batteries and energy storage technology

Moody’s, the credit rating agency that gave Exide a tough time a decade ago is once again putting the company’s financial performance under the microscope.

Exide Technologies has seen weak operating performance over the last two financial quarters that has resulted in a poor credit rating.

Moody’s Investor Services changed Exide’s rating outlook from stable to negative. The company’s rating is categorised as highly speculative in the categories of Corporate Family and Probability of Default Rating, as well as its liquidity rating.

In an attempt to remedy this, and raise its credit rating back to its previous level, the company has closed battery transportation and recycling facilities in Tennessee, Texas and Pennsylvania. The company hopes the savings on operational costs from closing these facilities will improve earnings for 2013.

These combined actions will bring North American capacity down to demand level and limit the company’s exposure to volatile core costs related to recycling.

The company could be in further trouble if it cannot manage fluctuations in commodity costs; if the global demand for battery products dips; or not being able to offset lower demand with restructuring savings could lower operating performance.

If Exide cannot achieve a sequentially consecutive improvement in operating profits, Moody’s could further downgrade it.

The company can be considered for a stable rating when it can sustain EBIT (total expense from interest payments) over 1.0x; generate positive free cash flow; and maintain an adequate liquidity profile.

The sale of the smelter in Frisco, Texas should gain the company US$37million, which will strengthen the company’s US$74 million in cash on its September 2012 balance sheet.

Exide's ‘highly speculative’ Corporate Family Rating of B3 reflects the company's business focus on markets that enjoy greater stability. The automotive aftermarket replacement battery market represents about 75% of Exide's transportation revenues (44% of total revenues). About half of Exide's revenues are generated in North America where industry reports indicate shipments of both aftermarket and OEM batteries have increased on a year-to-date basis through October 2012. 

UK-based Intelligent Energy is the in Britain, and one of the few companies in the world, to make a profit from fuel cell development.

Intelligent Energy has been developing fuel cell technology to be used in cars, power stations and portable electronic devices for 20 years.

Just two years ago Intelligent Energy made a £15million loss, which it has now turned into a £7.8million profit after revenues surged in 2012 by 269%. This demonstrates the considerable growth in the fuel cell industry in recent years.

Intelligent Energy credits a joint venture with Suzuki to manufacture fuel cells for cars as enabling it to become profitable.

It is also leading a consortium to introduce zero carbon emission fuel cell electric taxis to London, is working on fuel cells for back-up power systems to replace traditional diesel generators and has a joint venture with SSE to develop fuel cell combined heat and power systems for use in the home and industry.

Finnish gas engine manufacturer Wärtsilä is to engineer and supply a 225 MW power plant to South Texas Electric Cooperative (STEC) in the USA.

The STEC Red Gate power plant will be located in Hidalgo County, Texas and is scheduled to be in commercial operation by summer 2014. The plant will be powered by 12 Wärtsilä 50SG engines running on natural gas.

The new Red Gate power plant is designed to meet BACT (Best Available Control Technology) pollution standards as mandated by the United States Clean Air Act.  Wärtsilä  said one of the benefits of the 50SG engine is that its high simple-cycle efficiency is achieved with minimal water consumption.

Wärtsilä has also signed a maintenance agreement to provide technical and operational assistance with maintenance planning, technical advisors, spare parts, and an on-site inventory.

China has published a white paper confirming its position on rare earth elements following a complaint filed to the World Trade Organisation.  The US, EU and Japan protested China are limiting their export of rare earth elements to protect domestic industries. China has rebuked this claim and cites mounting environmental damage by over-mining as the reason for slowing its mining programme.
The country is now being criticised for manipulating its estimation of reserves held. Previously they claimed to have 30% of the global reserves but now state it is closer to 20%. The Chinese government is fearful of the environmental impact of over mining.  The country has already come under much scrutiny for its poor environmental track record so vigilance should be welcomed. However some critics fear the re-estimation and slower mining of reserves could have more to do with keeping prices up than concerns for the land they come from.
Industries rely heavily upon rare earth elements and will have to look elsewhere for resources if China is to stand by its conviction.  Greenland could hold the answer, there is an estimated quarter of the elements required globally hidden beneath its ice.  Alternatively countries could follow suit with South-East Asia and by ‘urban mining’ – reclaiming used materials from landfill sites.