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BFD Expert Voices - Climate Deals

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Data: Wood Mackenzie ; Chart: Jared Whalen/Axios

New community solar projects to power local neighborhoods and businesses plummeted 16% last year as grid connection delays stretched ever longer.

Why it matters: That's a huge reversal from 2021 and the first real decline since community solar became a thing, Alan writes.

By the numbers: Developers brought about 1 GW of community solar projects online in 2022, per a report this week from Wood Mackenzie.

Catch up fast: Community solar projects enable local residents or businesses to subscribe to electricity generated offsite. The projects are typically less than 5 MW in capacity.

Context: Community solar saw relatively rapid growth since 2019 as policies encouraged more of these smaller projects.

New installations jumped 40% in 2020 and another 33% in 2021. Those are from small bases — but they underscore the magnitude of the decline last year.

What's happening: Renewables projects are getting hammered by years-long interconnection queues. Community solar is no exception.

The number of projects waiting to connect to the grid in 2021 exceeded the country's entire existing capacity.

That's driven a two-fold spike in grid connection costs for wind, solar and battery storage — and in some cases as much as 8x.

What we're watching: The experts at WoodMac say community solar will rebound — if grid operators and regulators clear the interconnection logjam.

"Some states have plans or proposals in place to help alleviate these backlogs, but there remains uncertainty around how and when we could see these clear up," the consulting firm tells Alan.

1 big thing: Grid logjams are crushing solar

BP this morning announced it's buying highway rest-stop operator TravelCenters of America for $1.3 billion cash, Alan writes.

Why it's the BFD: The move reflects BP's major move into the EV charging sector. 

Details: TravelCenters is being acquired by BP Products North America, a wholly owned indirect subsidiary of BP. 

The acquisition will add about 280 rest stops and truck stops to BP's portfolio.

Context: BP yesterday unveiled plans to invest $1 billion in U.S. EV charging  through 2030. 

Meanwhile, TravelCenters last month announced an agreement with Electrify America to install 1,000 chargers at 200 highway locations.

It invested in June in a $12 million Series A round for Xendee, a La Jolla, Calif.-based company installing EV fast-chargers at truck stops.

Be smart: Charging an EV can take anywhere from 20 minutes to an hour. That's plenty of time for drivers to spend money on rest-stop meals and retail.

2. The BFD: BP's big EV charging play

Illustration of an electric car charging pump with a dollar bill as the prong.

A steady stream of clean energy companies' public debuts is giving Tyler Lancaster hope, Megan writes.

Why he matters: Energize Ventures has roughly $1 billion AUM. It is still actively investing in middle-stage companies just as other investors have pulled back to focus on smaller early-stage deals amid the turbulent funding environment. 

This interview has been lightly edited for length and clarity.

What, in your view, has been the big story in clean energy/climate tech this week?

Nextracker’s oversubscribed IPO valued the company at $3.4 billion, or a 24x multiple of enterprise value to 2022 gross profit. This indicates that investor demand for solar “pick-and-shovel” technologies remains robust despite a continued challenging public market environment. 

We’re excited that the current generation of climate and energy software companies are finally reaching maturity and scale, surpassing hundreds of millions of annual recurring revenue with very strong gross margins (70%+). We’re seeing that in our own portfolio with the likes of Aurora Solar and Sitetracker. 

The next generation of climate technology companies approaching the public markets will be digital platforms that accelerate the deployment and optimize proven climate solutions like solar, batteries, EV chargers, etc. 

By contrast, what is not receiving the attention you feel it deserves?

Digital climate tools may not be as traditionally exciting, but they're helping accelerate commercially proven climate solutions in a major way. Climate software solutions like Monta, an electric vehicle charging management software, and Sourcemap, which helps ensure solar panels and battery minerals are ethically sourced, are making an impact today.

In three-ish words, what change would you make to clean energy/climate-tech investing?

