IPO Corner: Perfect Storm For Renewables

Between the pandemic, climate change and global conflict, the world is looking at a “perfect storm” for renewable energy. The only question is when Wall Street will respond.

Circumstances have flipped the world upside down and brought a change to the way we view and live our lives, especially when it comes to how we utilize our finite resources and has given us the opportunity to slow down and really take notice of the quickening pace of the ravages of climate change. And the conflict between Russia and Ukraine has only further highlighted our painful dependence on oil… gas prices seem to change by the day, if not the hour.

Here in America, it’s getting very hard to ignore our precarious situation… between wildfires, record-breaking tornadoes, windstorms, droughts, and flooding, we’re collectively waking up to the fact that shifting gears is not only necessary, but urgent. And the costs associated are just as hard to miss. Just in the last year, extreme weather has cost Americans over $100 billion dollars… with about one in three Americans being hit by a weather disaster, and two out of three suffering through severe heat waves.

Biden Has A Plan

Biden has been incredibly vocal about his feelings on climate change and the renewables space. Recently, at COP26 in Glasgow, he made it clear that he sees climate change as an existential threat to people, economies, and the world, and called for swift, bold action to reduce emissions and bolster and strengthen America’s position in the space. His view on the situation as it pertains to America: “code red”… and he has a plan, a plan that he says will cut costs for consumers, bring jobs, and ensure a competitive U.S. in the 21st century.

He’s making good on his talk through legislation intended to promote our transition to clean energy and has set ambitious goals, including carbon neutrality for the power sector by 2035 and for the entire country by 2050. On November 15th of last year, his $1.2 trillion-dollar, bipartisan infrastructure bill was passed into law by congress, and it’s jam-packed full of funding for forward-thinking projects.

It’s Raining Money

The bill will create serious opportunities for companies to get a piece of the pie. Recent market research by Mordor Intelligence indicates that America’s renewable energy market should grow at a CAGR of over 6% by 2025… basically, the market opportunity for providing renewable-sourced energy in the U.S. is large and growth won’t be slowing down.

The bill funds research and development toward commercializing advanced nuclear reactors, hydrogen, and direct air capture, funds energy efficiency initiatives, transmission, existing nuclear plants, and transportation. It includes $3.5 billion in funding for the Weatherization Assistance Program, which is designed to be deployed to reduce energy use and consumer energy bills and contains $27 billion in grid investments. The bill aims to harden our existing grid against disruptions.

Clean energy transmission is a major focus, with more than $65 billion going toward upgrades to American power infrastructure through the building of thousands of miles of new, resilient transmission lines to help facilitate the expansion of renewable energy and the creation of a new Grid Deployment Authority, investment in research and development for advanced transmission and electricity distribution tech, and the promotion of smart grid technologies and the investment in demonstration projects and research hubs for next gen technology such as advanced nuclear reactors, carbon capture, and clean hydrogen.

In terms of public transit, the infrastructure deal makes the largest investment in passenger rail since Amtrak was created. $66 billion dollars will be available to replace thousands of transit vehicles (like buses, including our nation’s fleet of yellow school buses), with clean emission vehicles to modernize and expand transit and rail networks and repair, upgrade, and modernize America’s transit infrastructure. Electric Vehicle Infrastructure is included as well, with $7.5 billion available for the building of a brand-new national network of EV chargers. The funding is aimed at the development of a network EV chargers along highway corridors.

Ports will see $17 billion in funding for port infrastructure to handle backlogged repairs and maintenance, reduce congestion and emissions, and drive electrification.  A further $50 billion is earmarked to protect against droughts, heat, and floods, as well as the weatherization of American homes. Clean drinking water is a focus, with $55 billion allotted to expand access to clean drinking water by eliminating lead service lines and cleaning up dangerous chemicals. $21 billion will go toward tackling legacy pollution by cleaning up superfund and brownfield sites, reclaiming abandoned mines, and capping orphaned oil and gas wells.

Open Skies For Renewable Deals

With funding aplenty, things seem to be looking good for companies in the renewables space looking to IPO… overwhelmingly, companies want in. For example, after a merger with special purpose acquisition company Novus Capital Corporation II, energy storage company Energy Vault initiated trading on the New York Stock Exchange last month as NRGV. So far, so good.

The company develops proprietary energy storage technologies and energy management software and offers gravity-based solutions… essentially using the principles of physics and mechanical engineering in its technology (which is really cool).

Upcoming IPOs in the space that we’re watching include REV Renewables and Expion360. Formed recently by energy infrastructure investor LS Power to develop and operate renewable energy production utilities and related storage units, New York Based REV Renewables has filed to raise $100 million to go public as RVR. Describing itself as an “emerging growth company”, the firm operates utility scale battery storage, pumped storage hydro, and wind and solar-based energy production projects in the United States.

Helmed by former founder and owner of Zamp Solar, John Yozamp, Oregon-based Expion360 designs and sells lithium iron phosphate batteries and related products and touts itself as a greener alternative to the lead acid batteries currently in use. While the company currently targets RV and marine retailers, they plan to expand their product line into home energy storage and industrial markets.

When will the company go public under ticker symbol XPON? We’ll simply have to see.