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BFD Expert Voices - Climate Deals

BFD Expert Voices

Finnish startup Steady Energy is developing a small nuclear reactor that it can pair with district heating systems for homes and industry, a novel concept that hasn't been commercialized before, Katie writes.

Why it matters: District heating is an efficient and popular way to heat buildings and factories in Europe, but most systems rely on fossil fuels.

Background: Steady Energy, which was spun out of Finland's research institution VTT, is developing the designs behind the concept as well as the small nuclear reactor, called the LDR-50.

The company is hoping to build a pilot plant (that won't yet run on nuclear) to test the concept over the next couple of years, followed by a first commercial plant by 2030.

How it works: District heating plants use a system of pipes to pump low-temperature heated water to be used for heating buildings and industrial facilities in cities or regions that can be as large as 20,000 to 30,000 people.

Common in Europe as well as in China and Russia, most district heating systems use fossil fuels like natural gas and even coal, though some in Europe are starting to use biomass or are paired with solar.

Such heating systems can be difficult to pair with intermittent clean energy like solar and wind, as heating for buildings usually needs to be delivered around the clock.

In Finland, nuclear energy is becoming increasingly popular as a way to help the country become independent from Russian natural gas and meet aggressive climate targets. In April, Finland's latest large (1.6 GW) nuclear power plant went online.

Of note: Steady Energy just raised €2 million (~$2.2 million) led by San Francisco-based Yes VC and Finnish investors Lifeline Ventures. VTT invested their intellectual property in the round.

Yes VC partner Jyri Engeström, who previously sold his mobile startup Jaiku to Google, led the Steady Energy deal. Yes VC is a seed venture firm created by web entrepreneurs, including Flickr co-founder Caterina Fake.

Steady Energy is "the only serious venture-backed effort to commercialize this technology," says Engeström, speaking from the city of Helsinki, which gets most of the heat for its homes and buildings from district heating.

Engeström, who's Finnish, says he's seriously looked at five or six nuclear deals as an investor, but saw the huge market potential for a technology like Steady Energy's, driven by Europe's new rush to get off of Russian gas.

Zoom in: Steady Energy CEO Tommi Nyman helped develop the reactor while at VTT and previously worked on Finland's Olkiluoto nuclear power plant, as well as at CERN on particle physics experiments.

Nyman said he's interested in using nuclear for district heating because "it's the simplest way of using nuclear for the climate problem." Nyman said Steady Energy's district heating system will eventually be cost competitive with heating systems that run on biomass in Europe.

What's next: Eventually the company will need to raise a lot more money to get its nuclear heating systems deployed and producing heat for cities.

The startup says its nuclear reactors could also be used to power desalination plants and produce steam for industrial applications.

Yes, but: Steady Energy's customers will be limited to regions that are pro-nuclear and willing to swap out gas for nuclear for central heating.

The global popularity of nuclear power has ebbed and flowed over the years, the most recent ebb following the nuclear disasters at Fukushima, Japan.

Given the low adoption of district heating and the relative freeze on nuclear plants in the U.S., this type of technology won't be coming to America any time soon.

1 big thing: Nuclear-powered heating

Illustration of empty store shelves with one glowing atom remaining.

Electric utility Duke Energy agreed to sell its commercial distributed-generation business to an affiliate of private equity giant ArcLight Capital Partners for $364 million, Alan writes.

Why it's the BFD: The nine-figure deal is the latest step by Duke to extricate itself from unregulated electricity markets.

Details: Duke will sell its commercial solar business, REC Solar. It had acquired a majority stake in the business in 2015.

It's also offloading fuel cell projects managed by Bloom Energy, the San Jose, Calif.-based fuel cell manufacturer and installer.

The portfolios amount to about 200 MW, a Duke spokesperson tells Alan.

Zoom in: Duke says it expects to make $259 million in the sale, which it anticipates closing this year.

The deal comes a few weeks after the Charlotte-based utility announced plans to sell a 3.4 GW portfolio of large or "utility-scale" solar, wind and battery storage projects to Brookfield Renewables for $2.8 billion including debt.

Between the lines: Duke's utility-scale and commercial-scale portfolios were in unregulated markets. The company says it's pivoting to focus on its regulated assets.

Catch up fast: In traditional "regulated" markets, utilities build power plants  and transmission lines, then pass the cost to customers in their electric bills. The process can be slow but brings predictable returns.

In unregulated markets, project developers and operators compete on cost —  promising potential bigger upside but possibly more risk.

