ATS Automation Tooling Systems Inc. was in many respects saved this quarter — and year — by its solar division, which consists of Photowatt in France and Spheral Solar Power in Cambridge, Ont.

The solar group, which from a revenue perspective is only Photowatt at this point, grew revenues in the fourth quarter by 57 per cent to $41 million. For the year the group had $143.8 million in revenues, 62 per cent higher than the previous fiscal year. Operating earnings jumped three-fold to $13.1 million, and operating margins grew to 9.1 per cent from 4.8 per cent.

“Demand for solar products is expected to remain robust well into fiscal 2006 and our manufacturing efficiency and throughput at Photowatt have shown additional major improvements this year,” said ATS chief executive and president Ron Jutras. “We continue to actively manage the tight supply and rising prices of silicon feedstock. While the effects of tight silicon supply are uncertain, we believe Photowatt has secured sources for a significant amount of its capacity for fiscal 2006. As a result we expect Photowatt’s operating performance to remain strong.”

Commenting on ATS’s newest solar business, Spheral Solar Power (SSP), Jutras said strong solar market demand has created a “great environment” for the launch of Spheral’s technology. “Unprecedented demand for clean, renewable solar energy globally has created substantial interest in SSP’s products among wholesalers, distributors and retailers.” He said the company shipped its first fully functional SuperFlex products in April.

“As expected production volumes are very modest but we have now reached the next stage of our plan that will put the SSP factory through a deliberate and focused program of optimization. This is the normal course of commissioning a manufacturing facility of this magnitude. Our first optimization cycle is well underway and in June we will go into an intensive improvement stage which is expected to last approximately one month. We will then restart production, assess performance and begin a new round of optimization, each time gaining throughput and capacity improvements. Each stage of this optimization process should be shorter in duration.”

ATS is taking it slow with SSP, presumably because it wants to get things right before marching into a hot market with a product that could have glitches. The current factory in Cambridge has an annual output capacity of 20 megawatts. Jutras acknowledged that things are going slow, but he defended the approach. “This methodical and deliberate approach to factory ramp up is vital to ensure the factory can achieve intended yields at full capacity.”

Besides, it’s not like ATS is missing the solar boat by taking it slow with SSP. Photowatt is strong and doing well, margins are on the rise, and the company seems to be doing a good job of managing its silicon supply needs in a tight market where prices are rising. Investors seem to agree. ATS shares were up nearly 9 per cent on today’s earnings report.

I didn’t get a chance to listen to the morning conference call, but so far I’ve seen no mention of ATS’s intention of spinning off its solar group (or pieces of it) through an initial public offering, despite widespread expectation/speculation in the market. If I hear anything more, such as from conference call transcripts, I’ll post a quick update here.

Check out Vancouver-based Sonic Environmental Solutions Inc., which has a patented process that uses sonic energy to clean contaminated soil.

Decontaminating soil is usually an energy-intensive process, but Sonic Environmental’s approach doesn’t require nearly as much electricity to produce the low-frequency sonic energy needed to clean soil. Here’s a brief description that appears on the company’s Web site:

“The company has commercial scale sonic generators that have been thoroughly proven in operation and has completed tests to demonstrate that our first Sonoprocess for the remediation of PCB-continamed soils will meet regulatory requirements for non-harzardous soil disposal or use.

“The company’s sonic generators produce extremely intense agitation via low frequency sonic energy. This is accomplished using a steel bar vibrating at its natural resonance frequency… The vibrational sonic energy from the bar is transmitted to chambers through which fluid materials or slurries can be pumped. The materials are thus subjects to very intense sonic agitation which has the effect of speeding up reactions and making them more complete.”

This is a company to watch closely, keeping in mind that the market for soil decontamination is worth billions of dollars. Its first plant in Delta, B.C., is nearly built. This spring it will begin cleaning up 3,000 tons of soil containing PCBs.

Vancouver-based Ballard Power Systems has raised $18 million (U.S.) to push ahead with the development of its 1 kilowatt co-generation fuel stack, which is designed to provide heat and power to homes that want to reduce carbon emissions and their dependency on the grid. The money is coming from its Japanese partner EBARA Corp. of Tokyo and will be paid out over four years. On top of those funds, EBARA is making an equity investment in Ballard of $11.7 million (U.S.) in two payment — one this year and the other in 2006.

In return, EBARA Ballard, a joint-venture between the two companies that is 51-per-cent owned by EBARA Corp., will “gaint rights, over time, through an exclusive, royalty-bearing license, to assemble, service, develop, manufacture and sell stationary cogeneration fuel cell stacks in Japan.”

Ballard will retains all rights to manufacture and sell these cogen units outside of the Japanese market.

Dennis Campbell, president and CEO of Ballard, said in a statement that Japan, with some of the highest electricity rates in the world, is an ideal place to inititally target cogen fuel cells, which will run on natural gas.

“There are a number of conditions that support cogeneration success in Japan, including the high cost of electricity, the growing demand for energy in the residential and consumer sector, and a strong national energy policy focused on sustainability and energy-independence,” said Campbell.

