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BFD Expert Voices - Climate Deals

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🏭 Situational awareness: About 40% of U.S. manufacturing announcements since President Biden signed the IRA and CHIPS Act in 2022 have been delayed or paused indefinitely, per FT.

Seven years after the construction of four nuclear reactors tipped one of America's oldest energy companies into bankruptcy, investors are pouring money into the cash-hungry energy sector.

Why it matters: Next-gen fission and fusion are hitting tangible milestones fueled by private and public capital, soaring electricity demand, and tech advances.

The big picture: America's aging nuclear power fleet is the single largest source of zero-emissions electricity in the U.S., but the country has added just three new reactors in nearly 30 years.

Those projects suffered multibillion-dollar cost overruns and years-long construction delays, making the prospect of building traditional nuclear plants all but radioactive.

Driving the news: After years of stagnation, private and public investment in U.S. nuclear energy companies has soared this year to nearly $14 billion — double 2023's investment total.

Follow the money: Moonshot fusion energy has seen U.S. funding soar 47% from last year.

Investment in advanced fission technologies, including small modular reactors, has leapt more than 10x.

Stunning stat: Fusion startups are employing 4,000 workers, a 34% jump from 2023.

Between the lines: The funding deluge reflects how venture capital and private equity firms are joining cap tables alongside billionaire funders such as OpenAI CEO Sam Altman, Microsoft co-founder Bill Gates, and venture capital investors Vinod Khosla and Chris Sacca.

Zoom in: Recent tech breakthroughs and power-hungry data centers have stoked investor hopes that nuclear startups can reach markets within a fund's typical under 10-year window.

Case in point: Electricity consumption is taking off for the first time in decades — roughly in step with nuclear energy investment.

The surge has helped shore up NuScale's stock price after the company went public during 2022's SPAC boom. Oklo raised $306 million in its SPAC this year.

Meanwhile, Realta Fusion last month said it had helped set a world record for the strongest magnetic field applied to a fusion experiment, one of a series of advances that have further lured investment.

And startups such as Commonwealth Fusion and TerraPower have started building massive, long-awaited demonstration projects.

Reality check: A commercial SMR or fusion reactor remains years from starting operation.

Inflation and high interest rates have sent construction costs spiraling. NuScale, arguably the most prominent SMR developer in the U.S., saw its vaunted Utah project collapse as its price tag swelled.

U.S. sanctions on Russia following the country's invasion of Ukraine has imperiled nuclear fuel supplies and equipment.

And banks, which are often the largest and most critical sources of capital for infrastructure, remain leery of lending to new nuclear projects.

Nuclear's atomic moment

Insatiable electricity demand from AI-powered data centers has some investors looking anew at nuclear energy, which can generate vast amounts of energy without upending corporate emissions-reduction plans.

Why it's the BFD: Wealthy and climate-conscious tech companies could help provide a key lever to advancing next-gen nuclear.

Zoom in: Tech companies Microsoft and Amazon have struck partnerships for advanced nuclear projects this year.

Microsoft said it would buy fusion power from Helion Energy in the world's first fusion purchase power agreement.

Amazon acquired a nuclear-powered data center in Pennsylvania.

Zoom out: Tech investors that are familiar with the power demands of AI are helping fuel the investment.

OpenAI CEO Sam Altman has funneled $350 million into fusion startup Helion, his largest investment to date, and also backed SMR company Oklo.

Microsoft co-founder Bill Gates has plowed $1 billion into SMR company TerraPower and says he's willing to put in another $1 billion.

Amazon CEO Jeff Bezos has backed General Fusion.

The big picture: The AI companies are in a prime spot to help get next-gen nuclear across the finish line.

The Department of Energy is looking to help facilitate the union between AI and next-gen nuclear.

👀 What we're reading: "Is it better than the alternative?" That's the fundamental question facing tech giants' plans to supply their data centers with nuclear power. Jeff St. John walks through the arguments — both for and against — in Canary Media.

AI eyes nuclear

Illustration of an atom shape made by lasers

A handful of megadeals has propelled nuclear energy investment in North America.

State of play: Fusion energy posted a record 2021 driven by Commonwealth Fusion's $1.8 billion Series B.

Fission energy meanwhile had a blockbuster 2022, fueled by Brookfield and Cameco's $7.9 billion acquisition of Westinghouse Electric.

