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Deep Sky is running a carbon removal competition on the plains of Alberta.

Four years ago, Congress hatched an ambitious, bipartisan plan for the United States to become the epicenter of a new climate change-fighting industry. Like an idea ripped from science fiction, the government committed $3.5 billion to develop hulking steel complexes equipped with industrial fans that would filter planet-warming carbon dioxide out of the air.
That vision — to build regional hubs for “direct air capture” — is now languishing under the Trump administration. But a similar, albeit privately-funded initiative in Canada has raced ahead. In the span of about 12 months, a startup called Deep Sky transformed a vacant five-acre lot in Central Alberta into an operational testing ground for five different prototypes of the technology, with more on the way.
I had been following the project since early last year, after receiving roughly a dozen press releases from Deep Sky about all of the companies it was setting up partnerships with. But it was hard to believe the scope of the ambition until I saw it with my own eyes.
CarbonCapture Inc., one of the companies piloting its technology at Deep Sky, had originally planned to deploy in the U.S., but has since packed up and headed north. The Los Angeles-based startup recently shipped all the equipment for its first demonstration project from Arizona to the Deep Sky site on four flatbed trucks. On a crisp October day, under a bluebird sky, the company’s CEO Adrian Corless stood in front of the newly installed towering mass of metal fans and explained the move.
“Because of what’s been going on in the U.S. and the backing away from support of climate technology and carbon removal, we made a decision back in February that we were going to redirect our focus and effort to Canada,” he told an audience of Canadian officials who had come to see the tech up close.
“Eight weeks ago, this was just dirt,” Corless said. “Today, we’re actually going to bring the first of our modules to life.” Then he invited Danielle Smith, Alberta’s conservative Premier, to do the honors. She pointed her fingers like a pistol and yelled, “Hit it!”
Behind her, the fans started to whir.
Deep Sky is not like other companies working in direct air capture, or DAC. Whereas most startups are developing their own patented designs and then raising money to go out and build demonstrations, Deep Sky is solely a project developer. It buys DAC systems, operates them, and sells credits based on the amount of carbon it’s able to remove from the air and sequester underground. Other companies buy these credits to offset their own emissions.
In the spring of 2024, Damien Steel, Deep Sky’s then-CEO, explained the theory of the case to me. It takes a different set of skills to engineer the tech than to deploy it in the real world, he said, which requires procuring energy to run the system and developing storage sites for the captured CO2. “There’s a reason why renewable developers don’t build their own windmills and solar panels,” he told me.
DAC technology is nowhere near as advanced as solar panels or wind turbines. Removing carbon dioxide from the air, where it makes up just 0.04% of the total volume, is currently far too energy-intensive to be commercially viable. There are more than 100 companies around the world trying to crack it.
Deep Sky’s first ambition was to buy a bunch of prototypes, test them next to each other, and figure out which were the most promising. Steel told me he was in the process of acquiring 10 unique DAC systems to install at a “commercialization and innovation center” known as Deep Sky Labs.

By the end of that summer, the company had signed a lease for the site in Alberta. Less than a year later, this past June, it had completed initial construction and was ready to begin hooking up DAC systems. In August, it announced that it had successfully injected its first captured carbon into an underground storage well. I had never seen one DAC project in the real world, let alone five. The company suggested I come for a tour during CarbonCapture’s launch event in late October.
By then Steel, who joined Deep Sky after more than a decade in venture capital, had stepped down from the CEO role “for personal reasons,” he wrote in a LinkedIn post, though he stayed on as an advisor. My guide would be his successor, former Chief Operating Officer Alex Petre.
Deep Sky Labs, now called Deep Sky Alpha, is in Innisfail, a town of about 8,000 people surrounded by farmland and prairie. To get there, I flew to Calgary and drove 75 miles north on Highway 2, the primary throughway that connects to Edmonton. Innisfail is dense and suburban-looking, with an industrial corridor on the western edge of town. Deep Sky was on its outermost edge, on the site of a former sewage lagoon the town had recently reclaimed, and sat catty corner to a welding and manufacturing company, which, as I was later told — multiple times — was developing hydrogen-powered locomotives.
A bright white cylindrical building about the size of an airplane hangar, emblazoned with “Deep Sky” in big black letters, was visible from half a mile away. As I pulled up to the site, workers in neon vests and hard hats were scurrying among outcroppings of pipes and metal structures. Unsure of where to enter, I parked on the road and wandered up to some trailers outside the perimeter. Petre poked her head out of one and beckoned me inside an office, where she fitted me with my own vest and hard hat so I could get a closer look.
“This is the only place in the world where we are putting together different direct air capture technologies side by side,” she told me, as we passed through a gate and began walking the grounds. Other than the sound of trucks and excavators driving around, it was fairly quiet. None of the DAC units were operating that day — one was down for maintenance, one for the winter, and the rest were still under construction.
The first stop on the tour was a modest black shipping container labeled SkyRenu, a DAC company based in Quebec. It was the smallest system there, designed to capture just 50 tons of carbon per year — roughly the annual emissions from a dozen cars. Directly across from it, workers appeared to be fitting some pipe on a much larger and more complicated structure resembling Paris’ Pompidou Center. This was United Kingdom-based AirHive’s system, which would have the capacity to capture about 1,000 tons per year once completed.

