Esplanade Capital

Oct 16, 2020

Business Insider An icon in the shape of a person's head and shoulders. It often indicates a user profile. Login US Edition Registration on or use of this site constitutes acceptance of our Close icon Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification. Good Pachama Here's what you need to know: Want to get Insider Energy in your inbox every Friday? Sign up here . Do you have feedback or story tips? Reach out to me at bjones@businessinsider.com . I'm still rehydrating after shedding a liter of tears last night while watching My Octopus Teacher. I touched an octopus once as a kid while diving off the coast of San Diego. It was a bad idea. (The lil guy got stressed out, inked, and then darted.) But boy, octopuses are so cool, and I'm a big fan of the doc — which, you know, makes me different than exactly no one. Anyway … this week in energy brought talks of a mega-merger, the year's biggest solar IPO, and a new forecast for the future of oil. Let's get to it! Pachama cofounder and CEO, Diago Saez Gil Pachama In a sense, trees already have a price tag — if you cut them down, you can sell them as timber. But you can also make money by leaving them in the ground. Tell me more: Trees suck up carbon dioxide. In a world trying to decarbonize, people will pay for that service. There's a formal market that values the CO2-removing potential of a given forest. The currency of that market is carbon credits. The more CO2 a forest absorbs, the more credits it generates. A big opportunity …  The market for carbon credits is soaring as more and more companies make net-zero pledges. Analysts estimate it will hit $200 billion by 2050 , up from a mere $600 million last year. An array of solar panels in the desert near Victorville, California Reuters The year's biggest solar IPO is a company you've probably never heard of  Solar is the nerdy kid in high school who turned popular in college. And it got a major ego boost Tuesday when the head of the International Energy Agency said solar is "becoming the new king of the world's electricity markets." Yet a major solar IPO this week largely flew under the radar. The news: On Thursday, solar hardware provider Array Technologies debuted on the Nasdaq under the ticker ARRY. It was a hugely successful IPO and expected to be the largest this year. The company's share price was up two thirds by market close on Thursday. Array's market value reached nearly $5 billion Friday morning. Who is she? Array sells what are called solar trackers, a conceptually simple technology that allows the face of a solar panel to move with the sun and thus absorb more energy. (It's like when you're tanning on the beach and rotate your body to get maximum exposure as the sun changes position. Anyone?) Trackers allow panels to absorb about 25% more energy, Array CEO Jim Fusaro told me Thursday. "That's 25% more revenue for the customer," he said. Array is the second-largest tracker company, controlling 17% of the market last year, according to Greentech Media , citing research firm Wood Mackenzie. Fusaro says Array's advantage is that it's cheaper than competitors. "Our technology delivers up to 6.7% lower LCOE than our largest competitor. "  LCOE, or levelized cost of energy, is a common metric to measure the cost of producing renewable energy. Why the IPO matters: It's yet another sign that solar is no longer an obscure energy source and underpins a massive and growing market. Until recently, there weren't many public companies to invest in that make components of a solar system, Shawn Kravetz, the president and chief investment officer of Esplanade Capital, an investment firm, told us this week. "What a great example of the investable universe continuing to grow," he said. Potentially by the end of this year or early next, there could be up to three more solar tracking companies that go public, Paul Strigler, a VP at Esplanade, said. Sunfolding's technology uses air pressure instead. "All you're doing is changing the pressure on one side of the machine versus the other side of the machine, and that naturally causes the panels to tilt," Madrone said. That means the machines will use a lot less material and have far fewer maintenance locations.