Hey. I'm Chip. Glad you're here.
I'm currently a partner at an investment firm creating a portfolio of businesses from within the energy, basic materials and industrial sectors that balance the environmental and economy realities of achieving a carbon-neutral economy. I've been working at the intersection of asset valuation and energy systems modeling for the last 10+ years.
More about me here.
These are some scattered, often incomplete, thoughts. I'm hopeful you can find a kernel of information in here that might be helpful for you.
Viewing the Inflation Reduction Act Through the Lens of Energy Infrastructure
The Inflation Reduction Act (IRA), signed into law by President Biden on August 16, includes provisions for $370 billion in energy-and climate-related initiatives, making it the most significant environmental-focused bill Congress has ever passed. The bill has the potential to impact a wide range of industries. The stimulus is meaningful;
Renewable Cost Inflation
56% (50 GW) of global solar PV developments planned for 2022 are at risk of delay or cancellation due to rising material and shipping costs according to a recent analysis by Rystad Energy. PV module costs have increased by roughly 50% in the last year, largely driven by a 300%
Voluntary Carbon Credits - A Market Born Out of Necessity
The voluntary carbon credit market is coming of age. Next week, deliberation on Article 6 at the COP26 will be closely watched as the international community attempts to establish a framework for companies and countries to trade voluntary carbon credits. Article 6 was drafted with the Paris Agreement and allows
Gas on High
"Gas markets are on red alert…prices are up 250% since January. On an energy equivalent basis, gas prices are now the most expensive fossil fuel, on par with gasoline prices when oil was over $100 a barrel…we have to ensure that the climate crisis does not turn
Patents: Peering Into the Future of EV Charging Businesses
ChargePoint (CHPT) went public in March, becoming the second listed electric vehicle (EV) charging company in the US. Before ChargePoint's listing, the firm spent a decade building its charging platform, which now hosts 100 million chargers in the field, a cloud-based subscription platform, and partnerships with major retailers.
Turning Up or Down?
The materials sector is rife with confusion today. Commodity prices have done exceptionally well over the past 18 months, but the drivers of that performance are disparate and impossible to aggregate coherently. Some supply constraints are a function of forced shutdowns; some are a function of a decade of underinvestment.
The EU's Proposed Carbon Border Adjustment Tax
Cost Challenges Ahead Signal Inflationary Pressures The European Union (EU) may soon push forward with a carbon border adjustment mechanism (CBAM) if it can ensure compliance with the World Trade Organization (WTO). The EU parliament backed the CBAM proposal in March, and the European Commission is set to make a
Axa Insurance Cuts German Utility RWE
France’s largest insurance company, Axa SA, severed ties with the German energy utility RWE in the middle of March. Headline reports note the “precedent-setting” [1] decision and the “necessary consequences” of Axa policy on coal and climate. [2] Axa’s decision may seem prudent at face value. After all,
Chesterton’s Fence : Industrial Decarbonization
The industrial sector is made up of a staggering number of unique processes. From manufacturing to chemical to metallurgical, the sector is considered extremely challenging to decarbonize. While any single decarbonization solution is unlikely to be portable across the entire sector, a cross cutting opportunity is the decarbonization of heat.
Explosion of SPACs
Special purpose acquisition companies (SPACs) have exploded in 2020 and clean energy companies are not sitting on the sidelines. Electric vehicle OEM’s (Nikola, Canoo, Hyliion, Lordstown, Fisker, XL Fleet), battery technology supplies (Eos, Romeo, Quantumscape), an additive management company (Desktop Metal), rare earth material miner (MP Materials) and electric
Energy Transition in Focus: Recent Literature on Rooftop Solar, Green Hydrogen
The Lawrence Berkley National Laboratory released several studies this summer that explore what comes next in the evolving power market landscape of the United States. The application of academic literature can often be limited in the world of investing; however, I find Berkley's analytic rigor combined with thoughtful
Blackouts
California's electrical grid operator (CAISO) declared a stage 3 emergency last Friday, initiating a series of rolling blackouts across the state. Stage 3 emergencies are not trivial events; the last stage 3 emergency was in 2001 during the California energy crisis, which forced a halt to the state&
Concerning Frequency in Underperforming Solar Assets
There is systemic underproduction of electricity by solar assets in the US. This is largely driven by unreliable energy estimates and an industry wide bias towards aggressive assumptions. As the solar industry matures, investors are becoming increasingly focused on emergent risks for the asset class such as merchant tail risk[
Climate Uncertainty Leads to Divergent Corporate Strategies
There is growing interest in analyzing the environmental footprint of corporations. Banks and insurance companies are beginning to examine this risk when assessing borrowing costs and insurance premiums. Large corporate buyers have raised the bar considerably on suppliers. Policymakers in Europe seem to be in rare unison, almost without exception,
Cost of Decarbonization (ArcelorMittal)
Last Thursday, the Financial Times ran a story entitled: “ArcelorMittal (MT) warns that the EU’s carbon goal will cost steelmaker up to €40bn”. MT is looking to cut emissions by 30% over the next decade and to be carbon neutral by 2050, two goals they established last year. Their
Back of the Envelope Math on Green Hydrogen
Green hydrogen has piqued the interest of public companies in 2020. While expressions of interest may be legitimate, the surge suggests that there is a lot of window dressing occurring. I applaud companies that feel an urgency to commit to decarbonization targets. Whether companies can execute a green hydrogen strategy
Bold Climate Stimulus by the E.U.
On May 27th, the European Commission proposed the most significant fiscal stimulus in Europe's history with climate investment at the heart of the bloc's recovery effort. The proposal will likely have a considerable impact on both the architecture of the European Union and climate initiatives globally.
Growing Headwinds for Utilities
In late 2018 I published a piece examining potential changes in the hundred-year-old business model of electric utilities. I argued that while new energy technologies posed challenges to the legacy business, the long-term outlook for the industry was strong given trends in electrification. I also highlighted a growing divergence between
Risks and Opportunities in the Battery Supply Chain
Key Findings * The battery supply chain is misunderstood and undercapitalized. This will be the primary constraint to the rollout of electric vehicles. * While there are enough mineral reserves, the mining industries ability to ramp up production and chemical refining capacity is a significant concern. * Unlike lithium, there appear to be
Counter-Narrative to the Decline of the Electric Utility
Overview The US electric utility industry is in a period of fundamental transformation. Weak sales growth coupled with the rise of renewables [1] and distributed generation [2] has led many to believe that the traditional utility business model is untenable. Over the past decade, energy utilities globally have returned a
Tempering Expectations
Headlines are awash with optimistic growth projections for the energy storage market. Bloomberg New Energy Finance estimates $600 billion will be invested in the sector over the next 20 years, resulting in installed energy storage capacity growth of 1,000 GW and a 52% drop in the upfront cost of