Needham Clean Tech Monthly December

January 7, 2010 Theodore Kundtz • [email protected] • 212-705-0380 Edwin Mok • [email protected] • 415-262-4896 Vernon P. Essi, Jr. • [email protected] • 212-705-0948 Sean Hannan • [email protected] • 212-705-0106 James Ricchiuti • [email protected] • 212-705-0381 Conor Irvine • [email protected] • 415-262-4868

Clean Technology Monthly

Needham & Co. Clean Technology Monthly Highlights for the Month of December

This month, we highlight our recent Clean Tech research, including Edwin Mok’s Solar PV Industry Update and initiation of AEIS as well as Sean Hannan’s initiation of Itron. Our “DOE Watch” tracks recent DOE spending and our “Green Gossip” section analyzes recent developments in regulation and legislation. We also review recent and upcoming Clean Tech deal activity. The Needham & Co. Clean Technology Indices: Energy Creation, Energy Efficiency and Environmental Sciences & Services increased 5.73%, 8.35% and 3.55%, respectively, in December. • Sean Hannan initiated coverage on Itron, Inc. with a Hold rating. Itron is a leading technology provider of

meters and related solutions for electric, gas and water utility applications. Edwin Mok initiated coverage on Advanced Energy Industries, Inc. with a Buy rating and a $16 12-month price target and upgraded Sunpower to Buy with a price target of $32.

• The DOE announced a series of awards in December, highlighted by $979 million for carbon capture and

sequestration (CCS), $564 million to fund 19 biorefineries and $60 million for the interconnection of thenational smart grid. Approximately $9.2 billion remains available in DOE funding through ARRA for clean technologies.

• Despite the majority of popular media’s belief that all was lost at the Copenhagen Climate Change

Conference last month, we see the Conference as an important and successful event for the cleantechnology industry due to its focus on mobilizing approximately $830 billion over the next ten years in clean technology and deforestation support for developing countries. While the conference failed toproduce legally-binding GHG reduction targets, we are encouraged by the EPA’s apparent readiness to monitor GHG, which it now deems a danger to public health - an announcement that was well received by clean tech investors.

• Deal activity leveled off in December with 44 M&A announcements; down four from November and nine less

then were announced in December 2008. There were three clean tech IPOs in December, up from 2 in November and zero during the same month last year. We are optimistic for the clean tech IPO market as investor interest for the upcoming Solyndra IPO appears to be high.

• The Needham & Co. Energy Efficiency Index rose 8.35% in December, outperforming the S&P 500, which

rose by 1.78%. The Needham & Co. Energy Creation and Environmental Sciences & Services Indices alsooutperformed the S&P 500, both increasing by 5.73% and 3.55%, respectively.

Figure 1: Needham & Co. Clean Tech Vertical Indices – 11/30/09 – 12/31/09

1.78%

3.55%

5.73%

8.35%

S&P 500

EnvironmentalSciences &

Services

Energy Creation

EnergyEfficiency

Source: FactSet, Needham & Company, LLC.

11/30 12/7 12/14 12/21 12/2898

100

102

104

106

108

110Energy Creation Index Energy Ef f iciency IndexEnvironmental Sciences & Services Index S&P 500

2 An Investment Analysis by Needham & Company, LLC

Table of Contents

Needham & Company, LLC’s Clean Technology Universe/Verticals & Sub-Segments Figure 2

! Power Management/Smart Grid/ Metering

" Efficient grid-level networks and systems that measure and control energy consumption, various metering technologies.

!Energy Storage" Rechargeable batteries, fuel cells, flywheels,

super capacitors, utility-grade storage solutions

! Lighting Efficiency/Advanced Lighting" Energy efficient lighting and systems, LEDs

! Alt. Propulsion/Alt. Energy Vehicles" Hybrid vehicles, hybrid drivetrain, electric

vehicles

!Power Management Semiconductors

Energy Efficiency

! Power Management/Smart Grid/ Metering

" Efficient grid-level networks and systems that measure and control energy consumption, various metering technologies.

!Energy Storage" Rechargeable batteries, fuel cells, flywheels,

super capacitors, utility-grade storage solutions

! Lighting Efficiency/Advanced Lighting" Energy efficient lighting and systems, LEDs

! Alt. Propulsion/Alt. Energy Vehicles" Hybrid vehicles, hybrid drivetrain, electric

vehicles

!Power Management Semiconductors

Energy EfficiencyEnergy Creation

! Solar Value Chain" Silicon producers, wafer

ingots, silicon cells and modules, thin-film modules, vertically integrated, systems and integrators, equipment

! Wind Infrastructure" Components, gearboxes,

structures, turbines, bearings, subsystems

!Alternative Fuels" Ethanol, biofuels, hydrogen

generation, biodigestors, fuel additives

Energy Creation

! Solar Value Chain" Silicon producers, wafer

ingots, silicon cells and modules, thin-film modules, vertically integrated, systems and integrators, equipment

! Wind Infrastructure" Components, gearboxes,

structures, turbines, bearings, subsystems

!Alternative Fuels" Ethanol, biofuels, hydrogen

generation, biodigestors, fuel additives

Environmental Sciences and Services

! Haz/Non-Haz Waste Treatment" Remediation of contaminated land,

soil, water and buildings.

! Pollution Abatement" Air purif ication and pollution controls,

indoor air quality, emissions sensors and analyzers

! Filtration " Purification products/services,

filtration products/services

! Green Materials" Construction, biogenerated,

biodegradable, and green building materials

Environmental Sciences and Services

! Haz/Non-Haz Waste Treatment" Remediation of contaminated land,

soil, water and buildings.

! Pollution Abatement" Air purif ication and pollution controls,

indoor air quality, emissions sensors and analyzers

! Filtration " Purification products/services,

filtration products/services

! Green Materials" Construction, biogenerated,

biodegradable, and green building materials

Clean Technology

Ver

tical

sS

ub-S

egm

ents

Source: Needham & Company, LLC.

Needham & Co. Clean Tech Research Recap.......................................................................................... 3

DOE Watch: From Regulator to Rainmaker .......................................................................................... 7

Green Gossip: Legislation, Policy and Developments in the New Energy Era ..................................... 9

Investment & Market Activity ................................................................................................................. 10

Venture Capital & Private Equity...................................................................................................... 10

Mergers & Acquisitions .................................................................................................................... 10

IPO Activity ...................................................................................................................................... 12

Market Performance ................................................................................................................................. 14

Energy Generation ............................................................................................................................ 15

Energy Efficiency.............................................................................................................................. 19

Environmental Sciences & Services.................................................................................................. 21

Tables ......................................................................................................................................................... 22

An Investment Analysis by Needham & Company, LLC 3

Needham & Co. Clean Tech Research Recap

Solar PV Industry Update: Our 2010 Outlook Strong Recovery to Extend into 2010 as the Industry Broadens Beyond Germany (1/04/10) Y. Edwin Mok – [email protected] Conor Irvine – [email protected] Despite overcapacity throughout the solar supply chain, we believe demand for solar products will continue to grow in 2010. We believe growth will be driven by the desire to capitalize on good IRRs in several key regions, the rush to complete installations in anticipation for a sharper FIT cut in Germany, an improved credit market providing project financing, and favorable subsidies in countries such as the U.S, Italy, Japan and China, and the province of Ontario, Canada. Additionally, with prices stabilizing, we believe many solar markets have become more elastic, which has kicked off a new growth cycle in the industry. While a subsidy cut in Germany in the back half of 2010 creates potential risk, we believe a slowdown in Germany could be mitigated by strong growth in other regions. Overall, we believe companies with good cost structure will generate solid profits, and companies with strong project pipelines will deliver outperforming revenue growth. Based on our positive view, we continue to like JASO and SPWRA within our coverage universe. Growth in the worldwide solar market has broadened from Germany into multiple markets. Following the fall of solar instillations in Spain, Germany rose to the occasion and generated half of the worldwide solar instillations in 2009, driven by favorable subsidies that generate favorable IRRs. While Germany is likely to remain one of the most important solar markets, we believe the worldwide solar industry will become less concentrated in 2010, and we expect newly forming solar markets to experience meaningful growth in the next few years. We see upside to consensus revenue estimates in 1H10. As a result of strengthening near term demand and improved order visibility, we believe shipments generally tracked higher for 4Q09 and see un-seasonal sequential growth in various markets in 1Q10. We note that the Street is modeling 1H10 aggregate solar revenue to grow only 3% over 2H09, and 2H10 revenue to grow 19% over 1H10. We believe the Street's estimates are too conservative, as the demand picture continues to improve into the New Year and prices remain stable. Price stabilization driving demand growth in various regions. When prices were falling early in 2009, demand across various end markets became inelastic. However, demand has seen a dramatic uptick in the back half of 2009, as buyers moved off the sideline, which has allowed prices to stabilize. With stable prices, we expect solar markets in various regions to become more elastic, and expect solar installations to grow in 2010 as a result. Polysilicon remains the most oversupplied market in the solar food chain, and we expect prices for polysilicon to continue to fall; however, we believe prices of downstream products are more stable due to the pickup in demand, and we expect margins to expand as a result. We continue to like cost leaders and companies that are leveraged to the U.S. In our opinion, JA Solar Holdings (JASO, Buy) will remain the cost leader in solar cell manufacturing, which should enable the company to gain further market share in European markets and Japan. Among the low cost producers, we believe JASO can deliver above average growth due to continued share gain and its expansion into the OEM module business. We believe SunPower (SPWRA, Buy) is well positioned in the U.S. market, from small scale residential, commercial to large-scale utilities and government projects. Besides being the leading manufacturer of high-efficiency solar products, we believe SPWRA has developed


a comprehensive approach in providing a solar power solution that will be a sustainable advantage over the long term.

SunPower Corp. – Upgraded to Buy from Under Review (SPWRA) – (12/17/09) Y. Edwin Mok – [email protected] Conor Irvine – [email protected] SPWRA: Robust Near-term Demand to Drive Upside, Likely to Overshadow Accounting Issues; Revising SPWRA from Under Review to Buy On 12/17/09, we revised our SPWRA rating to Buy (from Under Review) and set a price target of $32. We believe the recent update on the ongoing internal investigation into accounting issues has improved investor confidence that these issues will be behind the company shortly. Based on strengthening demand in several key markets, including Germany and Italy, and share gains driven by the expansion of SunPower's dealer network, we see upside to estimates in the near term. Heading into 2010, we believe SunPower is best positioned in the growing U.S. market. With the shares trading below levels before the accounting issues, we recommend investors use the weakness as a buying opportunity. Accounting issues still outstanding, but more confident that the impact will be minimal. Although SunPower has not completed the investigation into accounting irregularities, we believe the press release gave investors some reassurance that the accounting issues will have minimal impact to prior financials. We continue to believe these accounting issues have no impact to reported and future revenues. Robust near term demand suggests upside to 4Q09 revenue estimates. Heading into 2010, we are seeing strong demand in several key regions including Germany, Italy and the U.S. Industry participants have confirmed that the near term strength should extend into at least 1H10. We believe SunPower's 2009 revenue guidance looks conservative, and based on strengthened demand, we see upside to consensus estimates for 4Q09 and 2010. SPWRA best positioned to benefit from the growth in the U.S. solar market. In 2010, we continue to believe the U.S. solar market will see substantial growth driven by increased availability of federal stimulus spending and a number of state/local subsidies. We believe SunPower is well positioned in all market segments, from small scale residential, commercial to large-scale utilities and government projects.

