Vast Solar: A Carbon-Free Breakthrough for Utilities of the Future – IPO Edge
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Vast Solar: A Carbon-Free Breakthrough for Utilities of the Future
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Vast Solar: A Carbon-Free Breakthrough for Utilities of the Future

  • Vast Solar going public via a merger with Nabors Energy Transition Corp. (NYSE: NETC)
  • NETC is the only SPAC focused on energy transition with a major corporate backer
  • Vast Solar uses a next-generation technology that will revolutionize solar industry, called CSP v3.0
  • CSP systems generate solar power through the use of mirrors that concentrate large areas of sunlight into a receiver, then use the heat to drive a steam turbine and create electricity
  • CSP offers carbon-free, dispatchable power and heat, lower-cost technology for sun-belt countries
  • CSP TAM by 2050 seen between 700-1,800 GW, with revenue potential at $3.5 trillion
  • Vast Solar has 3.7-GW global pipeline of potential CSP projects and 230 MW of projects under development
  • IEA forecasts deployment of up to 430GW of new CSP capacity globally by 2050 for on-grid applications alone
  • Outstanding C-suite includes experienced entrepreneurs and leaders from various sectors, led by CEO Craig Wood at the helm for over 7 years
  • Compelling economics with $770 million in 30-year lifetime revenue at 27% net margin for a typical 150 MW project

By Jarrett Banks and John Jannarone

Concentrated solar power (CSP), a decades-old technique for harnessing vast amounts of energy in a small area, should be ubiquitous in sunbelt areas around the globe. But until now, the technology wasn’t cost-effective for industrial heat and clean-power production at scale.

Meet aptly-named Vast Solar, a renewable energy company based in Australia that has developed the next-generation of concentrated solar power systems that will revolutionize the industry. The company is going public via a merger with Nabors Energy Transition Corp. (NYSE: NETC), a special purpose acquisition vehicle formed by energy powerhouse Nabors Industries Ltd., and is expected to be listed on the NYSE under the ticker VSTE in the second or third quarter of 2023.

CSP systems generate solar power through the use of mirrors that concentrate large areas of sunlight into a receiver, then use the heat to drive a steam turbine and create electricity. Vast Solar’s technology, called CSP v3.0, is carbon-free and provides power for on and off-grid applications, energy storage, and the creation of green fuels such as solar methanol and green hydrogen.

Now that the technology works efficiently, the potential to scale is dramatic. The total addressable market for CSP by 2050 will be between 700 and 1,800 gigawatts (GW), with a revenue potential of over $3.5 trillion, according to a top tier international management consulting firm. The International Energy Agency (IEA) forecasts deployment of up to 430 GW of new CSP capacity globally by 2050 for on-grid applications alone.

That leaves room for many players to succeed but Vast Solar is a first mover – and already getting a piece of the pie. The company has 230 megawatts of projects under development, with a total pipeline of 3.7 GW, as of February 2023.

Large governments around the world are firmly backing the business. Up to A$ 215 million of funding has been committed by the Australian and German governments.

Importantly, the technology is tried and true, with CSP v3.0 already piloted for over five years and de-risked through a grid-synchronized demonstration plant that’s operated for nearly three years. The modular tower modality and sodium-based heat transfer technology provide a design that increases reliability and efficiency, while reducing complexity, cost and construction time.

To accelerate deployments in the US, the Inflation Reduction Act (IRA) is expected to materially improve project economics through the 30+% investment tax credit. The partnership between NETC and Vast Solar represents an attractive entry point for some of the most topical energy transition macro themes: dispatchable power, storage, process heat and green fuels.

The parent of NETC, Nabors, is an energy powerhouse with decades of successful field experience. It will develop technology with Vast Solar to improve its systems by leveraging Nabors’ expertise in automation, robotics, remote operations and material science.

Traditional storage solutions come with many compromises such as cost, safety and supply chain issues. CSP offers a variety of key features, including carbon-free, dispatchable power and heat, lower cost technology for sun-belt countries, highly efficient systems with minimal losses, integrated energy storage with thermal batteries that charge themselves with daylight, and a low-risk supply chain consisting primarily of glass and steel.

CSP solves two problems that wind and solar photovoltaics (PV) cannot. Wind and solar PV are intermittent generators. Adding battery storage allows wind and solar PV to be dispatched, but only with limited duration, at a high cost and with significant trade-offs. CSP provides efficient long-duration storage which makes it comparable to traditional fossil generation.

Decarbonizing manufacturing is challenging because many industrial processes require heat that can only be efficiently generated by burning fossil fuels. CSP can generate process heat equivalent to burning fossil fuels, allowing manufacturers to decarbonize.

This expands addressable end markets beyond power generation to produce heat for industrial purposes or deliver a mix of power and heat for the production of green fuels such as green hydrogen, green methanol and sustainable aviation fuels, among others.

Vast’s Modular Tower is a new and innovative approach to CSP that seeks to address the challenges facing conventional CSP. The Modular Tower utilizes molten sodium as its heat transfer fluid, which enables a modular tower design that unlocks benefits that collectively drive down costs and de-risk the operation.

These provide a variety of advantages, including reduced construction time, locational flexibility, lower operational risk through better thermal process control, higher operating temperatures delivering improved plant economics in both salt storage and turbine efficiency, and the ability to alter dispatch to meet changes in grid circumstances.

Additionally, modular towers offer a safer and cheaper way to conduct maintenance on a smaller tower and receiver, increasing the ability to meet customer requirements for both power and heat.

Turning to deployment goals, the company has a focus on several sunny regions, including stretches of North America, Europe/Middle East, APAC, Latin America, Central and South America, and Africa.

One proof point is Vast Solar’s 50-megawatt Mount Isa solar thermal plant, located in northern Queensland state, which is also a testament to the growing demand for renewable energy. The isolated mining community will benefit from the plant, which incorporates technology that allows heat from the sun to be stored for up to 16 hours.

The facility is intended to complement the A$1.5 billion CopperString 2.0 project, which will connect the region to the national electricity network via as much as 1,000 kilometers (621 miles) of new transmission line. This will open up a route to urban coastal markets for the Mount Isa site and potentially even bigger solar thermal operations.

Investors should be lit up by Vast Solar’s unit economics. An illustrative 150 MW project will generate $770 million in revenue over a 30-year life at a robust 27% margin, as the company explains in its detailed investor presentation, available here.

Vast Solar’s executive team, led by CEO Craig Wood with 23 years of experience, is composed of entrepreneurs and leaders from various sectors. Meanwhile, NETC’s team is also world-class, led by President, CEO, Secretary and Chairman Anthony G. Petrello, who has 36 years of management experience. Mr. Petrello is also CEO of Nabors, where he has led the company successfully for over a decade.

Vast Solar expects to get up to $351 million from the SPAC merger transaction, which it plans to use for project development and investments, and deployment of manufacturing facilities. The company’s future is looking bright, and investors would be wise to catch some its rays before more of the world takes notice.


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