Newsletter: A palate cleanser from cleantech SPAC mania

Grid storage veteran Fluence is going public with real products and revenue.
By Julian Spector

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(Tayfun Coskun/Anadolu Agency via Getty Images)

It’s true — clean energy companies can IPO the old-fashioned way!

Fluence, one of the biggest suppliers of large-scale grid battery plants, filed papers yesterday to go public on the Nasdaq exchange. That’s bucking the trend of hotshot climatetech companies jumping to public markets via the special-purpose acquisition company (SPAC) route, which essentially moves faster and involves less scrutiny.

If investors crave exposure to clean energy innovators, but also want to see years of experience running an actual business that sells products to customers, Fluence shows it’s possible.

The company grew out of a decade of early-adopter work by U.S. power producer AES, which bet on batteries well before they were popular.

  • In 2018, AES spun off its storage team in a joint venture with Siemens, the massive German power equipment company. 
  • The idea was that creating a stand-alone company would let the Fluence team focus on storage and excel more than if they were just another division at a large multinational corporation.

Going public takes that idea to its logical conclusion: Fluence will no longer be a side project of two giant companies; it will be owned by a diverse array of investors and likely will raise more capital from them than it could get from its corporate parents.

That’s crucial to scaling rapidly, because, as I’ve reported, the storage market is growing like never before. To stay competitive among the upper echelons of storage providers, companies like Fluence need drastically larger budgets for sourcing batteries and improving their technology.

For investors, this IPO offers a change of pace from the parade of SPACs with no revenue or commercial products (see next-gen electric vehicle batteries, exotic long-duration storage tech, even flying electric taxis).

For the fiscal year ending Sept. 30, 2020, Fluence reported $561.3 million of total revenue, a gross profit of $7.9 million, a net loss of $46.7 million and negative $14 million in cash flow from operations, according to its S-1 filing with the SEC.

Half a billion dollars in revenue means this company is actually doing something. Granted, those numbers don’t show much profit right now, but this is a moment when Fluence is investing in growth and technological improvement. Presumably, Fluence will pitch potential investors on where it will be when the market it serves is many times larger than it is today.

Lyft and Uber aren’t going to save us

Here’s a new entry in the annals of Silicon Valley maybe isn’t going to save the world.”

The rise of Lyft and Uber led to some rosy projections about freeing customers from car dependence and making more efficient use of our city roads. No more circling for ages to find a parking spot; think of all the gas you’re saving! Back in 2016, in my urbanism reporting days, I wrote about why transit agencies are finally embracing Uber.”

But a recent Carnegie Mellon study of the environmental and societal costs and benefits of ride-hailing versus driving comes to a different conclusion. After analyzing externalities including vehicle emissions, congestion, crashes and noise, David Roberts reports:

There’s no way to avoid the conclusion: In most places, in current circumstances, all things considered, it’s worse to take a [transportation network company] ride than to drive a private vehicle.

The impact is especially bad when the Uber ride offsets a bike, walk or transit ride.

  • Even when the ride-hailing car is electric and fully charged from clean energy, its environmental impact is still no better than driving a gasoline-powered personal car. 
  • Read David’s piece for the details on why this is the case — it has to do with all the extra miles Lyfts and Ubers drive to get to and from their passengers.

This comes at a time when the nominal benefits of Lyft and Uber have become harder to grasp. Both companies’ IPOs mean they’re not in a position to subsidize their services by burning venture-capital cash. The supply-demand balance for rides has been off-kilter since the pandemic. In my home of Los Angeles, catching a Lyft or Uber to LAX now frequently costs more and is less reliable than taking a taxi (if we could only remember how to find one of those).

Maybe flying electro taxis will save us instead.

Still, this story reminds me of why I left the urbanism beat to cover clean energy.

Solar advocates, for instance, can tell people, We’ll give you electricity that’s cheaper, cleans up your air, makes you more resilient and reduces your dependence on monopoly utilities.” Advocates for smarter cities, armed with reams of data, keep coming back to some variation on: You should stop liking the stuff you like about having a car.” 

In the years I’ve been on the clean energy beat, carbon-free sources jumped from the fringes to dominating almost all new power plant construction in the U.S. I struggle to find any comparable success from the movement to convince people they shouldn’t like cars.

Now electric vehicles are gaining momentum, in large part because they offer customers a better experience than the status quo. Electric cars and trucks also minimize negative externalities of driving, such as noise pollution and emissions. But they don’t solve the broader societal problems stemming from car-centric lifestyles. Nor is it their job to.

Likewise, it was never Uber’s or Lyft’s job to free us from dependence on automobile ownership. They’re just trying to sell rides with other people in the driver’s seat. There’s a clear benefit to Lyft and Uber, but for the rest of society, not so much.

Julian Spector is a senior reporter at Canary Media. He reports on batteries, long-duration energy storage, low-carbon hydrogen and clean energy breakthroughs around the world.