Advanced Energy Industries, Inc. (AEIS): Inverter Business and Diversification Powering Growth; Initiated Coverage with Buy - (12/15/09) Y. Edwin Mok – [email protected] Conor Irvine – [email protected] On 12/15/09, we initiated coverage of Advanced Energy Industries, Inc. with a Buy rating and a 12-month price target of $16. As a leader in power conversion technology for advanced thin-film processes, we believe AEIS is well positioned to benefit from a recovery in key end markets, which include semi equipment, flat panel display, data storage and solar manufacturing. With a more diversified business, we believe Advanced Energy's revenues will return to prior peak levels and earnings will surpass prior peak levels even with a potentially


muted semi equipment cycle. We believe its solar inverter business is in the early stage of a multiple year expansion and the company is rapidly gaining market share in the U.S. commercial solar market, which we project will see substantial growth in the coming years. We believe AEIS offers better growth potential than semi equipment companies, and the shares will outperform in 2010. Well positioned to leverage a recovery in several key end markets. We see strong capital spending growth in several end markets in 2010, particularly in semi equipment (largest end market), hard-disk storage and flat panel display. In semi equipment, we project average inventory of key customers will return to normal range of 130 days by 4Q09. Diversification offsets a potentially muted semi equipment cycle, enabling revenue to return to and EPS to surpass prior peak levels. AEIS has increased non-semi revenue from 29% of revenue in 2002 (last semi cycle trough) to 40% in 2009 (recent trough). With a higher mix of non-semi business (better GM), revenues should return to prior peak levels of $350-400MM in 2011, with earnings power over $1/sh. Emerging solar inverter will drive substantial growth. We believe AEIS's inverter business is in the early stages of a multi-year ramp. With its differentiating transformer-less technology, we believe AEIS is rapidly gaining share in the U.S. large-scale solar market, which we estimate will grow at a 40% CAGR from 2009-11. We expect its recent entry into the European market drive incremental growth in 2010.

Initiated Coverage of Itron, Inc. (ITRI) – Hold (12/17/09) Sean K.F. Hannan – [email protected] Initiating Coverage at Hold On 12/17/09, we initiated coverage of ITRI, a leading technology provider of meters and related solutions for electric, gas and water utility applications, at Hold on valuation and pending improved visibility on timing of opportunities. Through multiple acquisitions and investments, Itron stands at the top of the global meter market that is gaining renewed interest as a core component to the smart grid. Leveraging its established history and deep customer relationships, we believe the company is well positioned to benefit from technology shifts toward advanced meter infrastructure (AMI) and a regulatory environment that is now (slowly) becoming more supportive. It is our view that the space will see healthy double-digit growth over the next few years, and we believe a leader such as Itron has the ability to take share and improve its global position. However, with its international (2/3 of revs.) outlook experiencing some lingering softness and utilities still moving slowly (with decisions or deployments), we view the current valuation as appropriate. Consequently, we are launching coverage at Hold and would be more constructive on pull-backs or through improved visibility that would allow us to increase estimates. Utilities Markets Provide Strong Secular Growth Opportunities Automation and Smart Grid efforts have finally moved to the forefront of utilities’ agendas while the decision processes at state regulators are (slowly) improving. This creates a fertile environment for all AMI players where adoption is showing better economics and acceptance. Operating Margins Poised To Expand With a leaner model, revenue momentum through a strong backlog, and higher tech mix, we expect to see notable Op. margin expansion in next 12-18 months. Strong Global Share & Presence


Itron is the leading global provider of meter solutions, with either #1 or #2 share positions in each application and a presence at customers in 130 different countries. Comprehensive & Holistic Product Approach Itron's portfolio approach can help to simplify the process for the risk-averse utilities in a couple of ways: (1) vendor/supplier management and (2) utilizing a solution with components explicitly designed to work together. Clean Technology: Environmental Sciences and Services (01/05/10) While we are now into the second quarter of the recovery and we remain optimistic for 2010 expecting GDP growth in the range of 3.5-4.0%. As has been well publicized, most companies will benefit from a significant degree of operating leverage once the revenue line begins to expand. In our sector we have highlighted Clean Harbors (CLH) as one of our best ideas for 2010 as we think it will be major beneficiary of an economic rebound in the upcoming year. Clean Harbors (CLH, Buy) We continue to recommend purchase of CLH believing that 2010 will be a strong recovery year benefitting from the economic recovery especially in the chemical and refining industries both of which have impacted results significantly over the past year. We continue to highlight that due to its strong industry position and solid cash flow characteristics, CLH has performed reasonably well in a weak economic environment. Also with the acquisition of Eveready completed, CLH has expanded its revenue base by over 50% further strengthening its product offerings and geographic reach. Pricing appears to be hold up well in landfill and incineration and the incineration utilization rates are close to 90%. Also CLH has been active in reducing its overheard expenses targeting a $20mm of cost synergies from the integration of Eveready in 2009 and another $20-$25mm in additional expense reduction in 2010. Following the acquisition, the company has $220mm of cash and debt of $299mm with capital expenditures expected to remain below depreciation levels. Following a disappointing 2009, we expect revenue to expand 34% (due in large part to the Eveready acquisition in for the full year) and EPS to increase from $1.83 in 2009 to $2.61 in 2010. Clean Harbors is a leading provider of environmental services and operator of non-nuclear hazardous waste treatment facilities in North America and Canada, offering technical, site and industrial services. The company’s technical services include collection, transport, treatment and disposal of hazardous and non-hazardous wastes and physical treatment, resource recovery, fuels blending, incineration, landfill disposal, wastewater treatment, lab chemical disposal and explosives management services. We value CLH on an EBITDA basis; and the stock is currently at a 7.0X multiple of 2010 EV/EBITDA. We view this at the low end of the range for the company and have a $70 price target on the company. CLH is entering 2010 with good visibility, a solid long-term market position, and underlying fundamentals that are very solid. With the economy slated for healthy growth in 2010, we believe the outlook remains very positive for CLH.


DOE Watch – From Regulator to Rainmaker With approximately $40 billion at its disposal for clean technology funding, the DOE has become the most powerful and important clean technology investor, expanding its regulatory role to include that of rainmaker, through a steady shower of government funds. Out of the $32.7 billion available to the DOE through the American Reinvestment and Recovery Act (ARRA), the DOE has awarded $21.8 billion and spent $1.7 billion, according to the DOE. Figure 3: DOE Funds Awarded & Currently Available Under ARRA as of 12/25/09

Cold War Nuclear Clean

Up$6.0

Smart Grid & Efficient Electrical

Transmission$4.5

Loan Guarantee Program

$4.0

Carbon Capture/ Storage

$3.4

Scientific Research

$1.6

Advanced Research

Projects Agency$0.4

Energy Efficiency & Renewable

Energy$16.8

(Billions)

Total: $36.7 Billion

Spent$1.7

Awarded$21.8

Still Available

$9.2 $32.7 Billion Excludes $4 Billion Loan Guarantee Program

Source: DOE, Needham & Company, LLC. The DOE announced a series of awards in December, highlighted by $979 million for carbon capture and sequestration (CCS), $564 million to fund 19 biorefineries and $60 million for the interconnection of the national smart grid. Figure 4: Significant DOE Investments, Grants and Loans Announced in December

Date Program Recipient(s)Amount

(MM) Description

4-Dec Clean Coal Power Initiative Round III

- American Electric Power Company- Southern Company

- Summit Texas Clean Energy $979

Accelerate the development of advanced coal technologies with carbon capture and storage at

commercial-scale

4-Dec Advanced Biorefinery Projects 19 biorefineries $564

Accelerate the construction and operation of 19 pilot, demonstration, and commercial scale biorefinery

facilities

7-Dec ARPA-E

- Electrofuels- Innovative Materials & Processes for

Advanced Carbon Capture Technologies - Batteries for Electrical Energy Storage

in Transportation $100 The DOE Annouced a second funding round for

ARPA-E for three funding opportunities

9-Dec Loan Guarantee Program Red River Environmental Products, LLC $245Build an activated carbon manufacturing facility near

Coushatta, Red River Parish, Louisiana

18-Dec

Smart Grid - Resource Assesment &

Interconnection-Level Transmission Analysis & Planning

- Eastern Interconnection: $30MM- Western Interconnection: $26.5MM

- Texas Interconnection: $3.5MM $60

Promote collaborative long-term analysis and planning for the Eastern, Western and Texas

electricity interconnections, which will help states, utilities, grid operators, and others prepare for future

growth in energy demand, renewable energy sources, and smart grid technologies.

22-Dec Enegry Innovation Hubs Three DOE research Hubs $366

- Fuel from Sunlight Hub- Modeling & Simulation for Nuclear Reactors - Energy Efficient Building Systems Design

Source: DOE, Needham & Company, LLC.


Carbon Capture & Sequestration Award – 12/04/09 The $979 million in funding for CCS will be in addition to $2.2 billion of capital from the three projects’ stakeholders, including American Electric Power (AEP), Southern Company, Summit Texas Clean Energy and partners. The project aims to develop CCS as a deployable technology in eight to ten years, able to achieve an efficiency capture target of 90%. The AEP project team includes APCo, Schlumberger Carbon Services, Battelle Memorial Institute, CONSOL Energy and Alstom. The project is expected to last 10 years and has a DOE contribution of $334MM. The Southern Company project team includes Mitsubishi Heavy Industries, Schlumberger Carbon Services, Advanced Resources International, Geological Survey of Alabama, EPRI; Stanford University, University of Alabama, AJW Group, and University of Alabama at Birmingham. It is projected to last 11 years and has a DOE contribution of $295MM. Figure 5: Participant Breakdown of $979 million in DOE Funding for CCS

Source: DOE, Company Reports, Needham & Company, LLC. Red River Awarded DOE Loan Guarantee – 12/09/09 Red River Environmental Products was awarded $245MM under the DOE Loan Guarantee Program for the construction of an activated carbon manufacturing facility in Louisiana. This is the fourth loan given out under the program and the second largest, as shown in figure 6. Approximately $3.2 billion remains available under the program. We note that Red River is the first non Energy Creation company to receive a loan under the program. We expect the DOE to continue to focus on carbon mitigation technologies as legislators take a more dovish stance towards fossil-fuels in the aftermath of international stalemate in Copenhagen and a stalled federal cap-and-trade program in the US. Figure 6: DOE Loan Guarantee Program Recipients (MM)

Available$3,161

Red River$245

Solyndra$535

Beacon Power

$43

Nordic Windpower

$16

Date Offered Recipient Amount (MM) Use of Funds

9-DecRed River Environmental

Products, LLC $245

Construction of activated carbon manufacturing facility near

Coushatta, Red River Parish, LA

2-Jul Nordic Windpower $16

Support expansion of wind turbine assembly plant to 1MW in Pocatello,

ID

2-Jul Beacon Power $43

Support construction of 20MW flywheel energy storage plant in

Stephentown, NY

20-Mar Solyndra, Inc. $535

Construction of commercial-scale manufacturing plant of its proprietary

solar modules Source: DOE, Needham & Company, LLC.

