Tuesday, 28 July 2015

Camco Clean Energy

Camco Clean Energy is a business in transition – and unrecognisable from the company that effectively hit the buffers in 2012 when the carbon trading market ground to a halt.
It is on the verge of something pretty significant, according to its broker finnCap, as it aims to become a world leader in large-scale liquid energy storage.
Okay, it is a firm in the early commercial phase; but if the technology takes off then we’ll be hearing a lot more about Camco over the next 18 months.
And in American contract manufacturer Jabil Circuit, which manufactures the iPhone for Apple, it has a partner with enough financial muscle and scale to make some very lofty ambitions a reality.

Camco’s REDT technology can trace its evolution back to NASA in the 1970s. It uses an electrolyte of vanadium and sulphuric acid to hold an electric charge for weeks and sometimes months at a time.
While this liquid energy storage has been around for something like 40 years, Camco is one of only two companies to have developed it to a level where it is commercially viable. The other is Cellstrom, which is now owned by the German green energy specialist Gildermeister.
It can be deployed to garner energy from renewable sources such as wind or solar that can be fed into the grid as and when it is needed and not just when it is blowing a gale or during a heatwave.

It can also be used to replace back-up generators that might be used by hospitals or by the telecommunications industry.
In fact Camco and Jabil are targeting four separate markets – utilities, telecoms, diesel genset replacement and the renewables industry.
The idea is the technology will be cheaper than what’s already out there and in most instances REDT is also likely to be a more efficient method of storing power.
At this point it must be pointed out there is more to Camco than energy storage – although the other two businesses won’t be long-term drivers of equity value.

Its African business, which used to advise on financing renewable energy projects, is now a fund manager that has won one mandate and expects to land more as the year progresses.
In the US it has a renewables arm, which doesn’t appear to be part of Camco’s long term focus.
In fact in recent deals it sold California carbon credits that will bring in up to US$3.9million and will help with its short term cash needs.
And, based on its last market update, it is also looking at potentially selling its American biogas arm, which should bring in funds enough to see it through to break-even.
‘It has to be stressed here the equity story is very definitely the battery,’ Camco chief executive Scott McGregor told Proactive Investors.
So the focus is on REDT and the commercial trials taking place in 12 locations around the world.
The locations of two have already been revealed – they are 1.68-megawatt-hour facility next to a wind farm on the Isle of Gigha in Scotland and 240-kilowatts supplying an eco-hotel in South Africa.
Ten other smaller units will be unveiled as the year progresses. The idea is to show potential customers just how cost effective its product is, rather than simply asking them to take it on trust.
‘Our view is we need to implement these systems and the demand will come,’ said CEO McGregor.
‘We have had plenty of interest from prospective customers. We want to focus on getting the initial 12 systems out there.’

The Jabil tie-up, which is a long term collaboration, is an interesting one in that it provides third party validation of the technology.
It also reveals the ambition of both sides as the US firm will be looking to mass produce units for sale around the world – so obviously believes REDT has legs.
‘Interestingly, they found us,’ said McGregor.
‘Jabil had a team searching storage globally because they wanted to get into the market. They decided they wanted to go into flow batteries.
‘After carrying out due diligence on number of companies they decided to go with us.’
Broker finnCap reckons Camco could be turning over £84million (115million euros) by 2018, which translates to operating profits £8.8million (12million euros) – and that it will break even the year before that.
Certainly this isn’t factored into the share price, which has marked time in the year to date and values the business at less than £15million. And this, for prospective investors at least, provides an opportunity.
In a recent note, finnCap analyst Raymond Greaves made this observation: ‘Camco is on the verge of turning itself into a pure-play on the commercial and utility-scale energy storage market – a market that is expected to grow exponentially at least to the end of the decade.
‘Its REDT energy storage business has developed a game-changing product that has been production and cost-engineered by Jabil Circuit, one of the world’s largest sub-contract manufacturers.’

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