DAC systems are feats of chemistry and mechanical engineering. At their core is a special material called a sorbent, a liquid or solid designed to attract carbon dioxide molecules like a magnet. The process is generally as follows:. First, the sorbent is exposed to the air, often with the help of fans. Once saturated with carbon, the sorbent is heated or zapped with electricity to pry loose the CO2. The resulting pure CO2 gas then gets piped to a processing facility, where it’s prepared for its ultimate destination, whether that’s a product like cement or fuel or, in the case of Deep Sky, a deep underground rock formation where it will be stored permanently.
Deep Sky’s aim was to trial as many iterations of the tech as it could at Alpha, Petre told me. That’s because what works best in Alberta’s climate won’t necessarily be optimal in Quebec or British Columbia, let alone hotter, more humid zones. “When the feedstock, which is ambient air, ends up being so different, we need multiple different technologies to work,” she said.
Case in point: A DAC system designed by Mission Zero, another U.K company, was offline the day I visited — and would remain so until next spring. It utilized a liquid sorbent and had to be drained so that the sorbent wouldn’t freeze when temperatures dropped below freezing overnight. The challenge wasn’t entirely unique to Mission Zero, however. “Everyone is struggling with winter,” Petre told me.

Alpha is piloting systems with liquid sorbents and solid sorbents, variations on the chemistry within each of those, and systems that use different processes to release the carbon after the fact. The development cost ran to “over $50 million” Canadian, Petre told me. The company raised about that amount in a Series A back in 2023. It also won a $40 million grant from Bill Gates’ venture capital firm Breakthrough Energy in December 2024, and this past June, the Province of Alberta awarded Deep Sky an additional $5 million from an emissions-reduction fund paid for by fees on the fossil fuel industry.
The company fully owns and operates almost all of the DAC units onsite, although it’s still working with the vendors to troubleshoot issues and sharing data with them to improve performance.
When it comes to Carbon Capture Inc., however, the arrangement is a bit different. Deep Sky has agreed to host the company’s tech, giving it access to power, water, and underground CO2 storage, but CarbonCapture will retain ownership and help with operations, and the two companies will share the proceeds from any revenue the unit generates.
Petre said the structure was mutually beneficial — Deep Sky gets to demonstrate its strengths as a full-service site developer, while CarbonCapture gets access to a plug-and-play spot to pilot its system in the real world. The U.S. company is also looking to expand in Canada. “There’s lots of potential collaboration down the line,” Petre said.
Before Trump arrived at the White House, CarbonCapture had been making aggressive plans to grow in the states. In the fall of 2022, before the company had even demonstrated its tech outside of a lab, it announced that it would build a project capable of removing 5 million tons of carbon per year in Wyoming by 2030. It later leased an 83,000-square-foot manufacturing facility in Arizona to produce the equipment for the project.
At the time, the Biden administration was integrating carbon removal — of which DAC is just one variety — into its “whole-of-governement” climate strategy. The Department of Energy rebranded its Office of Fossil Energy to reflect a new focus on “carbon management,” a broad term that encompasses carbon captured at fossil fuel plants as well as from the atmosphere. In addition to overseeing the development of the DAC Hubs, the agency was running more than a dozen other grant programs and research initiatives mandated by Congress that were intended to help the nascent industry get established in the U.S. Biden’s 2022 climate law, the Inflation Reduction Act, also increased the tax credit available to DAC projects from $50 for every ton of carbon stored underground to $180.
As helpful as all of that may have been for the nascent industry, Canada was arguably going further. In 2022, the country finalized its own tax credit — an investment tax credit — that would cover 60% of the capital cost of building a direct air capture plant. The approach, while inspired by the U.S. subsidy, is geared more at de-risking project development than rewarding project success. The following year, the province of Alberta said it would offer an additional 12% investment tax credit on top of that.
Alberta was also becoming a leader in developing carbon storage infrastructure. Despite — or, more likely, because of — its oil-based economy, the province views carbon capture and storage as a “necessary pathway” that “will help Alberta transition to a low-carbon future.” Canada is the fourth largest producer of crude oil in the world, and the bulk of it comes from Alberta’s environmentally destructive tar sands.

The government of Alberta owns most of the subsurface rights there, unlike in the U.S., where such rights are bestowed to landowners. That meant the province could simply offer companies leases to develop carbon injection wells. After two requests for proposals, the province selected 24 projects to “begin exploring how to safely develop carbon storage hubs.” A few of them, including Deep Sky’s storage partner — the Meadowbrook Hub Project north of Edmonton — are now operating.
Corless, of CarbonCapture, told me he spent a lot of time in Washington talking to the new staff at the DOE after Trump’s inauguration. It became increasingly clear to him that the DAC Hubs funding — and the general support for the sector enjoyed under the previous administration — would be going away.
By that point, the company had already planned to move its Wyoming venture to Louisiana after struggling to secure a grid connection at its original site. CarbonCapture had been awarded a DAC Hubs grant to conduct an engineering study for the project, but it received a notice from the DOE that the grant was canceled earlier this month. The company is still considering its options for how or whether to move forward.
