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BFD Expert Voices - Climate Deals

BFD Expert Voices

Data: Bain & Company; Chart: Baidi Wang/Axios

The electric vehicle charging sector is expected to see a 20x jump in profits by 2030, from about $300 million last year to more than $6 billion in the U.S. alone, Alan reports.

Why it matters: Cars may be fun, but the humble chargers that keep them running are set to be a huge revenue center. 

Driving the news: Potential profits from EV charging in the U.S., EU and China are expected to swell to nearly $14 billion by the end of the decade, per a report from Bain & Company. 

Zoom in: Among the biggest growth areas is what the consulting firm calls "next-generation smart energy services" — think vehicle-to-grid and vehicle-to-home EV charging.

"These services will become increasingly important as the volume of solar and wind energy grows because production is sporadic, and it is difficult to efficiently store irregular streams of electricity," the report says.

Context: By 2030, battery-electric vehicles are expected to account for 32% of all U.S. car sales, 40% in China and 55% in Europe.

The bottom line: There's a reason GM and Ford have announced big charging initiatives.

1 big thing: EV charging eyes record profits

The DOE's Loan Programs Office committed an additional $102.1 million to another battery project, through Syrah Technologies, just days after committing $2.5 billion in loans to a joint GM-LG battery project, Megan reports.

Why it's the BFD: Clearly, the DOE is willing to play a primary role to spur on lithium-ion battery production in the U.S. 

What's happening: The $102.1 million loan will fund the expansion of Syrah's Vidalia Facility, which produces graphite-based active anode material used in lithium-ion batteries.

Quick take: The LPO was instrumental in bringing down costs of materials for solar power during the Cleantech 1.0 boom, and seems poised to do so again for lithium-ion battery production.

The DOE is leaning heavily on the LPO to get several aspects of domestic battery production off the ground in the U.S., and companies are primed to take advantage of its tranche of available funds. 

The LPO has $15.1 billion in remaining loan authority from its Advanced Technology Vehicles Manufacturing program.

Though lower battery prices would help decrease overall EV manufacturing costs, it may not be enough to save some struggling EV makers.

What they're saying: “Securing critical materials, such as lithium and graphite, is essential to increasing domestic production of batteries to power the growing number of EVs on our roadways,” Energy Secretary Jennifer M. Granholm said in a statement.

“DOE’s investment in Syrah Vidalia builds on President Biden’s goals to secure our clean transportation future and grow the United States’ electric vehicle and advanced battery manufacturing workforce.” 

2. The BFD: DOE doubles down on battery production

Three batteries as the bars of a bar chart, each one increasing in height.

An emissions tracking company using satellites has spotted a surge in Chinese carbon dioxide emissions during July from the country's coal-fired power plants, Andrew Freedman writes for Axios Generate.

Why it matters: China is the top global emitter of greenhouse gases, and coal is the most carbon-intensive way to generate power.

Driving the news: The extreme heat in parts of China has made global headlines.

Temperatures in some areas have exceeded 104°F (40°C) in recent weeks, which has boosted the power demand for air conditioning.

The heat waves affected provinces including the manufacturing region of Zhejiang. Data from Kayrros, a French climate and energy analytics firm, shows emissions from coal-fired power there were higher than during the same month in the past three years.

Zoom in: China has been importing less European natural gas due to Russia's war in Ukraine, which has caused gas prices to skyrocket. Instead, power plants may be switching to coal, which is cheaper.

The bottom line: The heat wave and coal relationship would only worsen climate change.

"The consequences are unsustainable," Kayrros co-founder Antoine Rostand said in a statement.

3. Carbon tracking firm warns of Chinese coal use

Illustration of China's flag with pieces of coal replacing the stars.

😱 Bad news bears: The International Monetary Fund's new global economic outlook is a harrowing tour of big, overlapping energy and climate risks, our Generate colleague Ben Geman writes.

The report found energy prices have been among the major drivers of wider inflation, alongside higher food prices, which are also driven up partly by high energy input costs. 

Relatedly, energy and food price spikes are a conflict risk. The IMF notes the link between prices and "social stability" means that "further barriers to trade, or a poor harvest due to extreme heat and fertilizer shortages, risk causing further hardship, famine, or unrest."

4. 🌡️ Temperature check

Illustration of an earth in space covered in red and blue meteorological color lines.

