Pacific Green Technologies Concentrated Solar Power ("CSP") Opportunity: Initial Due Diligence
First off, a shout out to my colleague SmallCapsAlert (https://mobile.twitter.com/SmallCapsAlerts) who provided me with some fantastic due diligence on the potential revenue opportunity for Pacific Green Technologies and their CSP solution:
An article PGTK posted on Twitter indicates PGTK have completed 160MW of CSP projects before their recent acquisitions (Dunhuang 100MW Molten Salt Tower CSP Plant). The article also mentions that PGTK has a further 164 MW of new capacity under development. The average price for installing CSP in the US in 2019 was $5,744/KW x 1000 = $5,774,000/MW x 164 MW = $866 million dollars of CSP. For an example from the China market, the Shuohang 100MW CSP project had a cost of US$436 million. PGTK has 164 MW they are working on. That equals $715 million worth of CSP using that price comparison. The projects combine for about $700 million.
Source: PGTK Website
The question is what % of that will PGTK realize since they are not the only ones working on the project. In their latest financial report, PGTK reported $480k in CSP revenue for the 9 months with $340k of that coming from the final 3 months. So CSP appears to be ramping up, the question is how much will PGTK realize in revenues, hundreds of thousands, millions, tens of millions, hundreds of millions?
PGTK is in negotiations in Europe for 450 MW. STEM Inc., a direct competitor to PGTK in the energy storage space, trades in the billions (STPK), yet they are only on track to deliver 332 MW this year for about $140 million in revenue. So, if PGTK gets the 450 MW they are in negotiations for, that should be around $190 million in revenue. At the current share price of >$43, STPK’s market cap is around $6.264 billion. STPK trades at multiples higher than PGTK when PGTK could possibly install the same MW this year. PGTK is only in negotiations right now so no revenue can be confirmed yet. That said, New PGTK job postings on LinkedIn include CSP consultant (1 week old); Sales Director - Battery Division in the UK (2 weeks old); Sales Director (Battery energy storage - in Germany (6 days old). A good sign that the negotiations may be progressing well.
More to come on all of this as I have an interview with PGTK CEO Scott Poulter later this week and will publish a follow-up article from that.
Analyst's Disclosure: I am/we are long PGTK.
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