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BFD Expert Voices - Climate Deals

BFD Expert Voices

The need to supply power-hungry data centers with low-carbon energy colored virtually every climate-tech conversation during the first two days of the CERAWeek energy conference in Houston, Alan reports.

Why it matters: The U.S. has suddenly entered a new age of energy scarcity, where companies will have to fight for the electrons they'll need to power their businesses.

Flashback: Two years ago, CERAWeek occurred on the heels of Russia's invasion of Ukraine — prompting a sudden new focus on energy security.

Last year was marked by uncertainty: markets had dramatically cooled, and the Biden administration hadn't yet implemented main provisions of the Inflation Reduction Act.

The latest: The bulk of the IRA is in place, climate technologies have matured even from last year — and data centers have brought new urgency to the green-energy build-out.

Slow and steady growth in energy demand has been replaced by a sudden spike in consumption, further compounded by electric vehicles and the move to "electrify everything."

"Every investor is talking about data centers," Tim Heidel, CEO of power line startup Veir, tells Axios.

"The urgency of demand growth is going to drive a ton of investment."

Big picture: Now investors want to know about bottlenecks.

In conference hallways, panels, and cocktail receptions, investors and founders say they're watching for any signal that Congress may finally speed permitting for the pipelines, transmission and other projects that would supply such electricity.

As colleague Nick Sobczyck reported Monday from D.C., don't hold your breath.

Meanwhile, funders and founders are paying attention to financing for first-of-a-kind energy projects.

Convincing a lender to bankroll a new type of factory remains a challenge. But investors tell Axios they're seeing movement behind closed doors, albeit slowly, as banks and businesses have gotten more familiar with various types of green tech.

Lastly, investors are watching corporations and utilities: a purchase order from a risk-averse Fortune 500 can signal that a sector or startup has evolved from risky venture investment to a mature-ish company.

"You're going to start seeing the more thoughtful companies coming in earlier to be able to access the energy they need," Michael Kearney, general partner at Engine Ventures, tells Alan.

1 big thing: What we're hearing at CERAWeek

A photo of conference goers talking and listening to a panel at the CERAweek energy conference in Houston.

The conference floor at CERAWeek in Houston. Photo: Alan Neuhauser/Axios

Dryad Networks closed on €5.6 million to sell its forest networking tech to more customers around the world, the company exclusively tells Katie.

The big picture: Climate change is leading to more intense and longer wildfire seasons, and massive wildfires are causing major destruction around the world.

Computing technology can play a key role in helping equip firefighting groups with tools to better manage wildfires.

Wildfires release carbon dioxide into the atmosphere, contributing to climate change.

How it works: Dryad builds out a mesh network of its fire-sniffing, solar-powered, AI-enabled nodes around a forest. Each node can be nailed directly onto a tree.

Dryad CEO Carsten Brinkschulte says a small pilot could typically use 400 of its nodes, while a large commercial deployment could use hundreds of thousands.

The nodes detect gases — hydrogen, carbon monoxide and volatile organic compounds — that are present in an early smoldering fire and alert customers to extinguish it.

Dryad has deployed 50 installations of its tech for pilot customers.

Zoom in: Berlin-based Dryad said the round included new investors from family offices and existing investors German chainsaw maker Stihl and Canadian mobile operator Telus.

The €5.6 million was convertible financing and is the initial close of a €10 million round.

The wildfire detection startup also plans to start raising a Series B round, with a target of between €15 million-€20 million, later this year.

State of play: Companies are beginning to use various IT tools like satellites, drones, cameras, and AI to try to tackle the surge in wildfires.

Rain equips autonomous aircraft with firefighting capability and leverages data from early fire- and lightning-detection systems.

Pano AI has installed over 100 projects using AI-powered cameras at fire lookouts.

OroraTech uses satellite thermal imaging to alert its customers of emerging wildfire risks around their assets.

What's next: Beyond wildfires, Dryad wants to use its forest networks to collect information about forest health, as well as create an audio node to listen for the sound of chainsaws or guns and detect poaching.

