Mr. Dille: Predominantly it's three sectors: One is pollution control, and that's predominantly companies that are looking at reducing emissions from coal- fired power plants. The other space is distributed generation and distributed power storage, which includes lithium-ion battery companies for hybrid vehicles or companies that will have alternative technology power storage, or essentially have some sort of distributed solution for power storage or power generation. And then the last space is more on the demand side of the equation and is related to the smart grid - they are really demand response and energy efficiency companies, whether it is EnerNOC (ENOC) or Comverge (COMV). So they are demand response providers, which is an energy efficiency- or callable-type power reserve-free utility to have on the electricity grid. So everything outside of solar and wind, pretty much.
TWST: What factors trigger some growth in the mid to long term for the companies
you cover?
Mr. Dille: So it's everything from pollution control to alternative vehicles. On
the pollution control side, I think what we've seen happen is the change in
administration and broader headwinds from the economic downturn. In the short
run, the administration has probably caused some disruption and lack of clarity
in direction of new policy, and what the new administration is going to set out
as policy for pollution control. Additionally, what we've seen through the
decline in the economy is also a decline in electricity demand and also a
decline in profitability metrics for utilities. And I believe this has really
reduced capital budgets and the utilities' propensity to spend on pollution
reduction and control technologies. That being said, for activated carbon in
particular there are strong incentives established by independent states to
control mercury from the coal-fired power plants that operate within their
territory. So despite what the lack of federal oversight looks like and despite
the propensity for the utilities to spend on pollution control, the state
mandates are really driving the marketplace for activated carbon. And
predominantly, the control of mercury is from coal plants.
Tickers included in this excerpt: CCC, COMV, ECNG.OB, ENOC, HEV
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