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Water Tower Research says the green energy revolution has reached “commercial tipping points”

Until recently, renewable natural gas had been a bit under the radar, but it is fast becoming a key fuel source for both transportation and stationary power applications

Capstone Turbine Corporation - Water Tower Research says the green energy revolution has reached “commercial tipping points”
Shawn Severson, the co-founder of Water Tower Research, said green energy technologies are fast becoming 'cost competitive solutions'

After many false dawns, the sun is shining on the green-energy economy and renewable natural gas (RNG) is a central figure in this megatrend.

Water Tower Research co-founder Shawn Severson, who is the Head of Sustainable Investing and BioEconomy Research, says green energy is finally going mainstream, but the process to get there has taken many years.

“It has been a combination of technological advancements, the value of carbon reduction, government mandates, and, importantly, consumer and corporate choices. I can’t emphasize the latter enough as corporations have been leading the effort in many cases,” Severson told Proactive.

READ: Water Tower Research initiates coverage on Polar Power, citing growing demand for EV charging solutions

“With the cost of many of these technologies falling, they have reached commercial tipping points and are fast becoming cost-competitive solutions to the incumbent, carbon-heavy solutions.”

Despite the coronavirus pandemic alternative-energy spending has held up much better than spending on oil and gas. According to UBS, globally, clean-energy investment was estimated to account for half of total investment in the entire energy sector last year.

Going Mainstream

Support for the environmental movement has soared, as has political backing in many countries. Some US states, including California, are passing laws requiring the development of renewable natural gas. Crucially, the cost of renewable energy can now be competitive with fossil fuels.

“Today customers are looking for renewable fuels and technologies to meet their electrical and thermal needs: hot water, steam, direct burner applications. Most of these needs are best met with a combustion solution or better yet a microturbine CHP solution that can provide both thermal and electrical energy on-site. Renewable Natural Gas or RNG powered CHP meets that need from both an environmental and payback perspective,” according to Capstone Turbine Corporation (NASDAQ:CPST) CEO Darren Jamison.

“Capstone has continued to see a growth in customer demand for RNG solutions and to a lesser extent hydrogen as 40% of today’s population has grown up with climate change as part of their everyday lives,” he added.

Capstone, based in Van Nuys, California, offers a product line-up of microturbines that can produce anywhere from 30 kilowatt to 10 megawatts of power, operating on a variety of gaseous or liquid fuels. To date, Capstone has shipped nearly 10,000 units to 83 countries and in FY20, saved customers an estimated $219 million in annual energy costs and 368,000 tons of carbon.

RNG powering transportation  

Water Tower Research notes that the share of renewable natural gas as part of the transportation energy mix is growing.

“Until recently, RNG has been a bit under the radar, but is fast becoming a key fuel source for both transportation and stationary power applications. It is an excellent fuel choice as it can be substituted in most applications for fossil fuel natural gas and in the process, substantially reduce the carbon footprint of the consuming entity,” said Severson.

“Heavy and medium-duty transportation, which are some of the biggest sources of carbon dioxide (CO2) comes to mind as a tremendous carbon reduction opportunity by using RNG.”

Westport Fuel Systems (NASDAQ:WPRT) CEO David Johnson hailed a European Commission proposal in September to reduce emissions by at least 55% from 1990 levels by 2030, and set a target for net-zero carbon by 2050.

“Carbon neutrality will only be possible with policies that include a number of technology pathways, including the use of renewable gases,” added Johnson.

“In January 2020, Royal Dutch Shell announced that they will build nearly 50 LNG (liquified natural gas) refueling stations in Germany to supply a blend of fossil and renewable gas that will make their LNG supply carbon neutral.”

Vancouver, Canada-based Westport supplies advanced fuel delivery components and systems for clean, low-carbon fuels such as natural gas, renewable natural gas, propane, and hydrogen to the global motor vehicle industry. The firm has operations in Europe, Asia, North America and South America.

Westport's flagship HPDI 2.0 LNG fuel system

Westport develops cleaner-burning solutions for school buses, shuttle buses, and a variety of trucks. Westport’s HPDI 2.0 LNG fuel system, enables heavy-duty trucks to operate on natural gas with reduced fuel costs, reduced CO2 emissions, and diesel-like performance.

Johnson noted that recent analysis demonstrates that there is “sufficient renewable gas feedstock to fuel the entire truck segment in the European Union.”

“The potential to get to net-zero carbon for trucking in Europe (and globally) using Westport High Pressure Direct Injection 2.0 (HPDI 2.0) and renewable gas is available now and can be done at a competitive total cost of ownership compared to other technologies and with no compromise in performance, reliability, or durability,” added Johnson.

Westport Fuel stock rocketed nearly 40% to $12 on Monday morning after Reuters reported that Amazon.com Inc (NASDAQ:AMZN) had ordered hundreds of trucks from Westport that run on compressed natural gas as it tests ways to shift its US fleet away from heavier polluting trucks.

The engines, supplied by a joint venture between Cummins Inc and Westport Fuel Systems are to be used for Amazon’s trucks that run from warehouses to distribution centers.

"More than 1,000 engines that can operate on both renewable and non-renewable natural gas have been ordered by the supplier," said the news agency. 

Investors are betting that new President Joe Biden will further transition the US from an economy reliant on fossil fuels, coal and petroleum to one driven by wind, solar and other renewable-energy sources.

“Younger investors are voting with their investment dollars and are fully aware of corporate responsibility,” said Severson.

“Many of the stocks have already been reactive to the change in administration, but I think the focus runs deeper and stretches beyond policy makers.”

The US Energy Information Administration projects that renewables will be the most-used energy source in the world by 2050.

Contact the author Uttara Choudhury at uttara@proactiveinvestors.com

Follow her on Twitter: @UttaraProactive

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