This Amazon-backed startup puts a price tag on trees, eyeing a $200 billion market opportunity

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I'm still rehydrating after shedding a liter of tears last night while watching My Octopus Teacher. 

I touched an octopus once as a kid while diving off the coast of San Diego. It was a bad idea. (The lil guy got stressed out, inked, and then darted.) But boy, octopuses are so cool, and I'm a big fan of the doc — which, you know, makes me different than exactly no one. 

Anyway … this week in energy brought talks of a mega-merger, the year's biggest solar IPO, and a new forecast for the future of oil. Let's get to it! 

Amazon, Bill Gates, and Serena Williams bet on a unique startup that puts a price tag on trees

In a sense, trees already have a price tag — if you cut them down, you can sell them as timber. But you can also make money by leaving them in the ground.

Tell me more: Trees suck up carbon dioxide. In a world trying to decarbonize, people will pay for that service. 

  • There's a formal market that values the CO2-removing potential of a given forest. 
  • The currency of that market is carbon credits. 
  • The more CO2 a forest absorbs, the more credits it generates. 

A big opportunity …  The market for carbon credits is soaring as more and more companies make net-zero pledges. 

  • Analysts estimate it will hit $200 billion by 2050, up from a mere $600 million last year. 

… and one that does not elude investors. Amazon is among the high-profile funders backing the startup Pachama, which runs a marketplace where companies can buy these credits. 

This week, we took a closer look at Pachama and the market opportunity. Three scientists we talked to complicated the story. 

The year's biggest solar IPO is a company you've probably never heard of 

Solar is the nerdy kid in high school who turned popular in college. And it got a major ego boost Tuesday when the head of the International Energy Agency said solar is "becoming the new king of the world's electricity markets."

Yet a major solar IPO this week largely flew under the radar. 

The news: On Thursday, solar hardware provider Array Technologies debuted on the Nasdaq under the ticker ARRY. 

  • It was a hugely successful IPO and expected to be the largest this year.  
  • The company's share price was up two thirds by market close on Thursday.  
  • Array's market value reached nearly $5 billion Friday morning. 

Who is she? Array sells what are called solar trackers, a conceptually simple technology that allows the face of a solar panel to move with the sun and thus absorb more energy. (It's like when you're tanning on the beach and rotate your body to get maximum exposure as the sun changes position. Anyone?)

  • Trackers allow panels to absorb about 25% more energy, Array CEO Jim Fusaro told me Thursday. "That's 25% more revenue for the customer," he said. 
  • Array is the second-largest tracker company, controlling 17% of the market last year, according to Greentech Media, citing research firm Wood Mackenzie. 
  • Fusaro says Array's advantage is that it's cheaper than competitors. "Our technology delivers up to 6.7% lower LCOE than our largest competitor." 
  • LCOE, or levelized cost of energy, is a common metric to measure the cost of producing renewable energy. 

Why the IPO matters: It's yet another sign that solar is no longer an obscure energy source and underpins a massive and growing market. 

  • Until recently, there weren't many public companies to invest in that make components of a solar system, Shawn Kravetz, the president and chief investment officer of Esplanade Capital, an investment firm, told us this week.  
  • "What a great example of the investable universe continuing to grow," he said. 
  • Potentially by the end of this year or early next, there could be up to three more solar tracking companies that go public, Paul Strigler, a VP at Esplanade, said. 

A startup to watch: We talked to Leila Madrone, the founder and CTO of the startup Sunfolding, earlier this year. Sunfolding is developing a tracking technology that, unlike Array Technologies and its rivals, doesn't rely on motors. 

  • Sunfolding's technology uses air pressure instead.
  • "All you're doing is changing the pressure on one side of the machine versus the other side of the machine, and that naturally causes the panels to tilt," Madrone said.
  • That means the machines will use a lot less material and have far fewer maintenance locations. 
  • You can learn more about Madrone and her company here. 

Update: Industry mergers, bankruptcies

Mergers: US oil company ConocoPhillips is in talks to buy shale giant Concho Resources in a deal that could be announced in the next few weeks, Bloomberg reported, citing people familiar with the matter. 

  • Analysts at Morgan Stanley said a new phase for the oil industry, focused on returns, is likely to bring a wave of consolidation. 
  • Here the 11 deals they said are most likely. (They notably did not include a takeover of Concho by ConocoPhillips; they said the US major could buy Parsley Energy, another Permian producer.)
  • Earlier this year, Chevron bought Noble Energy and Devon Energy said it was planning to merge with WPX Energy. 

Bankruptcies: From July to September, 17 fossil-fuel producers filed for bankruptcy, according to the law firm Haynes and Boone. That's a 21% increase from the same period last year, the firm said in a report this week. 

  • "Given the continued low price environment and no expectations for any commodity price increases soon, it is reasonable to expect that a substantial number of U.S. producers will continue to seek protection from creditors in bankruptcy before this year is over," the firm said. 

3 other stories we didn't cover

  • EV-startup Arrival raised another $118 million from funds managed by BlackRock, the world's largest asset manager. 
  • Oil demand is set to return around 2023, assuming the coronavirus is gradually brought under control, the International Energy Agency said in a big report this week. "The shadow of the pandemic looms large," the report said.
  • Scientists recorded the hottest September on record, according to the National Oceanic and Atmospheric Organization.  

That's it! Have a great weekend. 

– Benji

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