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BFD Expert Voices - Climate Deals

BFD Expert Voices

Long-duration battery developer Form Energy has started meeting with investors as it prepares to raise up to $500 million this year, three sources familiar with the plans tell Alan.

Why it matters: Form Energy says it's developed an inexpensive battery that can put energy onto the grid for days at a time, a capability that would be a linchpin of the clean energy transition.

Catch up fast: Form Energy is among the buzziest startups in climate tech.

Its "iron air" battery can provide over four days of energy, a capability that's eluded expensive short-term chemistries like lithium-ion.

The breakthrough means Form Energy can fill the gaps created by intermittent wind and solar farms, displacing coal and natural gas plants to create truly zero-emissions grids.

The latest: Form Energy plans to begin raising a Series F in Q2 or Q3, sources tell Axios.

The startup is telling potential investors that this round will put the company on a path to break-even.

It's building its first two factories outside Pittsburgh: one in Weirton, W.Va, expected to start production this spring, the other in Eighty Four, Pa.

Between the lines: The round represents the impact of the IPO window being closed, sources tell Axios.

If public markets were more receptive to public offerings, Form Energy likely would have pursued an IPO instead of seeking this amount of cash through private investment.

Of note: Form Energy declined to comment.

The company previously raised $450 million in October 2022, reportedly at a $2 billion post-money valuation, per PitchBook.

TPG led the round, joined by GIC, CPP Investments, steel maker ArcelorMittal and Bill Gates-backed Breakthrough Energy Ventures.

How it works: Form Energy's battery "breathes" in oxygen to convert iron to rust, dispatching an electrical charge. It then recharges by "exhaling" the oxygen, converting the rust back to iron.

1 big scoop: Form eyes $500M round

an illustration of an industrial battery surrounded by shapes and cutouts of money 

Private equity firms KKR and EIG are investing $1 billion into solar and battery developer Avantus, writes Katie.

Why it's the BFD: Solar had a record year in 2023, accounting for over half of all new electric capacity added to U.S. grids, and investors are increasingly backing companies and projects.

Zoom in: KKR will acquire a majority stake in Avantus and following the close of the deal, KKR and EIG will be the sole shareholders.

EIG was also previously an investor in the company.

Catch up quick: Los Angeles-based Avantus — founded in 2009 and formerly called 8minute Solar Energy — was an early utility-scale solar developer.

To date, it's developed 6.5 gigawatts of solar and 6.3 gigawatt hours of battery projects and says it has a total pipeline of 30 gigawatts of solar and 94 gigawatt hours of battery storage.

KKR has been raising a $7 billion climate fund to invest in energy transition companies and technologies.

Last year KKR backed British EV fleet and energy storage developer Zenobē with $750 million.

Big picture: Private equity firms are looking to use their big funds to invest in mature climate tech projects with no technology risk like solar and batteries.

BlackRock acquired Global Infrastructure Partners to expand its investments in large sustainability assets like solar, and is also backing utility scale solar company Recurrent Energy and solar roof firm Enviria.

In part thanks to strong support from the Biden administration, solar in the U.S. broke records for deployment last year, growing 51% year over year and adding 32.4 gigawatts of new generating capacity.

After decades of manufacturing efficiencies, utility-scale solar is the cheapest form of generating electricity.

Yes, but: Last year was challenging for some of the solar companies themselves as they faced rising costs of building utility-scale projects, driven in part by higher interest rates.

What's next: Large volumes of solar projects will continue to get deployed in the U.S. at a rapid rate over the next few years.

2. The BFD: KKR in a $1B solar deal

Solar panels in a project developed by company Avantus.

Solar panels in a project developed by Avantus. Photo courtesy of Avantus

Radia is raising up to $300 million, the company tells Axios, as it races to make the world's biggest airplane, built for transporting massive wind turbine blades, Alan reports.

Why it matters: The jumbo aircraft would enable energy developers to more efficiently install wind turbine blades too long to be shipped by road or rail.

The latest: Radia in February started raising its Series C, targeting between $200 million and $300 million, CEO Mark Lundstrom tells Axios.

