SPX Corporation (SPXC)

Company website 2020 Financial Report Stock Analysis 2019 ESG Report

1.1

Billion Dollars

in 2020 revenue

12^%

Reduction

in scope 1 and 2 emissions, 2018 - 2020

197

Domestic Patents

SPX has 197 domestic and 214 foreign patents on their HVAC, transformer, and detection & measurement products

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The Path to Drawdown: Grid Expansion

Solving climate change and remaining below 1.5ºC of global temperature increase requires a massive scaling of emissions-free energy sources. And thankfully, renewable sources of energy like solar and wind are quickly expanding their capacity worldwide. But to reliably provide renewable energy to every household and organization in the world, we need a grid that’s much bigger and more flexible.

The power grid is the dynamic network of electricity generation, transmission, storage, and consumption that 85% of the world relies on. But its initial design for constant, centralized power production is not conducive to the intermittency of solar and wind energy. For the world’s electricity supply to become completely renewable, the power grid needs to become more adaptable than it is today. Many technologies -- constant renewables like geothermal and nuclear, utility-scale energy storage systems, batteries, and smart appliances -- contribute to grid flexibility.

The power grid also needs to expand to facilitate a renewable transition. Where the grid spans larger geographies and more electricity sources, it can even out the total output and variability of renewables. Electricity generated in Texas during the summer can then be used to power houses in snowy Minnesota during the winter. To achieve this scale, the IEA estimates that, between 2020 and 2030, around 16 million km of distribution and transmission lines need to be built, an increase of 80% compared with the past decade.

About

SPX Corporation (stock ticker: SPXC) supplies highly engineered infrastructure equipment and technologies. They operate in four markets: heating, ventilation, and air conditioning (HVAC), detection and measurement, power transmission and generation, and engineering solutions. Headquartered in Charlotte, North Carolina, SPX Corporation sells products in 100 countries.

SPXC's Role in Drawdown

SPC’s Engineered Solutions segment (p. 3) manufactures, installs and services transformers for the power transmission and distribution market as well as process cooling equipment for the industrial and power generation markets, primarily in North America. Typical customers for these products are publicly and privately held utilities.

In their engineered solutions segment, they offer medium and large power transformers and process cooling equipment which play a critical role in electricity transmission

Another important part of SPX’s business is their HVAC offerings. This segment sells package cooling towers, residential and commercial boilers, comfort heating, and ventilation products. In this segment, they serve a number of industrial, commercial and residential customers, and accounts for about 38% of SPX’s total revenue.

SPXC: What We Like

We’re encouraged by SPX’s long-standing sustainability reporting, evidenced by their sustainability reports that have been published annually since 2017.

On top of their reporting, they have a good track record of reducing their carbon footprint:

<::marker> Their scope 1 and 2 emissions combined have gone down by over 12% between 2018 and 2020. That’s a reduction of ~7,000 metric tons of GHG, equivalent to taking 1,500 passenger cars off the road for one year.

SPX’s Eden, North Carolina facility reduced propane usage by 86% in 2020 (p. 25) by replacing 46 propane-powered forklifts with 32 electric-powered forklifts

What We Want to See Improve

Switch to Renewable Energy Faster

From not using any renewable energy, SPX began using renewable electricity to account for 5% of total energy usage in 2020 (p. 29). We applaud this initial step in what we hope will be a continuing transition to zero-emission energy. But at the same time, their fossil oil usage went up significantly in the same time period. We urge SPX to accelerate their transition to renewables and aim to use 100% clean energy by the end of this decade.

Shift to Clean Banks

SPX Corporation has entered into credit agreements (p. 123) with several multinational banks that still overwhelmingly fund fossil fuel companies. These include Bank of America and Deutsche Bank. We urge SPX’s executives to turn to financial institutions committed to finance low-emissions sectors rather than those that perpetuate high-emitting industries.

Set a Zero-Emission Target

We’d like to commend SPX for their long-standing sustainability reporting track record. But what we still don’t see are clear targets for reducing direct and indirect emissions. A company of SPX’s size should be proactive enough to put forth aggressive targets for achieving zero emissions within the next decade and outline steps of how to achieve this goal.

Related Electrical Infrastructure Stocks in the Climate Index

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Allocated	Company	Description
4.34%	ABB Ltd (ABB)	ABB offers EV charging, solar and modular substations, distribution automation to expand the power grid. A larger grid can integrate more renewables
4.19%	Eaton Corporation plc (ETN)	Eaton offers electrical components, industrial components, power distribution for the electrical grid. Grid expansion is key for integrating renewables
1.08%	Quanta Services, Inc. (PWR)	Quanta offers engineering, construction and repair of electric grid infrastructure. Expanding the power grid is necessary for integrating more renewables
0.42%	MasTec, Inc. (MTZ)	MasTec builds the infrastructure that connects the US power generation to consumers. Expanding the grid is critical for integrating more renewables
0.42%	WESCO International, Inc. (WCC)	WESCO helps the power grid expand and adapt to a growing integration of clean energy. A key Drawdown solution for a more resilient and green grid
0.31%	Sunnova (NOVA)	Sunnova provides residential solar and energy storage systems in the United States. Both are critical for electrifying the energy system
0.17%	SPX Corporation (SPXC)	SPC makes transformers and cooling equipment for power generation and transmission - expanding the grid helps to integrate more renewable energy
0.03%	Willdan Group (WLDN)	Willdan helps utilities with new construction, improve efficiency, and demand response - all valuable in expanding and making the grid more resilient