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BFD Expert Voices - Climate Deals

BFD Expert Voices

Wind energy manufacturers are being hit by high costs, supply chain constraints and turbine breakdowns, Alan reports.

Why it matters: The challenges are forcing layoffs at the biggest turbine makers and dragging down quarterly earnings.

Driving the news: GE this morning reported that its renewable energy division saw revenue drop 19% in Q4, even as the rest of the company was profitable. 

The bulk of the pain was concentrated in GE's wind energy business, which is among the largest manufacturers of wind turbines and blades. 

GE's wind power struggles came amid a slowdown in new U.S. wind projects last year, per Deloitte's annual renewable energy outlook.

Zoom in: The company has reportedly been hemorrhaging money through warranty payments for unreliable turbines.

These include blade failures and tower collapses.

Of note: GE in October planned to layoff about 20% of its onshore wind workforce. 

State of play: The problems may be especially pronounced at GE. But the company isn't alone.

Siemens Gamesa in September said it would cut about 2,900 jobs and issued a series of profit warnings. 

Vestas, another major supplier to the U.S. market, saw its profits and orders tumble last year.

Both companies have run into their own quality-control challenges as they've raced to develop larger, more powerful turbines.

What's next: Incentives in the Inflation Reduction Act will give a moderate boost to manufacturers, per a Wood Mackenzie report last week.

But wind is expected to see slow growth this year, with its market share in the U.S. remaining flat at 11%-12% through 2024, the U.S. Energy Information Administration projected last week.

1 big thing: Tough weather for wind manufacturers

Illustration of a wind turbine with one broken blade.

TAE Technologies, a nuclear fusion developer, has spun off its power management division, the company tells Alan. 

Why it's the BFD: The move allows the parent company to focus on its fusion, and the new entity to focus on its battery technology for vehicles and renewable storage facilities. 

What's happening: Privately run TAE Technologies said it has created TAE Power Solutions as a wholly owned subsidiary, a company that aims to improve renewable battery life.

As part of the spinoff, TAE Power Solutions has made two acquisitions: The company has purchased Sprint Power, a U.K.-based vehicle electrification provider, and Eltrium, a U.K.-based manufacturer of systems for energy storage and power distribution.

Kedar Munipella, previously a senior executive at Applied Materials, is the CEO of the new company. 

What they're saying: "We’re solving the same problem in both those markets: Where and how do you manage and distribute power?" Munipella tells Alan.

Between the lines: It'll be years before fusion companies begin earning revenue from their nuclear energy projects. The power solutions spinoff opens up a new revenue stream at a company that would otherwise have to wait years before fusion development pays off. 

"When I think about power solutions versus fusion, the timelines are very, very different. In terms of power solutions, the revenue generation opportunities are, if not immediate, more near term, " Munipella says.

Of note: TAE Power says that the two acquisitions give the newly independent company access to important projects, including a consortium with BMW developing advanced batteries. 

2. The BFD: Fusion spinoff

Illustration of an atom with a coin as the nucleus. 

Tyba, a startup that makes predictive models for solar and storage projects, raised $2.25 million in seed funding, the company tells Megan.

Why it matters: Tyba's raise, which CEO Michael Baker calls "unlucky" in its initial timing, comes as more investors eye the growing ecosystem around energy storage and battery technology as a key element of the energy transition. 

Details: Powerhouse Ventures and Wireframe Ventures co-led the entirely-equity round but did not receive board seats as part of the deal because the company hasn't formed a board yet, Baker tells Megan.

Lorimer Ventures, MKT1 Capital and Virta Ventures also participated in the round, which closed in November. Baker declined to share the company's valuation following the raise.

How it works: Tyba's software models solar production, energy storage dispatches and price data to predict a project's overall value once complete.

It compares different solar panel models or battery technologies, as well as nuances of developing projects in specific areas, and calculates how each project can produce the most high-value energy at the lowest cost to developers and project investors.

Tyba sells its software to renewable energy developers, independent power producers and asset managers financing the projects.

Zoom out: Energy storage is a key part of the renewable energy transition to help ease energy demand when generation from solar or wind dips low.

Most project developers are comfortable making decisions about the different types of solar panel technology, Baker says, but are most interested in testing out different types of energy storage using Tyba's software.

3. Solar project software maker raises $2.25M

🟢 NuScale gets the green light: The Nuclear Regulatory Commission last week certified the design of NuScale's 50 MW power modular — making it the first small modular reactor design to get approved in the U.S. 

It's the "ultimate U.S. regulatory hurdle," Eric Wesoff wrote yesterday in Canary Media. 

"Utilities can now reference NuScale’s small modular reactor design when applying for a license to build and operate a reactor."

🤖 AI and the climate crisis: If you see climate as largely a tech problem, AI is cause for optimism. 

That's one conclusion from UC-Berkeley resource economist James Sallee, whose recent blog post was spotlighted by our colleague Ben Geman in Generate. 

"If, on the other hand, you view the climate struggle as a pitched battle  between partisans, you may well come to a different, darker view," Salee writes.

🚚 Tesla's new truck factory: Tesla will reveal plans today for a $3.5 billion Nevada plant to manufacture the electric automaker's semi-truck, Ben also writes.

Details are light — including how this may affect previously announced plans to build the truck in Texas. 

🚋  A streetcar named no-thank-you: Billionaire Warren Buffett is wading into local politics, opposing a $306 million plan to build a streetcar system in Omaha.

"America is in the midst of a streetcar boom," the NYT writes. Buffet argues that the system is too expensive and inflexible.

4. 🌡️ Temperature check

Illustration of the sand from a sand timer filling the temperature scale on a thermometer.

