Webber R|A Renewables Weekly

Webber Research: Renewable Energy

Highlights:

• Orsted JV To Develop Clean Hydrogen In Copenhagen (page 1)
• US Extends Safe Harbor Deadlines (page 1)
• Next Generation EU (page 2)
• Saudi’s Alfanar Rumored To Be Senvion India Buyer (page 2)
• ENPH Collaboration With University of Washington (page 2)
• RUN Introduces Brightbox In Nevada & Colorado (page 2)
• ENS Board Changes & Dividend Declaration (page 2)
• SGRE SG 14-222 DD Backlog Updates (page 2)
• Vestas Expands 2020 Vietnam Intake To Over 300MW (page 3)
• Aerodyn To Develop 111-Meter TC1B Rotor Blade (page 3)
• US Net Electricity Generation (pages 3-4)
• Solar PV Pricing (page 4)
• LCOE Benchmarks & Timeseries (page 5)
• Global Wind Turbine Market Share (page 6)
• Solar PV Inverter Market Share (page 6)
• US Wind & Solar Projects Announced Or In Early Development (page 7)

Orsted JV To Develop Large-Scale Clean Hydrogen In Copenhagen: On 5/26 Orsted announced it entered into a JV with Copenhagen Airports, Maersk (marine), DSV Panalpina (logistics), DFDS (ferry), and SAS (aviation) to develop a hydrogen and e-fuel production facility. The project will be developed in three phases with the ultimate goal of providing renewable fuel sources for multiple transportation methods in the Greater Copenhagen Area. Phase 1 includes a 10MW electrolyser to generate renewable hydrogen fuel for buses and trucks – potentially operational as early as 2023. Phase 2 considers a 250MW electrolyser which would have the capacity to produce renewable methanol for maritime transport and renewable jet fuel for aviation – potentially operational by 2027 when the first offshore wind power is available from Ronne Banke off the island of Bornholm. Phase 3 would upgrade the electrolyser capacity to 1.3GW with the potential to displace 30% of fossil fuels used at Copenhagen Airports by 2030. Orsted said the project could reach FID as early as 2021 after receiving required regulatory approvals as well as a full feasibility study.

US Extends Safe Harbor Deadlines: continued…

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Webber R|A Renewables Weekly

Renewable Energy Weekly

*REGI (Outperform) – Virtual NDR Weds 5/27 To participate email us directly or at [email protected]

Renewables – Weekly Highlights:

• GE To Add 193MW Onshore Wind In Turkey – Blades Built In-House (page 1)
• SPWR Sells O&M Business, Clears Maxeon Regulatory Hurdle (page 1)
• ENPH Expands Commercial Presence (page 1)
• IEA Updates Renewable Energy 2020 & 2021 Outlook (page 2)
• BNEF EV Outlook (page 2)
• AMRC Begins Commercial Operations In Ireland (page 2)
• SGRE Launches 14MW Direct Drive Offshore Turbine (page 2)
• Ginlong Solis To Double Manufacturing Capacity (page 3)
• Jinko & LONGi Launch New Modules (page 3)
• Sungrow To Provide Inverters For Ibri II Project In Oman (page 3)
• Suzlon Restructuring Update (page 3)
• PLUG Prices 2025 Convertible Notes (page 3)
• NJ Clean Energy Equity Act (page 3)
• US Net Electricity Generation (pages 4-5)
• Solar PV Pricing Dynamics (page 5)
• LCOE Benchmarks & Timeseries (page 6)
• Global Wind Turbine Market Share (page 7)
• Solar PV Inverter Market Share (page 7)
…continued

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W|EPC: Objections To Venture Global’s Storage Tank Design

Venture Global –  PHMSA Objects to Calcasieu Pass LNG’s Storage Tank Design

• A day after Venture Global successfully raised the first LNG storage tank roof
  (4/27/20) at its Calcasieu Pass LNG facility, PHMSA issued a memo (4/25/20) to
  FERC objecting to the LNG storage tank design, citing non-compliance with the
  National Fire Protection Association (NFPA 59A).
• LNG storage tanks must be designed and constructed to meet several regulations
  and codes, including NFPA 59A.
• The timing of PHMSA’s objection is notable since the tank design should
  have been approved by PHMSA & FERC prior to the start of construction.

