APWR produces Distributed Power and another $146 per Kilowatt makes DP more cost effective!

SHANGHAI government announced yesterday that it would improve incentives for local factories and businesses that install an energy-saving power generation system inside their buildings.

The system, named Distributed Generation, is based on a small gas-fueled power generation unit. Operators build these units on site, rather than take power from the national grid, which is powered by coal-fired power stations, usually located far away from power users.

Energy is saved because the distance between the power generator and the user is greatly shortened. In a traditional power grid, up to 70 percent of generated electricity is wasted during its transmission.

“Usually only 30 to 47 percent of electricity generated by large power plants is consumed by users,” said Pan Yahong, an engineer with the Shanghai Branch of China Huadian Corp. “The rest is wasted during transmission. But the Distributed Generation system ensures a low rate of wastage and could improve usage efficiency to up to 89 percent.” Huadian is a major promoter of the system to the Chinese market.

Distributed Generation also cuts power usage by collecting the heat given off during the power-generation process and using it to heat buildings.

Because it uses natural gas rather than coal, the system could lower greenhouse emissions by 34 to 61 percent, a United States survey found, according to a report on the China Energy Service Website (www.chinaesco.net).

The government yesterday announced it would raise the subsidy paid to those companies that install the system. Building owners will be paid 1,000 yuan (US$146) for each kilowatt of capacity their generator has.

The subsidy was 700 yuan when Shanghai first announced the subsidy policy in August 2005.

Local users, such as the Minhang District Central Hospital and Pudong International Airport, will also continue to enjoy discounted natural gas, said officials.

The allowance compensates the expense of buying and installing the gas generators.

The system could reduce operational cost of offices by 11 percent, and that of hospitals by 21 percent, according to the US survey.

borrowed from Ceegle:::

Economic Moat

• A-Power is the only experienced provider of local distributed power generation systems and micro power networks in China, and has completed 13 projects to date, ranging from 6MW to 400MW.

• Inroads with Chinese government and state-owned energy producing companies in a heavily regulated market with high barriers to entry

• Strategic location in Shenyang, China. Major industrial hub with proximity to future wind farms and easy access to ports and highways.

• Licensed leading European wind turbine technology through Fuhrlander of Germany and Norwin of Denmark.

• Strategic partnerships with top Chinese research institutions, Tsinghua University and the China Academy of Science. A-Power will own rights to 70% of new technologies developed by the China Academy of Science.

Valuation

A-Power has a proven financial track record with robust top-line growth (> 100% YOY) and consistent bottom line profitability. The company has considerable visibility with future income via DPG and wind turbine production (over 2B backlog with both), and has a strong balance sheet with no debt to provide sufficient working capital.

The main source of revenue is through DPG. Currently, APWR has over 800M in revenue backlog, not counting a 300M Memorandum of Understanding (MOU) that the company believes will shortly be translated into a contract. See catalyst section below. The company also has orders for over 1B USD of wind turbines. A second wind turbine facility is coming online in mid 2009, with full wind turbine production scheduled for early 2010.

A-Power has maintained a high ROE of 25%, and currently has an excellent balance sheet with 50M in cash and no long-term debt. The company, in a November conference call, maintained 2009 revenue and earnings projections and considered organizing a stock buy-back due to what the CEO stated was an “undervalued share price.”

South Korea will build 12 new Nukes to go to 48% Nuclear Power but will signifigantly increase wind power…….

South Korea also plans to expand its use of alternative energy. Under the government’s long-term plan, renewable energy sources, including solar, wind and water, should account for 11 percent of power consumption by 2030 from the current 2.2 percent.

To achieve its goals, South Korea intends to invest 100 trillion won in alternative energy by 2030. The country seeks a 44-fold increase in the supply of solar power to 3,504 megawatts, a 37- fold gain in wind power to 7,301 megawatts and a 19-fold increase in biofuels supply.

Wind power is generating a lot of excitement across Iowa, which, state and utility officials note, has population and geographic advantages to push it along.

“The state is primed because the Iowa Department of Economic Development has laid the groundwork for this in the state of Iowa,” said Tom Wind, owner of Jefferson-based Wind Utility Consulting.

Each year, Wind conducts a projection on the growth of wind power in the Upper Midwest for the IDED.

“I see the handwriting on the wall out there and know we’re going to have to reduce our greenhouse gas emissions, and about the cheapest way to do it is wind power,” Wind said.

In 2008, the state has added as much as 1,000 megawatts — enough to power about 300,000 homes — to its electrical grid through wind-generated power, Wind estimated. In 2009, he projects, another 700 megawatts will power up.

Iowa is ranked No. 3 among states in wind power, and it’s climbing, Wind said.

“We may pass California here in a year or so,” he said.

Iowa has an ideal combination of population — it passed 3 million residents this year — and geography for wind power to flourish, Wind noted.

“Iowa is not the windiest state in the Upper Midwest, but it has enough people and enough electricity needs that it’s a good combination of wind speed and the need for electricity, and we have two utilities, in MidAmerican and Alliant, that believe in wind power.”