$295

$334

$350

Southern Company AEP Texas Clean Energy Project

APCo, Schlumberger Carbon Services, Battelle

Memorial Institute, CONSOL Energy, Alstom

Mitsubishi Heavy Industries,

Schlumberger Carbon Services, Advanced Resources

International, EPRI

University of Texas, Siemens technology


Green Gossip – Legislation, Policy and Developments in the New Energy Era Expectations were high leading up to the Copenhagen Climate Change Conference as President Obama announced early in the month that he would attend the closing in efforts to secure an agreement and as the triad of potential spoilers (the US, China and India) had already announced their intent to participate through voluntary carbon cuts. Domestically, things appeared to be progressing with or without the wishes of Congress as the EPA declared greenhouse gases a danger to public health, potentially leading to new emissions regulation and causing the Needham Energy Creation index to rally, led by the Solar index. As the Copenhagen Conference drew to a close, greens and the usual myriad of climate concerned countries, such as Greenland and Denmark, deemed it a failure. We disagree and see the framework, in the form of the 3-page “Copenhagen Accord”, as a foundation and as a building block for progress. While we acknowledge the outcry over the conference’s inability to produce legally binding GHG reduction targets, we also note that very serious money in the tune of $30 billion for the period 2010 to 2012 and $100 billion annually by 2020 for a clean technology fund to assist developing countries is being mobilized and could act as a follow up catalyst to the various government stimulus packages that are currently buoying the sector. Furthermore, a successful conference in our opinion was not necessarily one that succeeded in efforts to legally bind nations to targets and goals for the purpose of mitigating the possibility of catastrophic climate change, as many investors and scientists are not convinced that climate change is man-made, but one that’s results produced the generation of some sort of clean technology fund to further support the energy infrastructure transformation currently taking place. We believe the conference was successful in doing so and will be tracking the development related to these funds. Developed countries’ insistence on conditionality attached to these funds should make sure the funds aren’t seen as retribution or aid for developing countries, but instead are used for clean technology development and to fight deforestation. While we do not see these funds as a near-term catalyst, we believe it could act as an important long-term growth driver for the overall sector. Progress on establishing a price on carbon was nascent and hopes for implementing a global cap-and-trade program or anything legally binding was shot; however, a framework for establishing both was put into place if and when the US and other countries choose to implement it at home first. This is a prospect we doubt will take hold prior to next year’s Climate Change Conference in Mexico City. Senior Democrats in carbon-intensive and agriculture-focused states such as Indiana, North Dakota, Louisiana and Nebraska are concerned about the effects it could have on jobs and other Democratic Senators are hesitant to support what is essentially a tax ahead of midterm elections in the wake of economic uncertainty and stubbornly high unemployment. While we are still optimistic for an energy reform bill in 2010, we believe that if cap-and-trade is to be a part of that bill it is likely to be held off until at least 2011. But then of course if there is a Democratic mid-term drubbing, cap-and-trade might not be so easy to push through in its aftermath.


Investment & Market Activity Venture Capital & Private Equity Investor appetite for clean tech investment remains robust, highlighted by the continued influx of venture capital and private equity investment. In 2009, world wide PE & VC investment was $11.655 billion, down 18% from the highs of 2008 but up 72% from 2007. Energy Creation continues to attract the lion’s share of private investment; however, investment opportunities arising from stimulus spending directed at the smart grid is spurring interest in Energy Efficiency while expectations for emission-related legislation is buoying investment in Environmental Sciences & Services, as shown in figure 7. Figure 7: World Wide PE & VC Investment in Clean Tech – 1999 to 2009

$ -

$ 2,000

$ 4,000

$ 6,000

$ 8,000

$ 10,000

$ 12,000

$ 14,000

$ 16,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Environmental Science & Services

Energy Efficiency

Energy Creation

(MM's)

Source: Cleantech Group, Needham & Company, LLC. Clean tech financing activity in December was highlighted by Hudson Clean Energy Partners closing its first fund, which is over $1 billion. The fund will invest in late stage energy creation and energy efficiency technologies in the range of $50 million to $150 million on average per transaction. The firm was founded in 2007 and is led by John Cavalier and Neil Auerbach. Mergers & Acquisitions The clean tech industry has seen a steady rise of M&A activity over the past few years reflective of the industry’s growth and as shown in figure 8 below. Activity has increased as a growing number of players, previously unrelated to clean technology, have made acquisitions to gain exposure to the space. December saw a number of companies enter the clean technology space via acquisition including Panasonic and Taiwan Semiconductor Manufacturing Co. (TSMC) through Sanyo and Motech, respectively. We expect this trend to continue and expect an influx of new players to continue to enter the space via acquisitions, such as defense and telecom companies, based largely on opportunities presented by the smart grid.


Figure 8: World Wide Clean Tech M&A Activity - 2005 to 2009

56

147 144188

267

66 43

86

94

35

100

70

87

94

20

2005 2006 2007 2008 2009

Environmental Sciences &Services

Energy Efficiency

Energy Creation

111 total

313 total

257 total

361 total

455 total

Source: Cleantech Group, Needham & Company, LLC. December 2009 saw 44 M&A announcements; a decrease of four deals from November, and nine less than December 2008. Energy Creation saw the bulk of deal activity in December 2009, in-line historically, with 25 transactions. Of those transactions, seven were biofuel, eight were solar and five were wind. Figure 9: World Wide Clean Tech M&A Activity – December 2009, Y/Y & M/M

36

10

7

27

10 11

25

11

8

Energy Creation Energy Efficiency Environmental Sciences &Services

Dec-08 Nov 09 Dec 09

Source: Cleantech Group, Needham & Company, LLC. Selected Clean Tech M&A in December A few noteworthy transactions in our opinion are listed below. Clipper Windpower announced it sold a 49.5% stake to United Technologies on December 19th. The proceeds are to strengthen the company’s balance sheet, pursue strategic initiatives and facilitate project financing. Also, noteworthy in the wind industry was PG&E’s undisclosed acquisition of Iberdrola’s Manzana Wind Farm, a 246 MW project under development in California that would be PG&E’s first wind farm. The project will cost


approximately $900 million to develop, which includes payment to Iberdrola. Iberdrola is developing and building the wind farm while PG&E will own and operate it. PG&E, along with the other California utilities, are trying to achieve a 33% renewable portfolio standard (RPS) by 2020. The upstream solar market saw some activity this month with the undisclosed acquisition of Eversol by MEMC and with TSMC taking a 20% stake in Motech Industries. The investment marks TSMC’s entrance into the solar market, which was expected; however, the size of the investment surprised on the upside in light of TSMC’s board reportedly approving only a $50 million investment in August. On 12/09/09 EnerNOC acquired the 30-person monitoring-based commissioning outfit, Cogent, for an undisclosed amount. Figure 10: Selected Clean Tech M&A – December 2009

Target Buyer Deal Size Date Annouced SubsectorClipper Windpower United Technologies Corporation $270,000,000 12/9/2009 WindCogent Energy, Inc. EnerNOC Undisclosed 12/9/2009 Smart Grid

Motech IndustriesTaiwan Semiconductor Manufacturing Co. $193,000,000 12/10/2009 Solar

246 MW Manzana wind farm -:- assett of Iberdrola Renewables, Inc. PG&E Undisclosed 12/11/2009 WindCalifornia Micro Devices ON Semiconductor Corp $108,000,000 12/14/2009 LightingEversol MEMC Electronic Materials, Inc. Undisclosed 12/21/2009 SolarCO2 Solution, Inc. Codexis, Inc. Undisclosed 12/21/2009 Clean CoalTotal Agroindustria Canavieira S/A Petrobras $84,000,000 12/22/2009 Biofuels

Source: Cleantech Group, Needham & Company, LLC. IPO Activity Clean tech IPOs in December rose to 3 from 2 in November. There were no IPOs during the same month last year. China Longyuan Power Group, China’s largest wind power producer, raised approximately $2.26 billion via an initial public offering. The IPO is the third largest clean tech IPO to date, behind Iberdola’s $6.6 billion IPO in December 2007 and EDP Renovaveis’s $2.4 billion in June 2008. On 12/31/09 shares of Longyuan were up 12.4% since it began trading on 12/10/09. Figure 11: Select Clean Tech M&A Transactions – December 2009

Date Company Ticker Exchange Offer Shares12/3/2009 China Forestry Holdings Co., Ltd 00930 Hong Kong Futures Exchange $0.27 750,000,000

12/10/2009 China Longyuan Electric Power Group Corp 0916 Hong Kong Futures Exchange $1.06 2,142,860,00012/16/2009 Pure Klimaschutz 4CT Frankfurt Stock Exchange Undisclosed Undisclosed

Source: Cleantech Group, Needham & Company, LLC.


In 2009, there were 13 clean tech IPOs, according to Cleantech Group. On average the shares of clean tech companies that went public last year returned 25.8%, driven by the outperformance of China Singyes Solar and Duoyuan Global Water, Inc. Figure 12: IPO Performance Year to Date, as of 12/31/09 & IPOs by Needham & Co. Clean Tech Vertical – 2001 to 2009

-7% -6%

5% 5% 11% 12% 20% 22%34%

64%

221%

-11%-35%

Euro Mult

ivisio

n Ltd

Shenzh

en MYS

Greens H

oldings

Indian Energy

Pure Klimasc

hutz

China Forestr

y Holdings

A123 Sys

tems, Inc

China Longyu

an

STR Holdings I

nc

Magma Energy Corp.

China M

etal R

ecyclin

g

Duoyu

an Global W

ater Inc

China Singye

s Solar

Shares of Cleantech Companies to IPO in 2009 are up an average of

26%, as of 12/31/09

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2006 2007 2008 2009

Environmental Science &Services

Energy Efficiency

Energy Generation

Source: Cleantech Group, FactSet Needham & Company, LLC. Figure 13: IPOs by Needham & Co. Clean Tech Vertical – 2001 to 2009

2001 2002 2003 2004 2005 2006 2007 2008 2009

Energy Generation 0 3 1 1 14 35 26 13 6

Energy Efficiency 0 0 0 2 6 8 15 1 2Environmental Science &

Services 2 3 0 2 12 15 11 3 5

Total 2 6 1 5 32 58 52 17 13 Source: Cleantech Group, Needham & Company, LLC. Cancelled or Delayed Clean Tech IPOs While Longyuan enjoyed a successful IPO in December, Trony Solar, a Chinese solar module maker, postponed plans for its IPO which was scheduled for December as well. The delayed Trony IPO comes on the heels of the lackluster STR Holdings IPO last month. STR Holdings opened trading at $10/share, below its offering range of $11 to $13, which had already been reduced from $13 to $15. Upcoming Clean Tech IPOs We are optimistic for the clean tech IPO market as investor interest for the upcoming Solyndra IPO appears to be high. Solyndra, a California based commercial-scale cylindrical thin-film solar company, filed a registration statement for a $300 million IPO on the Nasdaq. Solyndra (which would trade under the symbol SOLY) would use the proceeds for the construction of the company’s manufacturing facility in Fremont. Solyndra could buck the recent dismal solar IPO trend due to technological differentiation in its use of mirrors and due to solid financing thus-far that includes $535 million from the DOE Loan Guarantee Program. Codexis Inc., a California based cellulosic ethanol company that uses a biocatalyst process to produce fuel, filed for a $100 million IPO on the Nasdaq. Shell, the largest advocate of biofuels of the oil majors, owns approximately 20% the company. Codexis (which would trade under the symbol CDXS), intends to use the proceeds for working capital and other general purposes as well as to possibly acquire technologies or companies. The company backed out of previous plans to go public in September 2008, citing unfavorable market conditions.


