Generally speaking, utilities or large energy users tend to be very thorough when contemplating any technology they are not familiar with. That applies even to systems already proven elsewhere.
Just a few years ago a significant Australian electricity generator undertook substantial "real world" testing of diesel engines so as to work out their actual fuel efficiency. They were considering some large units for peaking / backup generation at the time and weren't happy to take someone else's numbers on fuel efficiency, maintenance requirements etc. So they leased some of the same units they were looking at and put them into operation...
Utilities are generally fairly conservative. They won't likely be ordering anything more than a trial batch of BlueGen's until they've done their own "real world" testing over a number of years (ie until they break or at least need a major overhaul).
Now lets assume we dont know which utilities/partners of CFCL have been testing what and for how long.
Testing has been done to death already, in 6 months from today, those testers will know it all.
Frank,
But we do know. The company keeps telling us each time a utility buys one of them as if it is a pivotal moment.
Perhaps you should re-read what Smurf stated, they will do there own testing over time, probably years. There are only 12 out there now, the rest are yet to be delivered, the utilities need to get them installed before they START testing.
Do you not have an answer to my question about where you think the money will come from to keep going, given the current cash burn rate??
My take is a new share issue while the current share price rise is in progress as the logical place and time.
brty
One issue is credibility and financial backing of the supplier.Now lets assume we dont know which utilities/partners of CFCL have been testing what and for how long.
And we dont know any more than we did yesterday.
Testing has been done to death already, in 6 months from today, those testers will know it all.
One issue is credibility and financial backing of the supplier.
If this equipment was being manufactured by General Electric, ABB, Mitsubishi, Rolls Royce, Toshiba, Siemens or anyone else already well known to the utilities and who has fairly solid finances then that alone would add some confidence.
But it would be a huge risk for any utility to undertake a mass roll-out of a product with unproven long term performance from an unproven supplier. Anything is possible, but doing something like that doesn't fit too well with the inherently conservative business model of virtually all electric / gas utilities who are more likely to purchase a handful of units and see how they go over a period of years before making any major committment to them.
It really comes down to return on investment. If I have my capital returned via energy cost savings within 5 years then the odds are that the device will last at least that length of time. But if it takes 10+ years to break even then questions about longevity of the device, and longevity of any government policy supporting it, immediately come to mind.
And going to the bank to get a loan, is that just out of the question.?
I think not.
So how are you calling the feed in tariff for the Bluegen in Victoria.?
Likely or not.?
I would see a positive outcome adding some more to the share price,
dont you.?
I would see a positive outcome adding some more to the share price,
dont you.?
There is always the lost millions still before the courts.
My apologies Frank, you had indeed answered the question. For some reason my computer went to Smurf's post as the first new one and I missed your reply.
In regard to the 6 months cash, it would be prudent to gain more cash well before the wolves started to sniff. If it to be a capital raising, and the timing is what makes this necessary now, then too wait until cash becomes critical hurts existing shareholders by having the new raising performed at the desperation stage. Nobody wants that except competitors.
This would be a particularly bad thing to do. The company does not have the cashflow to support a loan. If the company gets into debt at this stage then there is a high likelyhood of the shareholders losing the technology should the company be unable to pay the loan or break a covenant set by the lender.
Feed-in tariff for Victoria? Because politicians are involved, and there is an election coming up (in Victoria), then there is a high probability of some favourable noises being made. Whether it comes to fruition or not later on, is a different question.
Yes, it probably would kick the share price for a while, but that is separate from whether the unit makes economic sense at the current price or anything near it, eventually the market will realize this and the share price drop back.
I would not expect a fast outcome here. Irrespective of the result, appeals would drag the process out for quite a while.
brty
I would like to make another point.
If everyone agreed CFU was on a winner and we didn't have doubters then the price of the company would be too high and we should all sell.
The fact there are so many people doubting this company can succeed makes it the buy it is ... it is this judgement position that I believe is favourable, that must be weighed in peoples minds.
With regard to the utilites, this could give them additional cashflows with clients as rentals. It is a real positive for them and I am confident it will proceed.
As Brty says. cashflow is the problem near term.
If this is solved it could lead to a rerating. This management impressed with their last raising. I think we may see something innovative.
My faith so far has been rewarded as i am sitting on big profits but the next six months will be very interesting.
Ok I'm in with this for the update:
"Company Announcement
CERAMIC FUEL CELLS’ BLUEGEN SALE TO JAPAN ’S LARGEST GAS COMPANY
Ceramic Fuel Cells Limited (AIM/ASX: CFU), a leading developer of high efficiency and low emission electricity generation units for homes and other buildings, will install a BlueGen gas-to-electricity unit with Japan’s largest gas utility, Tokyo Gas.
Mitsui & Co. has ordered the BlueGen unit on behalf of Tokyo Gas. The BlueGen unit will be installed and demonstrated by Tokyo Gas at its testing laboratory in Tokyo ."
Another trial unit.
Do any of these companies release trial results as an ongoing thing? haven't seen anything. Well it may help keep everyone excited, eventually CFU will get a proper bite! may be getting closer.
As I posted earlier, utilities in general are unlikely to undertake a large scale purchae of any system they aren't familiar with, especially if it's not from an established supplier.Thanks jeff,
clearly this Bluegen unit is SO,SO good, so good, nobody can even believe it,
and so, must test it themselves.
Either that or they are trying to steal the technology.
It has been tested too death already.
As I posted earlier, utilities in general are unlikely to undertake a large scale purchae of any system they aren't familiar with, especially if it's not from an established supplier.
Experience does matter. Utilities with a background in coal-fired generation have no hessitation in building another coal-fired plant. They can do just about all the design and construction themselves and know exactly how to go about it. They'll stick with coal unless there's a very compelling argument to do something else. Likewise those with a background in hydro tend to keep building dams and so on.
Utilities are conservative by nature, and there are more than enough examples of doing something different leading to financial, technical or political disaster.
A trial they will certainly do. But they'll almost certainly await the results of their own trial before throwing serious $ at something new. History says that those who do otherwise tend to lose money.
The fuel cells have been tested to death.
The fuel cells are changed after 5 years or so
Frank,
This is clearly not the case from the perspective of the utilities that have been purchasing one or two units. Why else would they buy so few unless they wanted to test them??
The current contracts for the lease of the units, and what is available to the public now, includes replacing the fuel stack after 2 years.
In terms of CFU joining with a large utility, I find it interesting to note that LNC has teamed up with the British firm AFC to develop fuel cell electricity generation from their CTG developments. The AFC fuel cells are much cheaper than CFU's and operate at lower temperatures and have claimed 55-60% efficiency. They plan to make the electricity 'clean' by using carbon capture and storage at the same time.
brty
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