The Boulder, Colo.-based startup has gotten commitments from strategic investors that would benefit from being able to build taller wind turbines, Lundstrom says.

The CEO declined to state how much the company has raised so far. PitchBook pegs the figure at $104 million at an estimated $1 billion post-money valuation.

Big picture: Wind developers are scrambling to maximize the amount of energy generated by their turbines.

New wind farms are encroaching more on communities, stoking local opposition and permitting fights that have stalled land-based projects.

Meanwhile data centers and AI have unleashed a surge of new energy demand that's straining grids nationwide.

Radia burst onto the clean-energy scene last week, when the Wall Street Journal profiled the company's effort to build a cargo airplane with 12 times the volume of a Boeing 747.

Between the lines: Radia wants its 356-foot WindRunner aircraft to not only help get the blades to their project site faster, but to also help wind developers get more energy from their turbines, as the length of a blade determines how much energy it produces.

At sea, the blades can be enormous: they're being transported across open water by ship. On land, output is limited by what a truck or freight train can accommodate.

Radia says its extra-long aircraft, about the length of a football field, will enable developers to build turbines that are 300 feet taller than the current U.S. average.

The company's first customer is an independent power producer that's purchased a 1 GW project in Nevada.

Reality check: The airplane would need a 6,000-foot packed-dirt runway to be built for each project.

What they're saying: "What's important to the grid, data centers, green energy production is a power source that's low-cost and high consistency," Lundstrom says. "Bigger turbines do that better."

3. Scoop: Radia's massive raise

A rendering of Radia's giant WindRunner aircraft, depicted flying over a brown desert landscape.

Radia's WindRunner, seen here in a rendering, would span 80 feet longer than the largest military aircraft. Rendering: Courtesy of Radia

Major real estate companies have been slow to decarbonize — leaving an opportunity for fintechs and financiers to speed up the process, Fifth Wall CEO Brendan Wallace tells our Fintech Deals colleague Lucinda Shen.

What they're saying: "The technology now exists, and it's commercially viable, but it's not being deployed," says Wallace. "That's where fintech becomes the unlock."

Companies are leveraging fintech, software or other tech used in banking and financial services, for climate. 

Think software that supports carbon credits companies or solar loan providers.

Startups in the intersection of fintech and climate raised $2.3 billion of a total $285 billion last year according to CommerzVentures and Crunchbase data.

The residential space has companies such as SolarCity financing solar installations. Wallace sees similar companies popping up for buildings, factories, malls, and multifamily buildings.

"The largest owners of REIT stock — Blackrock, APG — have said they will preferentially deploy capital to low, or no carbon footprint real estate, incentivizing real-estate owners to reduce the carbon footprint. Major tenants, Google, Netflix, Amazon, have all very publicly committed to decarbonizing."

The intrigue: Fifth Wall is expanding from venture investment into debt financing, including project financing.

"We are actively considering a debt fund in two regards: Debt on the project financing side — to finance the building of factories, but also a kind of debt and equity fund," Wallace says.

"We've actually started to do some debt deals, some out of our existing funds. We've also brought in large sovereign investors to provide project finance to Fifth Wall portfolio companies on a direct basis."

4. When fintech meets climate

an illustration of Brendan Wallace of Fifth Wall surrounded by colorful squares photo

Fifth Wall CEO Brendan Wallace. Photo Illustration: Tiffany Herring/Axios; Photo: Roosevelt Nguyen/Fifth Wall

🚗 Making sense of new tailpipe rules: The EPA yesterday rolled out its latest emissions standards for cars, SUVs, pickups and medium-duty vans from model years 2027 to 2032, Axios Pro's Jael Holzman writes in Energy Policy.

The rule would substantially curb vehicle pollution, while keeping some business groups happy — or, at least, not terribly unhappy. It's in line with other Biden climate rules, which eased some regulations to win Democratic buy-in.

🚘 GM's own production hell: GM has been struggling to grow production of its Ultium batteries in an automated and efficient way at its Factory Zero in Detroit, reports Bloomberg.

The automaker bypassed its own best practices of using a nearby beta assembly line to work out kinks.

But GM execs tell the reporter that they think they've turned the corner on manufacturing mistakes.

