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BFD Expert Voices - Climate Deals

BFD Expert Voices

The number of planned small nuclear projects grew significantly over the last three years, according to a new report, writes Katie.

Why it matters: Companies and countries are turning to nuclear as a crucial carbon-free form of reliable power.

Catch up fast: Small modular reactors, or SMRs, can be built in factories and delivered to the project area quickly. In addition to speed, SMRs are meant to avoid the hefty cost overruns weighing on large nuclear.

Yes, but: There are currently no SMR projects that are operational. None are under construction, nor are any in advanced development phase. 

The sole projects in the development phase are in Canada from Ontario Power Generation and in Tennessee with TVA at its Clinch River site.

The vast majority of the SMR projects are in the announced or pre-development phase.

The canceled NuScale deal in November, which was going to be the first SMR in the U.S., was a blow to the sector.

Zoom in: The number of announced small modular nuclear projects hit 22 GW globally in the first quarter of 2024, up more than 65% from the 13 GW of capacity at the end of 2021, according to report by Wood Mackenzie.

That growth is being driven by supportive policies, particularly in Canada and the U.S., and growing interest in net zero power by both utilities and industrial companies like steel makers.

Long queues for transmission lines for solar and wind are also making next-gen nuclear an interesting option.

Data center operators like Amazon and Microsoft have increasingly been looking at nuclear.

Reality check: Sneaky costs have stymied deployment.

Developers need to work on the cost structure of SMR projects and make them "as predictable as possible," says David Brown, Wood Mac's director, Energy Transition Practice.

Construction costs have soared in recent years, partly due to inflation. Construction costs for the NuScale projects climbed from $5.3 billion to $9.3 billion.

Wood Mac says $176 billion will be required to get the current 22 GW of small modular reactor projects deployed.

What's next: While Canada and the U.S. remain the leaders in SMR projects, other European countries will likely be building SMR projects as well to meet net-zero goals.

We'll be watching to see if a data center operator signs an offtake agreement for an SMR project.

1 big thing: Big growth in small nuclear plans

Illustration of a hardhat with an atom on the front.

Natural gas production heavyweight EQT Corp. is buying the big pipeline player Equitrans Midstream Corp. for $5.5 billion in stock., the latest in a wave of multibillion-dollar deals sweeping the U.S. oil and gas sector, Ben Geman writes in Generate.

Why it's the BFD: Equitrans assets include majority ownership of the major Mountain Valley Pipeline project in West Virginia and Virginia.

Zoom in: Including debt, the deal carries an overall enterprise value of more than $35 billion.

EQT says the deal creates $250 million in annual synergies.

State of play: Creating the integrated company in the Appalachian Basin allows EQT to "thrive" amid gas price volatility, the companies said.

The intrigue: It reunites EQT with Equitrans, a company it spun off in 2018. 

Catch up quick: The North American industry is seeing a series of tie-ups spanning producers and pipeline companies

The latter includes Oneok's roughly $19 billion acquisition last year of Magellan Midstream Partners.

💭 Alan's thought bubble: Each of these gas deals is a multidecade investment, effectively locking in production for years to come. 

That's not great for emissions — but it also raises the hurdles for startups pursuing alternatives to natural gas, especially for industrial applications, where natural gas often remains the cheapest source of high-temperature heat or fuel. 

2. The BFD: Another big pipeline deal

Illustration of a giant pipe with a few bills coming out. 

🧩 Permitting, piece by piece: Congress will likely take steps to improve permitting "sector by sector," instead of pursuing a broad overhaul, Rep. Cathy McMorris Rodgers told Axios Pro's Jael Holzman last week.

"We're gonna negotiate on pipelines … we're continuing to have discussions and negotiate with my Senate colleagues on the nuclear package. That's probably more the approach it's going to be," the House Energy and Commerce chair, who isn't seeking another term, said.

🔌 Chargers are getting used more: The average utilization of a non-Tesla fast-charging station in the U.S. doubled to 18% last year, per a report from EV charging software developer Stable.

Fast-charging cords were plugged in for an average five hours every day — an indicator that more charging locations are finally turning a profit, per Bloomberg, which reported on the findings.

🛢️ Carbon-for-oil pipeline—maybe: Summit Carbon Solutions, a company aiming to build a giant pipeline to transport CO2 across the U.S., has said that it won't allow its project to supply oil drillers with carbon, who use the captured gas to produce more oil.

However, Reuters says that the company's documents and public statements tell a different story, showing that the company is open to such uses if there's interest from drillers.

Summit's CEO says the company's messaging has remained consistent, telling Reuters, "The front-end goal of this company is the ethanol industry and the sequestration of carbon, and it will be that until the market tells us to do anything different."

