Greenify #28: Capping your energy bill
September 9, 2022
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📌 Fact of the week
PSG’s coach Christophe Galtier and football player Kylian M’Bappe were heavily criticized by the media after laughing off a question related to climate change. Check it out!
Hottest news of the week…
Regulation 🗃 - Capping electricity prices?!
What happened: On Wednesday, a leaked document from the European Commission suggested the bloc is thinking about imposing a levy on revenues generated by non-gas electricity producers when market prices exceed 200 MW/h. Essentially, this means taxing abnormal profits for those who produce electricity via renewables and are enjoying the current high prices without facing higher costs. Why? Because consumers are facing higher and higher energy bills, and these abnormal profits can be used to support those who struggle!😬 (An official decision may arrive today!)
Zoom out: As electricity prices are pegged to gas prices, wholesale electricity prices in several European countries have boomed in recent months, following a >10x increase in average gas prices vs. previous decades. Why? Russia has limited gas supplies to Europe in response to the bloc’s economic sanctions, leading to a dramatic price increase to rebalance the market. Not everyone is happy about this proposal… especially Spain, who produces most of its electricity through renewables. ♻️
Business 💰 - JV<>EV: instant attraction
What happened: The EV space is boiling right now. Yesterday, automakers Mercedes-Benz and Rivian announced they are planning a 50-50 joint venture to manufacture electric vans. 🤝 Reportedly, Mercedes-Benz will be supplying the expertise in industrial processes, whereas Rivian will bring its technological know-how to the table. Mercedes, who is betting big on EVs, already has partnerships in place with Renault and Nissan on small electric vans. 🔋
Zoom out: Within the automotive broader industry, ramping up your EV capabilities is the top priority. With regulations restricting production of ICE vehicles going forward, it becomes crucial for traditional auto manufacturers to step up their game, whether by using in-house capabilities, or by partnering with existing EV pure plays. Just to put some numbers around growth rates, in 2021, 10% of total car sales were EVs, 4x the market share in 2019 (2.5%). 📈
Innovation 💡 - Repsol: raising money for a clean future?!
What happened: Repsol, the Spanish energy giant, just made an innovative and bold move, selling 25% of its exploration and production business! According to its CEO, the aim is to raise funds for projects that will help to get to net-zero by 2050! 👍 Proceeds from the sale are expected to be around $4.8bn, leaving the Spanish power company with a large amount of capital to be invested in clean technologies and a strong potential to bring innovation along! 🚀
Zoom out: Repsol’s move is in contrast with its main competitors, which prefer to keep the oil&gas and renewables businesses together, using the former as a “cash cow” to finance projects in renewables! It’s hard to say who is pursuing the best strategy…Repsol’s competitors get a recurrent cash flow from operations and have the ability to invest in clean projects, but Repsol may now face a lower cost of capital due to investors requiring a lower return to invest in renewables! Only time will tell who will thrive, if any…🤔
Deep dives of the week…
Chart of the week - Electricity generation… how? ⚡️
This week, given all the rumours about a potential electricity price cap coming in Europe today, we decided to focus on electricity generation. In areas such as heating and industrial processes, you often hear about electricity and it’s advantage vs. burning fossil fuels. However, it’s also crucial to understand how is this electricity actually generated. Below is the split of electricity generation in the UK throughout 2021… looks like electricity is getting cleaner! 👍
Source: National Grid
Company of the week - Lightyear, solar powered EVs! ☀️
If you still consider Electic Vehicles (EVs) innovative, then you should check Lightyear, a dutch start-up that builds solar-powered EVs! Thanks to its efficiently designed solar roof and advanced technolgy that transforms every joule of energy in power to the wheels, the “Lightyear 0” has a daily solar range of 70kms, on top of the 625kms range of its battery! The company just raised €81M to continue the production of the “Lightyear 0” and plan the “Lightyear 2”, which should be ready by 2025! Ready to order one? Well… maybe call your financial advisor first, as the model starts from €250,000, excluding taxes…😮
Article of the week - Fatih Birol debunking myths on the energy crisis! 👊
This week, Fatih Birol, the IEA’s executive director took the time to destroy the false narratives surrounding the energy crisis! In summary, he identified THREE main myths: 1. Moscow is winning the Energy battle; 2. Today’s energy crisis is a clean energy crisis; 3. The crisis is setting back our fight vs. clmate change.
To see how he destroys these fallacies, I strongly encourage you to go read this 5mins article, but in case you are super lazy, you can have a sneaky peak below at the MAIN TAKEAWAYS! 🤓
Whoever says that Russia is winning ignores the mid and long term consequences that Russia is going to face due to a) the loss of both trust and markets, b) the prolonged international sanctions, and c) the limited capacity to extract oil without the cooperation of international companies and their technologies! 👊
Whoever believes high prices are driven by an exaggerated focus on clean energy in recent years is completely wrong, as governments are actually blaming themselves for not having invested enough into renewables and nuclear in the past. Therefore, the opposite is true. 👌
Whoever is pessimistic about the future of clean energy should look at the RePowerEu plan, the $370B US’ climate bill, and the many more policies adopted by governments to boost renewable energy, once realized about the unsustainability of the current energy system 💪
Let’s listen to the experts and stay optimistic 😉
👋See you next Friday, for the best sum up of this coming week!
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