Should I buy stock in Capstone Microturbines?
August 28, 2008 1:04 PM Subscribe
Are microturbines a serious contender in the future of world energy production? And if so, is investing now prudent?
While researching radical directions in power production, I came across microtubines. While less than radical—they still use natural gas (and gasoline etc) as a fuel source, though there is hope—they seem radically more efficient and cleaner.
So, one thing leads to another, and next thing you know I've spent hours and hours going over the background of Capstone Turbine. Now I am thinking of buying stock. Like seriously for me. Like to the tune of fifty grand.
So, am I missing anything about microturbines? Or on the other hand, could it be that microturbines as really as important as I am understanding? And are any other microturbines manufacturer other than Capstone Microturbines worth noting and serious contenders in the field of microturbines?
While researching radical directions in power production, I came across microtubines. While less than radical—they still use natural gas (and gasoline etc) as a fuel source, though there is hope—they seem radically more efficient and cleaner.
So, one thing leads to another, and next thing you know I've spent hours and hours going over the background of Capstone Turbine. Now I am thinking of buying stock. Like seriously for me. Like to the tune of fifty grand.
So, am I missing anything about microturbines? Or on the other hand, could it be that microturbines as really as important as I am understanding? And are any other microturbines manufacturer other than Capstone Microturbines worth noting and serious contenders in the field of microturbines?
Now I am thinking of buying stock. Like seriously for me. Like to the tune of fifty grand.
Do you already have $450,000 invested in the market already? If not, don't invest that much in one stock. Speculation itself is pretty risky, but doing it without proper diversification is just plain foolish.
Also, don't confuse a sector with a company, or assume that investing in a company in a growing sector will always be profitable. A lot of people figured out that the internet was the next big thing in the late 90s, but many of those people lost large amounts of money on foolish investments. Yahoo and Google looked very similar on paper, but they had vastly different performance over the years.
It may seem boring, but usually the smartest way to invest in stocks is to just buy a general stock market index fund and let it sit in your account. Professionals have a very hard time consistently beating that method, let alone individual amateur investors.
posted by burnmp3s at 1:27 PM on August 28, 2008
Do you already have $450,000 invested in the market already? If not, don't invest that much in one stock. Speculation itself is pretty risky, but doing it without proper diversification is just plain foolish.
Also, don't confuse a sector with a company, or assume that investing in a company in a growing sector will always be profitable. A lot of people figured out that the internet was the next big thing in the late 90s, but many of those people lost large amounts of money on foolish investments. Yahoo and Google looked very similar on paper, but they had vastly different performance over the years.
It may seem boring, but usually the smartest way to invest in stocks is to just buy a general stock market index fund and let it sit in your account. Professionals have a very hard time consistently beating that method, let alone individual amateur investors.
posted by burnmp3s at 1:27 PM on August 28, 2008
To get into markets like this you're better off investing in mutual funds like the Winslow Green Growth Fund, the Winslow Green Solutions Fund, or the Guinness Atkinson Alternative Energy Fund. These people work full time understanding not only the technology trends but also the specifics of the companies competing to bring each technology to market. You might be lucky with your dart board and single stock purchase, but then you might not.
posted by alms at 1:45 PM on August 28, 2008
posted by alms at 1:45 PM on August 28, 2008
So, am I missing anything about microturbines?
The real question for the future is what energy sources we will use, not how we'll use them. Microturbines are not an energy source, they're one of many mechanisms for converting something flammable into electricity.
That kind of conversion system is not revolutionary. If all the flammable fluids (which is what microturbines use as fuel) are scarce and expensive, then microturbines will not be widespread or effective.
There are also serious efficiency concerns. Perhaps the microturbines themselves are more efficient at turning fuel into electricity, but how much extra energy is needed for dispersed delivery of fuel to everyone who owns a microturbine? Depends on the fuel, of course; for gas, it's the same piping system that's already in place. However, there isn't enough natural gas for this country to rely on it as the primary source of energy for electricity generation. (It's also too expensive, even now, and as demand rises the price will rise even further.) Any kind of petroleum fuel has to be delivered to homes in trucks, the way heating oil is.