🔎 AI for nuclear regulatory process: A company called Atomic Canyon launched today with an AI product called Neutron that enables companies to search the 52 million pages of documents from the U.S. Nuclear Regulatory Commission.

Regulatory hurdles are one of the chief causes for the long timelines and high costs to deploy nuclear projects.

3. Temperature check

a box of matches that pictures a small outline of the earth and text that reads "Temperature Check"

• Up Partners, a Santa Monica-based firm targeting startups in transportation and logistics, is raising up to $230m for its second fund, per an SEC filing. https://axios.link/3TubLk7

• ProteinDistillery, a German biotech developing protein through biomass fermentation, raised a €15m seed round led by Berlin-based Green Generation Fund, joined by a German family office. https://axios.link/4a92pji

• Bene Bono, a French startup that resells aesthetically rejected products from supermarkets, raised €10m led by AVP, joined by 2050 and existing investors Stride.VC and Project A Ventures. https://axios.link/43c0qbH

• Umaro Foods, a Berkeley-based developer of seaweed-based bacon, raised $3.8m from Alexandria Ventures Investments, Climate Capital Bio, Ponderosa Ventures, and NBA point guard Chris Paul. https://axios.link/3PaUdak

• Suisom, a UK-based hydrogen generator developer, raised £3m from NPIF – Mercia Equity Finance. https://axios.link/49Jlmtl

• Niko, a Mexico City-based solar installation startup, raised a $3.3m in seed round led by Picus Capital and 468 Capital, per TC. https://axios.link/4a4Fhme

• Partners Group is considering a sale of VSB Group, a German renewables producer that could fetch up to $2b, including debt, per Reuters. https://axios.link/48I051G

• UK-based Winnow, a software developer for reducing food waste, received an undisclosed investment from Singapore-based ABC Impact. https://www.dealstreetasia.com/stories/abc-impact-winnow-386375

• Israeli EV startup REE Automotive raised ~$15m in an underwritten public offering of 2.3m Class A ordinary shares as it develops tech for electric and autonomous work trucks. https://axios.link/3VbOSDB

• Investors are pushing Zara parent Inditex to follow rivals H&M and Primark and publish its full list of suppliers so investors can assess potential supply chain risks, per Reuters. https://axios.link/3uVSfE1

• Xcel Energy, the Minneapolis-based utility, said that its equipment in Texas apparently contributed to the Smokehouse Creek Fire, the largest wildfire in Texas history. State investigators have said the fire was ignited by power lines. https://axios.link/3Iysvk6

• Illinois is allocating $680m to create a Fermentation and Agriculture Biomanufacturing Tech Hub. https://axios.link/43eImxH

• State oil companies Saudi Aramco and Abu Dhabi National Oil Company plan to extract lithium from brine in their oilfields, per Reuters. https://axios.link/3PiimM9

• GM resumed sales of its Chevy Blazer EV after pulling the vehicle due to software problems. https://axios.link/43adqyu

• EV startup Faraday Future recalled all 11 of the vehicles it made last year over faulty software related to an airbag warning light. https://axios.link/3Ta7bWY

• Rivian made a surprise reveal of two sporty compact SUVs, the R3 and performance R3X, in addition to the company's forthcoming two-row SUV, the R2. https://axios.link/3wOvClh

• Uber signed a charging partnership agreement with EV ride-hailing service and charging network provider Revel. https://axios.link/3v28TSn

• Uber also unveiled app features that give riders data on carbon dioxide emissions avoided, if they use electric vehicle and hybrid options, Ben Geman writes in Generate. https://axios.link/3vg3dnH

• Oscar Mayer parent Kraft Heinz is launching a plant-based hot dog, the "NotDog," with Chilean food-tech producer TheNotCompany. 🎶 My NotDog has a first name, it's o-s-c-ar…🎶 https://axios.link/3v4sTDS

4. Hot deals

• Rachel Teo joined Bayshore Global Management, the family office of Google co-founder Sergey Brin, to spearhead green investing, per Bloomberg. Teo was previously head of sustainability for GIC. https://axios.link/3wVHm5o

• Robert Zulkoski joined solar and EV charging developer iSun as CEO. Zulkoski is currently managing partner of Conduit Capital Holdings. https://axios.link/3T6fCTc

5. It's personnel

🌸 Welcome back! Hope you survived the spring forward. 

👀 What we're watching: We're fascinated by the idea of sector-by-sector permitting reform, in place of an elusive broad overhaul. Check out Temperature Check below for what that could look like.

🥱 Katie is looking forward to next week when the switch to daylight saving time is long behind us.

🙅 Alan is deeply opposed to this daylight saving farce. 

Thank you to Michael Flaherty and Chris Speckhard for today's edits.

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

March 11, 2024

1 big thing: Big growth in small nuclear plans