ABB Group – A Cleantech Company?

Power and automation giant ABB, Ltd. (NYSE:ABB) was named Cleantech Corporation of the Year at the Cleantech Forum in San Francisco. The company has been focused on acquiring start ups in the cleantech space for the last couple of years, with two significant ones in 2010: Ventyx, a provider of IT systems to utilities, and Baldor Electric, the premier supplier of high-efficiency motors in the US.

I very much like ABB’s approach to cleantech. I’d even written about Baldor as a good way to invest in energy efficiency earlier in 2010 just a couple months before the buyout announcement.

While ABB is touting its eco-sheik acquisitions in smart grid (Ventryx, Trilliant) and Electric vehicle chargin
g (Ecototality), they seldom mention one of the best reasons for a clean energy investor to be interested in the company: ABB has long been a leading supplier of electric transformers (the one in the lead image was outside my former house in Denver), substations, and high-voltage DC transmission.

Despite all the talk of grid-based energy storage, the least expensive solution to the variability of wind and solar power is geographic dispersion, according to Leo Casey, Chief Technology Officer of Boston-based inverter company Satcon Technology (NASD:SATC.)

Any investor familiar with the concept of diversification will agree. The farther you travel, the more the weather changes. So the output of dispersed solar and wind plants are less and less correlated the farther you spread them. By connecting them with a robust grid, you’ve built a diversified electricity generation portfolio, which will be much less volatile than an undiversified portfolio of local wind or solar generation.

So congratulations, ABB. You deserve the recognition… both for the shiny new acquisitions, and for the less pretty, but absolutely necessary power businesses you’ve always been known for.

This article was first published on Tom Konrad’s Green Stocks blog and was reprinted with permission.

DISCLOSURE: Long SATC

Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

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Tom Konrad, PhD., CFA is a portfolio manager, financial analyst, and freelance writer specializing in renewable energy and energy efficiency. He is currently looking for a money management firm to sponsor what he believes would be the first dividend income oriented green mutual fund, based on a strategy, the Green Global Equity Income Portfolio, he has been managing since December 2013.  He is Editor at AltEnergyStocks.com.  Tom lives in New York's lower Hudson River Valley. He volunteers for the environmental nonprofit community, runs, and is a woodworker. He's currently using those woodworking skills to renovate (and upgrade the energy performance) of the 1930 farmhouse he lives in with his wife.

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