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Pollution from peaker plants combined with heat and smoke can push summer air quality into the danger zone.

If you ever have to pick a day to stay inside, pick July 5. In cities across the United States, the Fourth of July’s pyrotechnic revelries make the wee hours after Independence Day consistently one of the worst of the year for air quality. Just look at Washington, D.C., which briefly held the distinction of having the world’s most polluted air this past Sunday morning following one of the largest firework displays in history.
But if you have to pick a second day to stay inside, shoot for one during the second half of July, which is the hottest period of the year in the United States. For one thing, it’s just plain miserable out. For another, the country’s 1,000 or so peaking power plants, or “peakers,” are more likely to be operating to meet the energy demands of heavy air-conditioning use, emitting disproportionately high levels of pollution for the electricity they generate.
Peakers are the backup power sources operators run only when demand is at its highest, such as during a heat wave. Peakers are also “probably the dirtiest and most expensive energy on the grid,” Abbe Ramanan, who leads the Phase Out Peakers project at the nonprofit Clean Energy Group, told me. “They tend to burn dirtier fuels, such as oil, and typically have older and less efficient emissions control systems.”
Some 63 million Americans live within a three-mile radius of a peaker, according to a 2023 Clean Energy Group report, where they face health conditions including “significant … increases in estimated rates of hospitalization for asthma, acute respiratory infection, and chronic obstructive pulmonary disease,” all conditions associated with proximity to fossil fuel-fired plants. On top of that, historic redlining practices mean two-thirds of peakers are located in communities with a higher percentage of low-income households than the national average, according to the group’s reporting. And yet peakers also provide life-saving power and AC when a blackout could mean death, such as during last week’s heat wave on the East Coast, making them simultaneously a menace and necessity to maintaining public health, at least with our current grid.
What exactly is peaker plant pollution? How does it appear in the Air Quality Index you might see on your phone? And how do local regulators consider pollution when issuing air quality forecasts? I set out to get answers.
To understand peaker plant pollution, let’s start with a refresher on how air quality alerts work.
The AQI scale runs from 0 to 500 and reflects the local concentrations of five major pollutants: particulate matter, ozone, carbon monoxide, sulfur dioxide, and nitrogen dioxide. Each pollutant has an Environmental Protection Agency-regulated benchmark for what is safe (many of which are set at levels clean air advocates argue are too lax). As concentrations increase, the overall AQI rises to warn first “sensitive groups” and then the general public when to take precautions, such as limiting outdoor activity or wearing a mask. (To learn more about the AQI scale, read my colleague Emily Pontecorvo’s explainer here.)
As do all fossil fuel power plants, peakers release planet-warming carbon dioxide as a byproduct of combustion, along with nitrogen oxides, particulate matter, volatile organic compounds, and other trace toxins that aren’t captured in the AQI, such as heavy metals. Oil and coal-fired power plants also release sulfur dioxide, which creates acid rain; natural gas-fired plants, on the other hand, emit comparatively little.
While NOx is an irritant in its own right, it is, more significantly, a key ingredient in the chemical reaction that creates ozone. When NOx mixes with volatile organic compounds — found in vehicle exhaust, personal care products, and yes, also power plant emissions — on a warm, sunny day, the chemical reaction creates ground-level ozone, which is corrosive enough to scar lung tissue with repeated, prolonged exposure. An expert once helpfully likened it to me as “sunburn on your lungs.” Health researchers have determined that, globally, ozone (also known as smog) causes a million premature deaths every year.
Yes, although it’s not an easy or neat measurement.
Peaker plants are used to rapidly supply electricity to the grid when demand exceeds the baseload capacity. As a result, they run infrequently — only about 5% of the year, or 464 hours per plant, in 2022, per Clean Energy Group’s analysis of 2022 EPA data. Using a stricter definition of peakers, the Government Accountability Office found that the plants represent nearly a fifth of the nation’s potential generating capacity but produce only about a 30th of its overall electricity, mostly due to the time they spend sitting idle.
