Geothermal & Nuclear Energy Stars Spark Gianni Kovacevic's Interest
By: The Energy Report and Gianni Kovacevic
-- Posted Thursday, September 17 2009 | Digg This Article |
"It's all about the management," says corporate development strategist and consultant Gianni Kovacevic, who has identified a single player in both geothermal and nuclear energy sectors—the "absolute leaders in the space." In this exclusive interview with The Energy Report, Gianni discusses some of the elements that make their management teams so powerful.
The Energy Report: What appeals to you about the energy sector?
Gianni Kovacevic: The world cannot live without energy, thus we've seen many governments around the world dedicated to creating energy in a greener and cleaner way. We need to look at the types of industries that are going to benefit from just a general interest in doing the right thing, and significant government incentive to create this energy (i.e., geothermal, wind, and even nuclear power).
TER: The greener and cleaner people usually focus solely on alternative energy, overlooking nuclear and geothermal. You have an interest in nuclear and geothermal, though. What's brought you to that point as opposed to wind, solar, wave, ethanol?
GK: These are the best two forms of green energy because they really do work. Geothermal has never had a true leader that could take a company, assemble assets, create shareholder value, and drive this industry, offering investors a vehicle to participate from inception to final vision.
Geothermal is a win-win-win. I like this industry. It's good for the environment. I like the fact that it basically goes forever. With fluid going into hot rocks, coming up creating steam and electricity, it just goes in perpetuity once that circuit is installed and efficiently managed and maintained. We've seen it in Italy. It's operated for 100 years.
From an investment perspective, I like the fact that we have government incentives, which make an already very economic and very good business better and easier to finance and maintain. With all the "green" money out there development of each megawatt of power is going to be heavily supported. Investors need to fluently understand just how much government support will be offered companies to solid geothermal companies. This is unprecedented and takes a lot of the financial risk onto the shoulders of others and less so to the shareholders and management. That's good.
I just see this as an incredible win-win-win situation for the citizens around the world, for the shareholders of such companies and for local communities. Rather than have a coal-fired or other fossil fuel-fired power plant, if a community can have a geothermal plant, where's the downside in this equation? I don't see it.
TER: When we started our conversation, you mentioned nuclear energy and wind in addition to geothermal under the "greener and cleaner" heading. What excites you about nuclear energy?
GK: Nuclear energy is a fantastic way to generate electricity because it works. We know that because, in America, 20% of the power comes from nuclear power and in Japan, about a third. In the ultimate demonstration of nuclear energy at work, over three-quarters of France's power comes from nuclear power plants. Even many environmentalists now acknowledge that nuclear power is better than fossil fuel power.
So we look at companies that will be able to provide this fuel for where the action's going to take place. We need to recognize where the environmentalist lobby is either limited or nonexistent (i.e., China and India), is where the projects are under construction and where the proposed projects will be built. I don't mean a few; I mean dozens of these nuclear reactors are going to be built in China and India. And where's the fuel going to come from?
We already know that a good third of the fuel that feeds the global nuclear plants right now comes from the dismantling of nuclear weapons. We also know that not every nuclear weapon will be dismantled. The nuclear plants also have contracts that expire in the next three to four years. Where will the fuel to cover this shortfall come from? New contracts? Perhaps? New supply is going to have to come on-line, but not at $50 per pound uranium.
In many places, including most of the U.S., it is so difficult to permit and develop uranium mines that when a company achieves this Holy Grail, they immediately go to the top of the list.
TER: The last greener cleaner energy source you'd mentioned is wind.
GK: Wind is a fantastic type of energy, but from a baseload perspective, it's only 30% to 40%. Wind is not constant; we all know that. I also like wind because it's extremely copper-intensive. T. Boone Pickens was planning on building the world's largest wind park in the United States. I don't believe that project's going ahead anymore, but the Chinese have taken the lead and they are building five or six significant wind parks, 10- to 20-megawatt parks. That's mind boggling. I think it's going to create a cheaper way to create wind power going forward, because any time you have this kind of development, I think people find shortcuts and economies of scale. So that's something we'll monitor very closely.
TER: Are you looking at any other clean energy sectors?
GK: I think with geothermal, nuclear and wind we've talked about the most significant clean-and-green plays. The important point to stress in how we think is to follow the leaders with decades of track record of the ultimate goal, creating recognizable shareholder value in industries that actually do work. There is no sense in succeeding in a sector that is only marginal, trendy and/or gimmicky. Both geothermal and nuclear energy generation will be around for our kids and our kid's kids. We like that.
Gianni Kovacevic, who works in corporate development at Global Opportunities AG Zurich, Switzerland & Kovacevic Consulting, brings more than a decade of investment experience in the resource sector to the task. In addition, over the past several years he has assisted with negotiated financings well in excess of $250 million from a large pool of global investors. A widely traveled citizen of the world who cultivates and nurtures relationships everywhere his interests take him, Gianni is fluent in German, Italian, Croatian and English, and is busily mastering Russian as well. A tireless researcher and avid reader, he maintains homes in both Vancouver and Zurich.
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-- Posted Thursday, September 17 2009 | Digg This Article |
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