President Biden’s Infrastructure Investment and Jobs Bill officially went into effect this week, adding billions of dollars in fuel to the growth of the American renewable energy economy. For some companies operating in this emerging market, this funding boost could be exactly the support they need to get their products into the mainstream.
We asked three of our foolish contributors to pick a stock that they believe will make special strides thanks to this infusion of renewable energy funds. Your choices – all leaders in certain green energy niches – were Flower energy (NYSE: BE), Proterra (NASDAQ: PTRA), and ChargePoint inventory (NYSE: CHPT). Because of this, they believe these companies are well positioned to capitalize on the boom in green energy investments.
The hydrogen-energy game
Travis Hoium (flower energy): Nowadays, most of the energy storage is achieved with lithium-ion batteries, but they have limits. Large storage batteries are great solutions for a home where you may need them as backup power for a few hours, or for a business to keep it running in the event of a brief outage. However, they are not as practical a solution for long-term storage as storing solar energy generated in the summer for use in the winter months. This is where hydrogen can come into play.
Companies like Bloom Energy are building a hydrogen economy that consists mostly of electrolysers – devices that convert electricity and water into hydrogen – and fuel cells that use that hydrogen to generate electricity. Done right, this could be a completely clean process that creates a non-CO2-emitting fuel that could be easily stored and shipped for use in buildings all the way to container ships. But the industry is extremely young, so there are many risks.
The infrastructure package could help the hydrogen economy in many ways. The bill provides $ 14 billion for resilience programs and includes another $ 11 billion grant program for states, utilities, and other organizations to invest in resilience.
In addition, 3 billion
What is clear is that the government is pushing investment in energy storage and clean energy technologies, and hydrogen is likely to be one of the beneficiaries. It provides a valuable solution, it comes down in costs, and manufacturing facilities are being built in the United States. So Bloom Energy could get a big boost in the coming years from new government spending.
A boost for buses and beyond
Howard Smith (Proterra): The technology company for commercial vehicles (EV) Proterra has already expanded its business in the course of the advancing electrification of transport. But it now has a new catalyst – the federal infrastructure bill, which is providing billions of dollars in funding to accelerate the country’s transition from internal combustion engines to electric vehicles.
Proterra, which makes electric vehicles, powertrains and battery platforms, announced its third quarter financial results last week, and sales were up 30% year over year. In addition, battery production almost doubled and electric battery shipments increased 144% due to a 58% increase in local bus shipments.
Biden’s $ 1 trillion in Infrastructure Investment and Jobs Act has two items specifically designed for Proterra’s business. The bill includes $ 5 billion for zero and low emission buses and other mass transit vehicles that will replace much of the country’s school bus fleet. And another 7.5 billion US dollars will flow into building the charging infrastructure for electric vehicles in the USA
Unlike many other newly public EV names, Proterra is not a start-up with plans but no pre-sales products. The forecast is for sales of nearly $ 250 million in 2021. The company has already delivered more than 750 electric local buses and has more than 55 megawatts of charging infrastructure for its fleet customers.
While there will certainly be bumps along the way, the transition to electric vehicles in the US looks like it will encompass a lot more than just consumer vehicles. Proterra is well positioned to benefit not only from vehicle sales, but also from increasing demand for its battery and energy platform solutions.
The stock is up nearly 25% last month, helped by investor optimism about the benefits of the Infrastructure Bill for the company. With that in mind, Proterra’s management said in its latest financial update that the law will continue to “provide additional momentum to the growth prospects for each of our businesses in 2022 and beyond.” Investors looking to capitalize on the upcoming growth in the electric vehicle sector shouldn’t miss this bus.
ChargePoint plays a central role in the growing electric vehicle industry
Daniel Foelber (ChargePoint Holdings): Although it took Congress months to draft the bipartisan infrastructure bill, the resulting legislation is still a huge win for EV charging companies. About $ 7.5 billion of the $ 1 trillion bill is for expanding the charging infrastructure for electric vehicles in the U.S. ChargePoint operates one of the largest Level 2 charging networks and has worked hard to expand its fast charging capabilities. It will benefit from government investments in infrastructure, but arguably an even bigger catalyst will be the rapid rise of electric vehicles.
In addition to Tesla, newer companies like Rivian, Clear group, Nio, and others are conquering the scene with amazing technology. Unlike Tesla, which built its own charging network out of necessity, many of these newer players will rely on third-party charging stations like ChargePoint. In addition, most of the old automakers like it ford and General Motors increase their EV spending.
ChargePoint’s growth is being driven by the demand for charging locations near businesses, as well as commercial and recreational areas. The COVID-19 pandemic slowed the company’s growth as companies lost footfall and therefore had less need to attract customers with charging stations. As the economy re-opened and businesses recovered, ChargePoint has seen its numbers improve too. It will take time for the company to become profitable as it continues to spend a lot of money to maintain its market-leading position. However, the company’s second quarter fiscal 2022 results showed that it has turned the corner and is poised to resume the growth path it embarked on before the pandemic.
Fuel for the energy transition
Each of these companies had strong market trends behind them. Electric vehicle sales are increasing and companies and governments are investing more in hydrogen plants. But the billions of dollars allocated to support their technologies could accelerate these companies on their growth path. Because of this, we believe Bloom Energy, Proterra and ChargePoint could be some of the biggest winners from the Infrastructure Investment and Jobs Bill.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.