Replies to post #5075 on Beacon Power Corp. (fka BCONQ)

[solarstock]

There is one number we do know.
BCON is working a deal with Northwestern energy for a one-megawatt (1 MW) Beacon Smart Energy Matrix flywheel energy storage system.

The initial term of the lease will be 15 months, which, at NorthWestern Energy's option, can be extended up to two additional 12-month terms. NorthWestern Energy will pay Beacon $500,000 for the first 15-month term and $500,000 for each subsequent term should it choose to extend the lease to a second or third term.At any point NorthWestern Energy can opt to purchase the 1 MW system outright for approximately $4 million. A portion of lease payments already made under the agreement would be applied to the purchase, depending on when the purchase was made.

So then a 20 mw plant would have a value of $10 million a year as a rental to a business like a power company. Or approximately $20,512,000 million to purchase over a 39 month time frame.
BCON must assume they will make more money then that regulating power or they would sell all the product to power plants and drop the idea of regulating power.

[THEBROKE1]

management said it should bring in 5 to 6 million a year with that number reaching 12 million a year if the pay for performance goes through.

[Budworth]

I must admit you know more about economics than I originally gave you credit for. However while this company was not born yesterday they (for the most part) are just being born when it comes to actually making revenue with their product. I think some of it is that they are likely cutting better deals then they will in the future so they can show people what their product can bring to the table. It will be interesting to see how the pay for preformance effects their revenue. Again I know they weren't just born yesterday but looking at the big picture of things this is a whole new market place. A big thing that has been holding back this green power kick (besides politics) is they steady flow of energy. Has it been in development for several years? Yes. Is this market for making green energy reliable enough been around for several years? Yes. But keep in mind that the degree energy is changing now a days is enormous. Ten or so years may seem like a long time but for the radical amount of changes that are taken place its a very, very short amount of time.

Point of this being is that they are just getting their feet wet when it comes to revenue. Its a new market so they are still developing the baseline of what a product can bring to the table and in turn how much they deserve to rake in for it.

Maybe it's just ignorant optimism but I think things will play out well.