Market Performance The Needham & Co. Energy Efficiency Index rose 8.35% in December, outperforming the S&P 500, which rose by 1.78%. The Needham & Co. Energy Creation and Environmental Sciences & Services also outperformed the S&P 500, both increasing by 5.73% and 3.55%, respectively. Figure 14: Needham & Co. Clean Tech Vertical Indices – 11/30/09 to 12/31/09

1.78%

3.55%

5.73%

8.35%

S&P 500

EnvironmentalSciences &

Services

Energy Creation

EnergyEfficiency

Source: FactSet, Needham & Company, LLC. Leading the Needham & Co. subsectors in December were LED, Non-Toxic Materials and Smart Grid, while Hazardous Waste and Wind lagged, as shown below in figure 3. A complete listing of the companies comprising each of these subsectors is detailed at the back of this report. Figure 15: Needham & Co. Clean Tech Subsector Indices – 11/30/09 to 12/31/09

0.08%

0.93%

1.12%

1.78%

1.86%

3.10%

4.00%

4.87%

6.72%

7.50%

9.27%

10.84%

11.27%

13.66%

14.98%

17.18%

Hazardous Waste Services

Wind

Alternative Vehicle

S&P 500

Air Pollution Control

Biofuels

Wave, Biomass & Geothermal

Water Filtration

Infrastructure

Power Semiconductor

Material Science

Solar

Energy Storage

Smart Grid

Non-Toxic Materials

LED



Energy Creation The Needham & Co. Energy Creation Index rose 5.73% in November versus the S&P 500 which increased 1.78%. Figure 16: Needham & Co. Energy Creation Subsector Indices – 11/30/09 to 12/31/09

3.10%

4.00%

0.93%

10.84%

Wind

Biofuels

Wave, Biomass &Geothermal

Solar

Source: FactSet, Needham & Company, LLC. The Needham & Co. Solar Index which is comprised of 46 companies, led the Energy Creation Index advancing 10.84%. The index returned an average 14% in December, led by Amtech Systems and JA Solar, which increased 85.1% and 46.5%, respectively. BTU International (Buy rated) rose 39% as the company, which supplies advanced thermal processing equipment to the alternative energy and electronics markets, is well positioned for improvement in solar equipment orders. The company has introduced several new products and we would expect increased traction in the thin film area by the 2H of 2010. The company's stock price is well supported by a book value of $4.30 per share and net cash of $1.71 per share. Akeena Solar (Hold rated) was up 30% in December due to its mid-month announcement of selling its Andalay AC panels through 21 Lowe's home-improvement centers in California. This represents a new distribution channel for Akeena. The AC panels have built-in inverters that produce AC power, so there is no DC wiring required for installation. Built-in inverters offer the advantage of generating more energy output especially in partially shaded conditions.


Figure 17: Needham & Co. Solar Index – 11/30/09 to 12/31/09

-12.1%

-10.1%

-9.6%

-8.3%

-5.4%

-3.4%

-2.9%

-0.6%

-0.5%

1.7%

2.0%

2.1%

3.1%

3.6%

5.6%

6.6%

7.9%

9.1%

10.9%

11.2%

11.3%

11.4%

12.1%

13.1%

13.2%

13.7%

14.6%

15.8%

15.9%

16.7%

17.1%

18.1%

18.7%

18.9%

19.1%

22.5%

23.6%

25.9%

30.2%

30.9%

32.3%

33.0%

38.9%

40.3%

46.5%

85.1%

Solar Pow er Inc.

LDK Solar Co. Ltd. (ADS)

Conergy AG

Premier Pow er Renew able Energy Inc.

Websol Energy Systems Ltd.

Green Energy Technology Inc.

PV Crystalox Solar PLC

E-Ton Solar Tech. Co. Ltd.

aleo solar AG

SolarWorld AG

Solon SE

Solar-Fabrik AG

Gintech Energy Corp.

centrotherm photovoltaics AG

Real Goods Solar Inc.

Energy Conversion Devices Inc.

Evergreen Solar Inc.

Q-Cells S.E.

DayStar Technologies Inc.

Suntech Pow er Holdings Co. Ltd. (ADS)

Yingli Green Energy Holding Co. Ltd. (ADS)

Wacker Chemie AG

Roth & Rau AG

MEMC Electronic Materials Inc.

Applied Materials Inc.

First Solar Inc.

SunPow er Corp. (Cl A)

Solarfun Pow er Holdings Co. Ltd. (ADS)

Trina Solar Ltd. (ADS)

China Sunergy Co. Ltd. (ADS)

GT Solar International Inc.

STR Holdings Inc.

ReneSola Ltd (ADS)

EMCORE Corp.

Ascent Solar Technologies Inc.

Sunw ays AG

Hoku Scientif ic Inc.

Neo Solar Pow er Corp.

Akeena Solar Inc.

Canadian Solar Inc.

Topco Scientif ic Co. Ltd.

Solartech Energy Corp.

BTU International Inc.

Spire Corp.

JA Solar Holdings Co. Ltd. (ADS)

Amtech Systems Inc.

The 46 companies in

the Needham & Co. Solar Index

Returned an average of 14%

in December



The Needham & Co. Wind Index, which is comprised of 20 companies, lagged the Energy Creation Index advancing 0.93%%. The index returned an average 3.0% in December, led by American Superconductor and Clipper Windpower, which increased 23.2% and 21.1%, respectively. Figure 18: Needham & Co. Wind Index – 11/30/09 to 12/31/09

-19.2%

-8.9%

-7.2%

-2.7%

-1.0%

0.2%

0.6%

6.5%

6.6%

8.4%

11.6%

13.1%

13.3%

13.4%

15.2%

16.4%

21.1%

23.2%

-26.4%

-24.4%

Composite Technology Corp.

GC China Turbine Corp.

AAER Inc.

Vestas Wind Systems A/S

Gamesa Corporacion Tecnologica S.A.

Xinjiang Goldw ind Science & Technology Co. Ltd.

Nordex AG

Energy Composites Corp.

Kaydon Corp.

Acciona S.A.

A-Pow er Energy Generation Systems Ltd.

ABB Ltd.

MagneTek Inc.

Broadw ind Energy Inc.

REpow er Systems AG

NEPC India Ltd.

Suzlon Energy Ltd.

Catch the Wind Inc.

Clipper Windpow er PLC

American Superconductor Corp.



Shares of American Superconductor have been driven higher by favorable developments in both its wind and superconducting wire businesses. In addition, in early December, management reiterated revenue and earnings guidance for the current year ending March and for the out-year. In its fast-growing wind power business, which represents over three-quarters of its revenues, AMSC continues to benefit from strong near-term growth drivers, notably the continued strong investment by Chinese wind turbine manufacturers, and longer term by potential new growth opportunities in the fast-growing off-share wind power market. We expect business to remain strong with AMSC's largest customer, Sinovel, the number one wind turbine manufacturer in China, continues to ramp production at the same time that the company's other wind turbine manufacturers in China, notably Dongfang and CSR Zelri, scale up production. AMSC has an active new product pipeline, including the next-generation PMW4000W for its new wind turbine designs and a new solar farm grid interconnection product. The company is also working on a 10MW offshore high-temperature superconductor (HTS)-based wind turbine called SeaTitan. While it's still a few years out, SeaTitan will follow a similar model that AMSC executed with its core electrical components in its current portfolio of wind turbines, namely license the HTS wind turbine design, then sell the HTS wire and electrical components, but with the potential for $1M of total content versus $60,000-$80,000 for its current wind turbine designs. AMSC believes the addressable market for SeaTitan could be as large as $1B by 2016. AMSC's shares have also gotten some lift from developments around the proposed Tres Amigas power hub in New Mexico, which will link three power grids in the U.S. and Canada and will incorporate the company's superconducting wire. Tres Amigas in December submitted filings with the Federal Energy Regulatory Commission (FERC) to move forward with the project, in which AMSC has a minority equity interest. As this project moves forward, we believe it will represent another important validation of the company's superconductor technology. Elsewhere in the wind sector, A-Power Energy Generation Systems, Ltd., which provides distributed power generation systems in China and manufactures wind turbines, last month announced that Shenyang Power Group (SPG), together with affiliates of U.S. Renewable Energy Group (US-REG) and Cielo Wind Power, LP ("Cielo Wind"), have entered into a definitive agreement for their ownership of a project company to develop a 600 MW wind farm in Texas. A-Power has been designated to supply wind turbines to this project. General Electric Co. in early December announced a $1.4 billion contract from Caithness Energy to supply its 2.5xl wind turbines and related services for the massive 845 MW Shepherds Flat wind farm project in Oregon, which is expected to be the largest ever. Construction is scheduled to start next year and is expected to be finished in 2012. GE will also supply 10 years of operational and maintenance services. The Shepherds Flat wind farm will supply renewable energy to Southern California Edison. Also in December, Danish blade manufacturer LM Glasfiber announced a five-year supply contract for a minimum of 1,500 MW with Samsung, a new entrant to the wind power market which plans to launch a new line of 2.5MW wind turbines. The government of Brazil announced it would contract 1.8GW of wind capacity, coming from 71 wind farms over a 20-year period.


Energy Efficiency The Needham & Co. Energy Efficiency Index rose 8.35% in December versus the S&P 500 which increased 1.78%. The Needham & Co. LED index, which is comprised of 7 companies, led the Energy Efficiency Index, advancing 17.2% followed by the Smart Grid Index, which is comprised of 12 companies and rose by 13.7%. Figure 19: Needham & Co. Energy Efficiency Subsector Indices – 11/30/09 to 12/31/09

1.1%

6.7%

7.5%

11.3%

13.7%

17.2%

AlternativeVehicle

Infrastructure

PowerSemiconductor

Energy Storage

Smart Grid

LED

Source: FactSet, Needham & Company, LLC. The companies comprising the LED index (market cap weighted) returned an average 17.2% in December, propelled by above average gains from Supertex and Cree, which increased 24.6% and 17.9%, respectively. Figure 20: Needham & Co. LED Index – 11/30/09 to 12/31/09

-20.9%

8.8%

9.2%

15.7%

16.4%

17.9%

24.6%

Nexxus Lighting Inc.

LSI Industries Inc.

Orion Energy SystemsInc.

Universal Display Corp.

Diodes Inc.

Cree Inc.

Supertex Inc.

Source: FactSet, Needham & Company, LLC. The companies comprising the Smart Grid index returned an average 3.6% in December, led by Telvent, MYR Group and EnerNOC, which increased 22.0%, 15.7% and 14.9%, respectively. We note that both Telvent and MYR Group are service companies, while EnerNOC is a software/ service company. We believe


shares of the service companies are demonstrated stronger momentum during the month versus the metering companies, which realized sizable gains during mid 2009 (as a result of the federal stimulus announcement followed by rounds of utility award announcements). Figure 21: Needham & Co. Smart Grid Index – 11/30/09 to 12/31/09

-18.3%

-12.6%

-0.7%

4.5%

7.3%

9.3%

11.1%

11.2%

14.9%

15.7%

22.0%

-21.5%Beacon Power Corp.

Zenergy Power PLC

PowerSecure Internat ional Inc.

Ambient Corp .

Echelon Corp.

ESCO Techno log ies Inc.

Comverge Inc.

Quanta Services Inc.

It ron Inc.

EnerNOC Inc.

M Y R Group Inc.

Telvent GIT S.A .

Source: FactSet, Needham & Company, LLC. The Needham & Co. Power Semis Index, which is comprised of 18 companies, advanced 7.5%%, in December. The companies comprising the index returned an un weighted average of 16.3%, led by California Micro Devices (which was acquired by On Semiconductor for $4.70 per share) and Cirrus Logic, which increased 57.0% and 25.6%, respectively. Texas Instruments, the largest in market cap by approximately 3.5 fold, weighed on the index with a monthly return of only 3.0%. Figure 22: Needham & Co. Power Semis Index – 11/30/09 to 12/31/09

3.0%5.2%5.3%6.2%

8.2%11.5%

13.3%13.7%

14.7%15.1%15.5%15.9%

18.2%18.7%

23.1%23.3%

25.6%57.0%

Texas Instruments Inc.

Natio nal Semico nducto r Co rp.

A nalo g Devices Inc.

Semtech Co rp.

P o wer Integratio ns Inc.

M o no lithic P o wer Systems Inc.

Linear Techno lo gy Co rp.

ON Semico nducto r Co rp.

M icrel Inc.

IXYS Co rp.