Power plants use a number of emission control systems to limit emissions of various pollutants. But the EPA has much looser requirements for low-operating peakers, which “may not have effective, if any, emissions control technology,” the GAO writes. When operational, peakers emit an estimated 60 million tons of CO2 per year, with a median NOx emission rate about 6.1 times greater per unit of electricity generated by natural gas-fueled peakers compared to non-peaker gas plants.
“One really big issue with peakers is the emissions control systems are not operating during times when the plant is starting up or shutting down, which means that emissions are just unabated during those times,” Ramanan told me. “And because those plants tend to operate in short bursts, such as during a heat wave, they will start up and shut down more frequently.” Even up to a day beforehand, when the plant is running its test cycle, it might be emitting pollutants even while not actually providing any power.
One 2017 study by University of Wisconsin–Madison researchers found that across the Eastern U.S. from 2007 to 2012, total electricity generation rose by about 4% for every 1-degree Celsius (1.8-degree Fahrenheit) increase in daily summer temperature, with NOx correspondingly up 3.6% and CO2 up 3.3%. Though these numbers aren’t peaker-specific, the plants represent a disproportionate share of the rise since they’re reserved for the hottest, heaviest-load days.
Though the slower rise in NOx suggests “slightly cleaner plants … on average,” the authors write, that is “not completely unexpected, as new natural gas plants are required to have controls installed even as some peaking plants do not.” They note, however, that their data does not fully capture grandfathered-in units, since gas- and oil-fired peakers are allowed non-direct-measurement reporting.
In fact, in Maine and Connecticut, which “use more petroleum for electricity generation than most states in the U.S., primarily as peaking plants deployed on the hottest days,” NOx jumped 33% and 23% per degree Celsius, respectively. Separately, a 2016 study found that peaking plants may have accounted for up to 87% of local particulate matter in the PJM Interconnection during a July 2006 heat wave.
Peaker plant pollution is significant enough that chronic exposure in local communities has measurable health impacts. But how does it factor into summer AQI levels?
My colleague Matthew Zeitlin spoke this week with Margaret LaFarr, the New York State Department of Environmental Conservation’s director of air resources, who told him that peaker plant pollution is “one of the factors we consider” in formulating its air quality forecasts. But because the state’s agency uses modeling to predict when and where air quality will be poor, the granularity of a single peaker just isn’t there. “If we have to have specific information on the emissions, it would not be ready in time for a timely advisory,” LaFarr said.
Ramanan, whose nonprofit has diligently recorded the negative impacts of peakers, concurred that it is “difficult to pinpoint just how much peaker plants contribute to local air pollution because those sorts of studies are just very expensive to do.” Studies that look at disproportionate health impacts, on the other hand, are a little simpler to put together.
Additionally, while the AQI might rise locally near peakers during a heat wave, because of the nature of the scale, it can’t neatly distinguish why. A high ozone reading, for example, might just as easily be due to tailpipe emissions on a hot day; in the New York metro area, vehicles are responsible for an estimated 60% of the air pollution. Meteorological conditions — whether it’s sunny, a key factor in ozone formation, or which way the wind is blowing — obscure the picture. Particulate matter readings could be from a peaker, for example, but they could just as easily be from wildfire smoke.
One way air quality activists like to think about peaker pollution is as a co-occurrence — that is, a compounding pollution on top of already degraded conditions. Hot days tend to be the worst for ozone already, because of the aforementioned tailpipe pollution; peakers, activated to help with the heat-related energy load, then release more ozone-generating emissions at the worst possible time.
While a precise breakdown of the AQI might not be there for peakers, “we know the days that are more conducive to ozone formation generally tend to be those same days where people are cranking up their ACs and there is a higher demand for energy,” LaFarr said.
There is some speculation that cleaner input fuels could help reduce the worst peaker plant emissions. Generally, this is true: The 2017 study by the University of Wisconsin–Madison researchers found that from 1997 to 2015, in Texas, petroleum use in electricity generation dropped 85% and coal dropped 12%, while natural gas increased 57%. As a result, Texas had the lowest level of SO2 sensitivity of any state.
