American Superconductor

American Superconductor (AMSC: Nasdaq)

With the widespread debt problems in Europe and the implemetation of austerity plans, many investors believe that alternative energy investments are dead in the water. Renewables are heavily subsidized by governments in order to help them compete with traditional fossil fuels on price. Spain, one of the leaders in solar energy, has seen many new projects put on hold or nose-dive over the past two years and other European countries and the US have done the same.

While many of the developed world's alternative and renewable energy plans have stalled due to massive budget deficits, the emerging world is picking up the slack. Many have begun taking the steps towards making significant progress and investments in the sector. In the short term, the panic from European austerity has given longer-term investors a chance to participate in the renewable sector at bargain prices.

By 2030, non-OECD economies will account for 59% of global energy consumption. The expansion of electricity-generating capacity in these emerging markets will need to be supplied by wind, solar, geothermal and hydropower.  China and India have already made their intentions well known, but growth is coming from other sources as well such as Pakistan, Taiwan, South Korea and Kenya.

But we do not need to look at companies in far flung emerging markets for profit growth in this sector: American Superconductor offers an array of proprietary technologies and solutions spanning the electric power infrastructure – from generation to delivery to end use. The company is a leader in renewable energy,providing proven, megawatt-scale wind turbine designs and electrical control systems. The company also offers a host of Smart Grid technologies for power grid operators that enhance the reliability, efficiency and capacity of the grid, and seamlessly integrate renewable energy sources into the power infrastructure. These include superconductor power cable systems and grid-level surge protectors. Direct current (DC) superconductor power cables are able to carry many gigawatts of electricity vast distances with ultra-high efficiency. Underground, out of sight and out of harm’s way, these systems can meet the demand for new transmission to carry renewable energy from where it is produced (often in remote areas) to where it is needed most (urban areas).  This is a fundamental problem that most renewable energy companies face and American Superconductor has the solution. Intelligent Grid solutions such as these are a requirement for the effective wide-spread application of new technologies such as smart meters and plug-in electric vehicles. AMSC’s technologies are protected by a broad and deep intellectual property portfolio consisting of hundreds of patents and licenses worldwide.

American Superconductor has picked up some significant contracts during 2010 - A mult million-dollar contract was signed with Sinovel in China to provide electrical components. Through AMSC's Windtec subsidiary, the two companies are also jointly developing 3 and 5 MW wind energy systems that Sinovel plans to market globally. Just in the last few weeks, AMSC received a turnkey order for the company's proprietary D-VAR STATCOM reactive compensation solution from Ergon Energy Corporation Limited, an electricity distribution company serving Queensland, Australia.  South Korea also recently purchased 3 million meters worth of high voltage superconducting cable from American Superconductor in order to build out its own smart grid.

America Superconductor should be able to cash in on the emerging markets huge growth in renewable energy and once the European debt crisis is solved it will also pick up major contracts there too.
All in all the future looks bright for this company.

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