Also, as to the efficiency claims, I think they're comparing microturbines to equivalent generators of comparable capacity, i.e. diesel generators, and they probably are more efficient than that. But huge power plants are much more efficient overall than small generators, and electricity distribution via wire is quite efficient.
Moreover, huge power generators can burn coal, which isn't practical for a dispersed generation system based on microturbines. Coal is cheap and plentiful here in North America. The US is the Saudi Arabia of coal, when it comes to anthracite and bituminous coal, the two most useful kinds. We own 27% of the world supply.
posted by Class Goat at 1:48 PM on August 28, 2008
The real question for the future is what energy sources we will use, not how we'll use them. Microturbines are not an energy source, they're one of many mechanisms for converting something flammable into electricity.
That kind of conversion system is not revolutionary. If all the flammable fluids (which is what microturbines use as fuel) are scarce and expensive, then microturbines will not be widespread or effective.
There are also serious efficiency concerns. Perhaps the microturbines themselves are more efficient at turning fuel into electricity, but how much extra energy is needed for dispersed delivery of fuel to everyone who owns a microturbine? Depends on the fuel, of course; for gas, it's the same piping system that's already in place. However, there isn't enough natural gas for this country to rely on it as the primary source of energy for electricity generation. (It's also too expensive, even now, and as demand rises the price will rise even further.) Any kind of petroleum fuel has to be delivered to homes in trucks, the way heating oil is.
Also, as to the efficiency claims, I think they're comparing microturbines to equivalent generators of comparable capacity, i.e. diesel generators, and they probably are more efficient than that. But huge power plants are much more efficient overall than small generators, and electricity distribution via wire is quite efficient.
Moreover, huge power generators can burn coal, which isn't practical for a dispersed generation system based on microturbines. Coal is cheap and plentiful here in North America. The US is the Saudi Arabia of coal, when it comes to anthracite and bituminous coal, the two most useful kinds. We own 27% of the world supply.
posted by Class Goat at 1:48 PM on August 28, 2008
I think you're missing a tremendous point: Who are this company's customers?
Our MicroTurbine is suitable for applications ranging from remote locations to city centers, delivering clean, high quality power from a wide variety of fuels, with superior safety and emissions. It offers the best value for clean and reliable small-scale power production.
Do "city centers" need this product? Why? How is Capstone acquiring and keeping customers? Who is this company competing against for business? What are those companies doing?
Never ask, "should I invest in this industry," unless you're talking about some managed fund. Ask, "should I invest in this this company?" Because, after all, you're investing in a real company run by real people, not an industry or an idea.
posted by Cool Papa Bell at 1:59 PM on August 28, 2008
Our MicroTurbine is suitable for applications ranging from remote locations to city centers, delivering clean, high quality power from a wide variety of fuels, with superior safety and emissions. It offers the best value for clean and reliable small-scale power production.
Do "city centers" need this product? Why? How is Capstone acquiring and keeping customers? Who is this company competing against for business? What are those companies doing?
Never ask, "should I invest in this industry," unless you're talking about some managed fund. Ask, "should I invest in this this company?" Because, after all, you're investing in a real company run by real people, not an industry or an idea.
posted by Cool Papa Bell at 1:59 PM on August 28, 2008
Microturbines are a more efficient alternative to small diesel generators. They're useful for emergency generation (hospitals, data centres) and portable generation, but they still rely on the same old fossil fuels that we're running out of. They're definitely *not* an alternative energy system, or a replacement for big fossil fuel or nuclear power stations on the grid. In effect, they're just bringing some of the efficiencies of big power stations down to small portable generators.
If you think there's going to be a BIG upsurge in the purchase of small generators, because of disaster planning for businesses or people, or as part of a big 'off-the-grid' movement as supplements to personal energy generation via renewables (solar, wind turbine etc) then fair enough, they might be worth a small investment via a fund of some sort.
Directly buying a lot of stock with your own money because they're the next 'big thing' in energy? Sorry, you'd be utterly mad.
posted by ArkhanJG at 2:18 PM on August 28, 2008
If you think there's going to be a BIG upsurge in the purchase of small generators, because of disaster planning for businesses or people, or as part of a big 'off-the-grid' movement as supplements to personal energy generation via renewables (solar, wind turbine etc) then fair enough, they might be worth a small investment via a fund of some sort.
