Energy economics: an overview?

This data-file provides an overview of 75 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, transportation 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.

Decarbonization targets: what do the data tell us?

The most comprehensive and useful online resource we have found to track different companies’ net zero commitments is zerotracker.net. The database is freely downloadable under a Creative Commons license. However, we have attempted to clean it up in this data-file, including some additional fields and analytics.

The result is 630 companies that have pledged to reach some definition of ‘net zero’. Although the commitments are somewhat skewed towards easier-to-decarbonize sectors, such as financials (22%), TMT (6%), professional services (5%), retail (5%), healthcare (4%).

The average year to achieve this is 2044, although again, it varies by sector, and easer-to-decarbonize sectors tend to have sooner-dated targets.

A key question is credibility. 20% of the companies are deemed to have unclear decarbonization objectives and 45% are assessed to lack a clear plan to reach their goals (interestingly, energy companies scored above average on both of these metrics, at 16% and 27%, which squares with our own experience that some sectors are working hard to tackle CO2).

Another key question is scope. We were impressed to find that 50% of companies are including Scope 3 emissions in their decarbonization targets.

Finally, the list is substantively composed of large public companies, of which 40% are in Europe, 30% are in the US, 15% in Japan, c5% in both Australia and Canada. Clearly if you are a large public company, operating in these geographies, then investors are increasingly going to start ‘marking you down’ if you do not have clear decarbonization targets. On the other hand, private companies and emerging world companies are vastly under-represented in this data-file, which will re-awaken old fears over industrial leakage, and re-iterates the need for practical and economic decarbonization.

In the spirit of open source data, our clean-up of the database is free to download, in case it is useful for you, or helps inform your own company’s decarbonization targets.

LNG regasification: the economics?

This data-file captures the economics for a typical LNG regas facility. We estimate that a fixed plant with 75-80% utilization requires a spread near to $0.8/mcf on its gas imports, in order to earn a 10% IRR.

However, infrastructure-like investments, such as regas facilities typically get financed off lower return expectations, and $0.6/mcf is sufficient for a 6% IRR.

The main input is cost, which we have appraised based on past projects, company disclosures and technical papers (chart below).

Most interesting for the 2020s is the asymmetric upside that could result from extreme gas market tightness. In times of weak pricing, downside is capped, as you can idle the facility. But recent history shows that during times of gas shortages, gas prices effectively have uncapped upside, and this can easily add 3-10% to full-cycle IRRs.

The Top 40 Private Companies for an Energy Transition

This data-file presents the ‘top 40’ private companies out of several hundred that have crossed our screens since the inception of Thunder Said Energy, looking back across all of our research.

For each company, we have used apples-to-apples criteria to score economics, technical readiness, technical edge, decarbonization credentials and our own depth of analysis.

The data-file also contains a short, two-line description follows for each company, plus links to our wider research, which will outline each opportunity in detail.

Glass fiber: the economics?

This data-file models the economics of producing glass fiber, the key component in fiberglass, which is used in wind turbine blades and the light-weighting of transport; but also an insulation material used in the construction industry.

We have broken down the costs across a dozen different input variables, such as capex, opex, energy and materials, based on technical papers, in order to calculate the economics and CO2 intensity of the material.

Some Chinese-made product can undercut Western-made product by c50% on price, but it will likely also embed about 2x more CO2.

Backup data, market sizing and notes from technical papers follow in the subsequent tabs of the Excel.

Wind turbines: screen of resin and polymer specialists?

This data-file tabulates details for 20 companies that make epoxy- or polyurethane resins and adhesives, especially those that feed into the construction of wind turbines.

We think there are 5 public companies ex-China with 5-35% proportionate exposure to this sub-segment of the wind industry, which could therefore be exposed to an acceleration of wind capacity-building. 3 companies stood out in particular and our highlighted in the data-file.

For each example, we have tabulated their approximate size, geography, patent filings, employee-county and estimated their exposure to wind turbine polymers.

Glass fiber: screen of leading companies?

This data-file aims to provide an overview of the world’s largest glass fiber manufacturers, quantifying company size, production volumes (in kTpa), proportionate exposure to the theme (% of revenues), plant locations, employee counts and patent filings. Summary notes are also provided for each company.

The industry is opaque, so our analysis has simply aimed to triangulate between publicly available data-sources and make informed estimates.

Three of the largest five companies in the industry are now based in China, but increasingly expanding internationally.

TSE Patent Assessments: a summary?

The purpose of this data-file is to aggregate all of our patent assessments in a single reference file, so different companies’ scores can be compared and contrasted.

In each case, we have tabulated the scores we ascribed each company on our five different screening criteria, mectrics on the companies’ size and technical readiness and a short descripton of our conclusion.

ESS: redox flow battery breakthrough?

ESS was established in 2011, incorporated in Oregon, and has c150 employees. The company went public in October-2021, via SPAC, raising $500M in new funds, valued at $1.1bn, and listing on NYSE.

It aims to be the leader in medium-duration energy storage (4-12 hours), with an iron flow battery costing 2-5c/kWh (assuming >daily cycling) and practically unlimited cycle life without degrading (>20,000 cycles). The first units have shipped and the company is now in the scale-up phase.

This is one of the highest-quality patent libraries that has crossed our screens, with excellent, specific and clear details; which have clearly locked up ESS’s implementation of an iron-based redox flow battery.

Five key challenges are identified in the file, along with helpful technical details of ESS’s innovations, all gleaned from reviewing its patents. In our view, the main bottleneck is round-trip efficiency, which may be dented by the electro-chemistry ESS uses to avoid side-reactions.

Energy transition: the top ten commodities?

This data-file summarizes our latest thesis on ten leading commodities with upside in the energy transition. We estimate that the average commodity will see demand rise by 3x and price/cost appreciate or re-inflate by 100%.

The data-file contains a 6-10 line summary of our view on each commodity, and ballpark numbers on the market size, future marginal cost, CO2 intensity and pricing.

Covered commodities include aluminium, carbon fiber, cobalt, copper, lithium, LNG, oil, photovoltaic silicon, sulphuric acid, uranium.