Array Technologies: solar tracking breakthrough?

Array Technologies IPO-ed in October-2020, listing on NASDAQ. It manufactures solar tracking systems, supporting 25% of US solar modules installed to date, and 22GW of projects globally. Its systems can uplift solar generation by 5-25%.

Array cites seven advantages of their solar tracker systems in its presentation materials, and we found clear, specific, intelligible patents, back-stopping six of these seven areas. The patent library looks concentrated, focused and may confer a moat.

This data-file screens Array Technologies’ patents, using our usual framework.

Combined heat and power turbines: market sizing?

The purpose of this data-file is to ballpark the ultimate potential market size for combined heat and power systems in the US (CHPs), most probably powered by natural gas, but possibly also biogas or hydrogen.

Our build-up looks across five main categories: large power facilities, large industrial heating facilities, landfill gas, electric vehicle charging and smaller-scale commercial and multi-family usage.

Our main conclusion is that ultimate market sizing could vary by a factor of 100x. Please download the data-file for our base case estimates on the potential market size.

Energy economics: an overview?

This data-file provides an overview of 60 different economic models constructed by Thunder Said Energy, in order to help you put numbers in context.

Specifically, the model provides summary economic ratios from our different models across conventional power, renewables, conventional fuels, lower-carbon fuels, manufacturing processes, infrastructure and nature-based solutions.

For example, EBIT margins range from 3-70%, cash margins range from 4-85% and net margins range from 2-50%, hence you can use the data-file to ballpark what constitutes a “good” margin, sub-sector by sub-sector.

Likewise capital intensity ranges from $300-9,000kWe, $5-7,500/Tpa and $4-125M/kboed. So again, if you are trying to ballpark a cost estimate you can compare it with the estimated costs of other processes.

Carbios: plastic recycling breakthrough?

Carbios is a French company, founded in 2011 and listed on Euronext, Growth Paris, with €430M market cap (Jun-21) and c40 employees. It has developed an enyzmatic process to recycle 90% of PET within 10-hours, which has been described in Nature.

“This highly efficient, optimized enzyme outperforms all PET hydrolases reported so far”. This has attracted partnerships with Nestle and PepsiCo. In November-2020, Carbios produced the first clear bottles containing 100% recycled PTA from textile waste, without downcycling, at lab scale.

The first full-scale plant will produce 40kTpa, costing €100M to construct, starting up in 2025, and saving 48kTpa of CO2. We believe economics could be extremely exciting, compared to conventional plastics and ethane cracking.

There are four challenges, based on our review, outlined in the data-file, and hard to de-risk from our analysis of Carbios’s patents. These challenges may therefore be worth exploring  with the company.

Landfill gas: the economics?

The purpose of this data-file is to model the typical costs of producing raw landfill gas (a mixture of CH4, CO2 and other impurities) at a solid waste landfilling facility.

Our capex and opex cost build-ups are derived from EPA guidance and our gas evolution equations are derived from a line-by-line breakdown of landfill products (below). Note this is prior to gas cleaning and upgrading.

We estimate that a typical landfill facility may be able to capture and abate 70% of its methane leaks for a CO2-equivalent cost of $5/ton. Other landfill gas pathways get more complex and expensive.

Inter-correlations between offshore wind farms?

The purpose of this data-file is to examine the correlations between different wind farms’ generation rates. Specifically, we obtained and cleaned-up half-hour-by-half-hour power generation data from c20 wind assets around the UK, in Megawatts (MW).

The output from individual wind farms was 67% correlated on average, at any given point in time. This correlation varies with distance, reaching as high as 90% within a 100km x 100km area, and dropping to 50-60% within a 750km x 750km area.

Auto-correlation was also high, as each wind farm’s generation was 80% correlated with its own generation 5-hours earlier or later; and the correlation still held at c25% c24-hours later. Windy and non-windy periods routinely last several 2-10 days.

What implications? This all makes it challenging to back up a wind-powered grid with batteries, but it is advantageous for demand-shifting.

Power capacity of a typical home?

This data-file aims to estimate the power capacity required for a typical home circa 2010, 2020 and 2030, under various energy transition scenarios.

Our methodology is to tabulate the typical power consumption of various appliances, then estimate the number of these appliances that would be required.

A typical home in the developed world currently has a 10kW maximum power capacity before tripping its circuit-breaker (although it varies).

This could easily double in the energy transition, due to phasing back gas heating, gas cooking and the addition of home charging stations for electric vehicles.

The only thing is that upgrading the power capacity of home can typical cost $1,000-5,000, and sometimes as much as $20,000.

Climeworks: direct air capture breakthrough?

Climeworks is a private, Swiss company, founded in 2009, commercializing a direct air capture technology, to pull CO2 out of the atmosphere. It has raised $125M by early-2021.

Its first CO2 removals facility is also running and a second is under construction. Current CO2 removal costs are likely above $1,000/ton. It uses a dry process with much lower water intensity than, say, Carbon Engineering.

The main innovation visible in Climeworks’ patents is a DAC plant with optimized air flow, passing CO2 through layers of fabric housing CO2-adsorbing materials. This is an important breakthrough to avoid steep pressure drops (and their resultant energy penalties) in DAC.

Based on reviewing Climeworks’ patents, we were unable to de-risk sub-$200/ton CO2 costs, which is the base case in our economic models.  

Photovoltaic silicon: the economics?

The purpose of this model is to break down the most likely contribution of photovoltaic silicon to overall solar panel costs. The model starts from quartz, which is smelted into silicon metal, purified into polysilicon, upgraded into mono-crystalline poly-silicon and ultimately used in solar cells.

We estimate silicon explains $0.1/W of the cost of a $0.3/W panel. There is no way silicon producers are making economic returns below $12.5/kg mono-crystalline polysilicon prices.

If environmental costs are reflected as well, then PV-silicon price could double. Specifically, the average kg of PV silicon in a solar panel is most likely associated with 140kg of direct CO2 emissions.

US industrial furnaces: breakdown by size, by industry, by fuel?

The purpose of this data-file is to aggregate all available EPA disclosures into the use of CO2-emitting fuels within the manufacturing sector.

We estimate there are 1,500 industrial furnaces in the US manufacturing sector, with a mean average capacity of 60MWth, c90% powered by natural gas, and thus explaining over 3.5-4 bcfd of total US gas demand (4-5% of total).

This is an unbelievably complex and granular landscape, but we have captured as much facility-by-facility data as possible, in the back-up tabs: company-by-company, facility-by-facility, fuel-by-fuel.

We also compare the manufacturing sector with broader industrial materials, where 3,000 furnaces, averaging 130MWth capacity likely explain over 12bcfd of industrial gas demand.