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BFD Expert Voices - Climate Deals

BFD Expert Voices

A surge in electricity needed for data centers, clean tech manufacturing, and EVs is ratcheting up pressure on utilities, writes Katie.

Why it matters: The heavy demand is exposing the notorious weakness of U.S. utilities in their struggle to move quickly in meeting energy needs and also reduce carbon emissions.

Driving the news: Daniel Yergin, energy expert and vice chairman of S&P Global told Axios Generate's Ben Geman that he's concerned about the surge.

There's a "whole new outlook on electricity demand, and AI data centers [have] been a big driver of it," Yergin said. 

Zoom in: Yergin's comments follow a new report that found that in the next five years, the U.S. is projected to add 38,000 MW of electricity demand, which is like adding another California to the grid.

If not enough electricity capacity is built to support the draw, regions of the country could risk blackouts.

Last year at an event for utility PG&E, Tesla founder Elon Musk said: "My biggest concern is there's insufficient urgency and people just don't understand how much electricity demand there will be."

Zoom out: A big chunk of the electricity surge will fall on Southern states where tech companies are building AI-fueled data centers and energy companies are also building factories to make batteries, EVs and solar panels.

Utilities in states like North Carolina, Virginia and Georgia are now moving to add natural gas plants, which emit greenhouse gases, at a rapid clip, complicating the efforts to meet climate goals.

The changing climate itself is also contributing to the demand surge as more air conditioning is expected to be needed to help with hotter peak temperatures in the summers.

Big picture: The fraught energy transition will fall onto the shoulders of the thousands of utilities that operate across the U.S. and are regulated by utilities commissions.

Many utilities are ill-equipped to manage the electricity surge, combined with the rise of clean energy, the emergence of EVs and the need to hit climate goals.

Yes, but: In crisis there is business opportunity.

The electricity surge will shift the landscape to make technologies like virtual power plants more attractive.

What's next: Expect the fear of a lack of capacity to drive utility decisions and politics to jump in the fray.

1 big thing: Electricity surge

Illustration of America as a power strip with multiple electric sockets across the nation, there are a few plugs in sockets. 

Utility Constellation Energy said it's issuing a corporate green bond worth $900 million to fund its nuclear energy projects, Katie writes.

Why it matters: The market for sustainable bonds continues to grow and could help fund a resurgence in interest in U.S. nuclear power.

Zoom in: Constellation Energy described the bond as "the first corporate green bond in the United States that can be used to finance nuclear energy projects."

The Baltimore, Md.-based utility will use the proceeds to maintain, expand and extend the life of its nuclear power plants.

The company has the largest nuclear fleet in the U.S. and operates 21 reactors at 12 sites across the Midwest and eastern U.S.

Catch up quick: Sustainable bonds, which include green bonds, are debt instruments that use the proceeds to focus on activities or assets with a sustainable purpose.

Moody's predicts that there will be $950 billion in sustainable bond issuances globally in 2024.

Big picture: The new nuclear green bond shows the utility sector's renewed focus on maintaining aging nuclear power plants as a major part of carbon-free power.

Surging electricity demand is making nuclear's baseload power — energy that can be run 24/7 — particularly attractive.

2. The BFD: $900M green bond for nuclear

Illustration of a hardhat with an atom on the front.

Gov. Brian Kemp and Rivian CEO R.J. Scaringe reassured Georgians this week that the pause on construction of Rivian's $5 billion EV manufacturing facility east of Atlanta remains temporary, writes Thomas Wheatley in Axios Atlanta.

Why it matters: The Rivian plant, which state leaders attracted with a reported $1.5 billion in incentives, is one of the biggest economic development deals in Georgia's history with the promise of 7,500 new jobs.

The latest: In an interview published this week, Scaringe said the company's "number one objective" is to build and launch the R2 midsize SUV and turn a profit.

It's cheaper to achieve that objective at the company's existing facility in Illinois, he said.

What's next: When the R2 is ready for a larger rollout, Scaringe said, the Morgan County plant would handle the mass production.

No plans have been announced for the 1,800-acre megasite. Crews have already cleared and graded the land.

"There is no doubt here. We're under contract with them," Gov. Brian Kemp said earlier this week, according to Fox 5. "The state is in a really good place."

The state's contract with Rivian runs until 2030, Georgia's economic development commissioner Pat Wilson told state senators this week.

3. Rivian reaffirms $5B Georgia factory

an illustration of a one dollar bill with a lightning bolt cut out of the middle

✈️ It's a blade, it's a plane: Startup Radia launched out of stealth via the Wall Street Journal with its idea to build a massive plane called WindRunner that can transport the largest of wind blades.

The plan is the brainchild of Mark Lundstrom, a rocket scientist and Rhodes scholar, and has raised $104 million with a valuation of $1 billion.

Investors include oil firm ConocoPhillips and venture firms Caruso Ventures, Capital Factory and Good Growth Capital.

Former Energy Secretary Ernest Moniz is a member of the advisory board.

🚘 Nissan-Honda alliance: Honda and Nissan announced plans Friday to seek ways to work together on EVs, per WSJ.