On the same day the news leaked, CarbonCapture announced that it was shifting its plans to build a separate, 2,000 ton-per-year pilot plant from Arizona to Canada. Corless told me the company had originally planned to partner with a cement company to store the captured carbon in building materials, but Alberta offered more attractive commercial prospects. The company could more quickly access geologic carbon storage there, enabling it to sell carbon credits, which command a higher price than experiments in carbon-cured cement.
The timing of the announcement was pure coincidence. The poor prospects for an American DAC industry under Trump weren’t not a factor in the move, however. CarbonCapture wanted its pilot project to be a “springboard” for its first commercial plant, and Canada was attractive “given the favorable economic incentives, favorable regulatory environment, and the general positive interest in deploying DAC,” the company’s marketing director, Ethan Stackpole, told me in an email. “This is in contrast to the current atmosphere in the U.S.”
CarbonCapture signed a contract with DeepSky to host the pilot, dubbed Project Tamarack, in May, and set up a Canadian business entity called True North to build it. When I visited the site, the company was in the final stages of “commissioning” the unit, i.e. getting it ready to operate. The equipment had been manufactured at the company’s factory in Arizona, but it may end up being the only system produced there. The facility is now sitting idle.
Petre and I followed the tidy rows of wires and pipes that wound through Deep Sky Alpha, carrying electricity, water, and compressed air to each DAC system. A set of return pipes delivers the captured CO2 to Deep Sky’s central processing facility — the big white cylindrical building — where the company measures the output from each system before combining it all into a single stream. Inside, she showed me how the gas moved between large, tubular instruments that measure, dry, compress, and cool it into a liquid.
“Everything outside is first of a kind,” she said. “All of this equipment in here is fairly standard energy oil and gas equipment, it’s just arranged in a very different way.”
Sensors monitoring the wires and pipes enable Deep Sky to measure how much energy and water goes into producing a ton of CO2. Finally, trucks carry away the liquid CO2 to the Meadowbrook storage hub about two hours north, where an underground carbon sequestration well operated by a separate company called Bison Low Carbon Ventures provides it a permanent home.
While trucking the CO2 wasn’t ideal, the amount Deep Sky would capture at Alpha was so small that it made more sense to partner with Bison, which already had a permitted well, than to try to build one itself, Petre explained. When Deep Sky scales up at its next facility, which it expects to build in Manitoba, the company aspires to drill its own carbon sequestration wells on site.
Despite Alberta’s advantages for DAC, the location is not without drawbacks. The province had imposed a seven-month moratorium on renewable energy approvals from 2023 to 2024, which led to project cancellations and put development on ice. When the ban lifted, new regulations restricting wind and solar on agricultural land and near designated “pristine viewscapes” continued to make it difficult to build. Petre told me Deep Sky was one of only two companies in Alberta to secure a power purchase agreement with a solar farm last year.
“If I said, ‘I need 150 megawatts for my next facility right now,’ it would be a fairly difficult process,” she said. “There isn’t that much capacity online, and I would have to compete with data centers and a whole bunch of other folks who are also looking to come here and develop.” The company has started looking into building its own renewable energy supply on site, she said.
That anti-renewable sentiment stems from the region’s strong oil and gas identity. After my tour with Petre, I sat through a short program celebrating Project Tamarack’s launch, where Alberta’s Premier Danielle Smith conveyed her excitement by asserting that the province was “working to phase out emissions, not oil and gas production.” Alberta would double its energy production in the coming years, she said, while still reaching a goal of carbon neutrality by 2050.
Of all the extraordinary things I had seen and heard that day, this was the most brazen. The promise of direct air capture — the entire reason to expend time and energy and funds on plucking CO2 molecules out of the air — is that it’s one of the few ways to clean up the carbon that’s already in the atmosphere. Using it to offset continued oil and gas production might slow climate change, but there are a lot of other cheaper, more efficient, and more effective ways to reduce emissions — like switching to carbon-free power and electric cars.
I asked Corless about Smith’s comments later that day over coffee. Was it realistic to double oil production and go carbon neutral? He was coy. It would be very hard, he said. But it also depends on whether you’re talking about neutralizing the emissions from producing the oil versus from burning it. Corless seemed to view the argument as a political necessity, if a dubious one, to win government support for scaling DAC.
“I was hopeful that when the new administration came in, we could create an economic argument and tie what we’re doing to energy dominance and energy security,” he said, of the Trump administration. “It was just, I think, a bridge too far. Whereas here, that narrative is landing.”
Petre was more equivocal, responding that Deep Sky acknowledges that “we are not going to move away from oil and gas tomorrow,” and takes this as motivation to “get direct air capture to as low cost as possible and as easy to deploy as possible.”
In addition to the five DAC units currently installed at Alpha — SkyRenu, Airhive, CarbonCapture, Mission Zero, and a system from a German company called Phlair — Deep Sky has announced plans to bring two more units to the site from Skytree and GE Vernova. A few other deals are in the works but not yet public, Petre told me.
Even once Deep Sky Alpha has enough capacity installed to be printing carbon credits by the day, it won’t have proven that DAC is viable at scale. It’s not meant to. Many aspects of the facility are intentionally inefficient because of its nature as a testing ground.