M axim Integrated P ro ducts Inc.

Vo lterra Semico nducto r Co rp.

Internatio nal Rectif ier Co rp.

Intersil Co rp. (Cl A )

A dvanced A nalo gic Techno lo gies Inc.

Fairchild Semico nducto r Internatio nal Inc.

Cirrus Lo gic Inc.

Califo rnia M icro Devices Co rp.



Environmental Sciences & Services The Needham & Co. Environmental Sciences & Services Index rose 3.55% in December versus the S&P 500 which increased 1.78%. The Needham & Co. Non-Toxic Materials Index, which is comprised of 8 companies, led the Environmental Sciences & Services Index, advancing 14.98%. Figure 23: Needham & Co. Environmental Sciences & Services Subsector Indices –11/30/09 to 12/31/09

0.08%

1.86%

4.87%

9.27%

14.98%

HazardousWaste Services

Air PollutionControl

Water Filtration

Material Science

Non-ToxicMaterials

Source: FactSet, Needham & Company, LLC. Headwaters and Hexcel led the Index increasing, increasing 38.4% and 23.0%, respectively. Figure 24: Needham & Co. Non-Toxic Materials Index – 11/30/09 to 12/31/09

-3.8%

-0.6%

5.8%

10.7%

17.5%

23.0%

38.4%

Tennant Co.

Landec Corp.

Zoltek Cos.

Kadant Inc.

KHD Humboldt Wedag

Hexcel Corp.

Headw aters Inc.



Figure 25: Needham & Company, LLC’s Clean Technology Universe

Closing Shares Market12 Mo. Price Out. Cap.

COMPANY (Disclosures) Subsector Symbol Rating 01/06/10 High Low (mil.) (mil.) AnalystEnergy Creation Advanced Energy Industries, Inc. (B, D, E, G, J) Solar Industry AEIS Buy $16.66 $16.82 $5.36 43 700 MokAkeena Solar Inc. (B, G) Solar Industry AKNS Hold 1.41 2.61 0.58 28 49 KundtzAmerican Superconductor Corp. (B, G, J1) Wind Power & Grid Products AMSC Buy 42.87 43.50 11.66 43 1,891 RicchiutiApplied Materials, Inc. (B, G) Solar Mfg. Equipment AMAT Hold 14.16 14.57 8.19 1,333 18,987 MokBTU International, Inc. (B, G, J1) Solar Mfg. Equipment BTUI Buy 6.26 8.30 2.66 9 58 KundtzJA Solar Holdings Co. Ltd. (B, G) Solar PV Technology JASO Buy 6.80 6.95 1.77 169 1,142 MokLDK Solar Co. Ltd. (B) Solar PV Technology LDK Hold 7.95 16.47 3.75 109 900 MokMEMC Electronic Materials, Inc. (B) Solar PV Technology WFR Hold 14.61 21.36 11.32 229 3,121 MokSolar Power Inc. (B, E) Solar Industry SOPW Buy 1.24 1.90 0.42 38 62 KundtzSunPower Corp. (B, E, G) Solar PV Technology SPWRA Buy 25.77 44.46 19.70 84 2,497 Mok

Energy EfficiencyEchelon Corporation (B, G) Smart Grid ELON Buy $11.97 $15.38 $5.13 41 491 HannanESCO Technologies, Inc. (B) Smart Grid ESE Buy 35.16 46.87 29.04 27 929 HannanFuel Systems Solutions, Inc. (B, D, G, J) Alternative Energy FSYS Buy 48.01 52.53 9.83 16 844 KundtzItron, Inc. (B, G) Smart Grid ITRI Hold 71.92 72.20 40.10 35 2,886 HannanIXYS Corporation (B, G) Analog/Mixed Signal IXYS Buy 6.95 11.00 5.61 31 216 Essi, Jr. LSI Industries (B, E, G) LED Lighting LYTS Buy 8.11 8.48 2.75 22 195 RicchiutiMaxwell Technologies Inc. (B, E, G) Alternative Energy MXWL Buy 18.13 21.81 4.50 21 472 KundtzMonolithic Power Systems, Inc. (B, G) Analog/Mixed Signal MPWR Buy 23.10 25.26 10.67 36 805 Essi, Jr. ON Semiconductor Corporation (B, D, E, G, J) Analog/Mixed Signal ONNN Restricted 8.90 9.12 3.17 379 3,783 Essi, Jr. Power Integrations Inc. (B, G, J1) Analog/Mixed Signal POWI Hold 36.02 37.15 16.75 32 971 Essi, Jr. Supertex, Inc. (B, G) Analog/Mixed Signal SUPX Hold 28.19 32.98 18.43 13 364 Essi, Jr. Ultralife Corporation (B, G, J1) Alternative Energy ULBI Buy 4.28 14.15 3.42 18 73 KundtzUniversal Display Corporation (B, G, J1) OLED Lighting PANL Hold 14.17 14.26 5.04 36 520 RicchiutiVolterra Semiconductor Corp. (B, G) Analog/Mixed Signal VLTR Hold 18.45 20.17 6.16 25 429 Essi, Jr.

Environmental Sciences & ServicesAmerican Ecology Corp. (B, G) Hazardous Waste ECOL Hold $17.25 $21.21 $13.56 18 313 KundtzCeco Environmental Corp. (B, G) Air Pollution Control CECE Buy 3.96 4.51 1.80 15 57 KundtzCeradyne, Inc. (B, G, J1) Diversified Technology CRDN Hold 19.35 25.07 14.27 27 497 RicchiutiClean Harbors Inc. (B) Hazardous Waste CLH Buy 61.05 65.18 40.90 23 1,600 KundtzFuel Tech Inc. (B, G) Air Pollution Control FTEK Hold 8.10 14.15 7.01 25 196 KundtzHeritage-Crystal Clean Inc. (B, G) Hazardous Waste HCCI Hold 11.01 13.80 6.50 11 118 KundtzPMFG, Inc. (B, D, G, J) Air Pollution Control PMFG Hold 16.60 18.50 3.96 13 220 KundtzTennant Company (B) Industrial Cleaning TNC Hold 26.56 33.37 7.61 19 497 Kundtz

52-Week



Figure 26: Needham & Co. Solar Index Needham & Co. Solar Index

Company Name TickerMarket

Cap 12/31/2009 High Low EV EPS 2010 EBITDA 2010 Sales 2010 P/E 2010EV/

EBITDA 2010Price/Sales

2010Equipment

Amtech Systems Inc. ASYS 66.40 $11.07 $7.50 $2.62 NM NM NM NM NM NM NMApplied Materials Inc. AMAT 18,085.16 13.94 14.19 8.19 15,400.21 0.65 1,539.97 7,269.64 21.51x 10.00x 2.49xBTU International Inc. BTUI 45.22 6.35 8.30 2.66 61.24 0.07 0.10 70.78 88.19x 612.41x 0.64x

centrotherm photovoltaics AG B2885W 952.52 42.20 45.50 13.10 NM NM NM NM NM NM NMGT Solar International Inc. SOLR 790.03 $5.56 $9.04 $2.55 575.66 0.56 104.88 564.15 9.86x 5.49x 1.40x

Roth & Rau AG B142TD 403.65 30.22 30.48 10.43 NM NM NM NM NM NM NMSpire Corp. SPIR 37.42 5.36 9.00 3.28 #N/A -0.80 #N/A 77.20 -6.70x #N/A 0.48x

Poly, Wafers & Ingots #N/A 1.25xHoku Scientific Inc. HOKU 53.49 $2.72 $4.64 $1.67 NM -$0.19 $9.83 $58.20 -14.13x NM 0.92x

LDK Solar Co. Ltd. (ADS) LDK 1,027.16 7.01 16.47 3.75 2,618.01 $0.27 $166.35 $1,342.13 26.20x 15.74x 0.77xMEMC Electronic Materials Inc. WFR 2,674.27 13.62 21.36 11.32 1,977.47 $0.85 $324.49 $1,595.32 16.10x 6.09x 1.68x

PV Crystalox Solar PLC B1WSL5 242.12 0.61 1.25 0.56 NM NM NM NM NM NM NMReneSola Ltd (ADS) SOL 300.02 4.76 7.90 2.02 689.04 $0.43 $116.65 $834.74 10.96x 5.91x 0.36x

Topco Scientific Co. Ltd. 625408 6,546.72 44.20 46.90 19.22 NM NM NM NM NM NM NMWacker Chemie AG B11Y56 6,100.29 122.12 119.84 45.15 NM NM NM NM NM NM NM

c-Si Cells and Modules 9.25x 0.93xaleo solar AG B189YN 119.23 $9.15 $9.50 $3.98 NM NM NM NM NM NM NM

Canadian Solar Inc. CSIQ 886.65 28.82 24.84 3.00 1,064.04 1.85 116.90 971.86 15.57x 9.10x 0.91xChina Sunergy Co. Ltd. (ADS) CSUN 188.88 4.62 6.40 1.36 129.84 0.29 17.60 336.47 16.00x 7.38x 0.56x

Conergy AG 706672 270.18 0.66 1.90 0.34 NM NM NM NM NM NM NME-Ton Solar Tech. Co. Ltd. B06BMV 17,968.36 81.50 93.40 47.80 NM NM NM NM NM NM NM

Evergreen Solar Inc. ESLR 320.08 1.51 3.79 1.00 496.10 -0.23 21.18 346.65 -6.52x 23.42x 0.92xGintech Energy Corp. B28TNP 31,558.84 93.40 107.00 37.80 NM NM NM NM NM NM NM

Green Energy Technology Inc. B1CDRR 13,968.35 83.00 108.36 63.28 NM NM NM NM NM NM NMJA Solar Holdings Co. Ltd. (ADS) JASO 890.30 5.70 6.29 1.77 798.90 0.29 103.97 709.39 19.65x 7.68x 1.26x

Neo Solar Power Corp. B284BT 17,297.02 80.80 87.50 13.51 NM NM NM NM NM NM NMQ-Cells S.E. B0LD4L 918.22 11.40 28.10 9.52 NM NM NM NM NM NM NM

Solar-Fabrik AG 739438 42.65 3.44 5.61 1.91 NM NM NM NM NM NM NMSolarfun Power Holdings Co. Ltd. (ADS) SOLF 391.21 7.63 8.95 2.27 548.25 0.60 69.16 645.29 12.81x 7.93x 0.61x

Solartech Energy Corp. B1YLN8 8,308.32 59.30 62.40 18.26 NM NM NM NM NM NM NMSolarWorld AG 581986 1,693.68 15.33 23.95 11.51 NM NM NM NM NM NM NM

Solon SE 745073 78.94 7.17 15.85 5.41 NM NM NM NM NM NM NMSunPower Corp. (Cl A) SPWRA 2,246.93 23.68 46.30 19.70 2,082.22 1.74 328.55 2,042.38 13.61x 6.34x 1.10x

Suntech Power Holdings Co. Ltd. (ADS) STP 2,723.24 16.63 21.38 5.09 3,847.11 0.65 280.41 1,938.63 25.39x 13.72x 1.40xSunways AG 703682 53.65 4.84 5.39 1.35 NM NM NM NM NM NM NM

Trina Solar Ltd. (ADS) TSL 1,480.83 53.97 50.74 5.75 1,670.47 3.42 188.23 1,076.31 15.76x 8.87x 1.38xWebel SL Energy Systems LTD B03KGZ 3,492.24 166.95 403.20 44.55 NM NM NM NM NM NM NM

Yingli Green Energy Holding Co. Ltd. (ADS) YGE 1,962.70 15.81 16.45 3.32 2,218.68 0.80 275.52 1,259.25 19.81x 8.05x 1.56xa-Si, BIPV, CIGS & other 10.28x 1.08x

