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BFD Expert Voices - Climate Deals

BFD Expert Voices

A three-country nuclear energy coalition is investing $400 million to win federal sign-off and begin making components for at least 10 small modular reactors.

Why it matters: The nine-figure investment is another concrete milestone toward building a new nuclear energy supply chain in North America.

Driving the news: The Tennessee Valley Authority, Ontario Power Generation, and Poland's Synthos Green Energy said today that they've ordered a pressure vessel from BWXT for the first small modular reactor from GE Hitachi Nuclear Energy.

The vessel is a key reactor component that takes more time to build than most. It will likely be manufactured in Canada. GE Hitachi is based in North Carolina.

Meanwhile, the $400 million should be enough to achieve sign-off from nuclear regulators while putting the pressure vessel into production.

Of note: Canadian nuclear regulators are expected to give final design approval in 2025. U.S. sign-off is anticipated in 2026.

That would enable Ontario's first SMR to come online by 2028, and the TVA's reactor shortly thereafter.

Ontario Power Generation has ordered one reactor unit, but indicated it would order three 

What's next: The TVA, Ontario Power Generation and Synthos have announced plans to build 10 total SMRs.

The TVA envisions four reactors at its Clinch River site near Knoxville. It said this month it's considering as many as 30.

Zoom out: NuScale, the Oregon-based SMR developer, announced this month that it had started manufacturing reactor components. 

The company aims to bring its first reactor online in Idaho in 2029.

👀 What we're watching: Whether utilities Dominion Energy and Duke Energy make follow-on investment announcements with GE Hitachi. 

Dominion invested in GE Hitachi's SMR program in 2018. Duke has been in talks with the company.

1 big thing: Here come the first 10 small reactors

Illustration of a hardhat with an atom on the front.

Ford executives told analysts yesterday that the company's electric vehicles will likely lose about $3 billion this year, one year after its EVs posted another $2 billion in losses.

Why it's the BFD: Ford can absorb these kinds of losses, especially with its EV unit on track to turn profitable in 2026. But cash-strapped startups like Rivian and Lucid? Not so much.

What's happening: Ford's internal combustion and fleet-vehicle divisions generated $10 billion in adjusted operating income.

That more than makes up for the EV unit's losses, which mounted as Ford ramped up production amid inflation, commodities volatility and ongoing supply chain challenges.

The intrigue: Some analysts had urged Ford to entirely spin off its EV division. Yesterday's financial results suggest that keeping EVs in-house instead was a wise one.

Zoom in: It's tough out there for EV-only automakers. 

Arrival, Canoo, Faraday Future, Fisker, Lightning, Lordstown, Lucid, Mullen, Nikola, Polestar and Rivian are just, ahem, a handful of the pure-play manufacturers struggling to stay afloat.

Indeed, Ford offloaded its Rivian stake in February. 

2. The BFD: Brushing off $5B in losses

Illustration of Benjamin Franklin in a car's rear view mirror, with a dollar-symbol air freshener.

Founders often prioritize scale. Eli Aheto tells Alan he thinks more about market size — not company size. "A relentless focus on unit economics and disciplined overhead will lead to a profitable business that attracts investors." 

Why he matters: Aheto is managing director with BeyondNetZero, the $3.5 billion climate venture fund from private equity giant General Atlantic.

This interview was lightly edited for length.

What, in your view, was the big story in climate tech this week?

The IPCC report Monday. Not surprisingly, it highlighted the lack of progress toward the emissions reductions goals aligned with 1.5-degree temperature rise.

By being slow to deploy technologies that underpin near-term decarbonization, we are subjecting consumers to higher energy costs over the next decade. We are missing climate targets at a cost to consumers that grows every year. 

The fact that solar, wind and EVs in most markets are cost-competitive should catalyze action to mitigate emissions. The transition from green premiums to lower cost/volatility is the real catalyst for our portfolio companies.

Countries are evaluating opportunities to create new industries and employment and reduce dependencies. 

The IRA gets all the attention given the size of the U.S. market, but other  non-EU countries are also creating the legislative support to drive priorities tied to climate.

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

💼 First job: IT support team at Constitution Reinsurance Corp.

👑 Proudest investment: A transmission line between Montana and Alberta that enabled thousands of megawatts of wind. It was sold to a large utility and then to a Berkshire Hathaway portfolio company. So I can say I saw the opportunity about a decade before Warren Buffett! Warren, I have some other ideas for you.

🤦 Facepalm investment: A small personal investment in a friend’s comedy movie project.

3. Expert Voices: Eli Aheto of BeyondNetZero

photo illustration of Eli Aheto of BeyondNetZero surrounded by squares overlaid on a photo of a hilly landscape

Photo illustration: Tiffany Herring/Axios; Photo: Courtesy of General Atlantic

🏦 Stifel scoops up SVB talent: Stifel Financial this morning announced it's hired Matt Trotter, former head of frontier technologies and climate technology and sustainability at Silicon Valley Bank. (And a frequent voice in Climate Deals.)

The St. Louis-based private equity firm also recruited Jake Moseley, SVB's former head of relationship management technology banking, and Ted Wilson, who was SVB's head of enterprise software.

🧟 Crowdfunding human composting: Recompose, a Seattle-based funeral home working to make burial more sustainable, launched a $5 million crowdfunding campaign, our What's Next colleague Alex Fitzpatrick reports. 

The startup turns human remains into soil that can then be used in a  garden or forest — with permission, where necessary. (Alan would opt for this. Though he'll also start getting concerned if these crowdfunding donations have his name on them.)

👀 Big week next week for EVs: The Treasury Department will release specifics on how it will implement tax credits for buying electric cars, E&E News reports.

