Fuel Cell Today has been a leading source of market-based intelligence on the fuel cell industry since 2001. They cover key trends and developments in the fuel cell industry while providing objective and unbiased reportage to equip decision-makers in the industry with relevant and useful information.
And they are RIGHT on the mark when it comes to their analysis of why fuel cell backup power is the ONLY real solution for providing dependable power outage and brown out solutions to the mobile telecom industry is countries like China and India with serious power grid problems.
As they note in their June 5 report “Why Fuel Cells for Telecoms Backup IS A Good Call”
“China is one of the world’s fastest growing economies. In April 2012 it was announced that China’s Ministry of Industry and Information Technology had granted approval of VelaTel subsidiary VN Technologies’ fuel cells for use in Chinese BTS. Since the announcement the company has successfully completed trials for China Mobile and China Telecom. The market potential here is vast: China Mobile is the largest mobile operator in the world with 650 million subscribers and China Telecom is the country’s largest fixed-line phone company with over 200 million subscribers." – Click here to read more from their June 5th article.
Here is more context from the June 5th article
The fuel cell is a versatile and scalable enough technology to fulfill power requirements in almost any imaginable application. However, it is in applications with a specific and niche set of requirements that the strengths of fuel cells most noticeably surpass alternative solutions.
One such application is backup and remote power, in particular for telecommunications base transceiver stations (BTS) in developing regions, where shipments of fuel cells have increased rapidly in the last two years. Mobile phone adoption is rocketing in these regions and cellular connectivity is becoming crucial to economic activities. In India, there are 65,000 BTS being installed each year. However, these regions are subject to underdeveloped and unreliable electricity grids that threaten to jeopardize connectivity, creating an increasing demand for reliable grid-support and off-grid power solutions.
Post-industrial nations such as the UK and USA developed their telecommunications networks in a time before emissions and pollutants had become such a strong concern, and the majority of BTS in these countries rely on expensive lead-acid batteries or diesel generators for backup power. The detrimental effects of using diesel generators are obvious and although lead-acid batteries do not produce emissions whilst in use, they raise significant environmental concerns in their manufacture and disposal.
19% of the BTS being installed in India are either powered by or hybridised with renewables and this is indicative of how nations developing rapidly at present are having to juggle economic progression with environmental responsibilities.
Within such a context fuel cells are beneficial in two main ways: they produce little-to-no emissions in use (depending on fuel) and offer more versatile and reliable performance than lead-acid batteries and diesel generators. Add to this a reduced life cycle cost compared against lead-acid batteries (thanks to decreased maintenance and replacement needs) and fuel cells become a truly compelling option. It is for these reasons that the systems have also been popular replacements for existing systems, particularly in the USA, where the inadequacy of existing backup power systems was highlighted during the aftermath of Hurricane Katrina.
This is why we are so excited about China Mobile’s announcement of building 207,000 NEW 4G LTE base stations in China…as Fuel Cell Today points out, ONLY VN Tech’s fuel cell backup systems have been fully approved by Chinese officials.
Furthermore, VN Tech (75% owned subsidiary of VelaTel Global VELA) is partnered with ZTE Communications in selling and installing ZTE base transceiver stations (BTS) equipped with VN Tech fuel cells.
With VN Tech selling its BTS fuel cell back-up systems to ZTE at @$20,000 per system, and China Mobile committed to building 207,000 NEW 4G BTS in 30 provinces and 100 most densely populated cities in China (1 billion+ population). The VN Tech addressed market opportunity in the next few years is literally $4.14 billion in OEM sales JUST to China Mobile (207,000 BTS X $20,000 OEM price to ZTE).
We do NOT know how many VN Tech fuel cells will be purchased for the 207,000 initial China Mobile BTS. Given China is the world’s largest developer and user of green energy technology, it is HARD to imagine they will not AT A MINIMUM equip 10-20% of their base stations in the most populous regions with VN tech fuel cells.
That is $400 to $800 MILLION is OEM sales to ZTE. Assuming at scale OEM prices come down to $15,000 per BTS…$300 million to $600 million.
Valuation impact on VELA stock?
We will see when the first BIG Purchase Order from ZTE is announced…but clearly every 10,000 unit order is $20,000,000 in sales…and China Mobile is building 207,000 new BTS starting with the contract awards July 15.
Then comes China Telecom…which will share SOME BTS with China Mobile…but has 200,000,000 mobile customers of its own.
Upside for VELA?
Hard not conclude a LOT from the $20 million market cap at 240M shares outstanding.
China Telecom and China Unicom have NOT yet announced their 4G BTS construction plans…but are expected to shortly.
Overall…in China alone…as the ONLY fully approved and tested fuel cell system for the one billion + wireless customers of China Mobile/Telecom/Unicom companies…VN tech is clearly sitting on.
Disclosure: NBT Group, Inc. has in the past been compensated in the past for VELA shareholder awareness and sponsored equity research. NBT believes it will be retained in the near future for similar services to NBT. NBT affiliates own 4 million shares of VELA acquired in various transactions.
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Founder and Editor-in-Chief for NBTEquitiesResearch.com. Contributor and Anchor for the Fox News Channel and Fox Business Network 2000-2013. Chairman & CEO of NBT Group, Inc., a boutique private capital investment bank and investor relations organization.
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