Ascent Solar Technologies Inc. ASTI 102.61 $5.30 $8.83 $2.19 108.61 -0.71 -17.14 32.84 -7.43x -6.34x 3.12xDayStar Technologies Inc. DSTI 15.43 0.41 2.38 0.30 NM -0.47 NM 10.00 -0.87x NM 1.54x

Energy Conversion Devices Inc. ENER 513.25 10.57 30.45 9.76 628.30 -0.79 24.48 309.18 -13.32x 25.67x 1.66xEMCORE Corp. EMKR 75.66 1.07 1.75 0.50 NM NM NM NM NM NM NM

ERSOL SOLAR ENERGY B0LGLV #N/A #N/A 110.50 94.99 NM NM NM NM NM NM NMFirst Solar Inc. FSLR 11,795.09 135.40 207.51 100.90 11,343.19 6.68 789.28 2,400.15 20.28x 14.37x 4.91x

STR Holdings Inc. STRI 237.34 15.71 14.48 9.50 NM NM NM NM NM NM NMIntegrators 11.24x 2.81x

Akeena Solar Inc. AKNS 48.42 $1.25 $2.61 $0.58 55.61 -$0.26 -$4.65 $51.16 -4.81x -11.96x 0.95xSolar Power Inc. SOPW 71.95 $1.23 $1.90 $0.42 NM NM NM NM NM NM NM

Real Goods Solar Inc. RSOL 61.25 $3.23 $4.67 $1.42 54.81 $0.03 $1.97 $84.33 129.20x 27.87x 0.73xPremier Power Renewable Energy Inc. PPRW 87.15 $2.75 $8.00 $2.00 NM NM NM NM NM NM NM

52 Week



Figure 27: Needham & Co. Wind Index; Needham & Co. Biofuels Index; Needham & Co. Wave, Biomass & Geothermal Index

Needham & Co. Wind Index

Company Name Ticker Market Cap 12/31/2009 High Low EV EPS 2010 EBITDA 2010 Sales 2010 P/E 2010EV/


2010AAER *AAE 21.66 $0.11 $0.33 $0.09 NM -$0.04 -$1.60 $53.60 NM NM 0.40x

ABB Ltd. ABBN-CH 43537.83 $19.94 $22.56 $12.71 NM NM NM NM NM NM NMAcciona S.A. ABBN-CH 5586.05 $91.10 $22.56 $12.71 NM NM NM NM NM NM NM

American Superconductor Corp. AMSC 1,515.28 40.90 37.58 10.88 1,406.99 0.93 $65.66 $387.54 43.79x 21.43x 3.91xA-Power Energy Generation Systems Ltd. APWR 544.71 18.29 18.70 3.00 NM 1.22 $64.00 $601.47 14.99x NM 0.91x

Broadwind Energy Inc. BWEN 705.28 8.09 12.49 2.60 NM NM NM NM NM NM NMCatch the Wind Inc. *CTW.S 54.70 2.20 2.25 0.40 NM -0.12 -$6.70 $10.52 -18.59x NM 5.20xClipper Windpower B09H7Z 192.62 1.73 1.90 0.62 NM NM NM NM NM NM NM

Composite Technology Corp. CPTC 100.80 0.27 0.75 0.15 NM NM NM NM NM NM NMEnergy Composites Corp. ENCC 176.84 4.01 5.10 2.55 NM NM NM NM NM NM NM

Gamesa Corporacion Tecnologica S.A. B01CP2 3,104.51 11.79 17.14 7.74 NM NM NM NM NM NM NMGC China Turbine Corp. GCHT 194.01 2.51 4.07 0.30 NM NM NM NM NM NM NM

Kaydon Corp. KDN 1,203.11 35.76 38.96 22.72 970.42 1.50 $104.79 $477.28 23.82x 9.26x 2.52xXinjiang Goldwind Science & Technology Co. Ltd. B29VXG 41,818.00 28.66 36.55 13.71 NM NM NM NM NM NM NM

MagneTek Inc. MAG 44.02 1.54 2.87 1.18 NM NM NM NM NM NM NMNEPC India Ltd 630237 584.76 10.10 11.95 3.95 NM NM NM NM NM NM NM

Nordex AG B06CF7 728.61 10.48 14.76 7.15 NM NM NM NM NM NM NMRepower Systems AG 732584 1,041.04 124.60 132.00 70.61 NM NM NM NM NM NM NM

Suzlon B0DX8R 126,250.94 90.35 145.85 33.05 NM NM NM NM NM NM NMVestas Wind Systems VWS-DK 70,990.88 317.00 429.50 215.25 NM NM NM NM NM NM NM

15.34x 2.59x

Needham & Co. Biofuels Index 16.00x 15.34x 2.59x



2010Andersons Inc. ANDE 512.40 $25.82 $37.56 $11.00 NM $2.40 $110.95 $2,849.85 10.78x NM 0.18x

Archer Daniels Midland Co. ADM 20,325.72 31.31 33.00 23.13 24,950.55 $2.81 $3,428.13 $65,063.41 11.15x 7.28x 0.31xEnvironmental Power Corp. EPG 5.26 0.19 1.19 0.25 NM NM NM NM NM NM NM

Green Plains Renewable Energy Inc. GPRE 325.41 14.87 13.50 1.12 NM NM NM NM NM NM NMMetabolix Inc. MBLX 265.39 11.05 13.45 4.62 250.25 -$0.71 -$18.90 $14.97 -15.61x NM 17.73x

Nova Biosource Fuels Inc. NBFAQ 0.56 0.00 0.24 0.00 NM NM NM NM NM NM NMPacific Ethanol Inc. PEIX 54.76 0.71 1.06 0.20 NM NM NM NM NM NM NM

PetroAlgae Inc. PALG 1,963.76 20.77 40.00 0.75 NM NM NM NM NM NM NMOriginOil Inc. OOIL 47.83 0.29 0.48 0.22 NM NM NM NM NM NM NM

Verenium Corp. VRNM 38.47 4.50 18.60 2.76 210.70 -$5.10 -$24.30 $83.55 -0.88x NM 0.46x7.28x 4.67x

Needham & Co. Wave, Biomass & Geothermal Index 1.36x 7.28x 4.67x



2010Calpine Corporation CPN 4,972.26 11.00 14.95 4.76 15,017.75 0.21 1,450.59 7,234.84 51.99x 10.35x 0.69x

Constellation Energy Group, Inc. CEG 6,530.02 35.17 33.87 15.05 10,613.01 3.21 1,843.95 15,762.18 10.96x 5.76x 0.41xCovanta CVA 2,666.21 18.09 23.31 12.47 4,323.21 0.87 547.78 1,692.38 20.79x 7.89x 1.58x

Nevada Geothermal *NGP 91.74 1.00 1.30 0.28 178.64 -0.03 5.09 NM -39.93x 35.07x NMOcean Power Technologies Inc. OPTT 92.20 9.01 11.22 3.78 55.47 -1.57 -16.19 15.61 -5.74x -3.43x 5.91x

Ormat Technologies Inc. ORA 1,904.59 37.84 42.68 22.84 2,403.29 1.47 177.04 437.96 25.67x 13.57x 4.35xRaser Technologies Inc. RZ 87.42 1.24 5.24 1.05 NM -0.46 -18.35 6.41 -2.70x NM 13.65x

US Geothermal HTM 94.99 1.53 2.09 0.33 93.47 -0.06 -4.58 2.93 -24.33x NM 32.37x11.54x 8.42x

52 Week

52 Week

52 Week



Figure 28: Needham & Co. Energy Storage Index; Needham & Co. Smart Grid Index; Needham & Co. Power Semiconductor Index Needham & Co. Energy Storage Index


EBITDA 2010 Price/SalesActive Power Inc. ACPW 75.8 $1.06 $1.50 $0.25 NM -0.08 NM 59.70 -13.25x NM 1.27x

Axion Power International Inc. AXPW 45.5 $1.56 $2.75 $0.78 NM NM NM NM NM NM NMA123 Systems Inc. AONE 1713.4 $22.44 $28.20 $14.31 1,288.57 -0.75 -63.08 144.82 -30.12x -20.43x 11.83x

Advanced Battery Technologies Inc. ABAT 224.2 4.00 5.04 1.62 NM 0.43 30.28 95.67 9.30x NM 2.34xAltair Nanotechnologies Inc. ALTI 91.5 0.88 1.55 0.60 NM -0.15 NM 29.00 -5.87x NM 3.15xBallard Power Systems Inc. BLDP 205.7 1.89 3.25 0.85 166.04 -0.28 -16.78 79.87 -6.85x -9.90x 2.58x

C&D Technologies Inc. CHP 43.9 1.55 3.64 1.09 NM 0.16 NM 372.17 9.91x NM 0.12xCapstone Turbine Corp. CPST 258.9 1.28 1.57 0.39 247.03 -0.04 NM 83.12 -34.07x NM 3.11x

Energy Conversion Devices Inc. ENER 513.2 10.57 30.45 9.76 628.30 -0.79 24.48 309.18 -13.32x 25.67x 1.66xEnerSys Inc. ENS 1147.4 21.87 24.57 7.04 1,296.66 1.69 200.56 1,648.61 12.98x 6.47x 0.70xEner1 Inc. HEV 732.8 6.34 9.49 2.35 723.08 -0.26 -29.66 111.33 -24.38x -24.38x 6.58x

Exide Technologies XIDE 580.1 7.11 8.87 1.83 1,076.45 0.66 256.41 2,727.46 10.70x 4.20x 0.21xFuelCell Energy Inc. FCEL 249.4 3.76 5.47 1.98 NM -0.43 -16.22 177.82 -8.68x NM 1.40xHydrogenics Corp. HYGS 41.8 0.37 0.75 0.29 NM -0.15 -14.08 37.31 -2.48x NM 1.12x

Hong Kong Highpower Technology Inc. HPJ 76.0 7.71 5.82 1.23 NM 0.42 8.66 82.63 18.36x NM 0.92xMaxwell Technologies Inc. MXWL 433.1 17.84 21.81 4.00 416.95 0.18 11.59 128.57 99.11x 35.99x 3.37x

Plug Power Inc. PLUG 102.7 0.71 1.55 0.66 NM -0.30 -34.41 30.36 -2.37x NM 3.38xQuantum Fuel Systems Technologies Worldwide Inc. QTWW 125.3 1.11 1.77 0.58 NM -0.03 0.76 176.49 -34.05x NM 0.71x

Ultralife Corp. ULBI 63.8 4.32 14.43 3.42 NM 0.22 11.20 207.81 19.42x NM 0.31xValence Technology Inc. VLNC 142.7 0.91 2.90 1.03 NM -0.13 -9.50 36.28 -6.94x NM 3.93x

2.52x 2.56x

Needham & Co. Smart Grid Index -0.14x 2.52x 2.56x



2010Ambient Corp. ABTG 134.2 $0.15 $0.26 $0.01 NM NM NM NM NM NM NM

Beacon Power Corp. BCON 82.0 0.49 1.09 0.32 88.19 -0.11 NM 3.60 -4.50x NM 22.79xComverge Inc. COMV 229.4 11.24 13.87 $3.37 237.78 -$0.30 $5.17 $125.49 -37.30x 45.97x 1.83xEchelon Corp. ELON 469.3 11.56 15.38 $5.13 438.29 -$0.43 -$7.04 $148.29 -26.88x -62.25x 3.16xEnerNOC Inc. ENOC 650.0 30.39 35.55 $5.76 599.10 $0.28 $27.20 $258.07 110.51x 22.03x 2.52x