💰Fusion fete: The Fusion Industry Association is holding its annual meeting in D.C. this week looking to attract more government funding to support the emerging sector of nuclear fusion, reports Reuters.

The industry is worried about falling behind China in the race to develop and build commercially viable nuclear fusion reactors.

🙏 Solar lines up, too: The solar sector is also worried about China's dominance. A new report from Guidehouse Insights and the Solar Energy Manufacturers for America Coalition says the solar sector needs even more government subsidies to compete with China.

The group is calling for tougher standards for project developers to qualify for a 10% bonus tax credit for using American-made components.

5. Temperature check

Illustration of an ice cream cone with a melted puddle of ice cream that looks like the earth.

• Buzz Solutions, a Palo Alto, Calif.-based startup that inspects critical energy infrastructure, raised $5m led by GoPoint Ventures, joined by Blackhorn Ventures and MaC Venture Capital. https://axios.link/4a2f9sk

• Blitz, an Indonesian EV logistics startup, raised a $1.6m seed round led by ADB Ventures. https://axios.link/3VjKfHz

• Greenly, a Paris-based provider of carbon emissions tracking solutions for small businesses, raised $52m in Series B funding led by Fidelity International Strategic Ventures and joined by Benhamou Global Ventures, Energy Impact Partners, HP Enterprise, HSBC, Move Capital, and XAnge. https://axios.link/4cnkgoJ

• Novocarbo, a German developer of carbon removal projects raised €25m from Swen Capital Partners. https://axios.link/3TFhbsJ

• Silence, a climate tech-focused VC firm led by Borja Moreno de los Rios raised $35m for its debut fund. https://axios.link/4aic6fo

• Exponent agreed to invest in Ireland's Ethos Engineering, a sustainable data-center design services provider. https://axios.link/4co7CFW

• Mad Capital, an investment group in Boulder, Colo., launched a $50m Perennial Fund II (PFII) to provide loans for farmers to transition to regenerative organic farming, with backing by Builders Vision, The Rockefeller Foundation, the Schmidt Family Foundation and others. https://axios.link/4aksa0e

• Rubicon Technology Partners invested in Ascend Analytics, a Boulder, Colo.-based provider of energy transition analytics. https://axios.link/43p9DxD

• Ikea added its plant-based hot dog to its U.S. menu, priced at $0.70, following the product's European debut. https://axios.link/4cnsTQ8

• Umiami, a French producer of plant-based whole cut proteins, opened its first commercial factory in France. https://axios.link/4a0Jckk

6. Hot deals

• Lincoln Singleton is joining Jefferies as a managing director in its private funds group. He previously was with Energy Capital Partners. https://axios.link/3VrWyS5

• Patrick O'Keefe, former CRO at Zelis, joined Edison Partners as an operating partner. https://axios.link/43uTsis

7. It's personnel

That was the observation from Arnold Ventures co-chair John Arnold. 

8. Tweet of the day: Arnold's observation

An image of a tweet yesterday from John Arnold, co-chair of Arnold Ventures, stating, "Walking around the big CERA energy conference this week and at times I felt like I was at an AI conference. Every conversation/panel eventually ended up on the topic and associated data center load."

Charlie the golden retriever visited the floor of CERAWeek, featuring a "CERAWeek therapy dog" bandana. 

Between the lines: She was just happy to be there. 

9. Bonus: Some CERAWeek therapy

A photo of Charlie, a blonde golden retriever puppy who visited the CERAweek energy conference as a therapy dog.

Charlie the therapy dog, after getting some pets. 

Welcome to Thursday! Happy second birthday to Climate Deals. 

🥂 Next Thursday! Join Axios Pro Deals in New York for an exclusive conversation with Goldman Sachs' global head of equity syndicate on the state of IPOs and ECM broadly. Register here while seats remain!

Sip of the week: A bottle of Meta Moon Prime, because Logan Paul is making bank off your kids' energy drinks.

😴 Katie is looking forward to sleeping this weekend.

🥘 Alan is still thinking about the carbonara, "tomato," and paella dishes he had last night at MAD Houston. 

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 long-duration storage groupies.

March 21, 2024

1 big scoop: Form eyes $500M round