With the clean energy shift beginning to gain serious momentum, the prime candidates for a sustainable future have been solar, wind, and to a lesser extent, geothermal energy and nuclear fission.
But new clean energy technology is drawing interest from both corporate investors and retail investors, and what we consider fringe today, such as ocean power and hydrogen, may become mainstream sooner rather than later.
In fact, Bloomberg New Energy Finance has warned that we may never reach our climate goals in time unless we invest more aggressively in fringe technologies such as hydrogen and carbon capture and storage (CCS). Some of these sectors are already experiencing explosive growth and may offer the best bang for the buck for long-term investors.
Here are five energy companies stepping into the 'fringe' clean energy space:
#1 Shell Plc: Peak Oil
Four years ago, Royal Duch Shell (NYSE:RDS.A) CEO Ben Van Beurden fired a grim warning that the world may have passed peak oil demand. Back in July, Van Beurden reiterated his earlier stance by predicting that global oil demand might never return to pre-pandemic levels.
Turns out he wasn't bluffing.
Shell has just made an even bolder declaration: Its oil production has already peaked and is set to fall every year from here. Shell says it expects its oil production to shrink between 1% and 2% each year while adding that its total carbon emissions likely peaked in 2018.
But that's just part of the seismic shift going on at the Anglo-Dutch oil supermajor. Shell says it will impose a salary freeze for most of its workers this year, will pay out zero bonuses and cut about 9,000 jobs, or 11% of its workforce. The company says this will help it realize ~$1B in cost savings which it intends to invest in its burgeoning renewable energy business. Related: How Much Higher Can Oil Prices Go?
Shell has unveiled a target to become a net-zero emissions business by 2050 (including Scope 3 emissions by its customers and partners), joining its European peers Total S.A. (NYSE:TOT) and BP Plc. (NYSE:BP).
Shell, however, intends to remain shareholder-friendly and will hike its annual dividend by 4%.
#2 David Energy: The Standard Oil of Renewables
The United States is the second-largest producer and consumer of electricity on the planet, behind only China. Unfortunately, the U.S. grabs top honors when it comes to energy wastage. With an energy efficiency of just 42%, the U.S. wastes 58% of all the energy it produces.
That's a critical shortcoming at this point when nations are desperately trying to limit their greenhouse gas emissions.
Thankfully, energy efficiency companies can help ameliorate some of that waste while also saving money for the consumer.
David Energy is a company that bills itself as a novel retail electricity provider whose software, AI, and machine learning tools help slash power costs while also simplifying the energy management process. The company combines energy management services for commercial buildings by selling energy directly to customers, which lowers energy consumption and the carbon footprint.
Mycor, the company's proprietary energy efficiency software, leverages a building's demand data and shifts user energy consumption to times when renewable power is most abundant, meaning lower costs for the user. Using its technology, David Energy tracks energy prices, sells energy to customers at a fixed price, and makes money off the difference in power pricing by leveraging its unique insights into energy markets.
James McGinniss, David Energy co-founder and chief executive, says the company intends to become "the Standard Oil of Renewable Energy."
The company has successfully raised $15 million in a monthly revolving credit facility from Hartree Partners that will help it pay for the power its customers buy upfront and another $4.1 million in venture financing from a group of investors.
McGinniss believes the power generation market is ripe for disruption:
"Renewable energy generators are fundamentally different in their variable, distributed, and digitally-native nature compared to their fossil fuel predecessors while customer loads like heating and driving are shifting to electricity consumption from gas. The sands of market power are shifting and incumbents are poorly-positioned to adapt to evolving customer needs, so there's a massive opportunity for us to capitalize."
#3 C-Zero: Turquoise Hydrogen Production
With the clean energy camp adamant about having zero fossil fuels in the energy ecosystem, hydrogen is being billed as the ultimate bridge fuel that will kick natural gas out and make renewable energy our predominant energy source. Whereas all hydrogen burns the same, there are many different ways of producing it, which has led to a colorful palette. Related: The Most Fragile Oil Price Rally In History
Green hydrogen--produced by using renewable energy in the hydrolysis of water--is currently garnering the most attention due to its 100% green credentials.
However, the vast majority of the industrial hydrogen produced today is the "gray" type made from natural gas via steam methane reforming. It's a process that emits some carbon dioxide, but at a significantly lower cost that green hydrogen will struggle to beat. "Blue hydrogen" is produced using essentially the same method as gray hydrogen--but with added carbon capture and storage. Yet another technique, methane pyrolysis, has earned the moniker "turquoise hydrogen" after merging blue and green hydrogen.
C-Zero is a startup that's attracting attention from clean energy investors for making low-cost, carbon-free turquoise hydrogen from natural gas. Last week, the Santa Barbara, Calif.-based company announced a $11.5 million Series A funding round led by Eni Next, the venture investing arm of Italian oil company Eni SpA and Bill Gates-founded Breakthrough Energy Ventures.
Nevertheless, C-Zero is competing against several turquoise hydrogen giants, including Monolith Materials, BASF, and the Hazer Group.
#4 Qairos Energies: Hemp-fueled Power Plant
Hemp, a type of cannabis plant that looks identical to marijuana, is already widely used to make a variety of commercial and industrial products, including textiles, clothing, rope, paper, and bioplastics.
However, the weed plant could soon play a vital role in alternative energy development as well.
French fuel cell startup Qairos Energies plans to invest ~$23 million into a gasification facility that will convert hemp biomass into hydrogen and methane. The two natural gas constituents are to be sold to regional transit agencies for the purpose of electricity generation.
The Qairos facility will run on gasification technology whereby heat and oxygen will be applied to hemp biomass resulting in gaseous substances. Qairos has a target to generate two tons of hydrogen and 200 cubic meters of methane per day.
Scientists and energy experts everywhere consider nuclear fusion the Holy Grail for clean, abundant, and sustainable power. Unfortunately, a host of technical issues have so far prevented the technology from becoming a reality, though France's International Thermonuclear Experimental Reactor (ITER) is working hard to change that, as we explained here. The $22 billion ITER is a collaborative effort by 35 countries and expects to begin testing in five years.
But now, another fusion startup is trying to succeed where others have failed.
Bloomberg has reported that Commonwealth Fusion Systems has raised $84 million from Singapore's Temasek Holding, Norway's Equinor, and other investors in its latest round. Founded by MIT researchers in 2018, Commonwealth Fusion Systems has now raised more than $200 million.
More than $1.2 billion has poured into private fusion startups such as Commonwealth Fusion Systems, Canada's General Fusion Inc., U.S.' TAE Technologies Inc. and U.K.'s Tokamak Energy Ltd.
By Alex Kimani for Oilprice.com
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