But beyond the existing fuel mixes, fuel switching is not a clean fix for peaker plants. “Burning things like hydrogen and [methane captured from waste processing facilities] don’t actually reduce the air pollution burden in any meaningful way,” Ramanan argued. “Hydrogen in particular tends to actually have extremely high levels of NOx emissions when it’s combusted.”
In Astoria, a neighborhood of New York City, activists opposed retrofitting the local oil-powered peaker plant to run on natural gas because doing so would “lock the state into relying on fossil fuels for decades, fly in the face of the state’s climate law that requires a drastic reduction in carbon emissions by mid-century and continue to pollute in an already overburdened community where many residents are immigrants and live below the poverty line,” Inside Climate News reported. At the same time, doing so would “reduce the state’s greenhouse gas emissions by more than 5 million tons through the year 2035,” per its owner, NRG Energy.
But a third way emerged: New York eventually denied NRG’s permit because it violated the state’s climate law, and the utility subsequently sold the Astoria facility to serve as the converter station for Beacon Wind, a development off the coasts of New York and Massachusetts.
While wind, new transmission, and battery storage all face enormous headwinds in the current political climate — meaning that many peaker plants targeted by activists for retirement are likely to stick around for years yet — advocates remain adamant that a playbook exists for decarbonization. “In terms of replacing one-to-one capacity, we’ve been looking at battery storage even just at peaker plant sites that can be paired with renewables or grid connected batteries,” Ramanan said, adding that “really great work is also being done in terms of virtual power plants and demand reduction — because it’s not just about reducing peak capacity, it’s also reducing the peak overall.”
That raises a final, particularly thorny question: Is air pollution from peaker plants “worth it” if it means being able to run AC?
A 2018 follow-up study by the same team of researchers at the University of Wisconsin–Madison explored a similar question. They found that climate change alone would increase summer mortality related to the smallest airborne particulate pollution by more than 13,500 deaths, and ozone-related mortality by more than 3,500 deaths in a mid-century scenario. AC-driven power sector emissions — full-fleet numbers, albeit disproportionately including peakers — would, on top of that, account for 654 PM 2.5 deaths and 315 ozone deaths, a nearly 5% and 9% increase, respectively, over climate impacts alone.
Researchers credit access to air conditioning in the United States with a 75% decline in deaths, and modeling exercises frequently show that a blackout during a heat wave could realistically result in hundreds of thousands of people needing medical attention. But clean air advocates also point to examples like Astoria, where the denial of a permit to retrofit a peaker plant for slightly better fossil fuels resulted in the grounds being used for a renewable energy source instead.
It’s certainly not an easily replicable process given the current political and economic climate, but it also perhaps suggests a false dichotomy of peakers vs. AC. Affordable power and livable spaces are just two among a host of community needs energy and public health officials must keep in mind.
“It’s not enough to just replace the existing system with renewables and battery storage and have fewer emissions,” Ramanan said. “It also has to be equitable, because otherwise we’re just going to replicate the same issues we’re having now in different ways.”
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Spoiler: They’re mostly winners.
There’s seemingly plenty to celebrate in the Senate’s new 400-plus-page permitting reform bill, the Bipartisan American Affordability and Jobs Act, or BAAJA. The headline benefit — and the one drawing the most praise from energy hawks — is that expediting the buildout of energy infrastructure and transmission lines ought to bring tons more zero-carbon energy online. No doubt it will speed up fossil fuel projects as well, but modeling shows that renewables like wind and solar are disproportionately held back by the notoriously contentious and slow planning and permitting processes the bill seeks to overhaul.
Old-school renewables aren’t the only technologies that stand to benefit from BAAJA, however.
Here are four more climate tech sectors — and the startups working in them — that are probably pretty happy to see that, after four years of debate and countless failed negotiations, a permitting bill finally appears poised to become law.
No surprises here: It’s well known at this point that geothermal is a beloved bipartisan technology, and BAAJA affirms the government’s commitment to bringing more of this clean, firm energy source online as soon as possible.
The bill would categorically exclude drilling exploratory geothermal test wells from review under the National Environmental Policy Act, and exempt lower-impact activities such as mapping and surface surveying from NEPA entirely. It would also require the Interior Department to hold annual geothermal lease sales, and drop the federal drilling permit requirement for geothermal exploration on non-federal land, so long as the government owns less than half of the underground resource.