• The Ish Company, a Rockland, Del.-based producer of plant-based food — including plant-based shrimp — closed a $5m seed round led by Acceler8. Stray Dog Capital participated. https://axios.link/3j3Aa0G 

• Vikasa SPAC Series I Acquisition Corp., a SPAC led by Energy Metals Fund CEO Ajit Kumar, withdrew registration for a $200m IPO. https://axios.link/3HrONUK

• Pegasus Digital Mobility Acquisition, a blank-check company focused on next-generation mobility, paid $2.25m to a trust account maintained with Continental Stock Transfer & Trust for a three-month extension period. https://axios.link/3iUsVbu 

• iSun, a Williston, Vt.-based solar developer, is developing a 16 MW portfolio of community solar projects in Maine that the company says are valued at ~$16.1m. https://axios.link/3XUFoup 

• Citroniq Chemicals, a Houston-based supplier of what it calls carbon-negative materials, and Mitsui Plastics, a plastics distributor with a U.S. office in White Plains, N.Y., executed an LOI for a large-scale supply agreement for sustainable polypropylene. https://axios.link/3kFqgCX 

• Element Resources, a Houston-based hydrogen production company, announced plans to build a renewable hydrogen production facility in Lancaster, Calif. https://axios.link/3hgazRl

• Statevolt, an aspiring LA-based battery manufacturer, acquired a 135-acre site in Imperial Valley, Calif., for its planned 54 GWh battery factory, with a reported expected capex of $4b. https://axios.link/3iXdlvJ

• Invenergy, the Chicago-based developer, entered a wholesale power supply agreement with Colorado’s Core Electric Cooperative to provide 1.2 TWh of renewable energy per year, including ~400 MW of new solar and wind energy projects, 100 MW of battery storage, and ~300 MW of existing natural gas. https://axios.link/3Hvg3lz 

• CNX Resources, a Canonsburg, Pa.-based natural gas company, is working on a waste-heat-to-energy pilot project in West Virginia with Ice Thermal Harvesting, a Houston-based developer of waste-heat-to-energy tech. https://axios.link/3woZEsz 

• Advanced Power, a Swiss renewables developer, announced that its 140 MW Cutlass Solar project in Texas entered full commercial operation. Advanced Power will remain the facility's asset manager; Solv Energy is its operator. https://axios.link/3J8peJO 

• Raven SR, the Pinedale, Wyo.-based waste-to-fuels developer, and H3 Dynamics, a Pflugerville, Texas-based developer of hydrogen propulsion systems for aircraft, signed an MOU to collaborate on waste-to-hydrogen energy systems to decarbonize airport operations. https://axios.link/3DcdpP7 

• Climavision, a Louisville-based weather data provider, is collaborating on sales and marketing in the Mideast with MeteoWeather, a Dubai-based weather intelligence provider. https://axios.link/3worO6X 

• The Offshore Wind Innovation Hub, a three-year program in Brooklyn backed by Equinor and BP, is seeking applications for startups developing innovations in offshore wind. https://axios.link/3XKEh0m 

• Venture For ClimateTech, a nonprofit venture studio and accelerator, announced that its third cohort is open for applications for early-stage climate tech concepts and startups. https://axios.link/3wowvNY 

Venture For ClimateTech is also offering an additional $10k fellowship to two Black and/or Latinx founders accepted into the accelerator, as well as a paid part-time apprenticeship for a climate tech founder who hasn’t yet launched a company. 

• CrossWind, a joint venture between Shell and Eneco, selected Ballard Power Systems, the Canadian fuel cell manufacturer, to supply a 1 MW fuel cell system for the 759 MW Hollandse Kust Noord offshore wind project off the coast of the Netherlands. https://axios.link/3kGYiXz

• The European spinout of Covanta, a Morristown, N.J.-based waste services provider, has launched as Encyclis, a waste-to-energy provider. It’s owned by EQT Infrastructure. https://axios.link/3XProCN 

• Cypress Development, a Canadian lithium miner that owns the Clayton Valley Lithium Project in Nevada, rebranded as Century Lithium. https://axios.link/3R1D1nc 

5. Hot deals

• Carbon America, the Arvada, Colo.-based CCS developer, hired Cruz Gamboa as chief commercial and financial officer and Craig Spreadbury as COO. Gamboa was previously  decarbonization leader for the Americas at GE Vernova; Spreadbury was previously COO at Four Corners Petroleum. https://axios.link/3WDKqKG 

• i(x) Net Zero, a U.K.-based investment firm, appointed chief investment officer Pär Lindström as CEO. Lindström succeeds Steve Oyer, who has stepped down effective immediately. https://axios.link/3XUUHmY 

• Covanta, the Morristown, N.J.-based waste services provider, appointed Sue Klug to its board of directors. Klug was previously EVP and CMO of Republic Services. https://axios.link/3R51Cre 

• Argonne National Laboratory, the U.S. Department of Energy research lab in Lemont, Ill., named Robyn Wheeler Grange as its first director of its Office of Community Engagement. Grange was previously head of state, local and regional public affairs and outreach. https://axios.link/3H4Mnu7

6. It's personnel

🍳 Megan hit the jackpot — her neighbor is giving away chicken eggs for free. Good luck in this economy?!

🥾 There was finally some significant snowfall last night in Boston. Alan belatedly realized he's in need of some boots. 

Thanks to Michael Flaherty and Phoebe Neidl for today's edits.

And thank you for reading Climate Deals! Please share with your friends, family and exterior designers.

January 24, 2023

1 big thing: Tough weather for wind manufacturers