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Thomas Hughes
solar panels in the field

A Major Breakthrough For Renewable Energy And Climate Change

An under-the-radar startup funded by Bill Gates has just made a major break-through in solar power.  The break-through, using mirrors and AI to focus sunlight to a fine point creating temperatures in excess of 1000 degrees celsius.

To put that number into perspective think about this. The temperature of the Sun’s photosphere, the visible surface, is about 5,500 degrees celsius. The company, Heliogen, promises to disrupt the carbon-based energy market but it still has a long way to go.

Using mirrors to focus sunlight for industrial purposes is not a new thing. It is used in limited circumstances to produce heat and electricity. In Oman concentrated sunlight is used to power oil rigs. The major difference is the temperatures. Until now, concentrated sunlight has not been able to produce the temperatures required for wide-scale use of the technology by industry.


Fighting Climate Change With Technology

Industries like steel and cement use massive amounts of carbon-based fuels to produce the required temperatures their processes need. According to the U.S. EPA steel and cement-making are among the leading contributors to carbon-based pollution.

Between them, they are estimated to produce 7% to 10% of global emissions and that’s where the promise of Heliogen’s technology lay.  Massive amounts of clean, carbon-free, heat and the best part is that sunlight is free. Once a business invests in the technology it is virtually free to operate.

The Heliogen system operates with AI. The software tracks the angle of the sun and adjusts an array of mirrors to follow it. The mirrors, hundreds of them, focus the sunlight into a single spot.

The technology is so ingeniously simple the machine worked the very first time it was turned on. The challenge now is to package the tech in a way usable by industry.

Another hurdle faced by Heliogen is the fact the sun doesn’t always shine. This means Heliogen will have to develop systems to store excess energy until it is needed.

Disrupting The Market

Scalability is the key to Heliogen’s success. It is likely the company will be able to apply their tech to industry, it is unlikely Heliogen will be able to disrupt the broad energy market any time soon.

The goal, ultimately, is to be able to produce totally carbon-free hydrogen. Carbon-free hydrogen is a viable alternative energy source and virtually unlimited provided the technology can be developed.

Heliogen’s next step is convincing industry to use the technology. Companies already reliant on fossil fuels may balk at the investment needed to convert to the new system.

There is also a significant investment in land required, the system can take up several acres. Despite this, Heliogen’s CEO thinks it will be a no-brainer once businesses begin to understand they can get clean, carbon-free energy and save money at the same time.

Solar Stocks Face The Biggest Risk From Heliogen

Solar stocks face the biggest risk from Heliogen’s technology. To date, the bulk of solar generation is done via panels and they are far less efficient than Heliogen’s technology.

Further, the Heliogen system is more adaptable to large-scale power generation making it a better choice. With the EIA forecasting a 50% increase in solar capacity over the next five years there will be plenty of opportunities for Heliogen to prove itself.

The two companies most at risk are SunPower (SPWR) and First Solar (FSLR). These companies are the two largest and most successful solar panel manufacturers globally. Recent improvements in manufacturing are aiding profitability and point to positive EBITDA in 2020.

Also at risk are traditional electric utilities. The costs of operating a solar-farm fell below that of coal-fired plants for the first time this year marking a major turning point in the industry. The EIA says more than 60% of new electric generating capacity will be solar over the next year. The advent of Heliogen’s tech could easily accelerate that trend.

Companies like Alliant Energy (LNT) are making a big push into solar. Alliant has been building out its solar capacity for years and is a possible buyer of Heliogen technology. Likewise, solar yieldcos like Terraform Power will also be interested in the new technology because of the cost advantage.

Yieldcos operate in much the same way as an MLP in the midstream sector. They own and operate solar infrastructure and sell the energy to mainstream power operators. The benefit of the yeildco is the dividend. Terraform Power aims to return 80% or more of its earnings to shareholders.

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