“We had to do a lot of overspec-ing and oversizing of things,” Petre said. All the excess makes her optimistic about Deep Sky’s next project, however, where it will scale up a smaller number of systems to a much larger capacity. “If we can do something this complex, there’s a lot of room to simplify,” she said.
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On Tesla’s solar factory, Bolivia’s protests, and China’s hydrogen motorcycle
Current conditions: The East Coast heat wave is exposing more than 80 million Americans to temperatures near or above 90 degrees Fahrenheit through at least the end of today, putting grid operators who run PJM Interconnection and the New York electrical systems on high alert • Thunderstorms are drenching the United States’ southernmost capital city, Pago Pago, American Samoa, and driving temperatures up near 90 degrees • Some 3,600 miles north in the Pacific, Guam’s capital city of Hagåtña is in the midst of a week of even worse lightning storms.
American investment in low-carbon energy and transportation has fallen for a second consecutive quarter, ending an unbroken growth trend stretching back to 2019. In the first three months of 2026, total investment in those green sectors reached $61 billion, according to a Rhodium Group analysis published this morning. That’s a 3% drop from the previous quarter — and a 9% decline from the first three months of 2025. Contrary to the Trump administration’s claims to be overseeing a resounding revival of U.S. manufacturing, investments in clean technologies fell for a sixth consecutive quarter to $8 billion, down a whopping 34% from the first quarter of 2025. With federal tax credits for electric vehicles eliminated, investments into battery manufacturing plunged 47% year over year. At the state level, there’s been some progress. Virginia, Colorado, New Mexico, Oklahoma, Michigan, and New York all recorded their largest year-over-year increases over the past four quarters as clean electricity investments at least doubled in each state. “Wind was the primary driver in Virginia, New Mexico, New York, and Colorado; and solar in Michigan and Oklahoma,” the report noted. Sales of electric vehicles, at least on a worldwide level, are also gaining momentum: the International Energy Agency released a report this morning that forecast 30% of global new car sales will be battery electric this year.
The Tuesday night primary elections in six U.S. states, meanwhile, offered mixed results for clean energy supporters. Representative Thomas Massie, the dissident Republican from northern Kentucky who repeatedly broke with his party to criticize President Donald Trump and boasted of his off-grid home’s solar and battery system, lost by double digits to his White House-backed rival. Pennsylvania’s state Representative Chris Rabb, a progressive would-be “Squad” member whose platform mirrors the Green New Deal movement’s key policy demands, won the Democratic primary for the 3rd Congressional District spanning parts of Philadelphia.

During an appearance on Fox News last week, investor and “Shark Tank” star Kevin O’Leary vowed to release documents showing that opponents of the data center complex he proposed building in the Utah desert received funding from China, suggesting the protesters seeking to thwart his $100 billion megaproject were useful idiots in Beijing’s bid to hamper America’s technological progress. Now Secretary of the Interior Doug Burgum is echoing those claims. “It’s not organic and local,” he said Thursday on stage at the Alaska Sustainable Energy Conference in Anchorage, where he was the keynote speaker. “Some of this is foreign-sourced dark money coming in.” The link between rising electricity prices and data centers, he said, was “specious.” He went on to cite a specific example of a small town in North Dakota, from when he served as the state’s governor, where a billion-dollar data center project ended up reducing costs for ratepayers by paying a premium to “buy down” the price households paid. It wasn’t immediately obvious which project he was referring to. But my best guess from some cursory research is that he may have meant the Applied Digital data center in Ellendale, along the southeastern border with South Dakota. In 2023, Prairie Public reported that the facility helped bring down transmission costs, reducing ratepayers’ bills by as much as $61 per year.
Burgum also suggested that Democrats were inflaming the data center issue for political gain. But opposition spans the political spectrum. Tom Steyer, the billionaire progressive running for governor of California, on Monday walked back a response to a candidate questionnaire published by Greenpeace, in which he said he supported a pause on data center development. In a statement to Politico, campaign spokesperson Kevin Liao said that while Steyer wants to ensure protections for electricity prices and water resources, he does not support a temporary ban.
It appears Elon Musk is more likely to follow through on his promise to build enough manufacturing capacity to churn out 100 gigawatts of solar panels in the U.S. than to sell 500,000 Cybertrucks a year. Tesla has selected a site just outside Houston for a new factory that will expand the company’s capacity to churn out panels in its home market. That’s according to Electrek, which said it had independently confirmed a tip from a source pointing the publication to the Brookshire, Texas, site. The plant will be co-located with a battery factory that is already under construction at the same site.
“Any level of commitment to onshore the entire supply chain is a positive sign for American solar manufacturing and supply chain security,” Yogin Kothari, the chief strategy officer at the SEMA Coalition trade group that advocates for U.S. solar manufacturers against cheap Chinese imports, told me in a text message Tuesday night. “We can make solar panels here — we just have to have the commitment to do it.”
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New Yorkers could receive $200 rebates from the state as part of Albany’s effort to soothe the pinch of rising electricity prices. On Tuesday, Newsday reported that the program would be part of the state budget agreement, which Democratic Governor Kathy Hochul and the Democrat-led legislature are still working to finalize. It wouldn’t be the first check the Hochul administration is sending out to voters as the former lieutenant governor, who initially came to power when former Governor Andrew Cuomo resigned over alleged sexual misconduct, runs for reelection in November. Last year, in a bid to combat the sting of inflation, the state issued rebates ranging from $150 to $400 depending on filing status and adjusted gross income in 2023.
