Heliogen Stock is a Risky Play on Concentrated Solar
The emergence of special purpose acquisition companies (SPACs) has paved the way for financiers to make boatloads of cash very quickly, companies to raise massive amounts of funding very quickly, all while the retail investor gets the short end of the stick. We’ve covered more than 40 SPACs, and what they all have in common are wildly optimistic growth forecasts that are in some cases just laughable. You can’t blame companies for making hay while the sun shines, and it’s that same sun that Heliogen is using to turn concentrated solar power into something that’s economically viable. Now, they’re merging with a SPAC called Athena Technology Acquisition Corp. (ATHN).
About Concentrated Solar Power
We’re all familiar with how solar panels capture energy from the sun which can then be used to power all the gadgetry contained within those trendy $120,000 Mercedes vans you see everyone driving these days. That’s the traditional way that solar power has been captured. If you’ve ever used a magnifying glass to fry ants start a fire, you’ll be familiar with the other method used to extract renewable energy from the sun. Concentrated solar power (CSP) involves using loads of mirrors (heliostats) to reflect the sun onto a single point (a receiver) that heats up and then generates power.
Today, a miniscule fraction of solar energy is produced using CSP plants located in 12 different countries, with the industry – in 2020 – approaching 100 plants in commercial operation. There’s a good reason why CSP hasn’t taken off as solar investors expected.
The Many Problems with CSP
The process of generating energy using CSP plants may sound simple, but it’s anything but. So far, CSP has been an utter failure when it comes to being economically viable. An article by Greentech Media titled “America’s Concentrated Solar Power Companies Have All but Disappeared” provides a good summary of all the failures out there, and it all comes down to this:
The biggest challenge facing CSP, not just in the U.S. but also in the rest of the world, is the plummeting price of solar PV.
Credit: Greentech Media
They’re absolutely right. One reason CSP can’t compete on cost is because it’s riddled with problems. The National Renewable Energy Laboratory (NREL) produced a 269-page report on the more than 1,000 problems they encountered while collecting data on nearly 80% of CSP plants operating worldwide. Nearly half the problems were related to technology which leads us to believe that CSP is just not economically viable.
It’s at this point you would probably wonder why anyone would want to throw more money at something that hasn’t proven to be economically viable. We’re wondering the same thing.
About Heliogen Stock
The first slide of the Heliogen investor deck is off to a bad start when one reason given for the merger decision is “diversity and inclusion.” Whether or not someone stands up or sits down to take a piss has no effect on their ability to deliver successful solar projects. The same goes for skin color. Companies that join the cult of “D&I” usually move towards using criteria other than competency when hiring talent, and that’s a huge red flag for investors.
Founded in 2013, Heliogen has taken in just over $128 million in funding from a long list of investors that include Bill Gates and leading steel and mining company, ArcelorMittal. One of the largest mining companies in the world, Rio Tinto, signed a memorandum of understanding (the legal equivalent of a handshake) with Heliogen and the two companies are working together on a pilot project at Rio Tinto’s borate mine in Boron, California
The founder of Heliogen, Bill Gross, has a reputation that precedes him. In the investor call announcing the deal, Mr. Gross said, “although the process of concentrating sunlight is not new, Heliogen has developed innovations which we believe fundamentally improve its potential.” He goes on to talk about how AI algorithms will optimize the placement of mirrors, ones that are much smaller than what’s normally used. This will allow for a “unique modular system design” that will reduce costs and complexity. Heliogen has spent eight years improving all aspects of their technology with the goal of achieving the record temperatures from concentrated sunlight which allows for multiple applications outside of just generating clean electricity.
What Heliogen hasn’t provided in their glossy investor deck is a plan to overcome all the prior failings of concentrated solar. And we’re not just talking about some birds getting zapped. For example, that pilot project they’re working on in California probably needs a method for keeping all those 40,000 mirrors clean. (The installation will be the size of about 100 football fields.) Hopefully, the cleaning method doesn’t involve water because there’s a drought affecting the State of California. The list of things that can go wrong trying to bring a new technology to market that so many others have failed at makes this an extremely risky investment. While Heliogen tries to make CSP economically viable, metal producers are already taking steps to curtail emissions.
Renewable Smelting
Mining, refining, and smelting new aluminum produce nearly 2% of the world’s total carbon emissions. To pacify the ESG types, producers are moving towards using renewable energy and improved processing methods to reduce emissions. Rio Tinto is already selling branded RenewAl aluminum which customers are willing to pay a premium for, at least when times are good. The technology behind that green aluminum lies in changing how the smelter operates. Alcoa’s EcoLum is an aluminum with a carbon footprint 3.5 times better than the industry average, something that’s achieved using predominantly hydro-powered smelters.
Using renewable energy to power a smelter isn’t some novel idea. More than 70% of Alcoa’s aluminum smelting portfolio runs on renewable sources.
When the economy has enjoyed a raging bull market for the last decade, it’s reasonable to expect consumers will pay more for green products. At least that’s better than government subsidies, a cost that taxpayers bear whether they like it or not. In either case, these are not sustainable methods. For a green technology to scale, it needs to offer value that substitutes can’t. The levelized cost of energy for wind and solar has dropped below “dirty energy” and that’s what made the biggest renewable energy company in the world such a success story. Heliogen needs to prove that they can produce energy using concentrated solar energy at a cost that competes with existing renewable energy sources. In order to do that, they’ll need to figure out how to handle all the issues that have plagued those who came before them. Until they’ve proven that, they don’t have anything but a team with a dream.
