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Subject:  Re: my end of year review of AMSC Date:  12/31/2006  2:40 PM
Author:  jimpiccard Number:  1400 of 2171

Good, short summary.

they can't go everywhere. They can't be used in overhead wires and such - though for many years I envisioned them doing so.

That's literally true if you're limiting yourself to the actual overhead cables. However, power cables are not the first application, even in the electrical utility sector. The first 'commercial' utility units are being installed in the next few months (which puts them a few months behind schedule, by the way) in TVA; but they are not wires, but the 'grid shock absorbers' called SuperVAR rotating machines. And TVA has committed to buying two more after that. It is these SuperVARS that AMSC hopes will be the first true grid HTS success story.(Note, however, that I don't expect these first four 'commercial' SuperVAR sales to TVA to be profitable in themselves).

I would consider 2007 'very successful' for AMSC if we are hear a year from now and AMSC has:
- gotten any SuperVAR orders from any other utility;
- if LIPA/Long Island Power Authority agrees to go to phase two of their HTS in-line cable project, going to at least 5000 feet.
- power electronics- including Windtec's - profitable growth continues.
- the Navy pronounces itself happy and totally satisfied with the 36.5m HTS test motor in Philadelphia.

Yup, that's it. Sounds kinda sparse? Well, there are two things that have proven themselves to move forward at a very slow pace:
- utility adoption of new technology. After all, taking any changes could conceivably interfere with skyrocketing CEO utility pay. (If you don't think that sort of thinking enters into the equation....well, we'll just agree to disagree....).
- ship usage. While I'd love to be proven wrong on this, I consider the chances of any commercial ship motor orders zero before the Navy pronounces itself totally satisfied with the 36.5 mw test order; and only marginally better after that. (Note, the CEO disagrees with me on this).
The chances of operational orders for any of the DDG-1000 numbers 3 thorugh 7 orders are decreasing, in my view; costs and US budget problems are worse than ever, and the ships even without hi-tech motors are tremendously expensive. Add to those two things democratic control of the Congress, and things don't look good.
That COULD change in one scenario, IMO: and that is if the company makes a hard, public push on how the expansion of HTS helps energy security and the environment. The push would have to be directly with the Massachusetts congressional delegation; AND, with any environmental hearings, It is all true, of course. But in addition, it would help put things like the DDG-1000 using HTS in an entirely different light: of providing the needed impetus that allows wide-spread adoption of HTS for commercial ship motors (the real prize), as well as helping with the infrastructure that enables economies of scale for other applications as well. The wider the spread of HTS - with large motors; with smaller motors over time--and with utility applications, the more fuel is saved, the less diesel, the less coal, the less CO2.

But this won't happen by wishful thinking or osmosis. And I don't see any indication that the company is thinking along these lines; perhaps because the CEO believes -wrongly, in my view- that the successful testing of the 36.5mw motor in Philadelphia is all that is needed for marine applications to take off.


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