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Wall Street Transcript Interview with Pavel Molchanov of Raymond James (RJF): Niche Opportunities in Solar Energy and Biofuels Despite Sector Headwinds

67 WALL STREET, New York - August 27, 2012 - The Wall Street Transcript has just published its Utilities, Alternative Energy and Water Services 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 - Water Infrastructure Development - Irrigation and Metering Technology - Water Industry Consolidation

Companies include: Real Goods Solar, Inc. (RSOL), General Electric Co. (GE), Siemens AG (SI), Echelon Corporation (ELON), Sasol Ltd. (SSL) and many others.

In the following excerpt from the Utilities, Alternative Energy and Water Services Report, an expert analyst from Raymond James discusses the outlook for selected alternative energy stocks:

TWST: In your recent industry report, you wrote it is important to debunk the myth that a temporary period of depressed oil prices marks the death knell for these emerging technologies. Would you elaborate? What do you believe will be the impact of oil prices on alternative fuel companies?

Mr. Molchanov: When looking at renewable fuel companies that are public, we can differentiate between two types. One is commercial-scale producers, and generally this will be in the ethanol and biodiesel arenas. The second category comprises the early stage advanced, or second-generation, biofuel developers that are not yet in commercial production. It goes without saying that for companies that are producing large volumes of product currently, declining oil prices certainly do not help. Again, that's true of ethanol and biodiesel. For companies that are early stage, lower oil prices also do not help in terms of investor sentiment, but when it comes to the underlying business, oil price swings actually have very little effect.

Let's look at some of the specific publicly traded companies. KiOR (KIOR) has zero revenue for the time being. Its first commercial plant is expected to start up late in the year. Gevo (GEVO) just started up its first commercial plant in June and is selling small quantities into the chemical market. Solazyme (SZYM) has limited revenue, currently producing mainly cosmetics from renewable feedstocks. Amyris (AMRS) also has limited revenue for the time being, as it's producing specialty chemicals, such as flavors and fragrances. To be clear, none of these companies are producing fuel on a large scale yet.

Then, there is Codexis (CDXS), which is not a biofuel producer on its own, but more of a derivative. Codexis has sizable product sales, but they come from its pharmaceutical business. For now, Codexis is an enzyme provider for the pharmaceutical industry and eventually for cellulosic biofuels.

The most recent IPO in the space is Ceres (CERE), which is an energy crop company. It is also a derivative on biofuels in terms of providing seeds for energy crops, like sweet sorghum. It has a small amount of sales in Brazil, but again its economics are not directly linked to the price of oil.

In the context of the Raymond James' energy group's view on oil prices, which is to say our belief that prices will not bottom until mid-2013, we don't think the advanced biofuel stocks are problematic. To be clear, these stocks are speculative and risky by their nature as early-stage companies, but near-term oil price weakness is not a major issue for them because they have so little current production to begin with.

TWST: Last time we spoke, you said you expected several IPOs in the biofuel and biochemical sector. Has that come to fruition and what is the resulting impact for the sector as a whole?

For more from 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.