Roulston smart grid roundtable in San Francisco

Aaron Lehmann has partnered with Roulston Research to review our consultant Roundtables and to add a 40 plus year investor perspective on the experts’ industry comments. The opinions and points below are from his experience. Roulston delivers his thoughts to give our clients a summary of the event and a market insight of possible investment actions that might parallel the conclusions that the experts delivered. Let us know your thoughts, or if you would like to talk to Mr Lehmann directly, we encourage further dialogue.

Aaron Lehmann has since 1968 been engaged in the investment industry as a securities analyst, director of investment research, portfolio manager, and investment banker. His previous employers include Bank of America, Goldman Sachs, Hartford Insurance, Westinghouse Pension Investment Corp., Chase Investors, Steinhardt Partners and several investment boutiques. Mr. Lehmann has performed consulting services for corporations and investment firms. Although retired, he is actively involved in the investment markets and may periodically perform consulting services.

Roulston Conference September 14.2010
Smart Grid: Key Trends, Outlook and Winners/Losers

Sterling Lapinski, President, Genscape, CEO, GLO Ventures, who has impressive credentials, made a very academic type presentation. He focused on wind generation, the storage of the wind gusts and metering issues confronting the alternative energy industry, in particular, as well as the traditional providers of energy. His major concerns are:
1. How do you offload all the different energy sources- wind, solar, LNG, gas, and nuclear and store it for peak levels and what do you do with it in off-peak hours?
2. Can you change users habits to use energy when there is normally lower demand?
3. Can we create better metering to obtain more accurate measures of usage and to adjust the outputs to conform to demand?
4. Can alternative energy systems be made more efficient so that the utilities can get a better ROI?
Mr. Lapinski did not really provide any serious answers to these questions but did say the most likely players will be existing companies that are already in that space, such as: Siemens, IBM, Samsung, GE, as well as all the “chip” manufactures. He also felt that on the industrial metering side Honeywell and Johnson Controls would be dominant. He also raised concerns with the security of the power grid and the risk of cyber attacks.


Aaron Lehmann’s Comments

It was clear that Mr. Lapinski is highly knowledgeable in this field but unfortunately offers no real solutions for some very obvious and serious issues. One would have great difficulty in coming away with an investment thesis from his presentation. Nothing was said about the difficulty of building wind generating systems without some very rare earth materials necessary in building them and the fact that the Chinese now control the rare earth materials. No comment was made about the greater usage of nuclear around the world while the United States lags significantly. After a significant correction, uranium prices have begun to rise sharply based on a very positive long term outlook.

I don’t profess to have the answers to all of his concerns nor those that I pointed out here. What I believe is that while the companies mentioned by Mr. Lapinski may be participants because of their vast resources, I also feel that giants like Emerson Electric, LG, Mitsusbishi, Cisco, Oracle, as well as Badger Metering, and Ituran will be involved. However, I believe that over the next 10 to 20 years new companies will come onto the scene that may have serious solutions. Who would have believed that Intel (founded in the late 1960’s), or Apple (founded in the 1970’s) Microsoft (in the 1970’s), Cisco and Oracle (in the 1960’s), Google (in the 1990’s) and many others would have become the leading companies today. Likewise, there are many creative individuals all around the world looking for the opportunity of emerging as the next Google.
In conclusion, I can not suggest that an investor buys on the basis of a company possibly coming up with a solution to any of the aforementioned issues, since, with the exception of Badger and Ituran, they are very large companies and may only represent a small percentage of their respective business.


Opinions expressed herein are based upon presentations by participants at Roulston Research, LLC. sponsored Roundtables. The associated notes of such presentations summarized herein have not been independently verified for accuracy, truthfulness, or completeness. The report is in no way intended to be a recommendation by Roulston Research, LLC. to purchase or sell any security.