Directly buying a lot of stock with your own money because they're the next 'big thing' in energy? Sorry, you'd be utterly mad.
posted by ArkhanJG at 2:18 PM on August 28, 2008
Class Goat, if you look at the second link, it references an application that uses fusion as the heat source, rather than any sort of chemical combustion.
Or, putting it another way, it looks like it is going to be used in a thermal solar application using superheated air as the working fluid, rather than the more commonly used steam. The customer is an Israeli company without a website, so it is hard to come to even a crude assessment as to why an air-driven microturbine represents a significant improvement over the more traditional thermal solar approaches, but that doesn't mean I won't take some wild-ass guesses.
It appears that the advantage of combustion-powered microturbines is that their compactness allows them to be deployed in situations where it would be difficult to run grid power (like a drilling platform). That compactness, combined with a reasonably fuel->electricity conversion efficiency also makes them practical for deployment where additional efficiency gains can be realized by application of waste heat for heating or other applications.
They may make it practical to deploy thermal solar in similar situations, but it doesn't sound like they'd offer significant efficiency gains over steam turbines for larger thermal solar installations. I can imagine that reducing the requirement for fresh water could also be valuable in some situations though.
Of course, all of this just represents my wild-assed guesses, and doesn't really answer whether there is a big upside for this approach to alternative energy, or whether capstone is well positioned to benefit from it.
My advice, unless you plan to spend a significant part of your free time as an amateur industry analyst, put most of your money into indexed funds, some into sector funds, and if you want to pick individual stocks, keep your total investment in them to a few thousand and treat it more as an investment in your education.
posted by Good Brain at 2:29 PM on August 28, 2008
Or, putting it another way, it looks like it is going to be used in a thermal solar application using superheated air as the working fluid, rather than the more commonly used steam. The customer is an Israeli company without a website, so it is hard to come to even a crude assessment as to why an air-driven microturbine represents a significant improvement over the more traditional thermal solar approaches, but that doesn't mean I won't take some wild-ass guesses.
It appears that the advantage of combustion-powered microturbines is that their compactness allows them to be deployed in situations where it would be difficult to run grid power (like a drilling platform). That compactness, combined with a reasonably fuel->electricity conversion efficiency also makes them practical for deployment where additional efficiency gains can be realized by application of waste heat for heating or other applications.
They may make it practical to deploy thermal solar in similar situations, but it doesn't sound like they'd offer significant efficiency gains over steam turbines for larger thermal solar installations. I can imagine that reducing the requirement for fresh water could also be valuable in some situations though.
Of course, all of this just represents my wild-assed guesses, and doesn't really answer whether there is a big upside for this approach to alternative energy, or whether capstone is well positioned to benefit from it.
My advice, unless you plan to spend a significant part of your free time as an amateur industry analyst, put most of your money into indexed funds, some into sector funds, and if you want to pick individual stocks, keep your total investment in them to a few thousand and treat it more as an investment in your education.
posted by Good Brain at 2:29 PM on August 28, 2008
Oh, and watch out for phrases like this, when talking about their partnership with heliofocus using their solar concentrators: "This fuel free renewable solution offers higher solar conversion efficiencies over traditional solar photovoltaic systems."
Yes, because traditional solar photovoltaics are - bluntly - crap. New solar voltaics systems are much improved. They also very carefully don't compare it to the power output of fossil fuels, which is what they are really competing with in the next 20 years.There's been a lot of work on solar concentrators with ways to convert the heat to useful work, and AFAIK stirling engines are the current darling of the field, if they can sort out a better heat transferring fluid than liquid sodium, though I stand to be corrected by a current energy expert.
There's a lot of research going into true alternative energy sources, and it is possible guys like this will play a small part in that. Spread your bets, invest in an energy fund that stays abreast of the current developments. Don't get suckered by marketing blurb.
posted by ArkhanJG at 2:32 PM on August 28, 2008
Yes, because traditional solar photovoltaics are - bluntly - crap. New solar voltaics systems are much improved. They also very carefully don't compare it to the power output of fossil fuels, which is what they are really competing with in the next 20 years.There's been a lot of work on solar concentrators with ways to convert the heat to useful work, and AFAIK stirling engines are the current darling of the field, if they can sort out a better heat transferring fluid than liquid sodium, though I stand to be corrected by a current energy expert.