Continued….
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Webber Research: Renewable Energy Weekly

• ENPH Partners With 5B In Australia
• GE Renewable Energy Q1 Earnings
• Sunpower COVID Updates
• Safe Harbor Deadline Extension Brought To Treasury
• BNEF Semi-Annual LCOE Update (Page 2, Charts On Page 4)
• New York Approves Offshore Wind Plans, But Delays Action Due To COVID
• Orsted’s 120GW Skipjack Offshore Wind Farm Delayed 1 Year
• Q Cells Tops US Market Share
• Sunrun Hires New CFO
• Houston’s First Climate Action Plan
• California Confirms PV & Storage Installers Are Essential Workers
• Chicago Supporting EV Adoption
• Figures:
• US Net Electricity Generation By Type
• US Net Electricity Generation By Renewable Type
• Monthly Net Wind & Solar Generation State
• Weekly Solar System Pricing
• Grid-Tie Solar System Weekly Retailer Price ($US/Watt)
• Solar Panel / Solar Module 120W+ Weekly Retailer Price ($US/Watt)

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ENPH Partners With 5B In Australia: On 4/22 ENPH announced it would collaborate with Australian solar innovator, 5B in its role in the Resilient Energy Collective (REC) – aimed at providing solar power solutions to Australians disconnected by bushfires and floods. 5B selected ENPH’s IQ 7+ microinverters to pair with its portable Maverick solar array systems, which will also be outfitted with Enphase Envoy with (communication gateway) which connects the system to Enphase Enlighten for easy monitoring & maintenance. ENPH also announced a partnership with Sunlogics in Belgium on 4/29 as its exclusive microinverter supplier using IQ 7 and 7+ microinverters (also outfitted with Envoy). Separately, after the close on 4/27 ENPH was announced to replace Core Laboratories (CLB) in the S&P MidCap 400 index effective before the market open on 5/1. ENPH traded up 16% on 4/28 as a result.

GE Renewable Energy Q1 Earnings: On 4/29 GE reported a $302MM Q1 loss in its Renewable Energy segment, down from a $187MM loss in Q119. Orders declined 13% y/y to $3.1B, which GE attributed mostly to poor execution and only partly to COVIDrelated supply chain disruptions and delays. GE highlighted LM Wind’s sites closures in India and the US and capacity reductions at 3 other sites in its Onshore Wind business (previously disclosed). In its Offshore Wind business, GE remains on track for certification of its Haliade-X turbine and plans to start production after delivering its 80- unit 6MW commitments to EDF (expected completion 2021). In Grid & Hydro, GE is operating 15 factories at full utilization, 10 factories at less than 80% utilization, and 8 factories at less than 50% utilization. Its facilities located in China are operating at preCOVID levels, including Wuhan which was shut down for 6 weeks. Overall GE said COVID-19 has had a limited effect on its Renewables business but that it’s monitoring supply chain constraints and implementing cost-out and restructuring initiatives.

Sunpower COVID Updates: On 4/20 SPWR announced further actions to address the financial and operational impacts of the COVID-19 pandemic including reducing base salaries of executive management another 35-50% (after cutting 25-30% and withdrawing 2020 financial guidance a month earlier), idling factories in France, Malaysia, Mexico, the Philippines, and the US (with expectations to bring them back online in the coming few weeks), and temporarily transitioning a portion of its employees to 4-day work weeks in response to reduced demand and workload (affecting ~3,000 workers according to GTM), but it said it’s still on track to spin-off its manufacturing arm, Maxeon Solar Technologies by the end of Q2.

