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BFD Expert Voices - Climate Deals

BFD Expert Voices

There's growing support for the next generation of geothermal energy tech, which can improve its availability and efficiency, writes Katie.

Why it matters: Companies across sectors, like tech and industrial, are suddenly desperately searching for low carbon 24/7 power.

Driving the news: Geothermal startup XGS Energy closed a $20 million Series A extension round co-led by Valo Ventures and VoLo Earth Ventures. Valo Ventures' investment was the first from its second fund.

The funding will primarily be used to get a demonstration project in California up and running.

XGS plans to case its wells in steel and then squeeze a highly conductive material around the casing, so it sits in between the rock and the casing. The wells can get 30% higher thermal productivity, says the company.

Catch up quick: Traditional geothermal energy is produced by drilling holes down into hot rock, pumping water into the wells and bringing the heated water back to the surface.

Energy companies have long been interested in geothermal because it can provide 24/7 baseload power, in contrast with wind and solar, which are intermittent.

But the geothermal sector has faced slow growth due to a lack of appropriate sites that meet all of the qualifications and are able to get permitted.

New so-called enhanced geothermal services use various types of tech to be able to build geothermal projects on many more locations.

State of play: The sector is seeing some major deals:

Fervo Energy, based in Houston, uses drilling tech from oil and gas sectors and just closed on $221 million.

Eavor, which has a unique brand of closed-loop geothermal tech, recently raised C$182 million.

Quaise Energy, which is using emerging drilling and conduction tech, closed $21 million in March.

Sage Geosystems has developed a geothermal system that stores and dispatches energy with pressurized water and raised a $17 million Series A round.

The big picture: The combination of new interest from companies and support from the Department of Energy is creating a growing ecosystem for new geothermal innovations. 

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an illustration of a lightning bolt made out of glowing magma rock

Reactive, a UK startup developing tech to monitor electric grids, raised a £25 million Series D, Alan writes.

Why it's the BFD: Countries need to vastly expand the resilience of their electric networks to meet decarbonization goals.

Zoom in: M&G's Catalyst led the investment round, joined by BGF and Breakthrough Energy Ventures.

How it works: Reactive's grid monitoring tech enables networks to boost stability and prevent curtailments and blackouts. 

Operators dial back — or curtail — electricity generation to reduce stress on the grid, which can occur when temperatures soar or when renewables like solar are putting too much electricity onto the grid. 

Zoom out: Global spending to build and upgrade electric grids will need to outpace investment in renewable energy to achieve net-zero emissions by 2050, per BNEF.

Countries will need to invest $24.1 trillion to double their power networks to 69 million miles. That's $1.4 trillion more than countries will need to spend on renewables to meet net-zero goals.

2. The BFD: Reactive raises £25M for grid monitoring

Illustration of an electrical power tower in the shape of a lightning bolt.

Lawmakers are already talking about further action to keep Chinese EVs out of the U.S. after the Biden administration's tariff hike last week, Axios Energy Policy's Nick Sobczyk writes.

Why it matters: Bipartisan anti-China trade policy is shaping the energy transition. This conversation on the Hill is going to stay alive no matter who's in the White House next year.

Driving the news: Lawmakers from both parties told Nick they may try to build on the administration's new 100% tariffs on Chinese EVs to cut off possible imports from Mexico.

"There's not much economically good that Joe Biden has done, but continuing the tariff policy, I think, is good, and we're gonna have to do more," Sen. Josh Hawley told Nick.

Context: Chinese-made EVs currently have tiny U.S. market share, but companies like BYD could move manufacturing to Mexico or elsewhere to get into the U.S. market, as our colleague Ben Geman pointed out last week.

U.S. trade representative Katherine Tai said that issue will require a "separate pathway."

Zoom in: Hawley introduced a bill this year that would try to close that workaround by placing tariffs on all EV manufacturers with close ties to China no matter where their operations are located.

"We need to close the back door so that they don't evade these tariffs," he said. "I mean, they're not stupid. They and every other manufacturer is going to try to find ways to circumvent any of the tariffs."

Axios Energy Policy is covering every twist and turn in the climate debate. Get it in your inbox

3. The Hill's next-level China EV push

Illustration of a yellow car with lightning bolt icons surrounding it in the shape of the flag of China

🤖 Amazon taps AI for batteries: Amazon is turning to AI to better utilize battery storage, paired with solar and wind, reports Axios Generate.

Amazon is looking at the tech for the Baldy Mesa solar farm in the Mojave Desert and its San Bernardino Air Hub.

Battery storage predictive systems are one of many promising AI applications that could reduce companies' emissions, but at the end of the day, the coming surge in data center energy demand could still overwhelm such gains.

😬 More hurts for Hertz: The rental-car giant has allegedly been assessing $200+ penalties to customers who rent Teslas for failing to refill their nonexistent gas tanks.

