Star Peak Energy Is Having a Very Good Week

Star Peak Energy (NYSE:STPK) is a special purpose acquisition company (SPAC) that is backing a company with an innovative approach to renewable energy. The technology, as you’ll read about later in the article, can stand on its own two feet. But it doesn’t hurt when a company gets a real-world example of why its technology is part of our nation’s energy future. STPK stock may not have needed the catalyst, but it certainly doesn’t hurt.

windmills and solar panels that represent esg investing
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The example I’m referring to is the uncommon and severe winter storms that are creating widespread power outages in Texas. Now that the overly simplistic explanations have passed, two things are becoming clear. And it illustrates a concept that makes many people uncomfortable, that is the fact that two ideas can be true at the same time.

In this case it’s clear that renewable energy is not solely, or even mostly, responsible for the problems. At the same time, it’s also evident that the current limitations of renewable energy are part of the problem.

This is why I say (with tongue in cheek) that the outages from this storm will be positive news for Star Peak Energy stock. STPK stock is up 113% since Jan. 1. And the winter storms in the deep South will serve as an opportunity for investors to push the stock higher.

A SPAC You Can Get Behind

Star Peak Energy is a special purpose acquisition company (SPAC) that is bringing the smart energy-storage company, Stem, public. Stem is not a pure play on renewable energy, but it is positioned to be part of our renewable energy future.

First, Stem is an energy storage company. As the United States is becoming more dependent on wind and solar, consumers and investors are becoming familiar with a key limitation. That is, that neither source produces electricity 24 hours a day.

But a bigger limitation is that as wind and solar become available at scale, there needs to be a way to store that energy. Currently when power plants need surplus and backup generation, they look to fossil fuels to fill that demand. This is for two reasons. The first reason is that these forms of energy can be ramped up quickly. And second these fuels provide spinning reserve capacity in which adding power to the grid becomes similar to adjusting the output from a faucet.

And if you need further convincing, Josh Enomoto reminded readers that the rolling blackouts in California are another catalyst for renewable energy storage.

Demand For Energy Storage Will Grow

In the aftermath of the power outages in Texas, more attention is being given to filling this need. But Jim Robb, CEO of the North American Electric Reliability Corporation, said that these technologies are only just now becoming economical and feasible at scale.

“To really make the vision that we like to get to,” said Robb referring to a highly decarbonized electric system, “…you’re going to have to have batteries deployed in many orders of magnitude beyond what we have now.”

STPK Stock Is a Bet On the What And the How

A catalyst for Stem, and therefore STPK stock, is that Stem provides the integrated storage systems that will be a part of this future. But there’s more to this story.

The other compelling benefit to buying into Stem is its lock-and-key approach to energy storage. The lock is the integrated storage systems. The key is how Stem uses artificial intelligence to buy and efficiently distribute energy. Stem’s customers become more efficient as their energy systems automatically switch between using power from the grid, from their on-site resources and from battery storage.

Star Peak may strike you as a boring company. But it’s similar to a utility. And that’s kind of what utilities are. Customers expect to be able to turn on the light switch and it works. They don’t really care why or how. That’s the opportunity for Stem.

I can understand if you’re weary of the number of companies that are coming to market via a SPAC. But Star Peak Energy is one to keep your eye on.

On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.

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