The renewable energy movement is now an established facet of the developed world, with expectations boosted by the transition in Washington DC to the Biden administration, which has already pledged its commitment to the sustainable energy cause to the tune of roughly twice the real-dollar investment that went into the space program in the 1960’s.
Furthermore, the Environment, Social, and Governance (“ESG”) investment theme is thought to drive as much as $67 trillion in investment flows over the next decade, according to research from Morgan Stanley. This estimate is driven by what may be the most powerful long-term force driving finance over the next ten years: inheritance. Capital is to be passed from baby boomers to millennials, with an associated shift in sensibilities and thematic focus.
In other words, if there’s a mission attached to the current presidential administration, it’s renewable energies. And, if there’s an emphasis coming from the investors of tomorrow, it’s the same. This correlation will likely drive the most important moves to come.
That dream is showing signs of becoming reality at a rapidly accelerating pace. A good example is a drama around California’s gambit to become 50% renewable-powered over the next decade. PG&E committed to the goal of getting to 55% renewables by 2031. Now, top brass analysts think CA can get there by 2025 or earlier.
In other words, it’s happening, and it’s happening faster than we thought possible even just a few years ago.
With that in mind, let’s take a look at some of the most interesting names in the renewable energies space, including Stem Inc (NYSE: STEM), NextEra Energy Inc (NYSE: NEE), ISW Holdings (OTC US: ISWH), and QuantumScape Corporation (NYSE: QS).
Stem Inc (NYSE: STEM) bills itself as a global leader in artificial intelligence (AI)-driven clean energy storage services. The company provides solutions that address the challenges of today’s dynamic energy market. By combining advanced energy storage solutions with Athena, a world-class AI-powered analytics platform, Stem enables customers and partners to optimize energy use by automatically switching between battery power, onsite generation, and grid power.
Stem’s solutions help enterprise customers benefit from a clean, adaptive energy infrastructure and achieve a wide variety of goals, including expense reduction, resilience, sustainability, environmental and corporate responsibility, and innovation. Stem also offers full support for solar partners interested in adding storage to standalone, community, or commercial solar projects – both behind and in front of the meter.
STEM most recently announced its financial results for the first quarter ended March 31, 2021, including revenues of $15.4 million vs. $4.1 million in the same quarter last year, Gross Margin (GAAP) of (1)% vs. (34)% in the same quarter last year, and Non-GAAP Gross Margin of 19% vs. 1% in the same quarter last year.
John Carrington, Chief Executive Officer of Stem, commented, “We are excited to announce strong first-quarter results following the recent completion of our business combination with Star Peak. Revenue exceeded the high end of our guidance range, coupled with strong gross margin and Adjusted EBITDA performance. Our contracted backlog grew more than 20% sequentially, reflecting strong commercial momentum particularly in the Front of the Meter (“FTM”) segment and a quickly growing end market. Looking forward, our sales, product development and operations teams continue to drive toward achieving our 2021 guidance and building momentum into 2022 and beyond. As the first publicly traded pure-play smart storage company, our experience, industry-leading software, robust service offerings, and strong balance sheet will continue to differentiate Stem in this rapidly expanding market.”
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -20%.
NextEra Energy Inc (NYSE: NEE) trumpets itself as a company that, through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America.
The company generates electricity through wind, solar, nuclear, and fossil fuel, such as coal and natural gas facilities. It also develops, constructs, and operates long-term contracted assets with a focus on renewable generation facilities, natural gas pipelines, and battery storage projects; and owns, develops, constructs, manages, and operates electric generation facilities in wholesale energy markets.
NEE most recently announced that it has entered into an amended agreement to upsize by $150 million its existing convertible equity portfolio financing with KKR (the Investor), through its core infrastructure strategy. NextEra Energy Partners originally entered into the 10-year convertible equity portfolio financing in November 2020.
“The agreement announced today demonstrates the continued robust private infrastructure demand for the high-quality assets in NextEra Energy Partners’ portfolio and our strong continued relationship with KKR, which is providing us with an attractive low-cost source of capital,” said Jim Robo, chairman, and chief executive officer. “This is a terrific source of capital for NextEra Energy Partners and supports funding for the acquisition of the previously announced 400-megawatt portfolio of wind projects. In addition, the upsizing of what is the lowest-cost and longest-dated convertible equity portfolio financing in the partnership’s history is expected to provide significant benefits for unitholders. We continue to believe that NextEra Energy Partners is uniquely positioned to take advantage of the disruptive factors reshaping the energy industry, meet its long-term growth objectives and deliver unitholder value going forward.”
Even in light of this news, NEE hasn’t really done much of anything over the past week, with shares logging no net movement over that period. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -20%.
ISW Holdings (OTCMKTS: ISWH) is a diversified holdings company trading at much cheaper levels than other stocks listed here. But it has strong exposure to the renewables energy space by virtue of its cryptocurrency mining segment, which is founded on driving operations from renewable energies, passing the high bar recently highlighted by Tesla’s Elon Musk.
ISWH is a relative newcomer in the crypto space, getting things ramped up last year in May and June with its partnership with Bit5ive LLC, designing and assembling its Proceso POD5IVE mining pod, a fully self-contained high-PUE mining solution designed, assembled, and installed in partnership with Bit5ive at the Bit5ive 100 MW renewable energy cryptocurrency mining facility in Pennsylvania.
It has since tripled its fleet of mining pods. Each pod is powered by 280 mining rigs and is capable of driving roughly $2.9 million in annualized revenues (at current cryptocurrency price levels). ISW Holdings continues to build out its own mining capacity, with plans to bring multiple additional pods online this year. However, data from pod mining operations is also being collected for the purpose of marketing the POD5IVE datacenter to other businesses and individuals interested in a self-contained industry-leading cryptocurrency mining solution.
ISWH announced strong gains in cash, overall business growth, and total current assets this morning in its latest quarterly filing. The company also pointed to its likely ramp in progress in Q2 as it fires up its mining operations at the Pennsylvania renewable energy mining facility.
As Alonzo Pierce, President and Chairman of ISW Holdings, noted in the release, “Our current focus is on implementation of a renewable energy sourcing plan that will get our mining operations closer to the 0% carbon emission standard. We support the current technology industry roadmap of implementing and sourcing only renewable energy resources, and we believe this will enhance our net profitability over the long term. This was always our end game, which should be clear given our initial mining launch at the Pennsylvania renewable energy mining project. We are committed to a brighter, healthier, and cleaner future.”
ISWH shares have pulled back sharply over the past two months after the establishment of its strong upward trend, in place over the past 6 months.
QuantumScape Corporation (NYSE: QS) bills itself as a leader in developing next-generation solid-state lithium-metal batteries for use in electric vehicles.
The company’s mission is to revolutionize energy storage to enable a sustainable future.
QS most recently announced that it has entered into an agreement with Volkswagen Group of America, Inc. to select the location of their joint-venture solid-state battery pilot-line facility by the end of 2021. The companies currently contemplate Salzgitter, Germany for the location. The pilot-line facility, QS-1, will initially be a 1-gigawatt hour (GWh) battery cell commercial production plant for electric vehicle batteries. QuantumScape and Volkswagen intend to expand production capacity by a further 20 GWh at the same location.
“Our goal has been to bring our solid-state lithium-metal batteries to market as soon as possible,” said Jagdeep Singh, CEO, and co-founder of QuantumScape. “This joint venture brings together QuantumScape’s core battery technology with Volkswagen’s deep understanding of high-volume, high-quality production, and maximizes our ability to bring this technology into industrial production.”
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action QS shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -3% on above-average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.
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