Treasury's interpretation of the complex incentives will help determine which vehicles qualify. That has implications for overall sales and  specific automakers. 

💰 A potential EU sovereign fund: Europe's economic commissioner yesterday re-upped the idea of a European Sovereignty Fund to finance clean tech projects. 

"Rather than transfer money from stronger EU economies to weaker ones, it could pay for joint EU projects that are equally important to all, like clean hydrogen," Reuters reports, citing the commissioner.

4. 🌡️ Temperature check

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

• Lun, a Danish maker of electric heat pumps, raised €10.3m in seed funding from Norrsken VC, Partech, Lowercarbon Capital, MCJ Collective and Fundamental. https://axios.link/3TEl6o6

• OneThird, a Dutch food-waste reduction startup, raised a $3m late-seed round led by Dutch-based impact investor Pymwymic. Existing investors Halma Ventures Limited, Shift Invest and Oost NL participated. https://axios.link/40vOTkY

• CollectiveCrunch, a Finnish forest and carbon credits management provider, raised €1.4m led by existing investor Nidoco AB. https://axios.link/3FMjcfv

• EQT Growth invested €100m in IntegrityNext, a Munich-based supply chain compliance and transparency software provider. https://axios.link/3yXL6kT

• BP is considering acquiring the remaining 50% stake in its Lightsource BP solar power joint venture, a deal that would value Lightsource's portfolio at about $2b. per Reuters. https://axios.link/3LMepOS

BP acquired a 43% interest in Lightsource for $200m in 2017. It upped its stake to 50% two years later.

• Sembcorp Industries of Singapore is seeking a buyer for its waste management unit, which could fetch up to $700m, per Bloomberg. https://axios.link/3yWqCJa

• KBR, the Houston-based engineering company, acquired Acetica, an acetic acid production technology developer for CO2 utilization. https://axios.link/42DwTab

• EnBW, the German utility, committed €2.4b to build its 960 MW He Dreiht offshore wind farm, per Reuters. Investors include Norway's sovereign wealth fund. https://axios.link/42BXzbm

• Albemarle, the Charlotte-based minerals company, announced plans to locate its previously announced $1.3b+ lithium hydroxide in Chester County, S.C. https://axios.link/3K2Om4G

• Qcells and Hanwha Advanced Materials Georgia announced another $147m investment to add advanced materials manufacturing in Bartow County, Ga. https://axios.link/3LMYUX6

• The Philadelphia Energy Authority, Nuveen Green Capital, and Southern Land Co. closed on $40m in C-PACE financing for a 329-unit multifamily property in Philadelphia. https://axios.link/3z2OLOq

• Enel North America, the Andover, Massachusetts-based renewables developer and operator, signed a tax equity investment agreement with Nestlé for Enel’s 208 MW solar-plus-storage project in Jackson County, Texas. https://axios.link/3Ziwk2Y

• Rain Enhancement Technologies, a rainfall generation tech developer, and Discovery Land, a private club developer and operator, announced an arrangement to deploy ground-based ionization rainfall generation tech on at least three Discovery properties. https://axios.link/3LHSzft

• Ubiquitous Energy, a developer of transparent solar tech for architectural glass, was invited to submit Part II of its application to the U.S. Department of Energy's Title XVII Loan Guarantee Program. https://axios.link/42x1EOa

• Archer Aviation and United Airlines announced their first planned air taxi route in Chicago, between O’Hare International Airport and Vertiport Chicago in the Illinois Medical District near the Chicago Loop. https://axios.link/3TEWMSR

• Electreon, the Israeli wireless charging developer, signed a joint development agreement with Toyota Motor and Denso. https://axios.link/3nfsTg0

• Alaska Airlines expanded its SAF supply agreement with Shell Aviation. https://axios.link/3K0Xl6j

• Electriq Power, a West Palm Beach, Florida-based energy storage and management provider for homes and small businesses, entered into an undisclosed "multi-year agreement with a major U.S. clean-energy company." https://axios.link/3niBqyU

• BHP, the engineering and professional services firm, and Hatch, a developer of electric smelting tech, signed an agreement to jointly design an electric smelting furnace pilot plant in Australia for decarbonized steel production. https://axios.link/3ZeFJIy

• WiTricity, the Watertown, Massachusetts-based wireless charging developer, and ABT e-Line, a German aftermarket automotive company, announced a collaboration to upgrade VW ID.4 electric SUVs in Europe with wireless charging capabilities. https://axios.link/3LKqHaj

• Lyte Aviation, a London-based developer of electrified vertical takeoff and landing aircraft, unveiled renderings of its cargo and 40-seat passenger vehicles. https://axios.link/42xzvGI

5. Hot deals

• Carbon Removal Canada hired Na'im Merchant as executive director. Merchant was founder and managing director of consulting firm Carbon Curve and editor of its newsletter and podcast. https://axios.link/42C5aXq

• Ionblox, a Fremont, Californoa-based lithium-ion tech developer, appointed Shirley Meng to its advisory board. Meng is professor of molecular engineering at the University of Chicago and chief scientist for the Argonne Collaborative Center for Energy Storage Science. https://axios.link/3JZqC1q

6. It's personnel

🥶 Ah, yes, March weather in Chicago. This is why Megan moved away in the first place. 

🌭 Entirely unrelated to climate, Alan is midway through "Last Stand of the Hot Dog King" in Grub Street. Give it a read.

Thanks to Michael Flaherty and Jay Bennett for today's edits.

And thank you for reading Climate Deals! Please share with your friends, family and anyone brave enough to outlast a Chicago winter.

March 23, 2023

1 big thing: Here come the first 10 small reactors