This Pineapple looks ripe to have for 2021
“…An aggressive investor relations campaign for Pineapple Power will be pursued, focused on the development of strong news flow…”
Investors exploring opportunities to fund the emerging green economy have had an abundance of news to digest over the past few weeks.
Joe Biden’s election renews US engagement with the Paris climate accord objectives and brings the promise of a some kind of green-oriented stimulus programme. China has stepped up its commitment to sustainable technologies by pledging carbon neutrality by 2060. The EU continues to pursue its European Green Deal. And here in the UK Boris Johnson has set out a 10-point plan for a £12bn ‘green industrial revolution’, shifted the deadline for a ban on the sale of new petrol and diesel cars forward to 2030, and announced that Britain will no longer subsidise international fossil fuel projects.
The strong tailwinds behind the evolving green economy, together with the prospect of an increasingly robust economic upturn through 2021, made for favourable conditions for the IPO of Pineapple Power Corporation, (LSE:PNPL) which traded for the first time last week and regular TMS readers will know is seeking to position itself as a key player within the flow batteries sector.
Flow batteries are among the most exciting green innovations, offering the revolutionary promise of electricity grids powered wholly through renewable energy sources, allowing surplus power generated by solar and wind to be stored when the sun is shining and the wind blowing, and released when the clouds roll over and the air is still.
At the opening – December 24th – Pineapple was listed and called for trading on the Standard market segment of the LSE’s main market as a Special Purpose Acquisition Company (SPAC), a ‘cash shell’ equipped with funds to acquire one or more private companies. SPACs have become increasingly popular sources of funds for companies looking for capital without having to go through the lengthy and costly IPO process.
It’s a mechanism that has proved effective in getting other battery startups off the ground, the best known, perhaps, being Nikola – the hydrogen fuel cell company named with playful reference to Tesla – which was fast tracked onto the NASDAQ through acquisition by a SPAC.
SPACs are expected to make a significant takeover within two years of listing as proof of their intent. Once a transaction has been achieved, they usually change their name and listing code, and evolve into conventional listed companies, valued according to the performance of the business in which they have become.
Pineapple’s directors have extensive experience of raising capital on the European, North America and international capital markets, expertise the company intends to employ to acquire at least one suitable venture in the emergent battery flow space.
Pineapple intends to present itself as a takeover target for a larger company, thereby opening the prospect of an increase in share price.
One area of interest within the sector is the emerging vanadium redox flow battery sector. The best known battery solution is currently lithium-ion, used to make light, flexible batteries ideal for their use in mobile devices and electric cars. Indeed Elon Musk has repeatedly said he expects Tesla’s storage service, which supplies solar and large lithium-ion batteries for the grid, to be as big as its car business in the longer term. Portable lithium-ion batteries can be slotted into the grid as quickly and conveniently as they can into cars.
But their storage capacity is limited. Lithium-ion batteries can generally provide up to four hours of storage. Vanadium flow batteries may be less well-known, but they offer complementary strengths that make them particularly well suited for heavy-duty use in the grid. Whereas lithium-ion batteries are light and portable, able to deliver concentrated bursts of high energy that makes them ideal for electronic devices and vehicles, flow batteries are large, durable workhorses.
First developed by Nasa in the 1970s, they harvest energy in tanks of liquid electrolyte – usually though not necessarily derived from vanadium – which is pumped through a stack of cells, causing an electrochemical reaction that generates electricity. Vanadium electrolyte can reliably charge and discharge for thousands of cycles without degrading, giving the batteries a very long life: they are able to perform reliably for at least 30 years, and can be recycled to last longer still. Their longevity means they can be relied on to store sufficient reserves of energy to keep power grids running through shifting patterns of demand, store renewable energy during the day and deploying it during peak demand, or overnight.
The implications are exciting for all who care about a sustainable economy: vanadium flow batteries promise to provide a green solution to the most obvious shortcoming of solar and wind power – their dependence on the weather. Even as solar and wind energies make ever greater contributions to the grid as their price falls, gas-driven power plants have been necessary to provide reliable backup power. But as they mature flow batteries can provide more of this function, storing reserves of solar and wind energy to ensure a steady power supply. They can also provide the backbone for standalone energy systems in regions or countries with poorly developed energy infrastructures. In Africa, for example, flow batteries hooked up to solar panels are already helping provide green power for communities and factories without access to a grid.
The first major vanadium projects are currently in development around the world. Flow battery specialist Invinity Energy Systems has won a major tender to provide storage for the Californian grid, and an 800 megawatt-hours vanadium battery – the world’s largest – is under construction in China.
In the UK, the Government’s keenly anticipated green investment programme will include a £1bn energy innovation fund to speed the commercialisation of emerging low-carbon technologies, including batteries. And earlier this year legislation was passed to make it easier for companies to get new energy storage projects off the ground, allowing them to apply for planning permission through local planning authorities rather than the complex national planning system.
Indeed Britain’s first major battery storage programme is well underway. The Energy Superhub Oxford project draws on a range of renewables technologies to integrate green infrastructures into urban environments: electric vehicle charging, low carbon heating, and smart energy management systems. The network depends on a 50 megawatt ‘hybrid’ lithium-ion/vanadium flow battery system, located in the National Grid’s Cowley Substation, that regulates the supply of power according to demand, ensuring – for example – its availability for the overnight charging of electric vehicles.
Mainstream adoption of vanadium technology will depend on the establishment of secure supply chains. As with lithium, which faces well documented supply challenges, the production of vanadium is sustained by a limited number of mines, most of them in China, which provide more than half of global supply. But there are indications that a more diverse supply network is developing. The South African vanadium miner Bushveld Minerals, for example, has attracted notice over the past year as it steps up production from its Vametco mine.
For the company’s IPO, Pineapple Power Corporation PLC has issued 43 million shares at £0.03 pence per share to raise £1.3 million. The founders hold 13.5 million shares and have restricted their shareholdings from trading for two years or until an acquisition has been agreed and closed.
Pineapple (LON.PNPL) is now in a position to make a strategic decision to negotiate and acquire the most promising of the acquisition opportunities presented to it.
The shares of Pineapple Power Corporation PLC should be of increasing interest to investors seeking exposure to a fast-developing renewable energy sector that has the potential to perform a key role in the energy transition. The companies Brokers are Peterhouse Capital and Axis capital Markets.
The author was remunertaed for this article but does not hold shares in the above named company.