It feels as though almost anything related to the U.S. electricity
market never manages to work out quite as well as hoped or advertised.
Independent power producers like Calpine (CPN) have had their struggles, as have metering technology companies like Itron (ITRI),
and the complex interplay of regulation (environmental and otherwise),
utility business models, energy demand, and other factors has made for a
pretty challenging operating environment.
So too for EnerNOC (ENOC).
On one level, what EnerNOC does should be pretty simple. Utilities
don't really want to build new plants, nor do they want to use expensive
peaking plants any more than necessary, and there's more "slack" in
power demand than commonly realized. As an intermediary between
businesses and utilities, EnerNOC can help both sides - utilities can
get the demand reduction they need and businesses can get paid to
curtail their demand during peak periods. What's more, there's
theoretically billions of dollars in helping enterprises better plan and
manage their power/efficiency needs.
Of course it's never that
simple. Between an ever-changing regulatory environment and the
year-to-year uncertainties of auctions within its largest operating
region, EnerNOC has had some huge swings in the market. I do believe
these shares are undervalued today, and that management's plan to
diversify and grow the business will bear fruit, but I also believe that
this is likely to remain a risky situation with above-average
volatility for the foreseeable future.
Please read more here:
EnerNOC Looks Undervalued, But Mind The Risks
No comments:
Post a Comment