones that Ballard and others are working on make more sense than 7 kW units that Plug Power has. Given that there are other fc technologies out there that are much more efficient than PEM at what should be the same or lower cost per kW, they make even more sense. That is the kind that ERC makes.
So while neither I nor anyone else knows yet knows who will succeed, as a speculation the odds make ERC seem the better bet. Its market cap is still well under $100 million, whereas Plug Power's is around $1 billion. What has kept ERC's cap so low is that it hasn't made any deals with "strategic partners" yet, intentionally so. The idea was to develop the technology to the point where all the technical issues were solved before making any deals; that would prevent excessive dilution prematurely.
Investors, not unreasonably, believe that they can't figure out on their own who will be successful, so use the number or quality of strategic partners as a proxy for likelihood of success. It was only after Ballard signed a deal with DCX that its stock started rolling, and the same was true of MKTY after its GE deal. The fact that the GE deal was lopsidedly in GE's favor passed unnoticed - just being in bed with GE was good enough for MKTY investors.
What I am suggesting is that ERC appears to be at the stage that Ballard and Plug were prior to their outside endorsements, with a plausible chance that such things will be coming soon. One difference is that ERC has a finished technology - the only remaining issues are business ones. Another is that it has kept its share count extraordinarily low, so should it do what it takes to be worth the $1-3 billion values that the Ballard and Plug have been accorded, the impact on the stock price could be staggering.
Does that mean that in the long run ERC will necessarily succeed? Absolutely not. But as a speculation it seems a lot more attractive than others who also may not succeed, but have a massively larger market cap. |
