Ballard has Lots of Company

Saturday, March 18, 2006

The sound you heard during George W. Bush's state of the union address in January was Greenpeace activists everywhere falling off their chairs.

The former Texas oil man, a lighting rod for criticism about the United States' energy policy and its plans to drill for crude in the Arctic, gave a big thumbs up to alternative energy with nary a mention of oil and gas exploration.

The President promised to spend US$1-billion on clean energy research, with money earmarked for technologies including hydrogen fuel cells, hybrid cars and solar power. It was a huge vote of confidence for companies in those fields.

Gasoline-electric hybrids vehicles, for instance, have caught the imagination of carmakers since Toyota and Honda built the first commercial models. Though not zero-emission, hybrids cut down substantially on fuel consumption.

Some even question whether hybrids will do away with the need for fuel-cell cars. Not surprisingly, Ballard Power Systems Inc. says hybrids are a stepping stone to the commercialization of their products.

That seems to be the thinking at Toyota and Honda, too, where engineers are working on their own fuel-cell vehicles. In January, Honda said a production version of its FCX fuel-cell car would be ready in four years. That raises the possibility that Ballard could be beaten to the punch.

As for solar power, investors have piled into the sector, reminding some of the mania around fuel cells in the 1990s.

"There are similarities between the two," said MacMurray Whale, an analyst with Sprott Securities Inc., who covers the alternative-energy sector.

"At least the solar guys are profitable."

Carmanah Technologies Corp. of Victoria, B.C., for instance, reported record results on Thursday for fiscal 2005. Sales grew 144% to $38.7-million, while earnings before taxes were up 112% to $1.3-million.

"This is a small company but the potential is so much larger," said Mr. Whale.