Though it’s home to the world’s largest known reserves of lithium, landlocked Bolivia’s vast resources have largely remained undeveloped after two decades of rule by a left-wing government leery of foreign investment. The right-wing government that finally broke the Movimiento al Socialismo party’s grip on power in La Paz last year has sought to tap the so-called white gold in its salt flats, particularly as Washington looks for new sources of metals outside of supply chains China largely controls. New documents published Tuesday by the left-wing journalist Ollie Vargas appear to show the Bolivia’s Public Prosecutors Office’s warrants to arrest protesters and labor leaders connected to recent nationwide strikes on charges that include terrorism. “Bolivia’s government has ordered the arrest of all the main leaders of the indigenous movements and mineworkers unions,” Vargas wrote in a post on X. “They’re being charged for Terrorism for having organised the general strike against hunger. Strike continues regardless, now in day 7.” Clashes between law enforcement and protesters started last week.
China’s hydrogen industry is booming. Its sales of electrolyzers are beating out domestic manufacturers in Europe. Fuel cell vehicles are hitting the roads. Hydrogen refueling stations are opening. But the Chinese hydrogen sector with the highest volume of orders coming from overseas is for something simpler: Two-wheeled, hydrogen-powered motorcycles. That’s according to the latest China Hydrogen Bulletin, in which analyst Jian Wu reported from the 6th China International Consumer Products Expo on the island province of Hainan that a maker of the motorcycles had secured $300 million in overseas orders.
The maker of smart panels is tapping into unused grid capacity to help power the AI boom.
The race for artificial intelligence is a race for electricity. Data centers are scrambling to find enough power to run their servers, and when they do, they often face long waits while utilities upgrade the grid to accommodate the added demand.
In the eyes of Arch Rao, the CEO and founder of the smart electrical panel company Span, however, there is a glut of electricity waiting to be exploited. That’s because the electric grid is already oversized, designed to satisfy spikes in demand that occur for just a few hours each year. By shifting when and where different users consume power, it’s possible to squeeze far more juice out of the existing system, faster, and for a lot less money, than it takes to make it bigger.
This is what Span’s smart panel does — it manages the energy drawn by household appliances to help homeowners integrate electric vehicle chargers and heat pumps without triggering the need for electrical upgrades.
Now the age of AI has opened up new opportunities for the company. Last month, Span announced the launch of XFRA, a device that works with Span’s smart panel to power AI applications by tapping into the unused electrical capacity available to homes and businesses.
The company refers to XFRA as a “distributed data center.” It’s sort of like if you chopped up a full-scale data center into washing machine-sized boxes and plugged them into peoples’ homes; Span’s smart panel then acts as a conductor, orchestrating XFRA’s energy consumption to take advantage of unused power capacity without stepping on the home’s other energy needs. In exchange for hosting one of these XFRA “nodes,” Span will offer homeowners and tenants deeply discounted, if not free electricity and internet service.
The idea sounded audacious, verging on fantastical, until I watched the economics play out in real time at one of Span’s labs in a warehouse south of San Francisco. Ryan Harris, the company’s chief revenue officer, showed me an XFRA prototype — a metal box about the size of a freezer chest stuffed with Dell servers and Nvidia liquid-cooled GPUs. Span was renting out the processing power from this node and six others to AI users through an online marketplace. On a computer screen next to the unit, a dashboard showed the revenue flowing in from the fleet — $500 over the past 24 hours, and more than $21,000 in the previous three weeks. The numbers continued to tick up as I stood there.
When I first planned to write about Span, XFRA was still a secret. I reached out because its smart panel business, which debuted in 2019, seemed to suddenly take off.
In February, Span announced that PG&E, the largest utility in California, would be installing its devices in thousands of homes beginning this summer. Then in March, the company revealed a partnership with Eaton, one of the biggest legacy electrical equipment companies in the world. Eaton is investing $75 million in Span and will begin selling co-branded electrical panels to its extensive network of distributors, installers, and homebuilders later this year. With the launch of XFRA, Span is becoming something like a utility itself. To date, the company has raised more than $400 million, and will soon close a nearly $200 million Series C.
Of course it will take more than smart electrical panels to serve data centers’ soaring power needs. In this era of unprecedented energy demand growth, building a bigger electrical system is unavoidable — but the size of the investment, and the cost impacts on everyday electricity customers, are malleable. Several recent studies have shown just how big the opportunity is to get more energy out of our existing infrastructure if the entire system can become a bit more flexible.
Last year, Duke University researchers found that on average, the U.S. is utilizing only about half of our electricity generation capacity. Nationwide, they estimated, the grid could accommodate at least 76 gigawatts of new load — close to the total generation capacity installed in California — without having to upgrade the electrical system or build new power plants, so long as those new end-users were somewhat flexible with when and how much electricity they used.
More recently, in a report commissioned by a coalition called Utilize, of which Span is a member, the Brattle Group found that milking just 10% more from our existing grid infrastructure on an annual basis could reduce electricity rates for all end users by 3.4%. Utilities can sell more energy, faster, and spread the fixed costs of running the system across more customers.