Conclusion
When dozens of companies try to implement a technology and fail miserably at it, said technology is off to a very bad start. The path to concentrated solar power is littered with failed projects, operational issues, and an inability to produce energy that can compete with other renewable sources. Never mind Heliogen is a SPAC which hasn’t generated any meaningful revenues yet, the technology just isn’t something we’re interested in dabbling in. We wish them the best of luck, but we’ll be avoiding the stock going forward.
If the merger goes through as expected, and that’s not a given, shares of Heliogen will trade under the ticker HLGN.
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It would be interesting to see article on solar cell stocks or startups, especially about perovskite ..
Perovskite-based solar cell technologies have gained attention due to their low manufacturing costs and higher operational output and efficiency.
We looked at perovskite solar cells a few years ago: https://nanalyze.com/2019/04/most-efficient-solar-cell/
Eg: named after the Baltic goddess of the sun, Saule Technologies makes sheets of solar panels using a novel inkjet printing procedure.
We looked at Saule a few years back: https://nanalyze.com/2019/04/most-efficient-solar-cell/
In that piece we noted “the first pilot production facility is scheduled to be launched at the end of 2019 ,which would allow for the fabrication of large perovskite PV modules on an industrial scale.”
According to their press releases, they only opened their first production like a few months ago. They’ve also apparently developed a solar-powered IoT tracking module for European bison. Now, nobody likes a bit of Zubrowka more than we do (we drink that isht straight, none of that apple juice nonsense), but it seems like this firm isn’t hitting their targets and may be getting a bit distracted.
Heliogen’s technology looks much like eSolar, an earlier Idealabs company that claimed its smart mirrors and algorithms would overcome a significant cost disadvantage vs. parabolic trough collectors. However such argument is moot now that crystalline silicon PV is so cheap. The often overlooked detail is that these CSP systems require direct sunlight. Even a small amount of clouds high in the atmosphere create dispersion that greatly reduces the performance, so FL and many other sunny places are not suitable, just dry desserts, but even the Middle East found out that dust was reducing performance 15%. CSP plants also use copious amounts of water to run the steam generation, often scarce in the dessert regions with the best DNI. Frankly, I think Bill Gross understands this but is using a SPAC to recoup lost money.
The fact that CSP can’t compete with crystalline silicon PV pretty much stops the thesis dead in its tracks. As for the usage of water and the massive history of project failures, it’s hard to see how anyone would drop a dime on this thing. Not to mention it’s a SPAC, and SPACs are already risky enough as it is.
Can somebody find out the connection between Heliogen and eSolar – https://en.wikipedia.org/wiki/ESolar
You can draw your own conclusions whether Gross is hiding part of past to make it seem like this is a new exciting technology.
That’s a fascinating tidbit of info Tom. You mean other than the fact Bill Gross is the founder of both companies? Fascinating. The Wikipedia entry talks about eSolar developing “a combination of small heliostats, modular architecture, and a high-precision sun-tracking system.” Sure sounds a lot like Heliogen. If anything, we can deduce that Bill Gross doesn’t have a very good track record when it comes to developing CSP projects (according to GTM, eSolar went out of business).
Looking at that report from the NREL, it’s hard to believe anyone would invest in this stock. Thank you very much for raising that!
Its evident that you dont unders and and Heliogen properly.
You’ll need to articulate your argument a bit better there chief. Can you say it louder for the people in the back of the class?
Its funny how you in all your research on Heliogen energy storage never came?
Are you aware that for a reliable grid operating on renewables, our ability to store energy is critical? Are you going to store energy with PV? Run planes with PV? Heliogen is making green hydrogen. That is a game changer. Also, raw materials for PVs pollute and the energy density compared to surface area is terribly low.
Also, the crux of your argument is: Thus far, concentrated solar hasn’t worked, therfore we should abandon it? Really, do you see anything wrong with that argument?
“It’s at this point you would probably wonder why anyone would want to throw more money at something that hasn’t proven to be economically viable. We’re wondering the same thing.” DOE and ARPA-E beg to differ. I guess you must know more than them…
Seriously, do better…
Anyone that says “do better” is usually mouthing the standard talking points of some ideology as opposed to forming their own thoughts and opinions. But let’s put that aside for now, along with your poor ability to articulate whatever it is you’re trying to convey here.
Yes, concentrated solar has proved to not even come close to being economically viable. Yes, that’s a huge problem. Why would you ever throw money at a renewable energy source that doesn’t work when there are so many others that do? Give this report a read and see if this is the sort of thing anyone in their right mind would throw money at: https://www.nrel.gov/docs/fy20osti/75763.pdf
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Interesting competing/opposing voice on this branch of solar tech and its associated companies, but the general Frat Boy attitudinal tone of this article’s author (not to mention their Comments below) is annoyingly immature and unprofessional. If you want serious investors to take your opinion seriously, and subscribe to your product, then grow up and lose the Brovestor ‘tude.
Nanalyze isn’t for everyone. If you want mature and professional, you came to the wrong place. Learning how to become a better investor by being part of a large global community of investors who learn from one another – and having fun while doing so – isn’t for everyone. We don’t take ourselves too seriously and you shouldn’t either.
What’s a “brovestor?” Is that like a “chickvestor?”
Can Heliogen work also with lower DNI such as 1,300 kWh/m2?
You’d have to ask the firm directly.