Cellulosic Biofuel Plants Operating in North America Tripling Production by End of 2014 and PV Module Price Drop from $4 per Watt in 2008 to $.65 per Watt by End of 2014: A Wall Street Transcript Interview with Pavel Molchanov

Wall Street Transcript

67 WALL STREET, New York - February 14, 2014 - The Wall Street Transcript has just published its Alternative Energy & Utilities Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Outlook for Biofuels and Biochemicals - Asia Pacific Demand for Solar Energy - Grid Parity Timelines for Alternative Energy - Solar Energy Pricing - Government Subsidies and Regulation - Solar Growth Drivers and Headwinds - Regulatory Headwinds for U.S. Utilities

Companies include: EnerNOC, Inc. (ENOC), Advanced Energy Industries, In (AEIS), Chart Industries Inc. (GTLS), PetroChina Co. Ltd. (PTR)

In the following excerpt from the Alternative Energy & Utilities Report, an expert analyst discusses the outlook for the sector for investors:

TWST: We talked a lot about biofuels last time we spoke. What is your outlook for biofuels in 2014? Do you think they will enter the mainstream, and why or why not?

Mr. Molchanov: While some biofuels are in the mainstream already, what are not in the mainstream are next-generation biofuels and particularly cellulosic biofuels. Of course, things like corn ethanol in the United States and sugarcane ethanol in Brazil have been widely used on a very large scale, with multibillion dollar markets for many years, so that's not new. But advanced and cellulosic biofuels are something that is emerging in the industry.

One of the realities in recent years has been that it is taking longer than many industry players would have expected to scale up these emerging technologies, and to some extent, it's been an issue of just pure execution. In other words, lots of operational and technological hurdles need to be overcome as part of commercialization, and this is true for companies that use fermentation as a process as well as those that use a thermochemical process. Also, financing has been a source of difficulty, because the public markets have not been very receptive for these companies.

Despite that, by the end of 2014 there should be at least six industrial-scale cellulosic biofuel plants operating in North America, versus only two currently, so hopefully it triples in the next 12 months. That's still not a huge amount of production in the grand scheme of things. Even when all these plants come on line, that would still be only about 100 million gallons in total. For some perspective, corn ethanol has production capacity of about 14 billion gallons in the United States, so the cellulosic ramp is very much a work in progress, but it is a good start.

One of the issues on the policy front that investors will be watching this year is what happens in Washington with regard to the Renewable Fuel Standard. To be clear, there is not much push in Congress to change the RFS in any meaningful way. The bigger issue is whether the EPA will follow through with a haircut of its production targets to the extent that its original proposal suggested last fall. The biofuel industry is not happy about these proposed haircuts, but on the other hand the petroleum fuel industry doesn't think they go far enough, so we'll see which way the EPA goes. My guess is they will probably upsize the blending targets because I think they want to be receptive to the needs of the biofuel industry, but the biofuel industry is not likely to get everything that it wants either.

TWST: In which direction do you think PV module prices will go in 2014, and what are the implications for the solar sector?

Mr. Molchanov: PV module prices have been quite stable over the past six months. They actually ticked up in the first half of 2013 and have been quite stable in the last six months. Of course, they are still dramatically lower than they were even two years ago, to say nothing of five years ago. Back in 2008 module prices were $4 a watt. Today they're at $0.70, so they're certainly not going back anywhere near those levels. My sense is they probably have some room to tick down this year, not dramatically, maybe 5% to 10% lower by the end of the year, so my guess is they could be at about $0.65 by the end of the year...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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