The Japanese government provides subsidies and support for homeowners who take advantage of such alternative energy products. In 2005 the government is providing for $23 million in subsidies that would result in the installation of 400 fuel-cell cogen systems. Tokyo Gas, Osaka Gas, Nippon Oil and others already have cogen products on the market.

“Given the market scope of 47 million households in Japan, cogeneration will remain a key component of our corporate strategy,” said Campbell.

It’s nice to see Ballard focusing more on non-auto applications for its fuel-cell technology. Clearly, cogen units – whether PEM-based or solid oxide — have a quicker path to market than the fuel-cell car. Japan is an obvious place to focus, but hopefully Ballard can capture interest from other Asian countries where conditions are similar.

Investors didn’t seem to care, however. The stock was slightly down this afternoon, demonstrating a continuing lack of general confidence in Ballard.

VRB Power Systems Inc. of Vancouver has received the Energy Storage Entrepreneurial Company of the Year Award from respected U.S. consultancy and research firm Frost & Sullivan.

I’ve been doing a little research myself into publicly traded VRB and I’m quite impressed by what this company is doing. Basically it focuses on developing electrochemical energy storage systems — i.e. a superior line of batteries — that don’t contain the usual toxic suspects such as lead or cadmium.

All components in the system are either recycable or have an indefinite lifespan. Vanadium is an inert metal that can be reused for other applications, while other plastic and reinforced fibre-glass components are either recycled or safely disposed. Sounds a heck of a lot cleaner than lead-acid alternatives.

I encourage you to visit the company’s Web site for more details, but essentially VRB has two “flow” battery technologies: One is a “Redox” battery based on Vanadium electrolytes that’s ideal for supplying 2.5 kilowatts to 10 megawatts of power for up to four hours; the second uses electrolytes of concentrated solutions of sodium bromide and sodium polysulphide and can be used in much larger utility-grade applications, ranging from 10 megawatts to 100 megawatts for eight to 12 hours.

The larger system is intented for huge utility applications and is still under development. The smaller system, called the VRB-ESS (the ESS standing for Energy Storage System), is being positioned as back-up power for utility and telecom applications and as temporary energy storage for off-grid renewable energy systems, such as those based on wind or solar with less predictable patterns of energy capture.

First commerical sales are being targeted at the cellular phone industry through a distribution and co-development deal with Magnetek Inc.

“This will enable VRB Power and Magnetek to offer an alternative to traditional lead acid battery technology with a reliable and environmentally safe energy storage product for switching centers and wireless base stations,” the companies said in a release last April.

Mark Kuntz, hired in November as VRB’s vice-president of marketing and business development, told me in an interview earlier this year that telecom customers across North America have expressed huge interest in the technology as a replacement for lead-acid batteries, which are changed out in three-year intervals.

“If you look at it from a life-cycle perspective, ignoring all the issues of lead disposal, after about five years we’re definitely the economic choice,” said Kuntz.

To see VRB’s 5 kilowatt ESS system compared to lead-acid batteries, click here. Essentially, VRB’s technology is a competitor to lead-acid, lithium-ion and future fuel-cell systems such as solid-oxide technology from Kingston-based Fuel Cell Technologies.

Jonathan Hykawy, an energy analyst with Fraser Mackenzie in Toronto, provides this analysis in a March 21 research note:

“Conventional wisdom ascribes the cause of looming ‘power shortages’ to a lack of generating capacity, but that is technically incorrect. There is a mismatch of energy supply and demand. The appropriate amount of energy can be generated by existing assets but it cannot be delivered as rapidly as required with existing tools. There is no technology in the current market that can cost-effectively store the electrical energy produced in off-peak periods, when demand is low, for later use during peak periods.”

He continues by saying the flow battery technology being developed — and readied for sale — by VRB Power changes this. With both systems, the company has the potential to “turn the power industry upside down” by allowing for better management of power supply and demand. It makes it easier to capture energy produced through from hydroelectric facilities and other Kyoto-friendly technologies such as wind and solar so that it can be consumed when industry, business and homeowners need it.

“We are confident that the technology developed by VRB Power is capable of being sold on an economic basis for motivated customers,” concluded Hykawy.

Mississauga-based Hydrogenics Corp. said it has signed a contract with the U.S. Army to supply a “self-contained regenerative fuel cell power system” that would provide auxiliary power for a light armoured vehicle.

The system would basically provide on-board electrolysis for producing hydrogen, which would then to stored and used when necessary to power a fuel cell. The system would work more quietly compared to an ICE engine, and it would operate at lower temperatures and with zero emissions. This is particularly important for military vehicles engaged in stealth missions that want to minimize heat trails.

Bottom line is that fuel cells are a natural for military applications, and Hydrogenics is likely to have more near-term success attracting contracts with the U.S. army and other militaries, where the technology can be proven in the field before we see industrial and eventually mass-market use in vehicles.