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************************************************************************ Dear IssueAlert Subscriber: I am very pleased to report that we received a tremendous response to the launch of SourceBook Weekly this week. To those of you who downloaded the first complimentary issue, thank you very much. Thanks also for the positiv= e commentary you sent me, letting me know that you found value in the first five articles of our new e-zine. As I've promised, SourceBook Weekly will continue to provide you with the most in-depth coverage of emerging issues in the energy industry, as they happen. My goal is for SourceBook Weekly to be your primary source of thought-provoking analysis on the rapidly changing energy industry. Let me remind you of our special introductory offer to SourceBook Weekly, available only during the month of December. We are offering a $70 discount as an introductory offer for new subscribers to SourceBook Weekly, bringing your annual subscription rate to only $425 for a year of valuable weekly issues of the e-zine. You can now use Visa or Mastercard for your purchase. Please visit our InfoStore today (http://www.consultrci.com) and ensure that you continue to receive SourceBook Weekly every Monday morning. Best regards, Will McNamara Director, Electric Industry Analysis ************************************************************************ SourceBook Weekly December 4, 2000 Issue:=20 http://www.consultrci.com/web/rciweb.nsf/Web+Pages/SBEntrance.html ************************************************************************ =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH IssueAlert, December 8, 2000 Allegheny Expands Growing Generation Portfolio with Solar Energy By: Will McNamara, Director, Electric Industry Analysis =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D Allegheny Energy Solutions, an unregulated subsidiary of Allegheny Energy, Inc., has added Siemens Solar Industries, L.P., to its growing portfolio of suppliers for distributed generation products. Through its new agreement with Siemens Solar Industries, Allegheny Energy Solutions will provide its customers with a comprehensive offering of solar electric solutions called earthsafe =01v. The systems are suited for industrial, commercial an= d residential applications. The new partnership further advances Allegheny's strategy of becoming a national energy supplier. ANALYSIS: This partnership comes on the heels of Allegheny's recently=20 announced agreement to purchase three gas-fired merchant plants from Enron North America. Both deals reaffirm Allegheny's intent to expand its geographic footprint and strengthen the scope of its unregulated generation capability= . In my opinion, Allegheny is one of a handful of companies that have further= ed very aggressive generation expansion plans this year, announcing one=20 acquisition or development after another. The company has added seven new offices in the northeastern United States over the last year, and has disclosed that it will open new offices in the Southeast in 2001 to begin preparing for the albeit slow move to competition in that region. The partnership with Siemens is particularly interesting as it indicates that Allegheny believes solar power will become a significant part of its service offerings. Siemens Solar is one competitive business in Siemens' portfolio of companies, specializing in high and medium voltage, protection and substation control systems, power and distribution transformers, system planning, and decentralized energy supply systems. Siemens Solar claims to be the number one provider of solar-power solutions in the world, having shipped solar cells and modules with a cumulative peak power of 200 MW. The company has been in business for about 20 years, and reached a mileston= e of 100 MW in 1996. Thus, the company has doubled its production output in just four years. Siemens Solar offers an array of solar-related products. As noted, Alleghen= y Energy Solutions will be adopting Siemen's earthsafe platform which, accord= ing to information on Siemen's Website, is offered in four models ranging in DC power from 300 watts to 1,200 watts. The earthsafe system consists of solar modules, universal roof mounting kits, DC/AC inverters, and interconn= ect hardware. The intent is that businesses and residences would install the earthsafe system to supply a portion of their energy needs (the remainder supplied by more traditional means) and contribute to the efforts of reduci= ng emissions from fossil fuel plants. Allegheny Energy Solutions claims that the addition of the Siemens' product to its service offerings positions it as one of the only suppliers of distributed generation products to offer a complete on-site power solution. I think that this is a smart move for Allegheny to take as it certainly diversifies the company's service offerings. Although the jury is still out regarding the profitability of solar power, along with other forms of distributed and renewable energy sources, for Allegheny the move makes sense as it attempts to offer on a national scale a full package of energy solutions. Allegheny