Next-generation geothermal companies such as Fervo Energy, Sage Geosystems, Mazama Energy, and Quaise Energy stand to benefit, of course, as finding viable sites to trial their tech and build early commercial projects requires plenty of mapping and exploratory drilling. This cohort aims to expand geothermal beyond the relatively small number of geographies with the ideal combination of high heat at shallow depths, naturally occurring subsurface water or steam, and permeable rock that conventional geothermal power plants rely on. But a company like Zanskar, which uses AI to identify overlooked conventional geothermal resources, stands to benefit, too — its approach also depends on scouting and drilling across many sites.
BAAJA is intent on advancing tech that can squeeze more capacity out of the transmission lines we already have. The bill requires utilities to conduct recurring evaluations on technologies that could increase the capacity of existing transmission infrastructure, such as higher-capacity replacement wires or monitoring systems that determine when the lines can safely carry more power. Investor-owned utilities have historically had little incentive to adopt any of this, since they earn money by building new infrastructure, not by making existing infrastructure more efficient. Now, that math could change. If the evaluations find this tech will provide net benefits, utilities are required to deploy it within a certain timeframe, lest the Federal Energy Regulatory Commission impose penalties.
That’s welcome news for dynamic line rating startups such as LineVision and Heimdall Power, which use sensors to monitor power lines in real time to determine when they’re capable of carrying more electricity than their fixed ratings allow. Companies building higher-capacity lines are also likely to see more business. This includes TS Conductor, which makes a carbon-fiber core wire that it says can double or even triple a line’s capacity, and VEIR, which originally aimed to build “high-temperature superconducting transmission lines,” though it recently pivoted to data center power solutions. Startups like NewGrid, whose software finds ways to avoid congested lines and route more electricity through the existing grid, could benefit, too.
The bill also opens doors for virtual power plants, networks of distributed energy resources such as rooftop solar panels, batteries, smart thermostats, and electric vehicle chargers that operate like a single power plant, responding to spikes in energy demand or shifting load to off-peak hours. Like grid-enhancing technologies, VPPs can reduce the need for new poles, wires, and power plants by making better use of the energy resources already installed in homes and businesses. And they also include an added perk: They pay these customers for adjusting their energy use when the grid needs it.
While FERC ordered grid operators to open their markets to these aggregators in 2020, implementation has dragged. BAAJA would speed things up by requiring operators to allow VPPs into their markets within 18 months of the bill’s passage and setting a low, 100-kilowatt threshold for device networks to be considered VPP-eligible. It would also require utilities to connect VPPs quickly and allow them to export power, while barring utilities from requiring aggregators to install the utilities’ own equipment like separate submeters and switches, which adds delays and added costs for hardware and installation. Separately, the bill directs the Department of Energy to fund efforts to streamline local government permitting and inspections for distributed energy resources like rooftop solar and batteries.
This is a boon for aggregators including Voltus, Renew Home, and David Energy, which sell grid services like demand response, capacity, and frequency regulation into utility programs and wholesale markets. Under this bill, they could do so more easily thanks to guaranteed market access and lower entry thresholds.
VPP software platforms like Leap could benefit, too. Leap helps manufacturers of devices such as smart thermostats and EV chargers enroll customers in VPP programs, so fewer utility equipment requirements and what will presumably be a much bigger addressable market would help. Home battery companies such as Lunar Energy and Base Power, which aggregate their residential batteries into VPPs, and smart panel-maker Span, which coordinates home appliances to respond to grid needs, could see similar benefits.
Hard rock mining is also among the bill’s clear winners. It clarifies that miners can use as much federal land as is “reasonably necessary” to store waste rock and tailings, and opens additional federal land for hard-rock mining leases. It also requires lawsuits challenging mining approvals to be filed within 150 days. Broader changes to NEPA, the National Historic Preservation Act, and the Clean Water Act will also accelerate the mining approval process.