2. The BFD: Dryad's forest networks

Startup Dryad is building forest networks for early wildfire detection. Photo courtesy of Dryad

Monaire, which makes AI-enabled building management systems, raised a $3.5 million seed round to build out the product, the company tells Katie exclusively.

Why it matters: Inefficient HVAC and refrigeration systems in small commercial buildings are wasting energy and costing owners money.

Zoom in: Construct Capital led the round with participation by Workshop Ventures, Toast co-founder Steve Fredette, and A-Street co-founder Tom Kuo.

Co-founders Rahul Subramany and Nish Kanapilly previously were executives in the HVAC industry and noticed that the big suppliers were ignoring the small commercial building market made up by retailers like restaurants, gas stations and grocery stores.

Subramany says the tech has been installed at 150 locations, mostly across Wisconsin, and he plans to expand to Illinois, Minnesota and the New England area this year.

He also plans to use the funds to start offering customers energy-efficiency upgrades and associated financing, as well as ways to dispose of refrigerants, which can emit greenhouse gases.

How it works: Monaire installs its thermostat and sensor network in a customer's building and plugs it into the existing HVAC and refrigeration systems.

The company's AI can then analyze the heating and cooling data and act as an autonomous agent, monitoring it, detecting falls in efficiency and identifying fixes.

The Monaire system can automatically deploy a fix by changing the thermostat or contact a third-party technician to help if a repair is needed.

Big picture: Monaire is an example of how AI can be used to make an inefficient, mostly manual, system more efficient and smarter.

Startups and big companies are leveraging AI for all parts of the energy and climate sectors, from better weather predictions to detecting early wildfires to making data centers run more efficiently.

As the climate warms, the world will also be adding more cooling, says Subramany: "This entire process is not sustainable and we wanted to do something about it."

3. Funding for AI-powered HVAC

Illustration of a robot hand adjusting a thermostat.

📦 Drone delivery is here: Drones are already delivering goods in the U.S. in select neighborhoods near Dallas, Salt Lake City, Tampa and Phoenix, but the process needs streamlining, reports Axios' Joann Muller in What's Next.

Axios journalists tested out drone delivery services for two of Walmart's partner services, Wing and DroneUp, in the Dallas-Fort Worth area to see what drone delivery is like.

Conclusion: Amazing, but needs efficiency improvements.

🫸 The Anti-SEC campaign: House Republicans' new oversight campaign against the SEC's climate disclosure rule will add to the pressure the agency faces in the courts, Axios Pro Energy's Nick Sobczyk writes.

We're seeing the opening shots in what promises to be a lengthy fight on the Hill over the rule as court challenges play out.

In the Senate, Democrat Jon Tester is taking credit for stopping the SEC from finalizing its supply chain emissions disclosure requirement, known as Scope 3.

🚘 New EV efficiency metric: There's a new estimate for fuel-efficient EVs from the Biden administration that's supposed to better reflect real-world driving conditions and could drive more EV sales, reports Bloomberg.

The new metric is 29 kWh/gallon for model years 2030 and later, reduced from the 82 kilowatt-hours per gallon for model years 2024-2026. It will be phased in over time.

4. Temperature check

Illustration of a thermometer shaped like a smoke stack with smoke spewing out.

• Acre Venture Partners, the Santa Monica-based VC firm, raised $140m for its third fund, targeting ag- and food-tech startups, per AgFunder News. https://axios.link/3TKu5Vp

• P1 Ventures, an SF-based VC firm focused on African startups, raised $35m in a second close of its Fund II. https://axios.link/3Tq16pt

• Novocarbo, a German startup building "carbon removal parks" in Europe, raised €25m from Swen Capital Partners. https://axios.link/3TFhbsJ

• E-peas, a Belgian startup focused on energy harvesting tech, has raised €17.5m led by Otium Capital, joined by Nomainvest, EIC Fund, KBC Focus Fund, The Faktory, Wallonie Entreprendre, Noshaq-Leansquare, and Start.Invest. https://axios.link/4cguG9w

