Zacks Industry Outlook Highlights: FuelCell Energy, Ballard Power Systems and Plug Power
CHICAGO, June 6, 2014 /PRNewswire/ -- Today, Zacks Equity Research discusses the Utilities, including FuelCell Energy (Nasdaq: FCEL-Free Report), Ballard Power Systems (Nasdaq: BLDP-Free Report) and Plug Power Inc. (Nasdaq: PLUG-Free Report).
Despite the assured demand for services, the utilities have to constantly meet the high expectations of its wide customer base, adapt to a changing global economic scenario, and upgrade technologies to meet stringent environmental norms. In fact, new technology to produce power at a cheaper rate and emerging alternative resources for the generation of green power is likely to drive the industry going forward.
The majority of new electricity in the next two decades in the U.S. will be generated from natural gas and renewable sources. Besides the abundance of natural gas, as many as 29 U.S. states and the District of Columbia have enforceable renewable portfolio standards or other renewable generation policies. We expect this count to go up, compelling producers to generate more green power to meet the renewable standards fixed by the states.
Fuel cell technology, an alternate method of power generation, has been making a lot of buzz lately. We, however, admit that this technology has a long way to go if it were to provide power plant solution on a large scale. The lead players in this field engrossed in R&D are FuelCell Energy (Nasdaq: FCEL-Free Report), Ballard Power Systems (Nasdaq: BLDP-Free Report) and Plug Power Inc. (Nasdaq: PLUG-Free Report). For now, it is a wait and see situation to find out whether fuel cell can offer a realistic solution to power generation and greenhouse gas emissions or whether its potential is only good on paper.
All said, utility operations globally depend on weather patterns that determine the extent of demand. The frigid weather in the U.S. during the last winter season showed how dependent we are on these utilities for basic needs.
To sum up, LNG exports will increase the profitability of the U.S. natural gas operators but the bottlenecks in granting permission are a concern. At the same time a concerted effort will have to be made to remove the funding requirement in the water utility sector. Otherwise the aging water infrastructure will lead to more wastage, leading to a hike in cost of operation and a related increase in the price of water supplied.
As for the electric utilities, we expect more investment in natural gas and alternate energy projects, wrenching the initiative from the pure-play coal based electricity companies.
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