There's a lot of research going into true alternative energy sources, and it is possible guys like this will play a small part in that. Spread your bets, invest in an energy fund that stays abreast of the current developments. Don't get suckered by marketing blurb.
posted by ArkhanJG at 2:32 PM on August 28, 2008
Upon re-reading, I should point out the hot working gas in a stirling engine certainly doesn't have to be sodium, but the last big scale projects I saw them on were using sodium.
posted by ArkhanJG at 2:41 PM on August 28, 2008
posted by ArkhanJG at 2:41 PM on August 28, 2008
Response by poster: Oh! I didn't mean to say I was worried about losing the $50k or that it's loss represented my all, or that I needed advice on investing. (Sorry/but thanks!) Rather, I consider $50k a serious investment in a more grand and robust portfolio. The loss of such an investment in this situation while of course regrettable and undesirable would be tolerable.
By "seriously for me," my intended meaning was I am thinking of leaning on this (individual) stock a little heavier than ordinarily.
Capstone Microturbines are being used in city centers successfully already. In public buses, for instance. I was researching for "the next big thing," when what I learned about instead was the practicality of microturbines with contemporary fuel sources. It is my intuition that energy production will undergo a radical and utter (overall) redirection well before 2020. Nonetheless, there is plenty of time between now and then/that Next Big Thing, and efficiency and cleanliness combined with practical application seems to be the hallmark of the Capstone microturbines.
On all appearances, the company is benefiting from consistency and solid operations.
That being so (and if that is so is an aspect of the question I was asking), do any mefites have any hands-on experience or first-hand knowledge of microturbines and their use and application which would contribute to my grokking Capstone and microturbines?
The solar-powered microturbine is of course particularly exciting. Nonetheless, as pointed out it, is too pie-in-the-sky at the moment to be a swingpin in my decision making.
posted by humannaire at 3:31 PM on August 28, 2008
By "seriously for me," my intended meaning was I am thinking of leaning on this (individual) stock a little heavier than ordinarily.
Capstone Microturbines are being used in city centers successfully already. In public buses, for instance. I was researching for "the next big thing," when what I learned about instead was the practicality of microturbines with contemporary fuel sources. It is my intuition that energy production will undergo a radical and utter (overall) redirection well before 2020. Nonetheless, there is plenty of time between now and then/that Next Big Thing, and efficiency and cleanliness combined with practical application seems to be the hallmark of the Capstone microturbines.
On all appearances, the company is benefiting from consistency and solid operations.
That being so (and if that is so is an aspect of the question I was asking), do any mefites have any hands-on experience or first-hand knowledge of microturbines and their use and application which would contribute to my grokking Capstone and microturbines?
The solar-powered microturbine is of course particularly exciting. Nonetheless, as pointed out it, is too pie-in-the-sky at the moment to be a swingpin in my decision making.
posted by humannaire at 3:31 PM on August 28, 2008
Best answer: First, a disclosure: I have money in Capstone.
My best advice is as follows.
For awesomeness and encouragement, do your due diligence, and find that they've got a tremendous backlog of orders, are actively working on increasing rates of production, and that their product is a good one: see 90% (!) efficiency with these doodads here.
For something to chew on, consider how microturbines can be used as a bridge to get people off the grid, and how CPST's turbines alone provide the advantages of lower maintenance from their design: one moving part, air-foil cushions, etc. Also see that these microturbines can be run off of resources that otherwise would go to waste: sour gas, flare gas, etc.
Many of the alternative power generation methods are in their infancy and have significant hurdles to overcome. They deserve every penny they can get to encourage research and development, but this does not necessarily make them a good company to invest in.
The solar-powered microturbine is indeed kinda "out there," but it's an interesting thing to think about: how many conventional photovoltaics would you need, and how much space and maintenance are required for them, to equal the potential output of an arrayed mirror system + microturbine?
