Anhydrous ammonia isn’t well-known as an alternative source of fuel, but it’s economic and environmental attributes make it a very compelling alternative to hydrocarbons. That’s why the IwtB Podcast is extremely honored to have Norm Olson on the program to explain some important characteristics of NH3. My favorite quote from this interview really sums up how fascinating anhydrous ammonia is. “It’s kind of a miracle how well this thing works in so many different applications.” If you’re a fan of, or just interested in hydrogen, this is a great interview to listen to. Norm was the Program Manager for Biomass and Alternative Fuels at the Iowa Energy Center and the President of the NH3 Fuel Association. Norm is one of the foremost experts on anhydrous ammonia and one of the biggest champions of NH3 as an alternative energy source.
Energy
Michael Rucker is the CEO and Founder of Scout Clean Energy, a private renewable energy developer. Michael is a renewable energy veteran with many years of experience developing utility-scale renewable energy facilities. Tune in to hear Michael talk about the history of Scout Clean Energy and renewable energy project development.
Bob Frenzel is the CFO at Xcel Energy (XEL), one of the largest and greenest utilities in the US. Tune in to the Buyside podcast to hear Bob breakdown everything you’ve wanted to know about utility investing. Topics discussed include the regulatory process, renewable energy, carbon-free target, replacement cost, and how to value utilities.
In this interview, you’ll hear Bob talk about some of the elements that are required for a utility to be, well, a great utility. You’ll also hear about Xcel’s carbon-free ambitions and what the company will have to do to achieve their targets. And here’s a spoiler, achieving a carbon-free generation portfolio isn’t solely based on wind, solar, and batteries. The solution is actually much more complicated than pundits would like you to believe.
Bob also does a great job of describing just what the regulatory process is like for a utility, how a utility justifies spending money that we, as ratepayers, essentially pay for, and Bob also talks a little about how a utility determines the rates that we as customers must pay. As someone who likes to talk about the future of electric generation and utilities, having Bob on the program is a real treat, but for me, there are two really interesting topics that are discussed.
The first is the fact that regulated utilities don’t generate a ton of free cash flow. That’s because they’re constantly reinvesting into the grid. The second relates to replacement cost or replacement value. I won’t spoil that last one. It’s a doozy, at least for the value investors out there!
Lynn Mueller is the Chairman, CEO, and Co-Founder of Sharc Energy Systems (SHRC / INTWF). Sharc Energy has a patented system of recovering thermal energy from wastewater. Tune in to The Stock Podcast to hear Lynn describe one of the most interesting heat recovery and energy recycling systems around today. It’s a truly fascinating interview about a company and a technology that could alter the course of natural gas demand going forward.
01 Jan: Jimmy Brock and David Khani – CEO and CFO of CONSOL Energy (CEIX) – The Stock Podcast, Ep.23
CONSOL Energy’s CEO, Jimmy Brock, and CONSOL’s CFO, David Khani, join The Stock Podcast to describe the CONSOL investment thesis and the business of mining coal. CONSOL is one of the premier coal producers in the country. Tune in to hear management talk about the outlook for the business, the industry, and one of the most valuable coal assets in North America, the Pennsylvania Mining Complex.
Wouter van Kempen is the Chairman and CEO of DCP Midstream, the largest natural gas gathering and processor company in the United States. Tune in to hear Wouter describe DCP‘s operational footprint, the game-changing technological advancements his company is implementing, and a truly compelling investment story.
DCP Midstream is one of a few MLPs that can boast of having consistently delivered on the inherent agreement between shareholder and management. The agreement relates to the cash the company distributes to investors via the dividend. Sure, one could argue that DCP is a troubled investment story, evidenced by the lack of dividend growth since the commodity price collapse of 2014. However, Wouter van Kempen and his team have done a phenomenal job steering DCP through a very uncertain period of the North American energy cycle and has delivered on one of the most critical components of the MLP investment thesis – stable distributions to shareholders!
Bahir Manios is the CFO of Brookfield Infrastructure, one of the largest diversified infrastructure companies in the world. Tune in to hear Bahir discuss BIP‘s asset portfolio, investment philosophy, and a very compelling investment story.
