In the November 2020 election, US voters were given the opportunity to choose to accelerate the clean energy transition already under way in red states and blue states. Joe Biden’s victory, coupled with Democratic control of the Senate, makes real progress at the federal level possible for the first time in four years.
During the Trump years, companies looked to state capitals, not Washington, DC for climate action. That is about to change. During his presidential campaign, Joe Biden set out his vision in a $2trn climate plan. Now he has put in place an unusually qualified climate and energy team to make the ambitious plans reality from day one.
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Many clean energy companies stand to benefit from Biden’s climate agenda. Here are two that could see breakout growth over the next four years.
Ørsted: carbon-free power by 2025
Ørsted may be the world’s best example of an oil company successfully transitioning from black to green. Founded in 1972 as Danish Oil and Natural Gas (DONG), this state-owned company was responsible for managing Denmark’s oil and gas resources in the North Sea. By the early 2000s, DONG had expanded into electricity production, including some of the world’s first commercial-scale offshore wind farms.
About a decade ago, DONG Energy, as the company was then known, adopted its ’85/15′ vision. The company’s operations would flip from being based 85% on fossil fuels and 15% on clean energy to the opposite. In September 2017, DONG Energy divested its upstream oil and gas business to Ineos.
Shortly after that transaction, having shed its fossil skin, DONG Energy morphed into Ørsted, a global clean energy company named in honour of Danish scientist Hans Christian Ørsted, who first connected electricity and magnetism. At its founding, Ørsted said it was on track to reduce its carbon emissions by 96% from 2006 levels by 2023.
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By GlobalData“The strategic steps we have taken over the past three to five years have focused on turning Ørsted into a global renewable energy major,” Martin Neubert, CEO of Ørsted’s offshore wind business, told consultancy McKinsey last year. “We also invested in the conversion of our domestic heat and power plants, enabling them to move away from coal towards biomass. As a result, we will exit coal in 2023, and our power generation will be carbon neutral in 2025.”
Building clean energy projects fast
Ørsted is the world’s largest, most experienced offshore wind developer, with projects in Europe, Asia and the US. Ørsted targeted the US as part of a global expansion, and smart, strategic acquisitions quickly gave it a foothold in the market. In 2018, Ørsted acquired Deepwater Wind, then a leading offshore wind developer on the East Coast, and Lincoln Clean Energy, a builder of onshore wind and solar installations. Ørsted’s US portfolio now includes onshore and offshore wind, solar and energy storage.
At the end of last year, Ørsted said it would build a 430MW solar PV project near Houston, Texas. With that project, Ørsted’s pipeline of onshore wind, solar PV, and storage projects in operation and under construction in the US reached 3,400MW. The company has also won the right to build 2,900MW of offshore wind capacity on the US East Coast.
We will exit coal in 2023, and our power generation will be carbon neutral in 2025. Martin Neubert, Ørsted
Ørsted was already primed for growth; Joe Biden’s win is an accelerator. During the campaign, Biden pledged to transition the US to carbon-free electricity by 2035. To have any chance of meeting that target, the federal government urgently needs to roll out measures to catalyse renewable energy deployment. In mid-December 2020, Congress extended several renewable energy tax credits, including one for offshore wind out to 2025.
Few companies are better equipped than Ørsted to build big clean energy projects fast – and having an offshore wind-friendly administration in the White House could make a difference. Delays, including permitting on the East Coast and military use conflicts on the West Coast, have held back offshore wind growth in the US in previous years.
“Permitting is an area critical to building projects that basically dictates your timeline and how fast you can build a project,” then-president of Ørsted North America, Thomas Brostrøm, said on a Columbia Energy Exchange podcast in October 2020. “Mature markets in Europe early on were typically using 24–30 months to get permits and now that has come down to 16 months in the UK because you have learned a lot what to look for.”
The US, he added, does not “have this one-stop shop as you have in Europe. You have a lead agency, but they have to coordinate with 15–20 agencies and that creates a process that is a little bit more cumbersome than it needs to be.”
The industry is hopeful the Biden administration will streamline offshore wind project approvals. If so, a developer as experienced as Ørsted will be ready to deliver them.
Proterra: turning buses electric
Joe Biden, famously, has a soft spot for trains. He has taken to electric vehicles (EVs) now, too.
“I believe that we can own the 21st-century market again by moving to EVs,” he said in an August 2020 campaign ad. “By the way, they tell me – and I am looking forward, if it is true, to driving one – that they are making an electric Corvette that can go 200 miles-an-hour.”
EV-maker Proterra is best known not for luxury sedans but workhorse public transit buses. The California-based company has delivered more than 550 all-electric buses to transit agencies over the past decade.
The California-based company has delivered more than 550 all-electric buses to transit agencies over the past decade.
In recent years, the company has expanded its core business to include building battery packs and installing charging systems as well as supplying batteries and electric drivetrains to partners such as Thomas Built Buses’s electric school buses and Van Hool’s electric coaches.
Joe Biden’s climate plan calls for 500,000 EV charging stations to be added across the US by 2030. It includes provisions advantageous to Proterra, such as a call for “all-new American-built buses to be zero emissions by 2030” and to “accelerate the progress by converting all 500,000 school buses in our country – including diesel – to zero emissions”.
Biden has also pledged to strengthen ‘Buy American‘ provisions for federal procurement, which should favour US-based EV manufacturers like Proterra. The company’s political savvy – energy secretary nominee Jennifer Granholm sits on Proterra’s board – should help it to win orders.
Last week, Proterra announced it was going public via a merger with ArcLight Clean Transportation Corp, a publicly traded special purpose acquisition company. The deal values Proterra at $1.6bn and arms the company with up to $825m in cash to fund expansion.