ESCO Technologies Inc. ESE 910.1 35.85 46.87 $26.94 1,008.67 $1.70 $102.85 $609.62 21.14x 9.81x 1.49xItron Inc. ITRI 2480.1 67.57 67.89 $40.10 3,148.46 $2.98 $277.37 $1,869.97 22.65x 11.35x 1.33x

MYR Group Inc. MYRG 342.0 18.07 23.50 $7.75 344.67 $0.97 $48.55 $655.42 18.59x 7.10x 0.52xPowerSecure International Inc. POWR 145.7 7.21 10.25 $2.70 146.51 $0.41 $8.91 $120.58 17.59x 16.44x 1.21x

Telvent GIT S.A. TLVT 1129.9 38.98 34.76 $8.25 NM $2.49 $154.73 $1,212.07 15.65x NM 0.93xQuanta Services Inc. PWR 3775.9 20.84 25.80 $14.00 3,778.86 $1.03 $482.89 $4,141.36 20.15x 7.83x 0.91xZenergy Power PLC B19HBR 74.2 1.16 1.55 $0.93 NM NM NM NM NM NM NM

7.28x 3.67x

Needham & Co. Power Semiconductor Index 13.81x 8.88x 2.96x



2010Analog Devices Inc. ADI 8,863.85 $31.58 $30.48 $15.29 7,419.10 $1.72 $743.06 $2,431.84 18.39x 9.98x 3.64x

Advanced Analogic Technologies Inc. AATI 140.90 $3.94 $5.59 $2.16 245.60 -$0.05 $3.60 $95.00 -86.19x 68.14x 1.48xCalifornia Micro Devices Corp. CAMD 70.13 $4.71 $3.32 $1.42 26.07 -$0.15 -$3.12 $48.49 -31.08x -8.35x 1.45x

Cirrus Logic Inc. CRUS 357.81 $6.82 $6.22 $2.16 239.51 $0.45 $36.31 $227.12 15.29x 6.60x 1.58xFairchild Semiconductor International Inc. FCS 1,089.37 $9.99 $11.48 $2.73 1,140.56 $0.59 $187.12 $1,375.89 16.92x 6.10x 0.79x

International Rectifier Corp. IRF 1,388.34 $22.12 $21.04 $9.65 890.13 -$0.07 $41.75 $811.09 -296.08x 21.32x 1.71xIntersil Corp. (Cl A) ISIL 1,665.83 $15.34 $16.76 $7.18 1,351.96 $0.87 $127.78 $709.06 17.67x 10.58x 2.35x

IXYS Corp. IXYS 207.09 $7.41 $11.00 $5.61 NM $0.47 $33.53 $263.85 15.75x NM 0.78xLinear Technology Corp. LLTC 6,100.42 $30.56 $28.99 $18.19 6,478.41 $1.39 $538.70 $1,071.67 21.94x 12.03x 5.69x

Maxim Integrated Products Inc. MXIM 5,527.77 $20.32 $19.43 $10.76 4,488.19 $0.90 $524.41 $1,900.94 22.65x 8.56x 2.91xMicrel Inc. MCRL 460.05 $8.20 $8.63 $5.81 382.14 $0.54 $57.79 $258.42 15.14x 6.61x 1.78x

Monolithic Power Systems Inc. MPWR 803.09 $23.97 $25.26 $6.96 651.42 $1.09 $48.12 $191.74 21.93x 13.54x 4.19xNational Semiconductor Corp. NSM 3,553.91 $15.36 $16.20 $9.06 4,012.85 $0.76 $396.94 $1,373.94 20.20x 10.11x 2.59x

ON Semiconductor Corp. ONNN 3,532.59 $8.82 $9.12 $2.60 3,991.88 $0.63 $460.93 $2,011.29 14.02x 8.66x 1.76xPower Integrations Inc. POWI 923.91 $36.36 $36.25 $15.43 769.27 $1.54 $62.96 $255.28 23.64x 12.22x 3.62x

Semtech Corp. SMTC 987.00 $17.01 $19.16 $9.44 795.69 $0.98 $75.33 $332.24 17.30x 10.56x 2.97xTexas Instruments Inc. TXN 32,499.55 $26.06 $26.08 $13.38 29,727.69 $1.72 $3,882.87 $11,463.40 15.12x 7.66x 2.84x

Volterra Semiconductor Corp. VLTR 408.97 $19.12 $20.17 $6.16 NM $0.91 $25.81 $134.08 21.12x NM 3.05x12.77x 2.51x

52 Week

52 Week

52 Week



Figure 29: Needham & Co. LED Index; Needham & Co. Alternative Vehicle Index; Needham & Co.Infrastructure Index

Needham & Co. LED Index 15.22x 7.21x 4.36x



2010Cree Inc. CREE 5226.4 $56.37 $50.60 $12.57 4,737.58 $1.25 $243.10 $829.96 45.07x 19.49x 6.30x

Diodes Inc. DIOD 797.1 20.41 22.17 $3.93 967.25 $1.05 $99.00 $519.70 19.45x 9.77x 1.53xLSI Industries Inc. LYTS 178.9 7.88 8.48 $2.75 NM $0.31 NM $261.77 25.11x NM 0.68x

Nexxus Lighting Inc. NEXS 36.8 3.40 7.40 $4.00 NM NM NM NM NM NM NMOrion Energy Systems Inc. OESX 86.7 4.39 5.94 $2.68 NM -$0.03 $0.71 $77.86 -172.99x NM 1.11x

Supertex Inc. SUPX 316.7 29.80 32.98 $18.43 NM $0.74 $11.23 $75.53 40.39x NM 4.19xUniversal Display Corp. PANL 413.0 12.36 13.91 $5.04 NM -$0.45 NM $19.39 -27.47x NM 21.30x

14.63x 5.85x

Needham & Co. Alternative Vehicle Index -33.74x 14.63x 6.63x



2010AeroVironment Inc. AVAV 629.4 29.08 41.22 18.50 489.63 1.30 48.60 326.70 22.38x 10.07x 1.93x

Fuel Systems Solutions Inc. FSYS 892.1 41.24 52.53 9.83 NM 2.73 93.93 506.67 15.11x NM 1.76xWestport Innovations Inc. *WPT 430.1 12.23 14.49 3.89 399.61 -0.41 3.37 200.03 -30.09x 118.72x 2.15xWoodward Governor Co. WGOV 1669.5 25.77 26.82 8.00 NM 1.60 268.64 1,473.35 16.10x NM 1.13x

64.40x 1.74x

Needham & Co. Infrastructure Index -2.05x 51.96x 2.56x



2010Argan Inc. AGX 174.6 14.39 16.00 8.37 NM NM NM NM NM NM NM

Badger Meter Inc. BMI 527.0 $39.82 $44.90 $22.50 527.32 $1.90 $52.51 $271.95 20.97x 10.04x 1.94xClean Energy Fuels Corp. CLNE 709.4 15.41 15.18 3.96 669.09 0.17 35.79 196.51 92.00x 18.69x 3.61x

AES Corp. AES 8770.7 13.31 15.44 4.80 25,472.04 1.19 4,472.00 14,046.83 11.21x 5.70x 0.62xInsituform Technologies Inc. (Cl A) INSU 811.8 22.72 23.00 11.42 835.98 1.27 105.69 855.52 17.89x 7.91x 0.95x

Layne Christensen Co. LAYN 507.8 28.71 35.14 10.36 472.93 0.90 86.55 899.99 31.89x 5.46x 0.56xTetra Tech Inc. TTEK 1625.1 27.17 32.00 16.96 1,653.17 1.37 169.01 1,535.06 19.86x 9.78x 1.06xTRC Cos. Inc. TRR 63.6 2.99 4.97 1.30 NM -0.07 NM 233.56 -43.20x NM 0.27x

9.60x 1.29x

52 Week

52 Week

52 Week



Figure 30: Needham & Co. Air Pollution Control Index; Needham & Co. Water Filtration Index; Needham & Co. Hazardous Waste Index; Needham & Co. Non-Toxic Material Index; Needham & Co. Hazardous Waste Index; Needham & Co. Material Science Index; Needham & Co. Air Pollution Control Index



2010Acorn Energy Inc. ACFN 84.0 7.38 8.33 1.30 NM NM NM NM NM NM NM

ADA-ES Inc. ADES 19.7 6.10 5.97 2.05 NM -0.47 -4.82 18.15 -13.09x NM 1.08xCeco Environmental Corp. CECE 59.3 3.95 4.51 1.80 NM 0.21 9.14 167.25 18.81x NM 0.35x

CLARCOR Inc. CLC 1629.4 32.44 34.64 23.05 1,633.61 1.65 163.78 959.39 19.64x 9.97x 1.70xComfort Systems USA Inc. FIX 445.4 12.34 13.12 6.97 292.46 0.66 53.40 1,076.49 18.58x 5.48x 0.41x

Donaldson Co. Inc. DCI 3321.3 42.54 45.19 21.82 3,431.82 1.94 286.13 1,884.04 21.89x 11.99x 1.76xFlanders Corp. FLDR 126.0 4.46 6.78 3.47 NM 0.37 22.00 251.41 12.05x NM 0.50xFuel Tech Inc. FTEK 211.7 8.17 14.15 7.01 201.10 0.14 9.16 88.15 56.56x 21.96x 2.40xMet-Pro Corp. MPR 134.0 10.62 13.78 5.88 NM 0.48 11.83 89.18 21.92x NM 1.50x

PMFG Inc. PMFG 207.2 16.21 18.50 3.96 NM 0.29 12.96 127.58 56.76x NM 1.62xTurbosonic Technologies Inc. TSTA 10.9 0.86 1.37 0.20 NM NM NM NM NM NM NM

12.35x 1.26x

Needham & Co. Water Filtration Index



2010Mueller Water Products Inc. MWA 776.6 5.20 8.55 1.48 1,421.75 0.10 164.51 1,467.21 54.52x 8.64x 0.53x

Nalco Holding Co. NLC 3445.2 25.51 24.97 9.38 6,363.89 1.26 722.94 3,907.83 20.24x 8.80x 0.88xPentair Inc. PNR 3017.1 32.30 34.27 17.23 3,774.53 1.81 390.09 2,722.15 17.84x 9.68x 1.11x

Sutron Corp. STRN 34.2 7.19 10.00 3.25 NM NM NM NM NM NM NMWatts Water Technologies Inc. (Cl A) WTS 1136.3 30.92 32.88 15.85 1,270.08 1.58 145.52 1,194.79 19.59x 8.73x 0.95x

8.96x 0.87x

Needham & Co. Hazardous Waste Services Index



2010American Ecology Corp. ECOL 299.1 17.04 21.21 13.56 302.78 0.92 38.24 114.59 18.57x 7.92x 2.61x

Clean Harbors Inc. CLH 1400.4 59.61 65.18 40.90 1,332.99 2.71 243.98 1,436.78 21.97x 5.46x 0.97xEnergySolutions Inc. ES 761.4 8.49 10.80 4.22 1,098.72 0.74 164.15 1,712.40 11.50x 6.69x 0.44x

Heritage-Crystal Clean Inc. HCCI 118.4 10.46 13.99 6.50 NM 0.45 12.15 111.14 23.24x NM 1.07xSims Metal Management Ltd. B0LCW7 4229.3 22.20 29.15 11.50 NM NM NM NM NM NM NM

Metalico Inc. MEA 192.6 4.92 5.48 1.34 NM 0.30 46.30 404.03 16.29x NM 0.48xPerma-Fix Environmental Services Inc. PESI 127.0 2.27 2.72 0.71 144.47 0.15 15.98 111.53 15.66x 9.04x 1.14x