What all this meant in practice did not fully click for me until I saw a demonstration of Span’s panel at the lab a few weeks ago. Harris, the CRO, led me to a free-standing wall lined with household appliances, a stripped-down version of an all-electric home. A minisplit heat pump whirred while a high-speed electric vehicle charger was juicing up a Rivian parked on the warehouse floor. A TV screen displayed the amount of power going to each device, as measured by Span’s electric panel.
Together, the heat pump and charger were using about two-thirds of the electric capacity of this demonstration home, which was running on a 100-amp utility service connection. The charger alone was using 48 amps.
The owner of this theoretical home would typically not have been allowed to install such an energy-intensive EV charger without upgrading to 200-amp service. Electric codes require that residential electrical systems have room for the rare scenario that a home’s major appliances all run at once, for safety reasons. Otherwise, the occupants might accidentally try to draw more power than their utility connection can deliver, overheat their wires, and start a fire. 100-amp connections are exceedingly common in homes designed to use gas or propane for cooking and heating, but once you replace those appliances with electric versions, or add an EV charger, you start to push the limit.
A service upgrade to 200 amps can take many months and cost several thousands of dollars. The utility typically has to run new wiring to the house, and might even have to augment the grid infrastructure serving the neighborhood.
Span’s smart panel offers an alternative.
“Shall we turn on some load?” Harris said. An engineer on Span’s product team turned on the demo home’s electric water heater, and I watched as the chart on the screen adjusted. The water heater jumped from zero to 22 amps, while the EV charger’s amperage decreased from 48 to 33. When the engineer switched on the clothes dryer, drawing 24 amps, the EV charger’s amperage dropped further.
The electrical panel was tracking how much power was flowing to each of its circuits and throttling the EV charger in response. When the team dialed up the electric stove to heat a pot of water, the EV charger shut off altogether.
Next, Harris requested a boost to the “garage” sub-panel, simulating a hot tub or some power tools kicking on. Soon, the water heater shut off, too. “You have 50 gallons of hot water, so it’s not going to have any negative impact on the customer in that moment,” Harris told me. He showed me an alert that appeared on the Span phone app notifying the homeowner that the system was temporarily limiting power to the EV charger and water heater in order to power other devices.
Users can choose which appliances the system bumps first. While some devices, such as EV chargers, water heaters, and heat pumps, have the ability to be ramped up and down, others will simply shut off.
At $2,550 excluding labor for the smallest, most basic smart panel, and just over $4,000 for the biggest one, Span is more expensive than the average dumb panel, which can come in under $1,000. Depending on the home and the complexity of a service upgrade, however, it’s often cheaper to install Span than to move to 200 amps. It’s also almost certainly faster.
Span’s first generation product couldn’t do any of this. Initially, the company’s value proposition was just to give people more control over their energy usage. The original Span panel gave homeowners with batteries the ability to select which devices they wanted to power during an outage and ensure they didn’t accidentally lose charge on non-essentials. The company had to build an initial customer base and validate the technology in the real world, Rao told me, before it could earn the credibility (and the capital) to deploy the fully realized version of the product.
In 2023, Span debuted “PowerUp,” the software that makes what I witnessed at the lab possible. With PowerUp, Span’s smart panel went from being a cool gadget to a money-saver, helping homeowners skip utility service upgrades. The success of PowerUp opened the door for Span to engage with larger partners, starting with homebuilders.
“We had to demonstrate that we were safe and scalable in the home retrofit category to then get homebuilders — who are typically very, very cost sensitive, are not often at the tip of the spear in terms of technology adoption — to say, this is a proven technology, and it saves you money,” said Rao.
Residential developers face similar problems as homeowners, but on a bigger scale. While 200-amp connections have become more standard over the past few decades, new electrical codes that require either fully electric or electric-ready construction are pushing the limits.
“Now the load calculations will put them at 300 or 400 amps of service per home,” Rao told me. “Multiply that by a community of 500 homes, and suddenly you’ve doubled the amount of interconnection you need to bring from the utility.”
This raises the cost of development, and it can also increase the wait time — potentially by years — to get hooked up to the grid. Again, Span offers an alternative. To date, nearly half of the top 20 homebuilders across the U.S. have used the company’s technology, Rao told me. More broadly, its electrical panels have been installed in tens of thousands of homes in all 50 states.
I should note that Span is not the only solution on the market for homeowners or homebuilders to avoid service upgrades — the main alternative is just choosing appliances that don’t use so much power. There are water heaters, clothes dryers, and EV chargers on the market that run on lower amperage, and startups like Copper and Impulse Labs are making stoves with integrated batteries that enable them to do the same. There are also Span-adjacent technologies such as smart circuit splitters that let you plug two power-hungry devices, like an EV charger and a clothes dryer, into the same circuit, and the device will safely modulate power between the two.
“You can hack your way around both problems — one, of a panel upgrade, and two, a Span upgrade, which is also expensive — with cheaper solutions,” Brian Stewart, the co-founder of Electrify Now, a group that provides education and advocacy on home electrification, told me. “But it’s less elegant, let’s just say, than the Span solution.”
