The Nuvve Micro-Spac: Most Intriguing Energy Transition Deal of 2020?

Nuvve is a technology company that has a “Vehicle to Grid” aka V2G technology system that optimizes EV charging between the car owner and the local/broader electric grid. The product’s software optimizes electric vehicle (EV) charging, lowers the total cost of ownership for EVs, and increases the positive environmental impact of EVs. Electric vehicles and their highly distributed batteries are (usually) dormant assets that can help balance the grid with on-demand requests as intermittent renewable energy sources become more dominant portions of our energy supply.

This type of technology is clearly the future. Car owners will opt in to communications that earn them revenue by helping balance the grid. Buildings will look to use EV batteries sitting in their parking lot to manage load as building air conditioners ramp up. School buses returning to their parking lots at 4pm will be ready to provide power to the grid right when the evening power jump occurs. Simply put, the embedded power resource within EVs will do wonders for our power grid. The issue, of course, is the ability to communicate and automate the balancing process with the millions of chargepoints around the country.

In my opinion, the main question for this technology is not if it is required, but when it is required. For Nuvve to be effective and needed, the company requires the existing market conditions:

• Millions of EVs being sold per year, including personal vehicles, fleets, or route vehicles (school buses, etc.)
• Millions of EV charging ports installed, including fast charging and high power sites where fleets are stored
• Major utility grade investments to handle the communication layer and handle the supercharging power requirements needed for many of these vehicles

We as a country are making progress on point #1, primarily due to Tesla but we are still years away from the “millions of charging ports” and years to a decade away from utility-scale readiness. Select other European countries are more ready for this technology and the company is also exploring use cases in Denmark, Netherlands, UK, and Sweden.

Nuvve has a very long horizon before their product is therefore ready for primetime, mass-market usage. And usually when a technology company is years away from commercial use, private market investors remain the sole financing entity. And yet, Nuvve is going public via SPAC with Newborn Acquisition Corp in a sub $150M enterprise value micro-SPAC.

And I believe this SPAC is a great idea. As mentioned in earlier posts, with a low interest rate environment and public market appetite for new energy solutions, this is a company that WHEN it is scalable, should be a very valuable and important part of our energy narrative. So the public investor’s ability to invest at this lower price point (around $130M in equity value) may provide a compelling return as the EV and smart building/utility market develops to allow for this control layer.

If the public market shows interest in this “micro-SPAC” then I suspect many more companies may emerge.

(Please note: none of this is meant as investment advice!)