IF there was equity in the world, which there isn't, the developer of domestic gas-to-electricity generation units would have a market worth billions, rather than the current $160m. An outlandish claim perhaps, but private equity-owned US equivalent Bloom Energy is being hawked around at a "pre IPO" valuation of $US2.7 billion ($2.6bn).
Bloom is pre-revenue, while Ceramic Fuels last year posted maiden (and largely symbolic) revenues of $3.6m. "There's some pricing arbitrage opportunities here," deadpans Ceramic Fuel fuel chief Brendan Dow.
About the size of a dishwasher, Ceramic Fuel's BlueGen units convert a given amount of natural gas into a relatively large output of power. Because the units aren't a renewable source of such, BlueGen has missed out on subsidies enjoyed by solar power, such as overly generous feed-in tariffs that have since been wound back.
For years, Dow has been lobbying government for the right for BlueGen users to sell back excess power at the normal going rate.
He hopes to win this one eventually, but in the meantime the company has made more traction in energy-conscious Europe, especially Germany, where it makes the units.
Dow reports an order book of about 500 units, including the first chunky order (100 units) from a German distributor.
"By the end of the calendar year, our order book should be closer to 1000 units," he says.
Ceramic Fuels hopes to increase financial-year revenue by three to five times in the current year and "substantially narrow" last year's $21m loss.
By boosting the cost of dirty power, the Clean Energy Act forms a useful backdrop in reaching the point of grid parity.
At about $30,000 a pop for a 2kW/h unit, BlueGens aren't cheap.
But the price has already tumbled from $45,000 and will continue to fall as decent manufacturing volumes are achieved.
The languishing Ceramic Fuel Cells shares are a speculative buy, given the technology has been proven and is well on the way to commercialisation.
CFU Price at posting:
12.7¢ Sentiment: Buy Disclosure: Held