Though he started at the home level, Rao has always had his sights set on a much bigger customer — utilities. Several Span executives I spoke to referenced an “infamous” Powerpoint slide from the early days of the company with a bar chart that showed how the company would scale in three phases. First came “back-up,” referring to Span’s initial home battery management product. Next was “power-up,” the software that enabled electrification by avoiding service upgrades. The third was “fleet.”
The same safety principles that trigger service upgrades at individual homes also apply upstream at the neighborhood level. For example, the size of a neighborhood’s transformer, the equipment that changes the voltage of the electricity as it moves along the grid, depends on the combined amperage of the homes it serves. If all those homes are installing EV chargers or heat pumps or whatever else and starting to use more electricity, the utility will have to upgrade the transformer — a cost that gets spread across all of its customers. If a critical mass of the homes have Span panels, however, they can avoid this.
Partnering with major homebuilders earned Span “the right to sit at the table with utilities,” Rao told me, “and say, look, we’ve done this at the home level, at the community level. Imagine if you could do this at the grid level, where the benefit doesn’t just accrue to individual customers or home builders, it can accrue to all rate payers?”
I got a taste of what this looks like back at the lab, where Harris showed me Span’s “fleet capability.” There were actually three demonstration homes set up on the warehouse floor, and Harris showed me how a utility could coordinate a response across multiple Span panels to keep a neighborhood within its safe energy limits.
Imagine it’s a really hot day, and the utility is on the verge of having to institute rolling blackouts. Instead, it can implement what’s called a dynamic service rating event, sending a signal out to the Span panels served by a given transformer to reduce their electrical limit from 100 amps to 60, for example. Rather than the entire neighborhood losing power, a few homes would see their EV charging cut back or their thermostats go up by a few degrees. Of course, not everybody will want to give this kind of control to the utility; customers often cite concerns about comfort and convenience as reasons they are skeptical of these kinds of programs. When I asked Harris whether participating would require that Span customers opt in, he said it was more likely to be opt-out.
Span has done several pilot projects testing this capability. Installing electrical panels is too complex for utilities to do en masse, though. So the company developed Span Edge, a smaller version of its panel that can be installed at a building’s electricity meter. It does all the same things the larger electrical panel does, without needing to serve as the home’s central nervous system. It still enables homeowners to avoid service upgrades by throttling EV chargers or whatever other devices are hooked up to it, but it’s much simpler to install.
This is the device that the California utility PG&E will begin deploying in homes later this summer. The company will offer Span Edge to homeowners who are installing appliances that might trigger an electrical upgrade, or are considering doing so in the future, through a program called PanelBoost. It’s entirely voluntary, and while participants will have to pay for installation, the panel itself comes gratis.
“This is the first time that there’s a large-scale direct purchase of Span equipment by a utility,” Alex Pratt, Span’s vice president of business development, told me. “This has long been the North Star for the company.”
Paul Doherty, the manager for clean energy and innovation communications at PG&E, told me the company saw Span Edge as a “win, win, win for PG&E, for our customers, and for the environment.” It enables customers to electrify their homes more quickly and affordably, and for PG&E to sell more electrons without raising rates.
“We’re very bullish about the opportunity for this technology and the benefit that it will bring for the grid and for our customers here in California,” Doherty told me.
Rao sees XFRA as a natural evolution of Span’s basic premise. The company has found that 98% of its customers that have 200-amp service connections have about 80 amps available at any given time, Harris told me. Hosting an XFRA node enables homeowners to monetize that unused capacity.
To start, Span is prioritizing getting XFRA into newly built homes, where the developer handles customer acquisition and installing at scale is straightforward since every home is roughly the same. The company has partnered with the developer PulteGroup to roll out a 100-home pilot program for a total of over 1.2 megawatts of compute capacity. The partners have not specified where it will be yet or whether there will be a single offtaker for the compute.
In the longer term, Rao told me, XFRA could be the “unlock” that makes electrification more affordable for people. “There is a utopian end state in my mind where XFRA allows more of our customers to get free energy, free backup, and free internet,” he said.
First, the company will have to find out if anyone is actually willing to let XFRA into their home. During my final conversation with the CEO, after my lab visit, he showed me the infamous slide forecasting the company’s growth from “back-up to power-up to fleet.” The y-axis on the chart showed the number of homes per year the company could address at each stage. The bar for back-up systems landed at 5,000 per year, Power-up came to nearly 100,000. Suffice it to say, Span hasn’t hit these numbers.
“Are you where you want to be today?” I asked him.
Of course, he wasn’t going to say no. “We have contracts in place for hundreds of thousands of homes already with utilities,” he said. “Right now our focus is on execution — delivering on that scale, as opposed to finding that scale. It’s a deployed product, it’s not a downloadable app, so it takes time to physically deploy hundreds of thousands of endpoints. So I think that scale is coming.”
After years of dithering, the world’s biggest automaker is finally in the game.
The hottest contest in the electric car industry right now may be the race for third place.
Thanks to Tesla’s longtime supremacy (at least in this country), its two mainstays — the Model Y and Model 3 — sit comfortably atop the monthly list of best-selling EVs. Movement in the No. 3 spot, then, has become a signal for success from the automakers attempting to go electric. The original Chevy Bolt once occupied this position thanks to its band of diehard fans. Last year, the brand’s affordable Equinox EV grabbed third. And then, earlier this year, an unexpected car took over that spot on the leaderboard: the Toyota bZ.