• Dronamics, a Bulgarian cargo drone service, received a €10m investment from the European Innovation Council. https://axios.link/3IR2IUd

• Montauk Climate, a climate tech startup incubator, launched with $8.5m in operating capital led by Amplo Founder Sheel Tyle. https://axios.link/3x6IymU

• Australian precision fermentation startup Cauldron has raised an A$9.5m (~$6.2m) Series A led by Horizons Ventures. https://axios.link/3THbWsE

• London-based Renovare Fuels, a NASA-backed biofuels developer, is raising £6m, per ESG Today. https://axios.link/43qFSfO

• Blixt, a Swedish maker of next-gen electricity infrastructure, has raised €5m in seed funding co-led by Union Square Ventures and Energy Revolution Ventures. https://axios.link/3IJ3eUo

• Automated Architecture, a UK-based robotic home construction startup, raised £2.6m in seed funding led by Miles Ahead, joined by Robotics & Automation Ventures, Rival Holdings, Morgan Stanley, Vandenbussche Group, and Bacchus Venture Capital. https://axios.link/3vjjCI3

• Enapi, a German software developer for the EV charging sector, raised €2.5m in pre-seed funding led by Project A Ventures, joined by Seedcamp and HelloWorld. https://axios.link/4a293bq

• Kyte, an on-demand car rental company based in San Francisco, secured $250m in debt via credit financing from Barclays Bank and Waterfall Asset Management. https://axios.link/4aix65O

• Solar developer Recurrent Energy, based in Austin, Texas, has acquired solar panel portfolio assets of 420 megawatts peak in southern Spain. https://axios.link/3TtaCbg

Enpal, the Berman home energy retrofit provider, secured a €1.1b debt vehicle from Barclays Europe, Bank of America and Credit Agricole CIB, per Sifted. https://axios.link/3x3D6kA

• Chemistry company Chemours, based in Wilmington, Del., has been awarded a $60m Department of Energy grant to develop membranes for hydrogen production and to make recycling tech for electrolyzers and fuel cells. https://axios.link/3PthRis

• Mad Capital, a Boulder-based financing provider, is raising $50m for a Perennial Fund II that would provide loans for U.S. farmers to transition to regenerative or organic agriculture. https://axios.link/4aiEvSA

• SAF maker World Energy, based in Boston, says it was invited to submit part two of the application for a $2b Department of Energy loan guarantee. https://axios.link/3IKXCZW

• Meatly, a UK-based lab-grown meat company, created what it says is the first canned pet food containing cultivated chicken. https://axios.link/3TIiwip

French firm Thales is opening what it says will be the world's first air traffic control site entirely powered by renewables, in the Atacama Desert in Chile, per Reuters. https://axios.link/49btaD6

• Geri Cupi is launching a "circular economy" fintech, Wingpay, shortly after shutting down the payments service he'd founded, Twig, which had raised £32m from investors before folding this year owing £15.4m, per Tech.eu. https://axios.link/3VmplHT

5. Hot deals

• Annie Liu has joined Mangrove Lithium as chief commercial & strategy officer. Liu was previously head of supply chain, battery and energy at Tesla. https://axios.link/3x6IH9W

• Paul Mulé has been promoted to chief financial officer of utility data company Arcadia. Mulé was previously senior vice president of corporate finance & corporate development. https://axios.link/4a21G3M 

6. It's personnel

🤔 Katie recently learned that dried camel dung is a source for energy. 

📕 Katie is planning on digging into Tom Steyer's "Cheaper, Faster Better: How We'll Win the Climate War" today. Any thoughts?

🛌 Alan's toddler has officially outgrown her travel crib. Alan and Terry have no idea what that means for their sleep while traveling.

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 CERAWeek attendees.

March 20, 2024

1 big thing: What we're hearing at CERAWeek