Energy Supply, where most of the generation expansion efforts of its parent are focused, develops competitive generation solution= s (e.g., cogeneration, green power, etc.) for a variety of end users. Within the last year, Allegheny Energy Solutions has made great strides in moving from a regional player into a national energy supplier, resulting primarily from its success in the strong Northeast market. This venture into solar continues a decided focus on distributed generation on the part of the unregulated company. Earlier this year, Allegheny Energy Solutions formed a partnership with Capstone Turbine Corporation under which the Capstone MicroTurbine was installed at Allegheny Energy's Mitchel= l Power Station in New Eagle, Pa. Allegheny Energy Solutions is providing technical and economic analysis of the unit for the customers of its parent company. This was a very strategic partnership for Allegheny as it makes the company one of the few system integrators of the Capstone MicroTurbine in the Northeast. The diversification of Allegheny's generation arsenal is also important because it gives the company a possible edge over direct competitors.=20 Allegheny must surely know that companies like Dominion, Reliant and AES=01*just to name a few=01*are also aggressively stacking up generation assets in key ar= eas across the country. Thus, by adding diverse power options to its service offerings, Allegheny conceivably will have more to offer customers in its energy supply packages. I observed several months ago that Allegheny was probably in search of a unique niche to set itself apart from other compani= es that are strong in generation. This partnership with Siemens seems to indic= ate that distributed generation, including solar power, could become that niche= . As a sidenote, Allegheny Energy was just added to Standard & Poor's 500 Index earlier this week. So, the announcement that the company is diversify= ing into solar power comes at a time when, as CEO Alan Noia puts it, "our stron= g growth strategy and resulting solid financial performance" have received recognition. The S&P 500 Index is widely regarded as the standard for=20 measuring large-capitalization U.S. stock market performance. As of yesterday (Dec. 7), Allegheny Energy's stock (NYSE: AYE) was priced at $42 5/16. The only red flag that I can determine for this deal relates to Siemens, not Allegheny Energy Solutions. Competition among companies that develop products related to solar power has become pretty fierce as of late, and there is still a great deal of uncertainty surrounding the profitability of this market. One direct competitor to Siemens that I've tracked recently is Evergreen Solar, a company whose String Ribbon technology reportedly cuts in half the required use of silicon, which is needed for most solar-po= wer technologies. Evergreen Solar, which recently became a publicly traded company, has acknowledged that its own market prospects are uncertain and that it may never become a profitable company. The same market conditions apply to Siemens Solar Industries, so the compan= y may have a difficult time in finding wide application for its solar power units. This is, of course, an issue for Siemens, and not Allegheny, to address. Under its partnership with Siemens, Allegheny attains all the value of solar power technologies and little of the risks. Thus, this appea= rs to be a smart venture for Allegheny and one that should strongly benefit its power supply opportunities. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let us know if we can help you with in-depth analyses or any other SCIENTECH information products. If you would like to refer a colleague to receive our free, daily IssueAlerts, please reply to this email and include their full name and email address or register directly at: http://www.consultrci.com/web/infostore.nsf/Products/IssueAlert =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D Feedback regarding SCIENTECH's IssueAlert and SourceBook Weekly should be sent to wmcnamara@scientech.com =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D ********************************************************************* Reach thousands of utility analysts and decision makers every day. Your company can schedule a sponsorship of IssueAlert by contacting Nancy Spring at nspring@scientech.com or (505)244-7613. Advertising opportunities are also available on our website. ********************************************************************* SCIENTECH's IssueAlerts are compiled based on independent analysis by=20 SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlerts are not intended to predict financial performance of companies discussed or to be the basis for investment decisions of any kind. SCIENTECH's sole purpos= e in publishing its IssueAlerts is to offer an independent perspective regard= ing the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy and telecommunications issues. Copyright 2000. SCIENTECH, Inc. If you do not wish to receive any further IssueAlerts from SCIENTECH, pleas= e reply to this message and type "delete" in the subject line.
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