Stericycle Inc. SRCL 4708.9 55.17 57.15 44.36 5,502.97 2.36 403.48 1,286.24 23.41x 13.64x 3.66xVeolia Environnement S.A. 403187 11236.8 23.13 27.10 15.00 NM NM NM NM NM NM NM

8.55x 1.48x

Needham & Co. Non-Toxic Materials Index



2010Headwaters Inc. HW 199.8 6.52 8.34 1.22 NM -0.14 106.48 687.76 -48.17x NM 0.29x

Hexcel Corp. HXL 1019.1 12.98 13.92 4.49 1,294.90 0.64 171.59 1,129.15 20.28x 7.55x 0.90xLandec Corp. LNDC 165.3 6.24 7.86 3.87 99.27 0.35 16.60 242.51 17.64x 5.98x 0.68xKadant Inc. KAI 179.1 15.96 16.82 6.50 179.95 0.55 22.00 250.94 28.84x 8.18x 0.71x

KHD Humboldt Wedag International Ltd. KHD 355.6 13.61 13.59 6.65 NM 0.40 15.70 354.80 34.03x NM 1.00xTennant Co. TNC 518.1 26.19 33.37 7.61 547.90 0.99 52.60 631.58 26.35x 10.42x 0.82xZoltek Cos. ZOLT 316.1 9.50 12.63 5.08 308.08 0.14 18.40 151.33 68.85x 16.74x 2.09x

9.77x 0.93x

Needham & Co. Material Science Index



2010Axion International Holdings Inc. AXIH 40.5 3.06 3.35 0.51 NM NM NM NM NM NM NM

Dionex Corp. DNEX 1234.7 73.88 71.58 39.92 1,028.30 3.37 102.81 423.94 21.94x 10.00x 2.91xLime Energy Co. LIME 97.7 4.42 8.94 3.01 NM -0.02 1.84 106.77 -221.00x NM 0.92x

Metalico Inc. MEA 192.6 4.92 5.48 1.34 NM 0.30 46.30 404.03 16.29x NM 0.48xMFRI Inc. MFRI 46.2 6.80 8.95 4.05 NM NM NM NM NM NM NM

OM Group Inc. OMG 935.8 31.39 35.97 13.90 NM 1.66 123.70 1,123.89 18.94x NM 0.83xPall Corp. PLL 3764.5 36.20 35.23 18.20 3,718.57 2.04 456.92 2,489.29 17.71x 8.14x 1.51x

Polypore International Inc. PPO 526.9 11.90 14.10 2.38 1,194.52 0.60 141.90 509.00 19.87x 8.42x 1.04xSulphCo Inc. SUF 72.0 0.67 2.18 0.40 NM NM NM NM NM NM NM

Synthesis Energy Systems Inc. SYMX 52.0 0.93 1.69 0.41 NM -0.23 -11.35 8.90 -3.95x NM 5.84x8.85x 1.93x

52 Week

52 Week

52 Week

52 Week

52 Week



ANALYST CERTIFICATION

I, Y. Edwin Mok, hereby certify that the views expressed in this research report accurately reflect my personal viewsabout the subject company (ies) and its (their) securit ies. I also certify that I have not been, am not, and will not bereceiving direct or indirect compensation in exchange for expressing the specific recommendation(s) in this report.

I, Conor Irvine, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject company (ies) and its (their) securit ies. I also certify that I have not been, am not, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation(s) in this report.

Disclosures applicable to MEMC Electronic Materials, Inc. (WFR/NYSE): B.

Disclosures applicable to SunPower Corp. (SPWRA/NASDAQ): B, G.

Disclosures applicable to Advanced Energy Industries, Inc. (AEIS/NASDAQ): B, D, E, G, J.

Disclosures applicable to Akeena Solar Inc. (AKNS/NASDAQ): B, G.

Disclosures applicable to American Superconductor Corporation (AMSC/NASDAQ): B, G, J1.

Disclosures applicable to American Ecology Corp. (ECOL/NASDAQ): B, G.

Disclosures applicable to Applied Materials, Inc. (AMAT/NASDAQ): B, G.

Disclosures applicable to BTU International, Inc. (BTUI/NASDAQ): B, G, J1.

Disclosures applicable to ESCO Technologies, Inc. (ESE/NYSE): B.

Disclosures applicable to Echelon Corporation (ELON/NASDAQ): B, G.

Disclosures applicable to Fuel Systems Solutions, Inc. (FSYS/NASDAQ): B, D, G, J.

Disclosures applicable to Fuel Tech Inc. (FTEK/NASDAQ): B, G.

Disclosures applicable to Itron, Inc. (ITRI/NASDAQ): B, G.

Disclosures applicable to IXYS Corporation (IXYS/NASDAQ): B, G.

Disclosures applicable to LSI Industries (LYTS/NASDAQ): B, G.

Disclosures applicable to Maxwell Technologies Inc. (MXWL/NASDAQ): B, G.

Disclosures applicable to Monolithic Power Systems, Inc. (MPWR/NASDAQ): B, G.

Disclosures applicable to ON Semiconductor Corporation (ONNN/NASDAQ): B, D, E, G, J.

Disclosures applicable to Power Integrations Inc. (POWI/NASDAQ): B, G, J1.

Disclosures applicable to Supertex, Inc. (SUPX/NASDAQ): B, G.

Disclosures applicable to Ultralife Corporation (ULBI/NASDAQ): B, G, J1.

Disclosures applicable to Universal Display Corporation (PANL/NASDAQ): B, G, J1.

Disclosures applicable to Volterra Semiconductor Corp. (VLTR/NASDAQ): B, G.

Disclosures applicable to Ceco Environmental Corp. (CECE/NASDAQ): B, G.

Disclosures applicable to Ceradyne, Inc. (CRDN/NASDAQ): B, G, J1.

Disclosures applicable to Clean Harbors Inc. (CLH/NYSE): B.

Disclosures applicable to Heritage-Crystal Clean Inc. (HCCI/NASDAQ): B, G.

Disclosures applicable to PMFG, Inc. (PMFG/): B, D, G, J.

An Investment Analysis by Needham & Compa

Disclosures applicable to Tennant Company (TNC/): B.

Disclosures applicable to JA Solar Holdings Co. Ltd. (JASO/NASDAQ): B, G.

Disclosures applicable to LDK Solar Co. Ltd. (LDK/NYSE): B.

Disclosures applicable to Solar Power Inc. (SOPW/): B.


Needham & Company, LLC. (the Firm) employs a rating system based on the following (Effective July 1, 2003): Strong Buy: A security, which at the time the rating is instituted, indicates an expectation of a total return of at least 25% over the next 12 months. Buy: A security, which at the time the rating is instituted, indicates an expectation of a total return between 10% and 25% over the next 12 months. Hold: A security, which at the time the rating is instituted, indicates an expectation of a total return of +/- 10% over the next 12 months. Underperform: A security, which at the time the rating is instituted, indicates an expectation that the price will depreciate by more than 10% over the next12 months. Under Review: Stocks may be placed UR by the analyst, indicating that the stock rating and/or price target are subject to possible change in the near term,usually in response to an event that may effect the investment case or valuation. Rating Suspended: Needham & Company, LLC has suspended the rating and/or price target, if any, for this stock, because there is not a sufficient fundamental basis for determining a rating or price target. The previous rating and price target, if any, are no longer in effect and should not be reliedupon. Restricted: Needham & Company, LLC policy and/or applicable law and regulations preclude certain types of communications, including an investmentrecommendation, during the course of Needham & Company, LLC’s engagement in an investment banking transaction and in certain other circumstances.For disclosure purposes (in accordance with FINRA requirements), we note that our Strong Buy and Buy ratings most closely correspond to a “Buy”recommendation. When combined, 59% of companies under coverage would have a “Buy” rating and 6% have had investment banking services provided within the past 12 months; Hold mostly correspond to a “Hold/ Neutral” recommendation; while our Underperform rating closely corresponds to the Sell recommendationrequired by the FINRA. Our rating system attempts to incorporate industry, company and/or overall market risk and volatility. Consequently, at any given point in time, our investmentrating on a stock and its implied price appreciation may not correspond to the stated 12-month price target. For valuation methods used to determine our price targets and risks related to our price targets, please contact your Needham & Company, LLC salesperson for a copy of the most recent research report on thecompany you are interested in.

To review our Rating system prior to July 1, 2003, please refer to the following link: http://clients.needhamco.com/Research_Disclosure.asp. Stock price charts and rating histories for companies under coverage and discussed in this report are available at http://www.needhamco.com/. You may also request this information by writing to: Needham & Co. LLC, 445 Park Ave., 3rd Floor (Attn: Compliance/Research), NY, NY 10022

ANALYST CERTIFICATION By issuing this research report, each Needham & Company, LLC analyst and associate whose name appears within this report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst’s and associate’s personal views about any and all of thesubject securities or issuers discussed herein and (ii) no part of the research analyst's or associate’s compensation was, is or will be directly or indirectly related tothe specific recommendations or views expressed by the research analyst or associate in the research report. The following disclosures (as listed by letter on the cover page) apply to the securities discussed in this research report: “A” The research analyst and/or research associate (or household member) has a financial interest in the securities of the covered company (i.e., a long

position consisting of common stock). “B” The research analyst and research associate have received compensation based upon various factors, including quality of research, investor client

feedback, and the Firm’s overall revenues, which includes investment banking revenues. “C” The Firm has managed or co-managed a public offering of securities for the subject company in the past 12 months. “D” The Firm and/or its affiliate have received compensation for investment banking services from the subject company in the past 12 months. “E” The Firm and/or its affiliate expect to receive or intend to seek compensation for investment banking services from the subject company in the next

three months. “F” The analyst or a member of the analyst's household serves as officer, director or advisory board member of the covered company. “G” The Firm, at the time of publication, makes a market in the subject company. “H” The Firm, and/or its affiliates beneficially own 1% or more of any class of common equity securities of the subject company. “I” The analyst has received compensation from the subject company in the last 12 months. “J” The subject company currently is or during the 12-month period preceding the date of distribution of this research report was a client of the Firm and

received investment banking services. “J1” The subject company currently is or during the 12-month period preceding the date of distribution of this research report was a client of the Firm and

received non-investment banking securities related services. “J2” The subject company currently is or during the 12-month period preceding the date of distribution of this research report was a client of the Firm and

received non-securities related services. “K” Our affiliate has received compensation for products and services other than investment banking services from the subject company in the past 12

months. This report is for informational purposes only and does not constitute a solicitation or an offer to buy or sell any securities mentioned herein. Information contained in this report has been obtained from sources believed to be reliable, but Needham & Company, LLC. makes no representation as to its accuracy or completeness, except with respect to the Disclosure Section ofthe report. Any opinions expressed herein reflect our judgment as of the date of the materials and are subject to change without notice. The securities discussed in this report may not besuitable for all investors and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. Investors must make their own investmentdecisions based on their financial situations and investment objectives. The value of income from your investment may vary because of changes in interest rates, changes in the financial and operational conditions of the companies and other factors. Investors should be aware that the market price of securities discussed in this report may be volatile. Due to industry, company andoverall market risk and volatility, at the securities current price, our investment rating may not correspond to the stated price target. Additional information regarding the securities mentionedin this report is available upon request. © Copyright 2009, Needham & Company, LLC., Member FINRA, SIPC.

445 Park Avenue, New York, NY 10022 (212) 371-8300

% of companies under coveragewith this rating

% for which investment banking serviceshave been provided for in the past 12 months

Strong Buy 4 0Buy 54 6Hold 36 2Under Perform <1 0Rating Suspended 5 12Restricted <1 100Under Review <1 0

Needham Clean Tech Monthly December

Technology

Transcript of Needham Clean Tech Monthly December