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BFD Expert Voices - Climate Deals

BFD Expert Voices

Early stage investment firm Clean Energy Ventures has raised $305 million for its second fund targeting startups developing the hardware needed to decarbonize.

Why it matters: It's a big chunk of money for nascent startups pursuing some of the most challenging tech in climate, Alan writes.

The big picture: Clean Energy Ventures closed Fund II after a lengthy raise that started in July 2022, a spokesperson tells Axios.

It's nearly triple the size of Clean Energy Ventures' debut $110 million fund.

The firm had initially targeted $200 million. It raised the cap after reaching that figure in six months, the spokesperson says.

LPs include Carbon Equity, The Grantham Foundation, Builders Vision, and New Summit Investments.

Catch up fast: Clean Energy Ventures got its start in 2017, but it draws from seasoned climate veterans, including managing partner Daniel Goldman, who launched a clean energy-focused private equity firm in 2003, and strategic advisor Ernest Moniz, the former U.S. energy secretary.

The latest: The firm generally invests as lead or co-lead, and it typically seeks board seats.

It's targeting startups from pre-seed through early growth rounds, an expansion from its Fund I practice of investing up to a startup's Series A.

"Technologies and companies with the potential to mitigate 2.5 gigatons of emissions is our key criteria," Goldman tells Axios.

The intrigue: Clean Energy Ventures with Fund II is expanding its focus to Europe and Israel, which has included opening an office in London.

Fund investments so far include Israeli green ammonia startup Nitrofix and UK sustainable aviation fuel developer OxCCU, as well as battery maker Noon Energy and compressor technology developer Evari.

The firm declined to predict how many companies it expects to invest in through the new fund. It backed 20 startups through Fund I.

👀 Worthy of your time: Goldman worries some of the challenges facing the energy transition may be insurmountable.

1 big thing: A hefty hardware fund 

Illustration of a utility pole with money elements and abstract shapes

Nuclear, geothermal and hydropower would be eligible for lucrative Inflation Reduction Act tax credits under a new Biden administration proposal, Axios Pro's Nick Sobczyk reports in Energy Policy.

Why it's the BFD: The move would make a wide range of clean energy projects economically viable. 

Catch up fast: Federal tax credits for new energy projects generally fall into two categories: investment incentives to defray upfront construction costs, and production incentives to reduce operating expenses. 

These measures, known as the ITC and PTC, have long been confined to wind and solar energy. 

The IRA signed in 2022 allows other low-carbon technologies to claim the credits, but the Biden administration has needed to work out how they'll be implemented — and which sectors would be eligible.

Driving the news: The Treasury Department this morning proposed approving nuclear, geothermal and hydropower for the credits.

Yes, but: The administration is punting on how to treat biomass fuels, such as crop waste and forest residue, which are burned to generate power.

Zoom in: The IRA requires the Treasury Department to study how technologies like biomass may affect climate warming. 

The agency is seeking comment on just how to conduct such a lifecycle assessment.

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

2. The BFD: Tax credit spigot 

Illustration of a magnifying glass examining the UN Climate Summit logo

Australian startup Relectrify has raised A$17 million ($11.3 million) to develop longer-lasting battery cells that don't need inverters, Alan reports.

Why it matters: A global inverter shortage has crimped battery projects.

Catch up fast: Inverters convert the DC power contained in a battery into the AC power used by lights, TVs, appliances and any number of devices.

The boom in electrification has resulted in a shortage of these electrical linchpins.

Driving the news: Relectrify says it's developed a control system that eliminates the need for inverters and extracts more energy from each battery cell, extending a battery pack's lifespan as much as 30%.

Zoom in: At One Ventures led the all-equity round, which closed this month.

Existing investors Toyota Ventures, the Australian Clean Energy Finance Corporation, Energy Innovation Capital, GS Futures, Creative Ventures, and NOAB Ventures participated.

What's next: Relectrify has produced industrial battery systems.

The company, which has an office in northern California, says it plans to target international markets, particularly in the commercial, industrial, and grid-scale segments.

3. Exclusive: Inverter-free batteries

Illustration of a battery with a dollar bill wrapped around it. 

👰 Hess + Chevron: Hess shareholders voted to support Chevron's planned $53 billion acquisition, but it's still not a done deal, reports Ben Geman in Generate.