State of play: Solar and wind have faced mounting  costs from supply-chain disruptions, trade disputes, grid-connection delays, labor shortages and inflation.

Project developers in the past two years have increasingly found themselves forced back to the negotiating table to revise power purchase contracts — an expensive  and time-consuming process.

2. The BFD: Duke offloads to ArcLight

Illustration of an electrical tower casting a dollar sign as a shadow.

Toyota says it's had a technology breakthrough around producing a solid-state battery, which will enable the Japanese auto giant to mass-produce these new batteries in electric vehicles in just four to five years, Katie writes.

Why it matters: Solid-state batteries have been the energy storage holy grail for years, and if a company can commercialize the technology soon it would help bring electric vehicles to the masses.

Driving the news: A battery expert at Toyota said the company has been able to simplify the production process of materials for new solid-state batteries, reported the Financial Times.

Toyota said the development will enable it to manufacture an electric vehicle that can have a range of 1,200 kilometers (745 miles) and can charge in 10 minutes or less by 2027 at the earliest.

Solid-state batteries use a solid polymer for the electrolyte and a lithium metal for the anode part of the battery.

The big picture: Toyota has been slower than rivals to transition to all-electric vehicles, and a key battery advancement could help the company compete.

It also could be seen as a Hail Mary effort, in an attempt to remain relevant as companies like Tesla scale up EV production dramatically.

Reality check: Solid-state batteries have been under development at both big battery makers and startups for years, and new battery technologies take a long time to achieve mass production.

Sony commercialized the first lithium-ion battery in 1991 and it's taken close to three decades for those batteries to get low-cost enough to power today's electric vehicle market.

Ergo, don't be surprised if Toyota misses its new timeline for its solid state batteries.

What's next: Meanwhile, automakers and battery manufacturers across the globe are investing billions of dollars into getting an edge in the race to electrify transportation.

3. Toyota touts solid-state battery breakthrough

Animated illustration of a charging battery stylied as a neon light.

The haves and have-nots of the EV world are coming into sharper focus in the summer haze, our colleague Ben Geman writes in Generate.

Driving the news: U.S. EV startup Rivian saw its shares pop Monday, after it reported higher than expected Q2 deliveries.

Market leader Tesla also saw its deliveries surge to a record Q2 and was also rewarded with a big market bounce.

China's BYD also posted record deliveries last quarter, tallying 700,244 per multiple reports, but that includes plug-in hybrids, not just full electrics.

Reality check: These U.S. companies are in very different places.

A consistently profitable Tesla delivered 466,140 EVs last quarter, while the younger Rivian tallied 12,640.

What we're watching: Going from startup to commercial-scale automaker is hard. Rivian will face continued challenges.

Meanwhile, Lordstown Motors went bankrupt last week.

Arrival, another EV startup, on Monday scrapped plans for a second SPAC merger. 

4. A split-screen summer for EV companies

🤖 Solar-powered robot farmers: An ex-Tesla engineer has unveiled autonomous, solar-powered robots that he and his co-founder say can sharply reduce the need for pesticides in farming.

Aigen, based in Kirkland, Wash., says its rolling robo-weeders can “work continuously for 12 to 14 hours at a time and never need to be plugged in,” per CNBC. “They can even run in the dark for about four hours, or six hours in light to moderate rain.”

🐔 Cultivated chicken, served warm: Diners at trendy SF restaurant Bar Crenn were served lab-grown chicken on Saturday, marking the first consumer sale of cultivated meat in the U.S., per producer Upside Foods.

The petri-dish poultry was “fried in a Recado Negro-infused tempura batter and accompanied by a burnt chili aioli,” and “garnished with edible flowers and greens.”

🥛 Mmm, synthetic whey beverage: The National Milk Producers Federation is calling on the FDA to strictly limit which dairy-like products can call themselves “milk.”

The trade group sent a letter last week to FDA commissioner Robert Califf, urging him to force certain non-dairy products to use the label “synthetic whey beverage.”

NMPF sent the letter shortly after lab-grown meat producers Upside Foods and Eat Just won federal sign-off to call their products “cell-cultivated chicken” — to the consternation of conventional meat producers.

🍔 Here come the electric grills: About 3% to 4% of Americans own an electric grill — but they’re about to become more popular as more people ditch fossil fuels to go green, per Canary Media.

“The look, and, more importantly, the taste are ​'the same as what you’d get from a gas grill,’” one enthusiastic owner told Canary. Alan gets it — but let him know when electric can draw comparisons to charcoal.