Well-capitalized and at-scale sustainability firms are starting to use their balance sheets to pursue M&A of subscale companies. This is exciting as it shows our space is maturing and can support that investment strategy.

3. Expert voices: Energize Ventures' Tyler Lancaster

Photo Illustration of Tyler Lancaster of Energize Ventures with windmills and shapes

Photo Illustration: Natalie Peeples/Axios. Photo: Courtesy of Energize Ventures

⚡ $20+ million for electric powertrains: ZevX, a Gilbert, Ariz.-based manufacturer of electric power systems for commercial vehicles, closed a $20+ million tranche of funding led by Reynolds Capital.  

The company builds powertrains and battery management systems for electric trucks, with a particular eye toward fleets and franchises.

“We are very capital efficient. We don’t need to build a $5 billion plant to get things done,” CEO Don Listwin tells Alan.

🔋 LG investing $75 million in U.S. lithium: LG Chem is making a $75 million equity investment in Piedmont Lithium, the companies announced this morning.

The battery maker also agreed to offtake 200,000 metric tons of spodumene concentrate over the next four years.

Piedmont is based in Australia. It’s developing a lithium project in Gaston County, North Carolina.

🏛️ Biden gets a World Bank pick: The early exit of World Bank Group head David Malpass brings pressure from the White House and beyond for the bank to make climate change a central focus under his successor, Axios' Ben Geman and Hans Nichols report.

The bank and other multilateral development institutions are key sources of finance and expertise to help poor nations cut emissions and adapt to unavoidable harms.

4. 🌡️ Temperature check

Illustration of an earth emoji combined with a sick face emoji.

• ChargerHelp!, an EV industry operations, maintenance and workforce development startup, raised $17.5m in Series A financing led by Blue Bear Capital with participation from Aligned Climate Capital, Exelon Corporation, Energy Impact Partners and Non Sibi Ventures. https://axios.link/3xnuO3Z

• Dance, a German e-bike subscription service, raised €12m in equity and debt from insiders HV Capital, Eurazeo and BlueYard. https://axios.link/3XvD38x

• QiO Technologies, a U.K.-based software provider for business decarbonization, closed a $10m Series B led by Boston-based Wave Equity Partners. https://axios.link/3S3QvPT 

• Robigo, a Cambridge, Mass.-based precision crop protection developer, raised $6.85m in seed funding led by Congruent Ventures. Good Growth Capital and First Star Ventures participated. https://axios.link/3I9gX68 

• Funga, an Austin, Texas, developer of carbon removal solutions, raised $4m. Azolla Ventures led, and was joined by Trailhead Capital, Better Ventures and Shared Future Fund. https://axios.link/3YKUUK0

• Brookfield is seeking to buy the remaining 50% stake in Spanish renewable power company X-elio from KKR at up to a €2.5b enterprise value, per Expansion. https://axios.link/3lugWSD

• BlackRock Alternatives acquired a majority interest in Environmental 360 Solutions, an Ontario-based environmental management provider. https://axios.link/3EeEgKF 

• Lotus Infrastructure Partners, the Greenwich, Conn.-based firm fka Starwood Energy, launched a hydrogen transportation and storage arm it’s calling NeuVentus. https://axios.link/3YWbFSs 

• Verde Clean Fuels, a Houston-based syngas-to-gasoline supplier, completed its SPAC merger with Cenaq Energy and Bluescape Clean Fuels Intermediate Holdings. https://axios.link/3luJQSD 

• Ronn Motor Group, a Scottsdale, Ariz.-based hydrogen fuel cell manufacturer, canceled its planned Nasdaq IPO and instead announced a “reverse triangular merger” with Lee Pharmaceuticals, “an innovative company seeking pioneering technologies to further sustainability and other global initiatives.” https://axios.link/3XFb9XM 

• Altus Power, a Stamford, Conn.-based commercial-scale solar developer and operator, acquired ~220 MW of solar assets (207 MW operational, 13 MW under construction) from True Green Capital Fund III for ~$293m. https://axios.link/3S2PEz0 