Safe Harbor Deadline Extension Brought To Treasury: Last week senators from the Energy and Natural Resources Committee wrote a letter to the Department of Treasury advocating a 1yr deadline extensions for the Investment Tax Credit (ITC) and Production Tax Credit (PTC) due to setbacks related to the COVID-19 outbreak. …continued

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Tankers: Moving From OPEC Trade, To Global COVID Relapse Hedge

Tanker Q120 Preview & Storage Update

• Thesis (EURN, DHT, FRO, ASC, etc) …………………Pages 1-2
• Floating Storage Scenario Analysis………………….Pages 2-5
• Tanker Rates Reactions & Implications ……………..Page 5
• Multi-Factor Supply/Demand Model……………….. Pages 6-7
• Crude Inventory & Production Cuts………………….Pages 7-9
• Valuations……………………………………………….. Pages 10-11
• Earnings Estimates……………………………………..Page 12

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Contango, COVID, & Floating Storage To Dominate Q1 Earnings: As with our Barge Preview from last week, we expect the majority of this earnings season to revolve around the simultaneous COVID+OPEC supply & demand shocks to global energy markets, which have driven down global oil demand by ~15-30mbd, introduced negative crude pricing for certain landlocked geographies, and reinforced the notion of systemic, structural and economically driven floating storage. The result: our tanker rate charts look more like seismograph readings (page 5) and our tanker group is poised to throw off record cash flow in Q2 & Q3 (and potentially longer). We believe the long tanker trade is gradually transitioning from a shorter-term OPEC trade, into a longer-term COVID-19 global relapse hedge. We believe tanker dynamics from the remainder of 2020 and 2021 will be defined by the depth and duration of the floating storage dynamics – which we believe will be increasingly driven by the shape and pace of a global economic reopening vs any remaining OPEC/policy maneuvers. Now that crisis level production levels are now more defined, we believe tanker rates and equities will have a strong negative correlation to the success of any semi-synchronized economic reopening. Hence, Long Tankers = Long An Extended And Asymmetrical Global Reopening.

Exxon, Qatar & Golden Pass: Something’s Gotta Give

Analyzing Project Costs & Logistics In The COVID Era
(Part 1 of 2 – Satellite Image Analysis Later This Week)

• Golden Pass: 4 Key Takeaways……………………………………Page 2
• EPC: Monthly Progress Evolution……………………………….. Page 3
• April 2020 Project Update…………………………………………Page 4
  • IP & Construction Activity ……………………………………Page 5
  • Labor Logistics In The COVID Era ………………………….Page 6
  • Cost Analysis – Significant Overruns Already?……………Page 8
  • COVID-19 Impact …………………………………………….Page 9
• December 2019 Baseline
  • Partner Organization, Key Participants ……………………Page 10
  • EPC Roles: MDR, Zachry, Chiyoda …………………………Page 12
  • Variance Analysis …………………………………………….Page 14

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Key Takeaways:

1) What’s Eating Golden Pass? QP & XOM Get Squirrelly In Press. On April 6th, the NYT ran an exclusive quoting Saad al-Kaabi (former QP CEO & current Qatar Energy Minister) as saying Golden Pass (GPX) was proceeding and on schedule. However, that was quickly followed by QP’s 30% partner Exxon (XOM) cutting $11B of 2020 CAPEX, delaying FID for Rovuma LNG (Mozambique), reiterating Coral LNG’s development, while ignoring GPX altogether. Since then, the NYT took down the article, energy markets are upside down, & questions mount. Based on actual EPC progress, we believe the reaffirmed GPX schedule falls somewhere between…..continued (Pages 2-3)
2) Is Golden Pass In Trouble? Monthly Progress Analysis. We believe GPX’s engineering has remained well behind schedule. Data suggests GPX has been attempting (unsuccessfully) to ramp labor earlier than planned…continued (Pages 9 & 13-14)
3) Labor Logistics In The COVID Era…On 4/17/20, GPX requested additional on-site parking amid challenges with safely busing craft workers to the site amid a global pandemic, however busing craft workers wasn’t supposed to begin for another year (2021). This minor, intuitive disclosure actually offers a few significant read-throughs for the project, as well as its path moving forward…continued (Pages 6-8)
4) Cost Overruns Poised To Accelerate From Here? Over the next 6 months we believe the project is already looking at construction cost overruns (relative to its baseline schedule) of at least…continued (Page 7)

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