Hertz refused to refund one Tesla renter who fought the charge, until car news site The Drive reported on the incident last week. Other drivers have since shared similar experiences, indicating that the absurd charge wasn't a one-off.

Hertz in 2022 agreed to pay a $168 million settlement to customers for falsely reporting that they'd stolen the company's cars. Its EV rollout has meanwhile been a mess.

4. Temperature check

Illustration of three emojis: a thermometer, a hot face, and a cold face.

Go deeper into our full database with the Axios Pro Deals Tracker.

• London climate VC firm ETF Partners closed its fourth fund with €285m, with investments from the European Investment Fund and British Patient Capital. axios.link/4dOzsMg

• Circtec, a London developer of pyrolysis tire recycling facilities, raised €150m, including a $75m equity investment led by Novo Holdings and A.P. Moller Holding, and €22.5m in Dutch government grants. axios.link/3V67Vyu

• Ketos, an SF water data provider, raised $10m led by Tenfore Holdings, joined by Danu Venture Group and insiders Broadway Angels, Plum Alley Ventures, Plug and Play Ventures, and Accenture. axios.link/4bD0Pai 

• Subeca, a Texas water metering tech developer, raised a $6m Series A led by Suez, joined by Amazon's Climate Pledge Fund and Burnt Island Ventures. axios.link/44SArao

• Cellugy, a Danish biotech developing cellulose-based materials, raised €4.9m in seed funding led by ICIG Ventures and Unconventional Ventures, joined by Joyance Partners and insiders PSV DeepTech, The Footprint Firm, and EIFO. axios.link/4dQJTPg

• South 8, a San Diego lithium-ion battery supplier, announced an undisclosed investment from Porsche Ventures. axios.link/3UQAMFV

• Alcazar Energy, a Luxembourg infrastructure investment firm focused on utility-scale renewables projects in emerging markets, closed its Partners II fund with $490m. axios.link/4bNVih0

• Shell shareholders approved a stepped back emissions cut target to 15%-20% by 2030, from its prior goal of 20%. Shareholders also nixed a previous 45% emissions reduction target by 2035. axios.link/44PXrGJ

• GM and battery supplier LG agreed to pay $150m to Bolt EV and EUV owners affected by battery fire risks affecting 2017-2022 models. axios.link/3V7H712

• Daimler Truck North America will use Proterra batteries for Thomas Built electric school buses and Freightliner last-mile delivery trucks. axios.link/3QVGYv7

• BMW allegedly imported 8,000 Mini Cooper vehicles into the U.S. containing electronic components from a Chinese supplier prohibited due to forced-labor concerns, per a U.S. Senate report. axios.link/3K6P28u

• Ford said it supports EPA regulations announced in March that would cut passenger vehicle fleetwide emissions ~50% by 2032 from 2027 levels. axios.link/3yuZFiT

• The U.S. National Highway Traffic Safety Administration is investigating possible steering problems involved in an April crash of a VinFast electric SUV that killed a family of four, per Reuters. axios.link/44Pdchk

5. Hot deals

• Souleymane Ba was named partner and co-head of climate strategy at LeapFrog Investments, a UK investment firm focused on Asia and Africa. Ba was previously board chair at Solevo Group. axios.link/4aou9Ag

• Jay McKenna was named CEO of Houston tidal-energy developer Occurrent Power (fka BigMoon Power). McKenna founded ATP Insights and was CEO of Yelofin. axios.link/3QTFHVh

• Alexandra Hobgood was named general manager of corporate responsibility and sustainability at equipment maker Liebherr U.S. axios.link/44LSJtP

6. It's personnel

Plant-based protein developer Beyond Meat and San Jose solar manufacturer Sunpower made S&P's list of the 10 most shorted stocks in the U.S., Alan writes.

Why it matters: The list offers a rough sense of the companies — and perhaps sectors — drawing the most shareholder skepticism.

State of play: The S&P tally is based on the percentage of outstanding shares on loan.

The latest: Beyond Meat ranks second on the S&P list with 40.9% of shares outstanding, and Sunpower is 10th with 29.99% outstanding.

7. Short-friendly climate stocks

It's the Tuesday before the Memorial Day weekend. Bring it on, summer!

❓ Trivia Tuesday: ETF, which just closed its fourth fund, calls itself Europe's original sustainability-focused VC firm. When did it get its start?

Last week's answer: H2B2 last year opened what it said was the first operational green hydrogen plant in North America, in Fresno, Calif. 

🤔 Katie has been watching "Dark Matter" and wondering what her high school physics teacher would think. 

🐓 Alan is pleased to report that Elsa the chicken has started laying eggs along with Anna.

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 geothermal groupies.

May 21, 2024

1 big thing: Hot rocks bankroll