Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

ZENERGY - a positive announcement but how about some idea of potential monetary value?

The AIM quoted superconductor energy company announced today that it has been contracted by ‘Con Edison’ to build and test a “Smart Grid” device for improving the stability and reliability of New York City’s electrical system. Pity they didn’t tell us more about it’s revenue generating potential or how much it will cost!

The so called Fault Current Limiter (`FCL’), instantly detects and absorbs spikes in power which may damage electrical equipment or cause partial or total power failures on an electrical network. Con Edison is a subsidiary of NYSE quoted Consolidated Edison, Inc. [NYSE: ED] so it’s a big vote of confidence from a big utility!

Zenergy expects to deliver the prototype by the end of August but frustratingly no details whatsoever were given with regard to revenue earning potential from this contract.

Con Edison has commented that Fault current limiters will be an essential element of the smart grid to maintain reliability and improve its resilience and flexibility, however, I assume there are other groups and not just Zenergy also involved in this field?

Power disruptions from faults and related issues are estimated by the U.S. Department of Energy (DOE) to cost the U.S. economy more that $100 billion per year – another big number, but what does this all mean in terms of revenue possibilities for Zenergy.

The recent announcement follows a previous announcement that Southern California Edison had installed Zenergy’s FCL in the grid in California, unfortunately there was no indication of revenue earning potential on this either.

I appreciate that this is all very early stage but I’m sure existing and prospective investors would like to gain a better understanding of the ultimate revenue generating potential from these contracts and in the absence of revenue how precisely they are being funded. There was an announcement in February stating how the U.S Department of Energy (`DOE’) is to provide additional funding from the initial US$800,000 to US$1,800,000 for Zenergy to extend its existing research and development agreement with Sandia National Laboratories. However, it’s not clear if this relates to today’s news.

Maybe I’m wrong but doesn’t ‘Zen’ refer to enlightenment?

 

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