• Athein, a Singapore-based IPP, is seeking to raise $1b in the next three years to develop solar and wind projects in Australia, India, the Philippines and Vietnam. https://axios.link/3It8egr

• Solar Mead, a joint project between Cemex, Sandia National Laboratories, and Synhelion, received $3.2m from the U.S. Department of Energy to replace fossil fuels with concentrated solar thermal energy in making cement clinker, an intermediary product in cement production. https://axios.link/3KhYg37 

• Gridmatic, a Cupertino, Calif.-based power marketer, entered a two-year 15 MW power purchase agreement with Avangrid, the Orange, Conn.-based energy provider, from Avangrid’s 120 MW Barton Chapel wind project in Jacksboro, Texas. https://axios.link/3XBZxor 

• Ameriflight, the Dallas-based cargo airline, signed an LOI to buy 35 VTOL air cargo drones from Sabrewing Aircraft, based in Oxnard, Calif. The aircraft can use sustainable aviation fuel. https://axios.link/3k3m288 

• Nuvve Holding, a San Diego-based V2G and electrification provider, and Circle K, the Canada-based convenience store chain, announced a joint effort to integrate grid services with EV chargers at 50 Circle K service stations and three to five storage sites in Norway and Denmark. https://axios.link/3I7j4r4 

• Sakuu, a San Jose-based developer of additive manufacturing for batteries, says it’s 3D-printed a functional battery. https://axios.link/3XzItj8 

• NaturalShrimp, a Dallas-based shrimp farmer, is beginning a prawn farm wastewater reduction trial in Mackay, Australia. https://axios.link/3IqgCxj 

• Costa Group, an Italy-based cruise operator and a part of Carnival Corporation, and Proman, a Swiss methanol producer, signed an MOU to incorporate methanol as a marine fuel. https://axios.link/3Kciueg 

• China Petroleum & Chemical opened what it says is China's first methanol-to-hydrogen and hydrogen refueling service station. https://axios.link/3I6ObmB 

5. Hot deals

• Commercial Metals, an Irving, Texas-based metals manufacturer and recycler, appointed Peter Matt as president, effective April 1. Matt succeeds Barbara Smith, who will remain chairman and CEO.  https://axios.link/3k5Sg2I 

• Ultra Safe Nuclear, the Seattle-based micro-reactor developer, hired Rosemary Yeremian VP, business development, Canada. Yeremian was previously VP of corporate strategy and business development at X-energy Canada. https://axios.link/3YAglh1 

• Pickering Energy Partners, a Houston-based financial services firm, hired Diego Kuschnir as managing director, investment banking. Kuschnir was previously global head and portfolio manager of Solanas Capital. https://axios.link/3S1oCbn 

• Assent, an Ottawa-based supply chain management provider with a focus on sustainability, hired Aaron Korsen as SVP of sales, North America. Korsen was previously SVP of sales at Mitek Solutions. https://axios.link/3lGPT6Q 

• Transat, the Quebec-based airline, hired Julie Lamontagne as chief people, sustainability and communications officer. Lamontagne was previously VP, talent and culture, at Enerkem. https://axios.link/3xq4Tsk

• Largo, a Toronto-based vanadium supplier and vanadium-based battery developer, announced that president and CEO Paulo Misk departed the company. Board member Daniel Tellechea was appointed interim CEO. https://axios.link/3KcMLtp 

6. It's personnel

Data: Marcom Capital Group; Chart: Axios Visuals

7. Chart o' the day

❄️ There's a dusting of snow on the mountains outside Megan's town, so Punxsutawney Phil was right about six more weeks of winter.

🦠 Alan's wife is sick. The kiddo is still a little sick. Alan is washing his hands about every 10 minutes. Send hand balm, please. 

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 solar subscribers.

February 16, 2023

1 big thing: Grid logjams are crushing solar