The surprise is not so much the car itself, but rather its maker. Over the years, we’ve called out Toyota numerous times for dragging its feet about electric cars. The world’s largest automaker took the hybrid mainstream and still produces the hydrogen-powered Mirai. Nevertheless, Toyota publicly cast doubt about the viability of fully electric cars on several occasions and let other legacy car companies take the lead. Its first true EV, the bZ4X, was a disappointment, with driving range and power figures that lagged behind the rest of the industry.
Suddenly, though, the Toyota narrative looks different. Working at its trademark deliberate pace, the auto giant is revealing a batch of new EVs this year, just as competitors Ford, GM, Honda, and Hyundai-Kia are pulling back on their electric lines (and writing off billions of dollars to tilt their companies back toward fossil fuels). There is the Toyota bZ, which Car and Driver called “quicker, nicer inside, and better at being an EV” than the bZ4X, its predecessor. There is the C-HR, a small crossover that had been gas-powered before it became fully electric this year. And there is the large Highlander SUV, a popular nameplate that’s about to become EV-only.
To see what’s changed with the cars themselves, I test-drove the C-HR last week. A decade ago, I’d taken its gas-powered predecessor on a road trip down Long Island and found it to be a fun but frustrating vehicle. Toyota went way over the top with the exterior styling back then to make the little car scream “youthful,” but under the hood was a woefully underpowered engine that took about 11 seconds to push the C-HR from 0 to 60 miles per hour. Now, thanks to the instant torque of electric motors, the new version finally has the zip to go with its looks: It’ll get to 60 in under five seconds, and feels plenty zoomy just driving around town.
Inside, C-HR feels like an evolved Toyota that isn’t trying too hard to be a Tesla. The brand took the two-touchscreen approach, with a large one in the center console to handle main functions such as navigation, entertainment, and climate control, and a smaller one in front of the driver’s eyes where the traditional dashboard would be. There are still physical buttons on the wheel to manipulate music volume and cruise control, but climate controls are entirely digital.
The big touchscreen is a work in progress. It’s too crowded with information compared to a clean overlay like Tesla’s or Rivian’s, and the design of the navigation software had some profound flaws. (Whether you’re using the voice assistant or keyboard input to search for a destination, the system lags a troubling amount for a brand-new car. Maybe Toyota just expects you to use Apple CarPlay and ignore its built-in system.) Still, the interface is more iPhone-like and intuitive than what Hyundai and Kia are using in their EVs.
Here’s the real problem with the C-HR: Although it accomplishes the mission of feeling like a fun-to-drive Toyota that happens to be electric, it’s not terribly good at being an electric car. The Toyota lacks one-pedal driving, the delightful feature where the car slows itself as soon as you let off the accelerator, negating the need to move your foot between two pedals all time. Nor does it have a front trunk, a.k.a. frunk, the fun bonus on EVs made possible by the absence of an engine. According to Toyota, the C-HR is so small that engineers simply didn’t have room for a frunk (or a glovebox, for that matter).
The C-HR’s NACS charging port makes it possible to use Tesla Superchargers, and its charging port location on the passenger’s side front should make it simple to reach them. But instead of sitting on the corner of the car, easily reachable by a plug right in front of the parked vehicle, the port is several feet back, just behind the front wheel. And its door opens toward the charger, so the cord has to reach over or under the door that’s in the way. I made it work at a Supercharger in greater San Diego, but only after several frustrating tries and with less than an inch of cord to spare.
Those are the complaints of a longtime EV driver, and they might not matter to some C-HR buyers. The deepest oversight is the C-HR’s nav, which, at least right now, doesn’t have compatible charging stations built into its route planning — a warning message will notify you if the chosen route requires recharging to reach the final destination, but the car won’t tell you where to go. This is a glaring omission for potential buyers who’ll be taking their first EV road trip. (Get PlugShare, folks.) Planned charging is effectively an industry standard — even Toyota’s legacy competitors like Chevy and Hyundai will choose appropriate fast-chargers and route you to them, even if their interface isn’t as seamless and satisfying as what’s in a Tesla or Rivian. At least that’s a problem that could be solved later via software update, though.
Because of these faults, it’s difficult to imagine someone choosing this as their second or third EV. But maybe that’s not the game at all. There is a legion of Toyota drivers out there, many of whom might think about buying their first electric car if their brand built one. Despite its flaws, the C-HR is that. It’s got enough range for city living and occasional road trips, enough power to be fun to drive, and a Toyota badge on the hood.
Whatever their quirks, the very existence of the C-HR and its electric stablemates is a testament to Toyota’s plan to play the long game with EVs rather than ebb and flow with every whipsaw turn in the American car market. And they’re here just in time. Amidst volatile oil prices because of the Iran war, drivers worldwide are more interested in going electric.
In the U.S., that interest has buoyed used EV sales — not new — because so few affordable options are on the market. Although C-HR starts near $38,000, Toyota has begun to offer discounts that would bring it in line with gas-powered crossovers that are $5,000 cheaper. Maybe that’ll be enough for the subcompact to join its bigger sibling, the bZ, on that list of best-sellers.