Flashback: Westinghouse is the nuclear energy company that was driven into bankruptcy during the beleaguered construction of two reactors at Georgia's Plant Vogtle nuclear facility and another two reactors in South Carolina.

The fine print: You may notice that the chart above includes North American investment, not simply U.S. funding

🇨🇦 Canada, not America, is on track to build the continent's first commercial SMR as soon as 2028, as part of a partnership between Ontario Power Generation and the Tennessee Valley Authority.

🇺🇸 TVA is aiming to bring the first U.S. SMR online no earlier than 2032.

Yes, but: TerraPower, an advanced reactor developer funded by Bill Gates, is aiming to bring its own advanced reactor online by 2030.

The reactor is a smaller design than a traditional reactor, but it's not a small modular reactor — it's not designed to be manufactured in a factory and then shipped somewhere else. (It also uses a different cooling system than light water-cooled SMRs.)

TerraPower broke ground at the construction site in Wyoming in June.

Fission and fusion funding flows

Nuclear energy is experiencing a political revival that's made it a central part of the climate and energy policy conversation.

Why it matters: It's one low-carbon technology Democrats and Republicans agree on. That's resulted in Congress pumping billions into the next generation of reactors.

Zoom in: The Inflation Reduction Act allowed nuclear power to qualify for huge federal tax incentives traditionally reserved for wind and solar.

The Department of Energy's nuclear research and commercialization programs consistently get big funding and bipartisan support in annual appropriations bills.

Lawmakers this year also passed into law a package of regulatory changes aimed at making it easier to license advanced and small modular reactors.

Between the lines: Fuel is a challenge because the United States has brought in so much enriched uranium from Russia in recent years.

President Biden recently signed a ban on Russian uranium imports into law, paired with $2.7 billion in funding for domestic fuel production.

But there are hurdles to securing the consistent supply needed for advanced reactor designs.

What's next: The industry is lobbying for federal cost overrun insurance, as utilities look to possibly build more conventional large reactors.

Yes, but: More high-profile failures could turn policymakers off from an industry that already enjoys robust subsidy.

The embarrassing price tag and tardiness of Georgia's Plant Vogtle has prompted some skepticism about building more large-scale reactors.

And at some point, Congress is going to have to deal with nuclear waste, an issue that has been in total stasis since the demise of the Yucca Mountain waste repository.

Policy to watch

illustration of an atom surrounded by shapes and legal symbols

When Westinghouse went under in 2017, it seemed to mark the end of the American nuclear energy age — the power plants set to be replaced by low-cost solar and wind, ever-cheaper batteries, and maybe natural gas.

"If you told me the NRC is expecting more than 10 projects in the next 10 years, I would've said, 'Whew, that's a rosy picture,'" Jeremy Harrell tells Axios, referring to the Nuclear Regulatory Commission.

Why it matters: Harrell in May was named CEO of ClearPath, a conservative-leaning D.C. nonprofit that advocates for low-carbon energy and for years was one of the few champions of nuclear power.

What's been top of mind amid the growth nuclear investment?

"The market dramatically needs more 24/7 clean power. The Plant Vogtle investments are seeming wiser and wiser. The big movers in this economy, the big tech companies, are putting money into this."

What vulnerabilities do investors need to be mindful of?

"The NRC expects to see upwards of 12-15 new licenses before the end of the decade. It's important to keep watching the process.

We've got to get past this first wave of products. How do we get from Project 1 to Projects 2-5?"

"The case against the Plant Vogtle reactors is that they were over-budget and took much longer to build — and that's absolutely right. But the investment looks really good over the next 60-80 years.

These are reactors that are going to operate for nearly a century. Once you do the upfront capex, they're cheap to operate. You can't compare it to one utility-scale solar project that's going to last 25 years."

Revising the reactor outlook

Photo illustration collage of Jeremy Harrell.

Photo illustration: Axios Visuals. Photo: Courtesy of ClearPath

💰 Strategics back carbon credits fund: Mining giants BHP and Rio Tinto and airline Qantas plan to invest A$80 million (about $52.7 million) in an Australian carbon credits fund managed by Silva Capital, per Reuters.

The firm, a joint venture between Roc Partners and C6 Investment Management, is aiming to raise A$250 million ($165 million) for the fund, which will invest in reforestation projects.

🤖 DOE's AI plan: The Energy Department this morning released an 11-page list of resources — including grant programs, financing options, technical assistance, workforce training, and research tools — aimed at accelerating power plant construction to meet electricity demand from data centers.

