TL;DR

• Case Study: ØRSTED’S renewable Energy Transformation

• A Cosmological Marvel - The Big Ring

• Phantom Debt

• Revolutionary Battery Tech

• and more…

Case Study #4 - Ørsted

Ørsted's Renewable-Energy Transformation

Ørsted, formerly DONG Energy, transitioned from a coal-reliant energy company to the world's largest offshore wind power producer. In 2009, Ørsted boldly aimed to generate 85% of its energy from renewable sources by 2040. By 2019, it surpassed this target, generating 86% of its energy from renewables and leading the global offshore wind market.

Strategic Shift and Key Initiatives:

• Offshore Wind Expansion: Ørsted prioritized offshore wind as a growth area, partnering with suppliers, investing in specialized installation vessels, and standardizing project delivery to enhance efficiency.

• Farm-Down Model: Ørsted introduced a "farm-down" model, co-financing projects with institutional investors while funding its share internally. This model attracted Danish, Dutch, and Canadian pension funds, unlocking substantial capital for growth.

• Organizational Restructuring: Establishing a wind-power business unit improved global governance and project management, reducing costs and boosting efficiency.

Key Lessons:

1. Vision and Agility: A clear goal to shift to an 85/15 renewable-to-conventional mix by 2040 enabled Ørsted to reverse its energy portfolio and pivot entirely to renewables within a decade.

2. Strategic Partnerships: Working with Siemens on a long-term turbine agreement ensured a reliable supply of turbines, while the "farm-down" model attracted pension funds, securing capital and reducing risk.

TECHNOLOGY

The Big Ring

Astonishing new cosmic structures have been unveiled, challenging our fundamental understanding of the universe's architecture. Dubbed the "Big Ring," this ring-shaped superstructure spans a staggering 1.3 billion light-years in diameter and circles about 4 billion light-years.

It coexists with an even larger structure, the "Giant Arc in the Sky," which measures 3.3 billion light-years across, both situated in the constellation of Boötes.

An Artist’s Impression of the Superstructure

The structures challenge our understanding of Baryon Acoustic Oscillations (BAOs), remnants of early universe pressure waves. Although BAOs typically form uniform structures about 1 billion light-years across, these structures are much larger, questioning current cosmic theories.

The discovery of enormous structures like the "Big Ring" and "Giant Arc in the Sky" challenge our understanding of the cosmos. These anomalies may necessitate a reevaluation of our standard models, particularly in how dark matter and dark energy influence the universe's structure.

Apple & Open AI bringing ChatGPT to iPhone

Apple has closed in on an agreement with OpenAI to introduce Chat GPT onto their iphones as part of their broader push to introduce AI into their products according to a recent Bloomberg report.

If the deal goes through, users could see a more powerful and versatile virtual assistant. ChatGPT is known for its ability to generate realistic text, potentially offering a significant upgrade over Siri's capabilities.

This reported deal with OpenAI signifies Apple's growing focus on artificial intelligence. The company is also reportedly developing its own AI chips, suggesting a long-term commitment to in-house AI innovation.

Chat GPT Growth

Apple's Worldwide Developers Conference (WWDC) is just around the corner, and many anticipate the official unveiling of their AI plans, including the potential integration of ChatGPT features.

Whether this deal is finalized and how exactly ChatGPT will be implemented remains to be seen, but one thing's for sure: Apple is making a big push into the world of AI, and iPhone users could be in for a significant upgrade in functionality and intelligence.

FINANCE

Expanding Horizons in the Private Credit Market

The private credit sector, currently valued at $1.7 trillion, is set for further growth with opportunities extending beyond traditional direct lending. David Geenberg of Strategic Value Partners sees a trend of increasing sophistication and expansion within the market.

In terms of geographical distribution, about three-quarters of the global private credit market, which reached $2.1 trillion in assets and committed capital last year, is concentrated in the United States. This scale places it near the market share of syndicated loans and high-yield bonds.

PE, Private Credit, and Public Equity Benchmark Returns

Danielle Poli from Oaktree Capital Management highlights emerging opportunities in life sciences and asset-backed finance, while Marc Lipschultz of Blue Owl Capital describes the sector's evolution not as a golden age, but as a renaissance, indicating continued transformation.

Despite banks re-entering the market, James Reynolds of Goldman Sachs Asset Management remains optimistic, citing significant capital deployment early this year and a sustainable coexistence with banks.

Given these dynamics, how will the private credit market adapt to increasingly complex financial environments, particularly with stable interest rates set by the Fed? It will be interesting to see what strategies within the private credit markets will outperform the others.

Phantom Debt

Retailers are increasingly adopting "buy now, pay later" (BNPL) options, a short-term financing solution that lets consumers purchase items immediately and pay in installments over time.

A Wells Fargo economist, along with many others, state that this is creating ‘phantom debt,’ - a $700 Billion Blackhole that economists aren’t accounting for.

Adverse Impact of growing BNPL Schemes

Phantom debt often goes unrecorded by credit agencies. This gap in information isn't just a minor detail. Juniper Research predicts that in 2024 alone, BNPL transactions will hit $334 billion and are expected to soar to $687 billion by 2028, doubling in size.

Economists are concerned because major BNPL platforms often don't share customer purchasing data with credit bureaus, fearing it could lower their users' credit scores.

However, there are players combatting this issue. Experian, for example, has reassured that they have mechanisms in place to protect consumers' credit scores. Their technology ensures that BNPL data can enhance, rather than harm, financial health by helping to build a robust credit profile.

SUSTAINABILITY

Batteries taking over gas plants in California

The evolution of California's power grid over the last decade has been nothing short of remarkable, with batteries emerging as a transformative force in the state's clean energy transition.

Recently, Governor Gavin Newsom announced a significant milestone: California has surpassed 10 gigawatts of installed battery capacity, setting a new standard in energy storage that outpaces other states and even entire countries.

Real-world data from April indicates that batteries are fulfilling the promises made by clean energy advocates, effectively managing the evening decline of solar, enabling more solar generation, and reducing reliance on fossil gas.

Solar Surges in April 2024

Dispatch data from the California Independent System Operator (CAISO) reveals a significant increase in battery activity during evening hours, reaching levels comparable to the gas fleet's performance.

This shift marks a turning point in California's energy landscape, where storage plus solar is extending the clean energy transition into the nighttime.

Making Lithium Batteries from Wastewater?

The future of lithium extraction might be closer than we think—and it could be right beneath our feet, flowing in wastewater from Pennsylvania's Marcellus shale gas wells. Imagine if nearly half of the lithium used in the U.S. could be sourced locally, significantly reducing reliance on international supply chains.

Recent analysis suggests that lithium extracted from this wastewater could potentially meet up to 40% of the country's demand, potentially reshaping the global lithium market. With advancements in extraction techniques, researchers have achieved over 90% efficiency in recovering lithium.

Lithium Battery Demand is only Increasing

As the U.S. government aims to produce all lithium domestically by 2030, the search for alternative sources has intensified. Traditional extraction methods involve shipping lithium from brine ponds in Chile to processing facilities in China—a lengthy and resource-intensive process.

As we strive for energy independence and sustainability, leveraging unconventional sources of essential minerals like lithium offers a promising path forward.

NEXUS NEWSFLASH

• Tim Cook’s Successor for Apple is being deliberated - Candidates for the visionary role include COO and the Hardware Chief.

• Renewable Energy accounts for over 30% of the World’s electricity supply - Are we on the brink of driving down fossil fuel generation?

• Global debt has surged to a record shattering high - $315 Trillion in Debt is being fueled by China and India’s borrowing binge

STAT OF THE WEEK