Another similar thought: how much of either tech would be needed to power a large building, such as some of the ones in NYC which have already turned to CPST microturbines? Plaster every single flat surface of the building, and you still won't be able to provide stable power to the whole building.
Of course, there's the bad: CPST has only recently begun to turn around. They've got production issues they're trying to work on. They have a huge backlog of orders with a decent turnaround time, but what're they doing to improve this? Management predicts being cashflow positive in December of this year, but when will they become truly profitable?
The stock price itself is low enough for massive amounts of shorting. There are a lot of shares floating around, too, though institutional ownership has been increasing (to around 45% now). There's a lot of room for them to grow, but there's also a lot of room for them to screw up.
What got me to invest in the company? I've been following them since the dot-com ages and read something in Wired about microturbines. I read up on CPST. I was poor. I was also glad I didn't invest back in their crazy $90/share time. But I think they're doing things better, and I believe that they have a good product while maintaining my belief that we should continue to support research in fuel cells and other ways of producing electricity.
Anyway, that's my spiel. My personal take is that they're going to kick ass as a company. But invest only that part of your portfolio that allows for you to do what you want with whatever company. And don't listen to me: do your due diligence.
Soon, I might make enough money to pay for the MeFight Club server for, like, the next 28483 years.
Feel free to MeMail me if you want to talk about this more.
posted by herrdoktor at 7:11 PM on August 28, 2008
My best advice is as follows.
For awesomeness and encouragement, do your due diligence, and find that they've got a tremendous backlog of orders, are actively working on increasing rates of production, and that their product is a good one: see 90% (!) efficiency with these doodads here.
For something to chew on, consider how microturbines can be used as a bridge to get people off the grid, and how CPST's turbines alone provide the advantages of lower maintenance from their design: one moving part, air-foil cushions, etc. Also see that these microturbines can be run off of resources that otherwise would go to waste: sour gas, flare gas, etc.
Many of the alternative power generation methods are in their infancy and have significant hurdles to overcome. They deserve every penny they can get to encourage research and development, but this does not necessarily make them a good company to invest in.
The solar-powered microturbine is indeed kinda "out there," but it's an interesting thing to think about: how many conventional photovoltaics would you need, and how much space and maintenance are required for them, to equal the potential output of an arrayed mirror system + microturbine?
Another similar thought: how much of either tech would be needed to power a large building, such as some of the ones in NYC which have already turned to CPST microturbines? Plaster every single flat surface of the building, and you still won't be able to provide stable power to the whole building.
Of course, there's the bad: CPST has only recently begun to turn around. They've got production issues they're trying to work on. They have a huge backlog of orders with a decent turnaround time, but what're they doing to improve this? Management predicts being cashflow positive in December of this year, but when will they become truly profitable?
The stock price itself is low enough for massive amounts of shorting. There are a lot of shares floating around, too, though institutional ownership has been increasing (to around 45% now). There's a lot of room for them to grow, but there's also a lot of room for them to screw up.
What got me to invest in the company? I've been following them since the dot-com ages and read something in Wired about microturbines. I read up on CPST. I was poor. I was also glad I didn't invest back in their crazy $90/share time. But I think they're doing things better, and I believe that they have a good product while maintaining my belief that we should continue to support research in fuel cells and other ways of producing electricity.
Anyway, that's my spiel. My personal take is that they're going to kick ass as a company. But invest only that part of your portfolio that allows for you to do what you want with whatever company. And don't listen to me: do your due diligence.
Soon, I might make enough money to pay for the MeFight Club server for, like, the next 28483 years.
Feel free to MeMail me if you want to talk about this more.
posted by herrdoktor at 7:11 PM on August 28, 2008
Wow. Live preview looked ok, but final post didn't. My apologies.
posted by herrdoktor at 7:12 PM on August 28, 2008
posted by herrdoktor at 7:12 PM on August 28, 2008
This thread is closed to new comments.
That being said, energy stocks are definitely a tough market, and you never know what might come around the corner that will displace microturbines. Also, if $50k is more than you are comfortable losing entirely, then this might not be a wise move, as individual stocks are a high-risk investment. Perhaps find an exchange traded fund that focuses on alternative or clean energy products instead?
posted by Grither at 1:20 PM on August 28, 2008