This will undoubtedly be controversial for many climate advocates; while the energy transition demands more critical minerals, mining itself is a dirty endeavor. Yet there are a number of climate tech-adjacent companies focused on extracting, refining, and processing materials like lithium, nickel, cobalt and copper that stand to benefit.
One of the buzziest startups trying to develop new critical minerals mines, AI-driven exploration and development company KoBold Metals, is mainly working abroad right now. But a more favorable domestic environment could prove an enticement to invest more at home. Mariana Minerals, a software-driven developer working to bring mines online faster and cheaper, definitely stands to benefit given its current domestic focus. So could startups like Jetti and Endolith, which are developing technology to extract more copper from low-grade ores. Both work with existing mines, so could stand to profit from a domestic mining boom.
Of course not everyone will win here. For the horde of climate-tech adjacent startups trying to jump on the data center bandwagon — perhaps those working on chip cooling or capturing and recycling the waste heat from data center servers — maybe the added costs this bill imposes on data centers will reduce demand for their services just a bit. But I wouldn’t count on that. The bill certainly won’t stop the buildout so much as change who pays for some of the infrastructure required to serve it, shifting the cost of new power lines and grid upgrades from ratepayers onto the tech giants and developers themselves.
Then there are the myriad software startups such as Nira Energy, Paces, and Piq Energy that help energy developers navigate the grid interconnection process. Since the bill requires regional grids to streamline their queues, this could reduce demand for their services. But developers will still need to know where the grid has room and where projects pencil out, and utilities and grid operators will have to rebuild their interconnection processes, a transition that could generate demand for software of this sort.
There’s also just an array of climate industries that go largely unaddressed. While the Inflation Reduction Act offered incentives for practically every decarbonization technology under the sun, this bill is far more targeted, leaving sectors such as EV manufacturing, industrial decarbonization products like clean cement and steel, agricultural technologies, and methane abatement relatively untouched.
Carbon capture and removal projects, EV charging, and hydrogen get only minor nods: protection from administrative delays for carbon management projects and DOE funding to help local governments expedite permitting for EV chargers and hydrogen refueling stations. All of these industries could still benefit when building manufacturing plants or other facilities that need federal sign offs. But they could also lose ground if speedier approvals for fossil fuel infrastructure make cleaner alternatives less competitive.
On Korean reactors, California plug-in solar, and Europe’s green steel champion
Current conditions: Floodwaters from the remnants of Hurricane Polo breached a 20-foot dam in southern New Mexico, forcing evacuations • The Pacific’s active hurricane season continues as Hurricane Rachel threatens dangerous rip tides off Baja California • Further north in the Pacific, Tropical Storm Choi-wan is headed toward the Northern Mariana Islands.
It’s 417 pages — or, for those of you who think in such terms, roughly two-and-a-three-quarters the length of a standard environmental impact statement. And it the landed yesterday with much fanfare. The Senate’s grand compromise on permitting reform, dubbed the Bipartisan American Affordability and Jobs Act, or BAAJA, is packed with sweeping changes that promise to upend how data centers are built, whether transmission lines get constructed at all, and speed up deployments of all kinds of energy infrastructure. My colleagues — there are five bylines on this sucker, if you have any doubt about how seriously Heatmap is taking this — have a dense and comprehensive explainer here.
Whether the bill becomes law is another question. Already, House Democrats are casting doubt over whether they will vote for the legislation during the lame-duck session after Republicans likely lose control of at least the lower chamber of Congress in November’s midterm elections. “Most Democrats will want to see how things go on Nov. 3 and then do a reality check,” Representative Jared Huffman, a California Democrat, told Bloomberg reporter Ari Natter. “If we’re on our way to a majority in one or both Houses, it makes no sense to fold our hand when we could wait a few months and have a much better deal early next year.” Any hope of brokering a deal to vote on the bill before the election seems unlikely. A GOP source told me “there is no way” House Speaker Mike Johnson, the Louisiana Republican, “will call back people from the campaign trail to vote on this in the House.” So it may be too soon to turn the acronym into a name. But my humble suggestion is to pronounce BAAJA as BAH-zhuh, which sounds like Basha, my late grandmother’s name. I can only assume the rest of you are equally moved by that association.
