What happened
Monday is turning into a busy day in the clean energy space, with Clean energy fuels (NASDAQ: CLNE) exploding (in a good way), up to 31.2% as of 11:45 am EST. Chinese car battery manufacturer CBAK Energy (NASDAQ: CBAT) fell 10%, and fuel cell company Bloom Energy (NYSE: BE) is up, but only a modest 1.7%.
Let’s see if we can unpack all of this for you.
Image source: Getty Images.
And
This morning, Clean Energy announced that it has signed a multi-year contract with the Los Angeles County Metropolitan Transportation Authority to supply approximately 47.5 million gallons of renewable natural gas (RNG) “to supply the largest transit bus fleet. from the country”.
In the next five years, says Clean Energy, LA Metro plans to transition its bus fleet from diesel fuel to “cleaner, low-carbon fuel”. 2,400 buses in the transport system run on RNG, which is methane gas produced from organic waste.
There is a chance that this business will also get even bigger. On the one hand, the five-year contract contains an option to extend its duration by “up to three additional years”. In addition, LA Metro is trying to achieve a “bus fleet with 100% zero emissions by 2030” and “zero net emissions … by 2050.” Since the RNG captures methane that would otherwise escape into the atmosphere before burning it as a fuel, releasing carbon, it is not considered an emitter New carbon in the atmosphere. Therefore, expanding future clean energy RNG purchases may be one way that LA Metro continues to move toward its goal.
What now
Shortly after the LA Metro news was released, we also learned that investment bank Craig-Hallum doubled its target price on Clean Energy shares to $ 25. According to TheFly.com, which reported the change, Craig-Hallum believes that Clean Energy is playing a “critical role” in reducing greenhouse gas emissions, particularly through its focus on renewable natural gas – which the analyst says will comprise 100% of clean energy sales by 2025.
But the bank also highlighted a trend that it believes to be even more important than this LA Metro business. As the analyst points out, Amazon (NASDAQ: AMZN) has just ordered 1,000 natural gas truck engines from a joint venture between Cummins and Westportthus joining UPS what the analyst believes will develop in a multi-year trend of major transportation companies shifting their fleets from diesel to natural gas.
In the analyst’s opinion, this is great news for companies focused on natural gas, such as Clean Energy – but it bodes ill for the prospects for fuel cell companies and electric battery companies to take over the truck industry. It is probably no coincidence that Bloom Energy’s shares are showing only modest gains today, while Plug Power (NASDAQ: PLUG) stock – the fuel cell industry thermometer, dropped a fraction of one percent.
Meanwhile, in batteries, CBAK Energy announced today that it is selling $ 70 million in new shares at $ 7.83 per share (about 8.9 million shares), and also issuing 11.2 million guarantees to buy shares additional costs at an even lower price (in total, adding about 20.1 million dilution shares) in an effort to raise cash to “speed up the company’s business plan, pay off some of its outstanding debt and finance any additional needs working capital. ”
While the purpose of raising cash seems reasonable, it also illustrates the continuing unprofitability of CBAK operations, which had not been producing profit for more than five years. If Craig-Hallum is right, and the shipping industry has decided that natural gas is the best way to transport goods with minimal carbon emissions – and that “electric” via batteries and fuel cells may not be – then obviously it wouldn’t be great news for a battery company like CBAK.