Although RNG is currently a tiny sliver of the energy market, analysts expect output to grow rapidly in the
years ahead as more companies across industries work to minimize environmental damage.
Adam Comora, Opal co-chief
executive officer, said one of the firms advantages is that it is already vertically integrated, meaning it can simultaneously work with landfills and dairy farms to limit their emissions while meeting demand for clean fuel from large
companies.
We feel very fortunate that we sit at the epicenter of both of those trends, Mr. Comora said in an interview.
Opal is combining with the SPAC ArcLight Clean Transition Corp. II, a so-called blank-check firm focused on the
energy transition.
Owned by the sustainability-focused investment firm Fortistar LLC, Opal was created late last year through the combination of three
separate companies: Fortistar Methane Group, Fortistar RNG and TruStar Energy.
The firm has used so-called biogas
projects for renewable electricity for years but is now focused on converting those to make transportation fuel. When sold as an alternative to diesel, RNG is significantly cheaper, Mr. Comora said.
Fuel and green-energy credits also give customers incentives to use RNG. Some analysts say higher costs for some other applications of biogas, without
factoring in such credits, could limit its uptake.
Opals deal adds to a flurry of green-energy SPAC combinations. SPAC deals have become
ubiquitous in the past year, in part because they allow companies going public to make business projections that arent allowed in traditional initial public offerings. Blank-check deals also let companies quickly raise cash to accelerate
expansion, executives say.
Opal is raising a $125 million private investment in public equity, or PIPE, associated with its SPAC deal. PIPE
investors include NextEra Energy Inc., NEE 1.22% commodity trading giant Gunvor Group and Wellington Management.
NextEra is also making a
preferred equity investment in Opal of up to $100 million.
The ArcLight SPAC has about $310 million, though blank-check firm investors could
withdraw their money before the deal goes through. Low share prices incentivize such withdrawals. The SPAC is backed by energy infrastructure private-equity firm ArcLight Capital Partners LLC. One of the firms previous SPACs took
electric-vehicle technology startup Proterra Inc. PTRA -4.37% public.
A SPAC is a shell firm that
raises money from investors and trades on a stock exchange with the intent of merging with a private firm to take it public. After the private company files detailed financial statements with the Securities and Exchange Commission and
regulators approve the deal, the private firm replaces the SPAC in the stock market.
A record of more than 235 SPAC deals have been announced this year
that value companies at about $575 billion, according to Dealogic.