5. Temp Check

Illustration of a pattern of repeating thermometers with different temperature levels.

• Aptera Motors, the Carlsbad, Calif.-based developer of solar-powered EVs, is seeking to raise $20m, per an SEC filing. https://axios.link/46CNc98

• ADQ, the Abu Dhabi sovereign wealth fund, invested $20m in Indonesian aquatech eFishery’s Series D round. https://axios.link/3JFRZwX

• Bluu Seafood, a German cultivated fish developer, raised a €16m Series A led by LBBW and Sparkfood, a subsidiary of Portuguese food group Sonae, per Vegconomist. SeaX Ventures, Manta Ray, Norrsken VC, Delivery Hero Ventures, IFB Innovationsstarter, and Be8 Ventures participated. https://axios.link/3NY2DBA

• RoboDeck, an Israeli maker of deck maintenance robots, raised $2m in pre-seed funding. SOSV led, and was joined by Scalar Ventures and Etz-Ve-Etza. https://axios.link/3NX2Oxa

• NextEnergy Capital of London secured $480m in a first close for its fifth flagship fund, which is targeting $1.5b with a $2b hard cap. https://axios.link/43irapj

• Hidroelectrica, a Romanian energy producer, priced its local IPO at around $22.87 per share, which implies a $10.3b market cap. It's Europe's largest IPO of 2023 and the largest ever on the Bucharest Stock Exchange. https://axios.link/3PLZaYa

• Honeywell, the Charlotte, N.C.-based conglomerate, sold its interests in the Savannah River Nuclear Solutions joint venture to Fluor and Huntington Ingalls. https://axios.link/44eL2es

• Bunge, the St. Louis-based ag giant, and Chevron acquired Argentina-based seeds business Chacraservicios from Italy-based Adamant Group. https://axios.link/46Cp9aI

• Arrival, the London-based EV design and manufacturing company that went public in 2021 via a SPAC, canceled a subsequent SPAC merger with Kensington Capital Acquisition Corp. V. https://axios.link/3NBmyF1

• L Catterton sold Italian bicycle brand Pinarello to an undisclosed family office. https://axios.link/3pA2wTr

• Goldbeck Solar Group, the German renewables developer, closed a €44m debt facility with French fund manager Rgreen Invest to fund construction of four ground-mounted solar PV projects in Canada and Chile. https://axios.link/3JKhzRp

• Amazon began rolling out its Rivian electric delivery vans in Europe. The first vans arrived in Germany, joining electric vans from other manufacturers that Amazon has on the road there. https://axios.link/3PJjgCl

• Westinghouse Electric submitted vendor design review documents for its microreactor to the Canadian Nuclear Safety Commission. https://axios.link/3ri805R

• Houston-based Tallgrass entered an agreement with Korea Western Power to evaluate green hydrogen and ammonia production in South Korea. https://axios.link/449f4jV

• India is in talks to potentially supply 10m metric tons of green hydrogen to the EU in exchange for hydrogen production investment, per Reuters. https://axios.link/3XC9Uue

• Moolec, a U.K.-based alt proteins developer, unveiled a pink soybean containing up to 26.6% of pork protein — a product it’s calling “Piggy Sooy.” https://axios.link/3XC8m3o

6. Hot deals

• Mike Sweers has been promoted to EVP and chief technology officer of Toyota Motor North America. https://axios.link/44y2R8e

• Susan Elkington was promoted to SVP, electric vehicle supply, at Toyota Motor North America. https://axios.link/44y2R8e

• John Bitove was named board chair of Miami-based scooter company Bird. Bitove is the chairperson and founder of Bird Canada and founder of investment company Obelysk. https://axios.link/3ptVVKq

• Sarah O’Brien joined electric vehicle maker Rivian as its chief communications officer. O’Brien was previously at Meta. https://axios.link/43bLk4j

7. It's personnel

👋  Welcome back! Whether you had a four-day weekend, five-day weekend, or two-plus-one, we're happy to have you back.

🎆 Katie is grateful she got to enjoy some impressive fireworks in the suburbs this year.

🌭  Alan and Terry hosted neighbors for a barbecue before watching some neighborhood fireworks. It was fun, but they also learned a lesson: When hosting parents who also have children under 2 years old, takeout is the way to go.

Thank you to George Moriarty and Phoebe Neidl for today's edits.

And thank you for reading Climate Deals! Please share with your friends, family and fellow members of the Finnish Diplomatic Sauna Society.

July 05, 2023

1 big thing: Nuclear-powered heating