It's a win for backers of the troubled megadeal, but the plan is still ensnared in a dispute with Exxon, which claims right of first refusal on Hess' share of a mammoth, Exxon-operated field off Guyana's coast.

The merger also still needs Federal Trade Commission approval.

🏍️ Onyx e-bikes: TechCrunch takes a deep dive into the financial and legal issues of electric motorcycle maker Onyx Motorbikes, as well as the tragic death late last year of its young owner and CEO.

The story reports: "Today, no one owns Onyx Motorbikes, which means all operations — customer deliveries, payments to suppliers and creditors — have ground to a halt."

📈 EV signs of life: Automakers in the U.S. posted a blockbuster Q1 for EV sales — but only some automakers.

While sales growth slowed for manufacturers such as Tesla, GM, and VW, others like Hyundia-Kia and Ford saw demand boom.

"It's a tale of two EV markets, where consumers are flocking to some brands in record numbers while turning their backs on those with inferior battery range, slower charging and high prices," per Bloomberg.

4. Temperature check

Illustration of the sand from a sand timer filling the temperature scale on a thermometer.

• Frore Systems, a San Jose, Calif., maker of solid-state chips for active device cooling, raised an $80m Series C round led by Fidelity and joined by Prosperity7, Mayfield, Clear Ventures, Qualcomm Ventures, MVP Ventures, Stepstone Group, and Alumni Ventures. axios.link/3yEADxI

• One Energy, a Findlay, Ohio, wind energy developer, raised a $35m Series A from undisclosed investors ahead of its planned merger with blank-check company Trtl axios.link/3WZeNPy

• Faircado, a Berlin developer of an AI assistant for second-hand shopping, raised €3m in pre-seed funding led by World Fund, joined by Accel, General Catalyst, Lightspeed Venture Partners, NEA, Northzone, and Impact Shakers. axios.link/3VjoW8p

• Realtime Robotics, an industrial robotics software company based in Boston, is raising a Series B round led by Mitsubishi Electric. axios.link/4aGVwWz

• KKR agreed to buy a minority stake in Labrador Island Link, a Canadian clean energy transmission project, from Emera for C$1.2b. axios.link/44Zxpko

• OMERS is seeking to sell a stake in Leeward Renewable Energy, a Dallas wind farm operator that could be valued at ~$3.5b including debt, per Bloomberg. axios.link/4bZXjah

• Vietnamese EV maker VinFast may further delay a planned $4b plant in North Carolina. axios.link/3XjjgNt

• The Biden administration yesterday unveiled another ~$900m in awards from the 2021 Bipartisan Infrastructure Law for 530 school districts to replace their school buses with electric models, the third tranche from a $5b EPA program for clean school buses. axios.link/3R5ZBML

• Zenobe, a UK fleet electrification and battery storage provider, secured £410m in financing for its electric bus operations. axios.link/4bzQVqo

• Volkswagen plans to develop a €20k EV for the European market by 2027 to compete with Chinese rivals, as investors pressure CEO Oliver Blume to sharpen VW's EV strategy. axios.link/4aFi0qA

• Japanese policymakers are debating restarting the Kashiwazaki Kariwa Nuclear Power Plant, the world's largest nuclear plant, which shut down after the 2011 Fukushia Daiichi meltdown. axios.link/3UYYe3S

• Chinese automaker executives are preparing for negotiations with the European Commission to ease the impact of European tariffs. axios.link/3wY0Qqz

5. Hot deals

Data centers could consume up to 9% of U.S. electricity generation by 2030, according to a new report from EPRI. 

Why it matters: That would be more than double the amount of electricity currently used for data centers and represents a vast new source of demand for the power grid.

Zoom in: Eighty percent of U.S. data center load in 2023 occurred in 15 states, led by Virginia and Texas, Katie writes.

EPRI recommends data center operators focus on making their facilities more efficient and flexible, better coordinate with utilities and use better modeling tools. 

6. Number of the day: 9%

🛢️ Situational awareness: ConocoPhillips agreed to buy Marathon Oil in an all-stock deal that values the company at $22.5 billion.

❤️ Katie's oldest is graduating kindergarten next week!

📚 All 14 people at Alan's workout class this morning were talking about "Fourth Wing" and the "Empyrean" fantasy book series. Alan's finally got a new book to check out.

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 tax credit watchers.

May 29, 2024

1 big thing: A hefty hardware fund