Renewable energy player on front foot

Sun Herald
Sunday 6/12/2009 Page: 63

CBD Energy has runs on the board but still faces some testing times, writes David Potts.

THERE'S a lot to be said for being a renewable energy supplier. Everybody's on side, an ETS can't hurt you and there are lots of federal and state solar subsidies and grants besides. Then there are other people's ETSs, too. China has $US350 billion ($379 billion) ready to be harnessed to meet its 2020 target of 15% of its electricity supplied by renewables. That will buy a lot of, er, wind or solar energy.

Australia's renewable energy target is 20% but this requires a more modest $25 billion-$30 billion investment. CBD Energy, which has antecedents in other fields stretching back before the tech wreck, has lost no energy in getting on the front foot. It has a $25 million deal with a Chinese state owned utility, Baoding Tianwei Wind, which will supply finance (at 4% a year) and turbine windmills for its renewable energy project at Adjungbilly in the Snowy Mountains.

As the project manager, CBD Energy will collect an unspecified fee for building and running the windfarm, its second in the Snowys. It's also bought 20% of Planet Power, paid entirely by scrip, which happens to be one of its biggest customers. Good to see they get on so well. Incidentally, the Hume Building Society in Albury has installed solar panels supplied by CBD Energy, which it says will reduce its electricity tariff by 14%, cut carbon dioxide emissions by 87 tonnes and even generate revenue if it sells surplus power back to the grid.

But the real breakthrough for CBD Energy was when it secured the licence for a method of storing renewable energy through graphite that, putting the resource shoe on the other foot, it imports from China. The trouble with renewable energy is it doesn't work when there's not enough wind for a windmill or the sun has set for solar energy. But CBD Energy's graphite battery can store some of the energy a windfarm can generate. In remote locations it could virtually replace expensive to run diesel generators. By all accounts, it works.

CBD Energy has a joint venture with Hydro Tasmania on King Island, supplying most of its electricity. And the cheese tastes just the same. CBD Energy will be supplying the batteries for its new best friend's huge solar thermal project at Liang Shan in China, its biggest installation yet. They're both looking at other renewable energy projects in Australia and China. Unfortunately, that's different to saying they're making money from them. CBD Energy does have two businesses that are profitable, CapTech and Parmac, but they don't have much to do with renewable energy - one installs air-conditioners.

All up, CBD Energy made a modest loss last year and Alto Capital, which underwrote its recent $5.4 million capital raising and so could be expected to be familiar with the innards of the company, is projecting after-tax losses of $2.5 million next year - down from this year's $3.7 million - and a $0.3 million loss in 2011. Alto Capital says: "It must be noted that if CBD Energy is to achieve its goals in the renewable energy sector, the comp any will be required to raise substantial capital going forward." This could be "at least $40 million in new equity over the next two years".