Greenlane Renewables (GRN) could be a huge green energy stock to look at. The biogas is released into the atmosphere with the decomposition of organic waste. This biogas is generated by the anaerobic decomposition of organic matter can be turned into biomethane that could be used as a substitute for natural gas.
This means that it prevents the release of methane (one of the greenhouse gases) into the atmosphere as well as CO2 making a carbon-neutral loop or even a carbon-negative loop. A big plus for this technology is that it uses the already available infrastructure to distribute gas, making it more viable economically.
This is not all perfect since the combustion of this gas is still pollution. This raises the question of how much this investment is worth it since the technology can be considered “polluting” in a decade. The risk of such a scenario is reduced since there is no way to reduce the pollution from farms, wastewater, and landfills, making it the only viable solution.
The main driver of this business is the regulatory changes that encourage this technology. The de-carbonization is one of the main drivers of this business since it is very difficult to actually reduce the emissions of CO2 in areas such as farms and landfills.
The company was created in 1986 in New Zealand with a focus on designing and building heat exchangers and gas compression packages. In the 1990’s they started to install the upgrading systems using water wash technology (their main technology).
In 2014 the company was acquired by Pressure Technologies and renamed to PT Biogas Holdings Limited.
By 2018, over 100 Greenlane Biogas branded biogas upgrading systems had been deployed into 18 countries.
In 2017 the company restructured, moving from three regionally managed units into one globally operated company headquartered in Vancouver, Canada by Brad Douville.
In 2019 the company acquired their business (then called PT Biogas Holdings Limited) from Pressure Technologies for £10.1million:
- £2.0 million in cash
- £2.0 million in Special Warrants at a deemed value of $0.20 per share. They were converted into 17,418,000 Common Shares and 8,709,000 Warrants on August 9, 2019
- £6.1 million in the form of a promissory note. It has a duration of 48 months and has an interest rate of 7%.
- The PT Intercompany Debt (debt contracted before the separation) was outstanding in the amount of $0.7 million and is being paid in 9 installments.
Possible risk factors of GRN stock
- The company has a limited amount of clients and thus the revenues are at risk. The acquisition of new clients is also a difficult and irregular task creating more volatility.
- The company relies fully on the suppliers for the manufacturing and installation of the buildings. There is no list of the suppliers and the only information that we have is that some parts are produced exclusively by 1 supplier putting the company in a difficult position if that supplier can no longer serve them. Long-term contracts can mitigate that risk and yet the company does not disclose any information about that either.
- Due to a large number of Warrants, the delusion of stocks is a guaranty.
- The company is still unprofitable and has some obligations, making it more difficult to expand its core business.