"We emphatically say at the Department of Energy that yes, yes we will" have enough energy for AI, Energy Secretary Jennifer Granholm told reporters. Energy Policy's Daniel Moore has more in Generate.

🔌 AI boosting power bills: PJM is feeling the crunch as the rapid build-out of energy-hungry data centers is leading to a spike in prices compared to a year ago, reports the Wall Street Journal.

High prices are one signal that the grid could need new power plants, as well as investments in grid-enhancing tech. They can also morph into a political and legal issue if utility bills rise.

🛵 Ola Electric pops: Shares in Indian scooter company Ola Electric surged 20% in their public debut in Mumbai on Friday, valuing the company at $4.8 billion.

The company raised $734 million and is India's biggest IPO this year.

Temperature check

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

• Balderton, the UK VC firm, raised a $615m early-stage fund and $685m growth fund targeting European startups. Go deeper

• Gaussion, a London EV startup developing faster-charging tech for EV batteries, raised a €10.9m Series A led by Autotech Ventures, joined by BGF and UCL Technology Fund. Go deeper

• Indian EV charging startup Kazam raised an $8m Series A3 to expand to Malaysia, Thailand and Indonesia, per TC. Go deeper

• Transaera, a Somerville, Mass., startup developing a more efficient home air conditioner that dehumidifies before it cools, is raising $6m, per TC. Go deeper

• CarbonQuest, a Spokane, Wash., modular DAC developer, raised an undisclosed Series A from Riverbend Energy. Go deeper

• Algonquin Power & Utilities, a Canadian utility with projects spanning U.S. markets, agreed to sell its renewables business (excluding hydro) to LS Power, an NYC energy developer and operator, for up to $2.5b USD. Go deeper

• Chinese self-driving developer WeRide is seeking up to $440m in a U.S. IPO. Go deeper

• Automaker Stellantis is laying off 2,450 workers from its truck assembly plant outside of Detroit. Go deeper

• Powerdot, a Portuguese EV charge point operator, secured €165m in financing from ABN Amro, BNP Paribas, ING, MUFG Bank Santander, and Société Générale. Go deeper

• Goldman Sachs Asset Management became the latest financial player to bail on Climate Action 100+, joining JPMorgan, State Street and several other firms, Ben Geman writes in Generate. Go deeper

• Westinghouse Electric started production of more efficient nuclear fuel pellets. Go deeper

• Archer Aviation, the San Jose, Calif., eVTOL developer, plans to launch an LA-area air taxi network. Go deeper

• Joby Aviation, the Santa Cruz, Calif., eVTOL maker, plans to launch a commercial taxi service in Dubai next year. Go deeper

• SES AI, the South Korean battery maker, converted a production line to manufacture lithium-metal battery cells for electric aircraft. Go deeper

• Lynx Motors, the Austin, Texas, high-end EV maker, plans to begin deliveries of its electric DeLoreans in 2025. Go deeper

• French energy giant TotalEnergies supplied its first delivery of 100% biofuel for ships in Singapore, per Reuters. Go deeper

• Chinese utility State Grid completed a 3.6 GW pumped hydro project. The $2.6b plant is the largest pumped-hydro plant in the world, per Bloomberg. Go deeper

Hot deals

• Paulo Ruiz was appointed president and COO ahead of a planned promotion to CEO of Eaton, the Dublin power-management provider. Ruiz takes on the president and COO role Sept. 2 and will become CEO on June 1, 2025. He succeeds Craig Arnold, who is retiring May 31. Go deeper

• Former Chevron CEO Kenneth Derr died at age 87, per WSJ. Go deeper

It's personnel

Familiar names top the list of the busiest investors in nuclear energy, notably Chris Sacca's Lowercarbon Capital and Bill Gates-founded Breakthrough Energy.

Between the lines: The No. 2 listed firm, Strong Atomics, is a San Francisco-based firm targeting fusion energy startups, including Xcimer, Type One Energy, and Commonwealth Fusion, per PitchBook.

Final numbers

☄️ Katie tried and failed to see the Perseid meteor shower.

👓 Alan learned an important lesson about buying eyeglasses: snap a picture while trying them on. Because when they arrive and you can't remember if the frames were quite this dark, all you can do is wonder. (For the record, Alan and Terry like the glasses; but still.)

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 nuclear energy experts.

August 12, 2024

1 big thing: Nuclear's atomic moment