Well, what a nice paper. It says a lot! Industry groups that prepare submissions like that walk a very fine line and it is fraught with risk and generally doesnt deliver the benefits they seek.
The first and obvious outcome is that you are labelled "rent seekers"! The underlying premise of which is we think we have something great to offer, its economics don't stake up, and without govt intervention in the form of money and laws mandating adoption of our products we have no future.
And unfortunately, that is precisely how that paper reads to me. Not sure its something I would want to be circulating in the middle of a capital raising!
I agree it shows they are working hard to get the technology up and trying to push all the right buttons in govt. And, I guess the paper's principal aim is to tell govt that if it is really committed to its goals in terms of mCHP by 2020, it needs to provide greater incentives to make it a reality. But, it also says that our future is dependent on govt intervention which quite frankly isnt something I'd be expecting much of in the UK's stuffed economy. And even if its forthcoming, it will probably take years to get delivered.
The second thing it shows is that the MCS outcome we waited ages for didnt deliver anything we can take to the bank, it just isnt enough.
The third and perhaps most important message I get out of it is that E.on isnt going to be agreeing to any long term supply contract anytime soon, because without further govt intervention, the economics don't work for it. No point having exclusive rights to a technology that is not going to make you financially better off and which places significant burdens on you. You might well be hoping that a competitor is foolish enough to jump in instead.
So looking at this I am inclined to draw two personal conclusions (don't rely on me - make your own). First, my views expressed earlier in the week about Jabil and the raising were overly optimistic they dont signal something imminent. Second, without significant improvement in the cost/benefit proposition this technology will remain a niche product. So jabil and capital raising are not indicators of something big happening, they are steps (risks) CFU has to take to fundamentally shift the economics to attract big customers. (E.on et al arent going to pay a premium to be early adopters).
Having already said too much I will make one additional point. Some industry groups embark on these sort of pursuits in the hope of getting additional govt assist. To sell their message they may be inclined to paint a bleaker picture than the reality in order to "scare/shock" govt into action or simply win simpathy. The problem is, there is usually more than one audience. While the message might be a good one for winning Govt intervention, it isnt a very reassuring message for your investors. Another aspect of the fine line walked by these groups.
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