South Korea is the only country in the democratic world with a strong, recent track record of building nuclear reactors competently and on time. Seoul’s state nuclear giant is also bound by a settlement with America’s flagship nuclear company, Westinghouse, which accused Korea Hydro & Nuclear Power of ripping off the design of the U.S. reactor, the AP1000. As a result, the Koreans can’t build their own reactors in North America or Europe. But in a bid to stave off President Donald Trump’s tariffs, South Korea has agreed to spend $200 billion on U.S. energy projects. That includes an investment into Alaska LNG, a major liquified natural gas terminal, a gas-fired station in Texas, and eight nuclear reactors, according to Bloomberg and Politico. The deal is the culmination of talks ongoing since the spring, as I previously reported, and comes amid swirling rumors in the South Korean press over whether Seoul could secure a stake in Westinghouse if the American company makes a debut on the stock market. In a statement, the Canadian uranium giant Cameco, which owns 49% of Westinghouse, said the eight reactors in the Korean deal “contemplates” the construction of as many as six new AP1000s and up to two Korean APR1400 reactors. Still, the company emphasized that it was focused on the Department of Energy’s condition loan commitment to finance AP1000 components for any joint venture between Westinghouse and a utility building one of its reactors. But it said that, if both the American and Korean reactors can be built successfully, “both technologies are expected to be deployed on federal sites designated” by the U.S. government, “beginning with the deployment of two AP1000 reactors.”
It’s unclear when the South Korean money will flow into actual projects on the ground. But New York is putting up dollars. On Tuesday, New York Governor Kathy Hochul awarded another $10 million to the New York Power Authority to support workforce development programs in a bid to train more people to staff the nuclear power stations her administration has tasked the state utility with financing. “Advanced nuclear is a cornerstone of my all-of-the-above strategy to keep the lights on and costs down for New Yorkers,” Hochul said in a statement. “The $10 million in funding approved today by the NYPA board will help ensure New York’s advanced nuclear future will be built by and for New Yorkers and also re-energize an industry that will create thousands of high-quality jobs while complementing our nation-leading efforts on wind and solar.” Canada, meanwhile, is upping its ambition. Saskatchewan’s provincial government announced plans this week to build at least two large-scale reactors by the early 2040s, NucNet reported.
When Secretary of Energy Chris Wright sat down with my colleague Robinson Meyer last week, he said he doubted the Trump administration would impose a temporary ban on exporting diesel amid record-high prices. But the Financial Times reported Wednesday that the White House was holding “crisis talks” to determine whether the move was merited. Experts have cautioned that it could lower diesel prices in the U.S. slightly, but would send prices soaring in Europe.
Russia, meanwhile, just renewed its ban on diesel exports, blunting both the effects of the global market chaos and the profits the Kremlin could be yielding given its rising crude exports, Bloomberg reported.
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California Governor Gavin Newsom signed a series of bills Wednesday that clear the way for more homeowners in the state to slash their electricity costs and personal carbon footprints. Under one new law, utilities will offer a voluntary incentive to electrify homes whenever the pipe connecting a home to a gas main line is due for replacement. Under another, homeowners and even renters will be able to install plug-in solar panels that can generate small amounts of electricity on roofs or balconies.
As grows a market in the nation’s most populous state, so goes the country. The so-called balcony solar bill in particular is expected to supercharge the market, making cheap, personal solar panels more widely accessible. As my colleague Katie Brigham wrote last year, plug-in solar is popular in Europe, and could find a big market in the U.S. New York, for example, passed legislation this spring, though Hochul has yet to sign it.
Europe once boasted two cutting-edge green industrial manufacturers, both in Sweden, with shared investors and executives. Northvolt, an electric vehicle battery manufacturer, declared bankruptcy last year. That left only Stegra, the green steelmaker. Shortly after Northvolt went under, Stegra went looking for another financial lifeline to cover the mounting costs of commercializing its renewable electricity-based method for forging steel. It ultimately received one from a French hydrogen investor. Now Stegra says it needs more money to complete its flagship first project in northern Sweden. The company named former Saab aerospace executive Håkan Buskhe as its new chief executive, replacing Henrik Henriksson who served in the top role since 2021. The new leadership’s review of its books and plans revealed “that additional capital is required to complete the project, as estimated costs of completing it are significantly higher than assumed in June.” The high costs “are mainly the result of substantial ramp-up costs following the prolonged scaling back of work earlier this year, as well as inflation.”