• Blue Frontier, an air conditioning startup, raised $20m in a Series A equity round led by Bill Gates-founded Breakthrough Energy Ventures, 2150 Urban Tech Sustainability Fund and VoLo Earth Ventures. Blue Frontier’s commercialization partner, Modern Niagara, also participated in the funding round. Read here.

• Gravity Climate, a carbon tracking software company for shipping and logistics, raised $5m in seed funding from Eclipse Ventures. Read here.

• Broad Reach Power, a Houston energy storage company, secured $160m to develop 18 operating battery energy storage systems in Texas and one in California. Deutsche Bank AG, New York Branch and MUFG Bank Ltd. acted as coordinating lead arrangers and joint bookrunners for the financing. MUFG acted as administrative agent and Deutsche Bank Trust Company Americas acted as depositary bank and collateral agent. Read here.

• Ardian, Groupe Casino, Bpifrance and Tikehau Capital agreed to acquire a majority stake in GreenYellow, a French decentralized energy company. The transaction values the company at €1.4 billion (~$1.42b). Read here.

• Clearlake Capital Group acquired BBB Industries, a Daphne, Alabama-based manufacturer of non-discretionary automotive, industrial, energy storage and solar parts, from Genstar, which will retain a minority ownership stake. Read here.

• Athena Consumer Acquisition Corp. agreed to merge with Next.e.GO, a German urban electric vehicle company, at a $900m valuation. Read more.

• West Virginia American Water purchased water and wastewater system assets of Jefferson Utilities, Valley Water and Sewer Services, Shenandoah Junction Public Sewer and East Jefferson Sewer Services for $30 million. The combined systems serve 3,978 customer connections in Jefferson, Berkeley and Morgan counties. Read here. 

• Concentric, a power management group, acquired Industrial Power Products, a power distributor in the mid-South. Read here.

• Wex, a SMB fintech company, plans to acquire the Exxon Mobil Business Card program for an undisclosed amount. Read here.

• Spearmint Energy, a Miami energy storage company, acquired Revolution, a 150-MW battery energy storage project in West Texas, from Con Edison Development, a wholly owned subsidiary of Con Edison Clean Energy Businesses. Read here.

• Allego, a Dutch EV fast-charging network, expanded its existing €120m (~$122m) senior debt facility by an additional €50m (~$51m) through Société Générale, Kommunalkredit Austria and SCOR Investment Partners. The senior debt facility expires in May 2026. Read here.

• Cepsa, a sustainable energy company, and Ohmium International, a PEM electrolyzer maker, partnered to develop small scale hydrogen projects with up to 300 MW of installed hydrogen production capacity. Read here.

• NuScale partnered with National Technical Systems to develop a test chamber to mimic the range of environmental conditions under which NuScale equipment is required to function in order to meet U.S. Nuclear Regulatory Commission and plant-specific requirements. Read here.

• Rocket Lab, an aerospace company, partnered with Lockheed Martin to provide coverglass interconnected solar cells for three Lockheed Martin Next Gen OPIR GEO satellites used by the United States Space Force. Read here.

• UGI Utilities, a Pennsylvania natural gas and electric utility, agreed to purchase 331,785 MMBtu of renewable natural gas generated by Archaea annually from its Assai RNG facility for a fixed fee for five years. Read here.

5. Hot deals

• Ag-West Bio, Saskatchewan’s bioscience industry association, appointed three new members to its board: Jeff Bertholet, Gayle MacDonald and Tyler Lynch. Read here.

• ComEd hired Lewis “Louie” Binswanger as senior vice president of governmental and regulatory affairs, effective Aug. 15. Binswanger was previously vice president of external affairs for Nicor Gas. Read here.

• Northern Oil and Gas appointed William Kimble to its board of directors. Read here.

6. It's personnel

❗ Situational awareness: In a sudden reversal, Sen. Joe Manchin (D-W.Va.) announced his support late Wednesday for the Inflation Reduction Act.

Catch up quick: Our Axios Generate friends have the climate angles covered.  

🍝 Megan's appetite is still a bit out of whack after the hike, so there have been a lot of savory morning meals this week that often include last night's leftovers or leftover trail snacks. Who doesn't love pasta in the morning?

Thanks for reading Climate Deals! Please share with your friends, family and futures traders.

July 28, 2022

1 big thing: EV charging eyes record profits