Another piece in the publicity jigsaw:
Dow Jones Newswires -- March 23, 2000
Superconductors Heating Up To Be Next Hot Utility Tech
By CHRISTINA CHEDDAR
NEW YORK -- The last time high-temperature superconductor companies were stealing headlines
Ronald Reagan was president and "Top Gun" and "Crocodile Dundee" were battling it out at the box
office.
A lot can happen in 14 years.
To start with, utilities aren't what they used to be. "What was once a staid old industry has become a
trillion dollar hotpot," said Deutsche Banc. Alex Brown analyst Edward Tirello. He said the market's
tremendous appetite for technology is spilling over to the utility sector. The feeding frenzy that drove
up fuel cell stocks is looking for more food, and high-temperature superconductors, or HTS, which
allow electrons to be transmitted unimpeded by resistance, could be the next beneficiary of this
interest.
Within the past month, superconductor wire companies American Superconductor Corp. (AMSC)
and Intermagnetics General Corp. (IMG) have set new 52-week highs. While the stocks have more
recently fallen back from those new peaks, their trading patterns have become more volatile. For
example, American Superconductor shares closed Wednesday up 23.7% at 52 1/4, without any
news from the company. Intermagnetics also gained 4% to 21, also without any official word from
the company.
Fuel-cell maker Plug Power Inc.'s (PLUG) tremendous success is lifting the tide for anybody focused
on power technologies, said Phil Giudice, vice president of Energy Industries in the Boston office of
Mercer Management Consulting. Plug shares, which were priced at $15 in their October debut,
traded as high as 156 1/2 in January.
Investors also see that gas and electricity sales are a $300 billion business, and utility deregulation is
causing a lot of volatility that can create new opportunities for investors, Giudice said.
Environmental concerns, higher energy prices and increased power needs also have come together to
revive interest in superconductivity. But despite working prototypes, wide-spread commercialization
is still three to five years away, Giudice said.
Electricity Transmission Prototypes In Progress
Since early January, three 100-foot long HTS cables with HTS tape manufactured by Intermagnetics
General, of Latham, N.Y., have been transmitting electricity at the Carrolton, Ga., headquarters of its
partner, SouthWire Co.
Intermagnetics also is working with the Los Alamos National Laboratory to develop its
second-generation HTS tape for devices such as transmission cables, transformers, motors,
generators and fault current controllers. Chief Executive Glenn Epstein expects to commercialize his
company's products over the next three to five years.
On Thursday, Intermagnetics, which already uses superconductive technology in its medical
diagnostics products, launched a new unit called SuperPower LLC to focus solely on developing the
HTS market. The unit will be particularly focused on HTS applications for the electric utility industry.
Meanwhile, Pirelli Cables & Systems, of Columbia, S.C., will use American Superconductor's
ceramic wire to make a power cable that is cooled by a liquid-nitrogen system created by Lotepro
Corp., a unit of Linde AG (G.LIN).
The cable will be used in a Department of Energy project at DTE Energy Co.'s (DTE) Detroit Edison
unit later this year. The project, which should be operational by 2001, will be the first real-world
installation of HTS cable to deliver electricity in a utility network.
The project highlights how important HTS cables will be in crowded urban environments where it is
nearly impossible to gain right-of-way clearance to build new power lines. With the new technology,
utilities will be able to upgrade aging infrastructure by pulling out the copper wire and snaking HTS
cable through the conduits that once held copper cable. Since HTS cable can handle more capacity,
the cables will immediately be able to handle greater demands for electricity. In other words, HTS
cable allows electric utilities to boost their bandwidth, said American Superconductor spokesman
Kevin Coates, stealing a phrase from the telecommunications world.
In the Detroit installation, only 250 pounds of superconducting wire will be needed to equal the
capacity of 18,000 pounds of copper wire, said Jim Daley, Superconductivity Program Manager for
the U.S. Department of Energy's Office of Power Technology.
HTS cable also has an economic advantage, said American Superconductor Chief Executive Greg
Yurek. The company recently gave an estimate to a utility that projected the cost of a traditional
copper cable upgrade at $80 million, he said. According to Yurek, about 70% of the estimated cost
was the price of digging up streets to lay cable. Yurek said his company can cut that cost to $40
million by retrofitting the system with HTS cable.
The reduced size of HTS transformers and the fact that they are cooled by liquid nitrogen, not oil,
which can leak from the conduit or catch on fire, means utilities will have more options about where
transformers can be placed.
Electricity Shortages Adding To Market Interest
Perhaps the most significant reason for the latest fascination with HTS cables is that the U.S. power
grid isn't expected to keep up with rising demand for electricity, Tirello said.
During transmission, resistance cuts U.S. electricity capacity by 10% to 15%, Giudice said.
Theoretically, HTS cable would recover that capacity.
Since electrons could spin around and around on HTS coils forever without loosing voltage,
HTS-based storage systems would be more reliable. And as more and more businesses move online,
demanding continuous operation 24 hours a day, seven days a week, the need for reliability only
grows more acute.
Unreliable power costs U.S. industry $50 billion a year, according to a study by EPRI, a Palo Alto,
Calif., think tank formerly known as the Electric Power Research Institute, and an investor in the
Detroit Edison project. The actual cost could be even higher because the study, published in
October, doesn't fully tally the impact of outages to the ever-expanding number of Internet-based
businesses.
"It's a number that is extremely hard to get your arms around," said Stephen Gehl, EPRI director of
Strategic Technology & Alliances.
Internet-based businesses aren't the only ones who need reliable power. A momentary brownout can
shut down factory production lines for hours.
Gehl estimates that an outage at Hewlett-Packard Co.'s (HWP) Oregon chip manufacturing plant can
cause temperature fluctuations that can result in the loss of an entire day's production, which is valued
at about $30 million. The estimate is even more striking when you compare it with the $65 million
Gehl estimates the entire company spends on electricity each year.
Perhaps the biggest threat to the future of superconductivity is deregulation, said industry watchers.
While no one has an interest in making the lights go out, there is uncertainty about how energy needs
will be met in a deregulated market, said Gerald Keenan, a partner at PriceWaterhouseCoopers
LLP.
"No one knows how you are going to make money in the transmission business," Giudice said. He
expects engineers will be able to solve glitches in HTS systems, but the questions about who will
invest in upgrading transmission systems have yet to be answered.
-Christina Cheddar; Dow Jones Newswires; 201-938-5166
christina.cheddar@dowjones.com |