Ken Anderson served as Commissioner with the Public Utility Commission of Texas (PUCT) from 2008-2017. Tune in to this episode of The Stock Podcast to hear Ken describes the success of Texas renewable energy, the history of ERCOT, and his views on an ERCOT capacity market. Ken also provides some of his perspectives on the current issues the PUCT will likely have to deal with down the road. In addition, Ken outlines some really interesting regulatory and market considerations regarding Sempra‘s acquisition of Oncor, as well as some of the benefits of limited federal oversight in building out CREZ and potential changes to the regulatory framework in Texas.
By means of background, Ken was a slightly controversial figure for utility investors. Ken’s opposition to an ERCOT capacity market was perplexing for many. However, Commissioner Anderson was unwavering when it came to his views on how deregulated power markets should operate. So far, he’s been spot on. ERCOT and Texas have some of the lowest power prices across the US. Part of this is attributable to strength in the Texas renewable energy industry. Sure, Texas is blessed with an extremely strong wind resource, but the free-market philosophy has helped to ensure growth in the industry, not to mention the construction of the CREZ line. It’s a fascinating success story for renewables.
Tom O’Flynn is the CFO of AES Corporation (AES). Tom provides a great overview of AES Corporation’s business model. He also discusses some really interesting catalysts for the company and highlights a compelling investment case for the shares of AES’ stock.
AES is a power company, but it’s different from regulated utilities, IPPs, and yieldcos, yet at the same time has similar characteristics. The asset portfolio includes traditional generation facilities, renewables, and a lot of the essential infrastructure required to produce and transmit electricity. Since the current management took the reins in 2011, they’ve pruned the portfolio, with more than $5B in asset sales over the past 7 years and exited 13 countries. During that time, management reduced parent level debt by $2B, cut costs by $300M, and they’ve returned almost $3B of cash to shareholders.
Part of the return to shareholders has been through dividends, and AES has also bought back about 16% of their stock since 2011. Another interesting fact is that the company has reduced coal generation capacity by about 20% over the past three years, and they’ve replaced a large portion of that capacity with renewable energy. De-risking the business has also been a key priority. Management has reduced AES’ FX exposure to around 15% from 40%.
Maybe one of the most interesting facts about AES Corp is that they are the largest owner of battery storage in the world, and the recently announced storage JV with Siemens called Fluence. The Fluence JV positions AES extremely well for the future. One of the reasons the battery JV is so interesting is because of the growth outlook. Generally speaking, growth investors aren’t interested in utilities. That’s because, double-digit earnings growth in utility-land is almost unheard of, at least not on multi-year outlook.
Another potentially big catalyst for AES Corp includes IMO 2020. This is a gross oversimplification, but IMO 2020 puts a cap on the amount of sulphur shipping vessels are allowed to use in fuel oil. This global regulation bodes well for global LNG demand. And with respect to debt, individual projects financed with non-recourse term debt, which means there is a natural deleveraging component to the business.
Something I like about this management team is that they’re focused on what they know, understand, and where they believe they have a competitive advantage. This perspective led to reducing the number of countries where they operate and becoming more acutely focused on developing and owning long-lived infrastructure assets.
Nathan Kroeker is the President and CEO of Spark Energy (SPKE). Tune in to hear Nathan describe Spark Energy’s business model and why he thinks SPKE stock is undervalued. Nathan also shares his thoughts on the outlook for the industry, and an explanation as to why the retail energy services business is misunderstood by the broader market. Most importantly, he outlines the most important aspects of the SPKE investment story and highlights the key elements of a really compelling investment idea.
Spark went public in 2014 and was largely considered a roll-up story. Retail electricity businesses were trading really low multiples. So, SPKE could use its public currency, which carried a higher multiple, to roll-up private retail business at lower multiples. Recently, however, Nathan Kroeker shifted the company’s priorities to organic growth, and to optimize the business. Management expects to achieve 20M in cost savings from some discrete integration initiatives, which is a big deal for a company that generates less than $100M in EBITDA. Cash flows could grow meaningfully next year for Spark, especially since earn-out payments from previous acquisitions will be completed by mid-2019.