The U.S., meanwhile, may be getting what Canary Media called a “lower carbon steel mill” in Iowa. Mesabi Metallics, which is already building America’s first new iron ore mine in 50 years, announced plans this week for a $15 billion steel plant in southeast Iowa that would rely on what’s called direct reduced iron, a cleaner method of making iron than a traditional coal-fired blast furnace. As my colleague Emily Pontecorvo wrote last year, the Trump administration may have violated the law when it diverted Energy Department funding from a green steel project in Ohio to instead reboot a blast furnace. Hyundai is also building a gas-powered DRI steel mill in Louisiana, which the automaker plans to eventually run on low-carbon hydrogen, as I previously reported.

Before the artificial intelligence boom (and its less sexy older brother, the cryptomining boom), electricity demand growth was a problem many proponents of decarbonization actually wanted, because it would mean electrification was taking off. Last year, record EV sales translated into record 16% growth in electricity demand for charging the light-duty battery electric vehicles. But this year the growth fell by half to just 8%, according to the latest analysis by the U.S. Energy Information Administration.
Controlled Thermal Resources has completed key financial steps ahead of its planned Nasdaq debut.
California’s inland Salton Sea is a potential clean energy double dip, with vast and largely untapped geothermal hotspots for generating heat and electricity and rich deposits of lithium, manganese, and other critical minerals needed to fuel the battery revolution.
Now one of the companies looking to commercialize both resources is taking a big step toward debuting on the stock market.
On Thursday, Controlled Thermal Resources is set to announce that it’s converting $205 million of debt into equity ahead of a planned initial public offering on the Nasdaq later this year, Heatmap can exclusively report. Among the big investors swapping debt for a stake in the Imperial, California-headquartered startup is the automaker Stellantis, according to a source with direct knowledge of the deal.
“Like a lot of our colleagues in this industry, we need to raise a lot of capital to build out a multi-stage project,” Rod Colwell, CTR’s chief executive, told me this week. An IPO, he said, “is a mechanism that enables us to keep going back to the market as we build out our 650-plus megawatts and supporting infrastructure that follows.”
He declined to comment on what interest Stellantis, which owns brands such as Chrysler, Jeep, and Maserati, has in the deal. The Dutch auto giant did not respond to multiple requests for comment.
“Automakers who successfully build out a resilient EV supply chain, including mining and mineral processing, will be in a good position to compete as the U.S. auto market continues to evolve in the years ahead,” Corey Cantor, the research director at the trade group Zero Emission Transportation Association, told me via email. With electric vehicles sales also booming globally, “having a more resilient supply chain up and running soon is more important than ever.”
CTR isn’t pursuing a traditional IPO. Instead, the startup is planning to go public via a merger with a special purpose acquisition company, a so-called blank-check firm that’s already trading, allowing the actual primary entity to swiftly issue stock to retail investors. While plenty of SPAC deals have proven volatile in recent years, particularly in cutting-edge clean energy, geothermal stocks are particularly — forgive me — hot.
Fervo Energy, the country’s frontrunner in developing next-generation geothermal power plants, is racing to complete its first major facility, known as Cape Station. Shares in the Houston-based firm skyrocketed after its IPO in May, though the price has sunk in the intervening months.
With demand for electricity soaring, CTR shifted its strategy to focus on building its debut 50-megawatt geothermal power station. Power and heat from that facility will, in turn, be used to extract and process lithium and other minerals from the briny inland lake.
CTR said it aims to move forward with its plant next June, with the facility expected to come online in 2028.
“Shortly thereafter, we’ll be building out the critical minerals component,” Colwell said. “That’ll be commissioned in 2030.”
Editor’s note: This story has been updated to correct the generation capacity of CTR’s debut power station.