The Ampol (ASX:ALD) share price is rising on Tesla partnership news

Shares in Ampol Ltd are rising today following news of a decarbonisation strategy and partnership with Tesla.

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Shares in Ampol Ltd (ASX: ALD) are rising today following news of a decarbonisation strategy. Interestingly, the strategy involves multiple partnerships and includes entities such as Tesla Inc (NASDAQ: TSLA). At the time of writing, the Ampol share price is up 0.36%, trading for $27.93.

Although it’s now in the green, the Ampol share price spent most of the morning below its previous closing price.

The news comes only days after Ampol committed to keeping its Brisbane-based Lytton oil refinery open. Consequently, the statement came after the announcement of a Federal Fuel Security Package, potentially worth upwards of $2 billion.

Let’s take a closer look at this morning’s news driving the Ampol share price.

Decarbonisation deals

Tesla and Enerven

As part of its newly announced Future Energy and Decarbonisation Strategy, Ampol will collaborate with Tesla. Furthermore, the aim of the project is to build virtual power plants at 3 of Tesla’s retail sites.

A Tesla virtual power plant is a network of solar panels and Tesla Powerwall battery systems. These components work together to create reliable, renewable power. A South Australian Tesla virtual power plant has already been supported by the state’s government. The project aims to create the world’s largest virtual power plant.

Enerven has agreed to install 6 to 9 Tesla Powerwall batteries and accompanying solar panels at 3 of Ampol’s Adelaide retail sites.

The deal will see Ampol generating, storing, and using solar power across its sites. It also has the potential to sell electricity back to the grid in the future, creating another income stream for the business.

Further, the installation of Tesla virtual power plants means Ampol will be able to assess whether it can integrate fast electric vehicle charging to its service stations nation-wide.

Hydrogen technology

Ampol will also partner with an unnamed early-stage Australian developer of hydrogen-based microgeneration and storage technology.

Additionally, Ampol states the technology could bring energy solutions that are cheap enough to compete with diesel generators. This would also give Ampol’s diesel customers a low carbon diesel option.

Fusion Fuel Green

Finally, Ampol has signed a head of agreement with Fusion Fuel Green PLC to install a green hydrogen production plant at Ampol’s Lytton oil refinery.

The two companies might soon be producing green hydrogen as a joint venture in Brisbane.

Green hydrogen is ‘green’ as it’s produced using renewable energy.

Ampol new emissions goals

Ampol has set itself ambitious carbon emissions targets as part of its Future Energy and Decarbonisation Strategy.

The company has vowed to ensure 40% of its operations are powered with renewable energy by 2025. In the same time frame, it will also reduce its convenience retail’s emissions by 25%. Additionally, the company aims to reduce its fuel and infrastructure’s emissions by 5%.

These milestones will increase over the years. Ampol plans to source 50% of its energy needs from renewables by 2030. By 2040, Ampol aims to have zero net scope 1 and scope 2 emissions.

Scope 1 emissions are those created by a company’s activities. Scope 2 emissions are from the power used by a company.

Ampol will also spend a minimum of $100 million on “future energy” projects by 2025. Furthermore, it states it has a goal to provide its customers with greener fuel by using electricity, hydrogen, gas, biofuels, and carbon offsets.

Commentary from management

Ampol’s managing director and CEO Matt Halliday commented on today’s news, saying:

 Our decarbonisation efforts and new initiatives to extend our customer value proposition will be executed with capital discipline to deliver sustainable returns for shareholders over the long-term…

There are a number of characteristics unique to Australia that will impact the pace of the national energy transition, including our geography, demographics and our strong base of transport and other heavy industries.

For this reason, an orderly transition will take time, and we expect traditional liquid fuels to play a key role in Australia’s energy mix for years to come and for demand to remain resilient until at least 2030.

Ampol share price snapshot

After announcing the news, the Ampol share price has been tumultuous on the ASX. Shareholders might be holding their breath as their shares get closer to making a profit in 2021.

Currently, the Ampol share price is down just 1.24% year to date. However, it has still gained 11.38% since this time last year.

The company has a market capitalisation of around $6.6 billion, with approximately 238 million shares outstanding.

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Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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