Early discussions have centered on joint procurement and components development. Investors have reacted positively to the news.

☀️ What could go wrong: Congressional lawmakers have asked federal scientists to develop research plans to block the sun to slow climate change, per NYT.

The most discussed approach involves spraying particles into the upper bounds of the atmosphere to reflect sunlight. Sounds familiar!

💰 Fisker pauses production, to raise funds: Electric vehicle maker Fisker said it would stop production of its vehicle for six weeks and would seek to raise $150 million by selling convertible notes, Reuters reports.

Fisker reiterated to Reuters that it is in talks with "a large automaker for a potential transaction," but did not name the company.

4. Temperature check

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

• Partners for Growth, the Tiburon, Calif.-based lender, received a $266m investment in its latest venture debt fund from Jada Fund of Funds, a subsidiary of Saudi Arabia's Public Investment Fund. https://axios.link/4ahcdbb

• Westbound Equity Partners, a Menlo Park, Calif.-based VC firm targeting underrepresented founders, raised $100m for its second fund. https://axios.link/3wSUEj8

• Sealed, an NYC-based home energy efficiency startup, raised $30m led by Keyframe Capital, joined by Cyrus Capital, CityRock and Fifth Wall. The company is also pivoting from B2C to B2B to work with contractors on data services, project planning, and financing. https://axios.link/49QI4iV

• Mission Zero Technologies, a London-based DAC startup, raised a £21.8m Series A led by 2150, joined by World Fund, Fortescue, Siemens Financial Services, and Breakthrough Energy Ventures. https://axios.link/43op49g

• Suri, a UK-based manufacturer of more sustainable oral-hygiene products, raised a £6m Series A from JamJar, V3 Ventures, DMG ventures, and Hambro Perks. https://axios.link/3IETGcS

• MarineLabs, a Canadian maritime weather intelligence provider, raised a C$4.5m seed round led by BDC Capital, joined by Seaspan Shipyards. https://axios.link/3VkebU4

• Crosstown H2R, a Swiss startup developing tech to convert natural gas plants to run on hydrogen and other lower-carbon fuels, emerged from stealth with ~€2m in funding, per Tech.eu. https://axios.link/3vfq56Q

• Poseidona, a Spain-based startup converting invasive ocean algae into food, raised €1.1m led by Faber. https://axios.link/49TPEcP

• UK-based biomaterials developer Cellexcel raised ~£250k from College Green Ventures, New Anglia Capital, Low Carbon Innovation Fund, and Turquoise. https://axios.link/3VfAHxa

• Energy company TotalEnergies has acquired carbon capture and storage company Talos Low Carbon Solutions. https://axios.link/4aiBS3i

• Walmart announced a pilot with Unspun to explore how the Oakland startup's efficient 3D weaving tech can be used to make workwear pants under a Walmart house brand. https://axios.link/43eAGvv

• Rivian's EV platform was picked for Canada Post's new fleet of electric mail trucks, being built by Michigan-based truck maker Morgan Olson. https://axios.link/3IH2pLK

• rPlus Energies, a Salt Lake City-based renewables developer, quadrupled the planned size of a battery project for utility Rocky Mountain Power to 1,600 MWh of storage capacity, per Canary Media. https://axios.link/3TplJCj

• The billionaire founder of Vietnamese EV startup VinFast launched an EV charging stations company, V-Green, per Reuters. https://axios.link/4ckkVaf

• China's Longi Green Technology Energy, the world's largest solar manufacturer, is cutting roughly one-third of its staff citing oversupply and competition, per Bloomberg. https://axios.link/4aeUrp1

• Environmental groups concerned about the fate of a rare 2-inch toad have for now stopped Reno-based Ormat Technologies from developing a geothermal energy project in northern Nevada. https://axios.link/3vfvF9n

5. Hot deals

• Gil West has joined rental car company Hertz as its CEO. West was formerly chief operating officer of Delta Airlines.

• Tony Garzolini has joined solar company Sunpower as executive vice president and chief revenue officer. Garzolini was previously senior vice president of residential product sales for Generac Power Systems.

• David J. Hayes and Steve Cole have joined carbon removal startup Vaulted Deep's Board of Directors. Hayes is a lecturer at Stanford Law School and the Stanford Doerr School of Sustainability, and Cole previously served as President and CEO of biosolids recycling company Synagro.

• Derek Booth has joined energy management company GridPoint as Chief Customer Officer. Booth was formerly with Johnson Controls. Chris Ash and Kim Park also joined GridPoint.

6. It's personnel

🍀 We hope you slide down a rainbow and find your climate tech pot of gold.

What we're watching: CERAWeek kicks off in Houston this week, and Alan will be on the ground bringing you the latest.

👍🏻👎🏻 Katie's green pancakes were a hit, but her green mashed potatoes were a miss. 

🛫 Alan is on his way to CERAWeek in Houston. Want to meet? Or got questions you want answered while he's there? Let him know!

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

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

March 18, 2024

1 big thing: Electricity surge