The sector saw major investment rounds in energy and power, while innovation is driving improvements in battery safety and durability.
Solar, wind and hydropower were among the renewable energy sources that contributed to the national electricity generation, which reached 23 percent of total generation compared to 20 percent for coal. Wind power reached record levels in April at 30.2 million megawatt hours (MWh).
The clean energy sector has witnessed a number of advancements during the second quarter of 2019. Several large investment rounds in solar power took place around the world, while continued investment in energy storage, energy efficient-buildings and batteries emerged.
Louis Brasington, cleantech analyst at Cleantech Group, told the Investing News Network (INN) that investment in cleantech in the second quarter of 2019 reached 8.4 billion euros, with energy and power receiving 1.1 billion euros in investment dollars. These numbers excluded investment rounds for behemoth European battery manufacturer Northvolt.
In June, Northvolt announced that it raised US$1 billion in financing to build the first gigafactory for lithium-ion batteries in Europe. Among the many investors in the round included Goldman Sachs (NYSE:GS), Volkswagen Group (DB:VOW3) and the BMW Group (DB:BMW).
Likewise, energy storage, a newer form of renewable energy, has continued to gain more prominence over recent years. The EIA reports that, between 2014 and March 2019, utility-scale battery storage power capacity quadrupled to 899 MW.
“There’s a huge push on the energy storage side to make these batteries safer and more durable and last longer,” said Brasington.
As considerable investment continues to flow into the cleantech space, we at INN review some of the major highlights and trends that took place in the cleantech sector over the second quarter.
Cleantech update Q2 2019: Political bifurcation
The quarter witnessed the province of Alberta removing itself from the Renewable Energy Program (REP). Newly elected premier Jason Kenney also lifted the carbon tax on May 30, a departure from both the previous NDP government and federal government policies.
On an alternate note, in April the Canadian federal government made a C$2.89 million investment in Rotoliptic Technologies, a company that provides a 40 percent reduction in energy consumption for energy-intensive pumps.
In March, US President Donald Trump cut the Office of Energy Efficiency and Renewable Energy by 70 percent as part of his proposed 2020 fiscal budget. Then, in April, Trump claimed that wind power is the most expensive source of power, suggesting that home values drop 75 percent when a windmill is built in proximity, according to Politico.
Individuals states have taken a different approach. According to a report from the EIA, 29 US states and the District of Columbia have renewable portfolio standards (RPS), which are regulations for electricity companies to increase the segment of renewable energy power for electricity output. During the second quarter, both Nevada and Maryland updated their RPS standards; now, sales from renewable generation are targeted to reach 50 percent of total sales by 2030.
On a global level, in May, Global Data Power Analyst Pavan Kumar Vyakaranam told the INN that China is positioned to lead the solar power race. In 2018, China secured close to 200 megawatts (MW) of concentrated solar power, a nearly 700 percent gain from the previous year.
Cleantech update Q2 2019: Innovation in battery durability and safety
The cleantech sector in the second quarter took place over the backdrop of innovation in improvement of cost efficiencies and safety for a number of renewables. This trend continued in North America, Europe and Asia.
Brasington mentioned US-based Sila Nanotechnologies as a company that stood out during the quarter. “Sila Nanotechnologies is basically developing new chemistries trying to increase the stability of lithium-ions,” said Brasington. “Ultimately it comes down to cost savings and predictions that there is going to be a huge rollout in commercial vehicles in the next 10 years.”
In April, Sila entered a strategic partnership with Daimler (DB:DAI) to power future electric BMW cars, as the company has developed new battery materials that are 20 percent more effective than its competitors’. This means that electric vehicles will be able to run 20 percent longer before recharging. The company secured US$170 million in financing from Daimler in April.
In addition to battery materials, investment in the second quarter was also focused on improving battery safety. This has spawned innovation in non-flammable module battery packs.
“The issue with Tesla, with (its) packs, is that it is increasing the density of the cells in the packs, and the temperatures are going up and up,” said Brasington.
Romeo Power is a company that is providing alternative solutions for battery pack issues, Brasington noted. Romeo Power was created in 2015 by former employees of Samsung (KRX:005930), Space X and Tesla. The battery pack developer entered a partnership with cleantech company BorgWarner (NYSE:BWA) in May.
“What a couple of innovators are doing is completely redesigning how the packs are made to allow the higher temperatures to be exhausted,” Bransington said.
While innovation in battery stability and safety trends shaped the second quarter, momentum in energy efficient buildings followed in line. Brasington notes that as building owners, managers and operators see roadblocks in the costs of integrating energy efficient solutions into their building, companies are in turn creating new business models that fits these needs, noted Brasinton.
In the case with Carbon Lighthouse, instead of charging for costly upfront installation costs, it is creating temporary contract models, where it installs the software and hardware and charge companies monthly to manage their services. This results in a recurring revenue stream for Carbon Lighthouse.
On another note, promising returns in the solar power sector were a highlight in the second quarter. For example, JinkoSolar (NYSE:JKS), the world’s largest solar panel supplier. Year-to-date, the company has realized over 121 percent gains in its share price. Bloomberg reported in June that the company projects that 85 percent of its 2019 revenue will come from overseas customers.
Meanwhile, Canadian Solar (NASDAQ:CSIQ) has gained nearly 50 percent in price since January. In the month of June alone, the company signed agreements with Anheuser-Busch (NYSE:BUD), Spain’s Solarcentury and Dallas-based energy company Energy Transfer.
Cleantech update: Beyond Q2 2019
Looking ahead, the cleantech energy sector still faces a number of challenges. Despite Trump’s rescision in June of former President Barack Obama’s climate rules, commercial, corporate and state-level organizations continue to invest in the clean energy sector.
In May, the EIA reported that Brazil plans to increase its production of renewable energy. Even as the International Energy Agency (IEA) reports troubling statistics on how CO2 emissions increased in 2018, a number of solutions are being developed in battery, building efficiency and solar power sectors to improve their economic viability.
“(Solar energy) project sub-costs still take up about 50 percent of entire soft-costs. And as these projects become bigger and bigger, that cost becomes higher,” said Brasington. The demand for improved models will continue to drive innovation within this sector, Brasington adds.
Cleantech update: Investor takeaway
Amidst logistical and political roadblocks, the clean tech sector has shown several breakthroughs in record investment rounds, innovation and regulatory advancements over the quarter. In turn, several companies have seen their share prices post favourable returns as the industry continues to grow and diversify.
For a comprehensive list of the top Canadian cleantech stocks to date, click here. Each of the top five companies have witnessed over 50 percent gains this year.
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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.