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Climate Tech

Funding Friday: Stretching the Limits of Climate Tech

On Breakthrough Energy Ventures’ quantum computing investment, plus more of the week’s biggest money moves.

A Critical Loop power station.
Heatmap Illustration/Critical Loop, Getty Images

It’s been a busy week for funding, with several of the most high-profile deals featured in our daily AM newsletter, including Slate Auto’s $650 million fundraise for its stripped-down electric truck and Rivian’s partnership with Redwood Materials to repurpose the electric automaker’s battery packs for grid-scale storage.

These are clearly companies with direct decarbonization implications, but one of the week’s other biggest announcements raises the question: Is this really climate tech? That would be quantum computing startup Sygaldry, which recently nabbed $139 million in a round led by Breakthrough Energy Ventures to build quantum AI infrastructure. Huh.

Elsewhere in the ecosystem, the climate connection is a little more straightforward, with new funding for advanced surface materials designed to improve insulation and fire-protection, capital for microgrids that can integrate a diverse mix of generation and storage assets, and federal support for next-generation geothermal tech.

Sygaldry Snags $139 Million to Build Quantum-Powered AI

Quantum computing offers a futuristic paradigm for high-powered information processing and problem solving. By leveraging the principles of quantum mechanics, these systems operate in fundamentally different ways than even today’s most advanced supercomputers, encoding information not as ones and zeros, but as quantum units called “qubits.” Naturally, there is significant interest in applying this novel tech — which today remains error-prone and not ready for prime time — to artificial intelligence, with the aim of exponentially accelerating certain training and inference workloads.

Perhaps less intuitively, however, these next-generation computers are now viewed, at least by one prominent venture capital firm, as a key climate technology.

This week, quantum computing startup Sygaldry raised a $139 million Series A round led by Bill Gates’ climate tech VC firm Breakthrough Energy Ventures to build “quantum-acclerated AI servers” for data centers, which could reduce the cost and power required to train and operate large models. “The AI industry is advancing faster than ever and needs a breakthrough in performance per watt,” Carmichael Roberts, Breakthrough Energy Ventures’ chief investment officer said in the press release. “Sygaldry’s vision for bringing quantum directly to the AI data center has the potential to deliver exactly that, bending the cost and energy curve at the moment it matters most."

Certainly Sygaldry’s ultra-high-powered computers could help lower the energy intensity of AI workloads, but that is no guarantee that it will reduce AI and data center emissions overall. As was widely discussed when the Chinese AI firm DeepSeek released its cheaper, more energy-efficient model early last year, efficiency gains could reduce emissions in the sector at large, but they are perhaps just as likely — or some argue even more likely — to drive greater proliferation of AI across a wide array of industries. This unfettered growth could offset efficiency gains entirely, leading to a net increase in AI power demand.

NanoTech Materials Raises $29 Million for Heat- and Fire-Resistant Coatings

Buildings account for nearly 37% of domestic energy consumption, with heating and cooling representing the largest share of that load. But while energy efficiency strategies typically focus on upgrading insulation or adjusting the thermostat, there’s another approach — essentially painting the roof with sunlight-reflecting material — that has the potential to reduce AC demand and thus cut a building’s cooling-related energy use by up to 50%.

Just such a “paint” is one of the unique ceramic coatings developed by NanoTech Materials, which this week raised a $29.4 million Series A to scale its infrastructure materials business. Beyond roofing, the company also offers a fire-protective coating for wooden infrastructure such as utility poles, fences, highway retaining walls, and other transportation assets, as well as an insulative coating for high-heat industrial equipment such as pipes and storage tanks designed to slow heat loss and prevent burn risk.

“Today’s built environment demands materials that don’t just meet code, but can also outperform the extreme conditions we’re now facing,” said D. Kent Lance, a partner at HPI Real Estate Services & Investments, which led the Series A. Nanotech Materials currently operates a manufacturing facility in Texas and plans to use this new capital to further expand its operations as it conducts market research for its various product lines.

Critical Loop Lands $26 Million to Build Microgrids For Faster Grid Interconnection

Interconnection delays aren’t just a data center problem. Industrial developers working on everything from real estate and electric vehicle charging to manufacturing and aviation are also struggling to get timely and reliable access to power when building or expanding their operations. Enter Critical Loop. This modular microgrid company is building battery energy storage systems that can integrate batteries of varying sizes and specifications with a variety of power sources, including onsite solar, diesel generators, and grid power.

This week, the startup announced a $26 million Series A round, bringing total funding to $49 million across all equity and debt financing. Critical Loop’s approach combines a software platform with proprietary hardware — what it calls a “combiner” — which reduces the need for the many custom components typically required to connect a diverse mix of batteries and generation sources. “There’s a lot of power problems that are not getting solved because of limitations on an understanding of how to integrate different systems at a site,” Critical Loop’s CEO Balachandar Ramamurthy, told me last month.

The company’s initial product is a modular single-megawatt battery system that can be transported in shipping containers for rapid deployment in capacity-constrained locations. To date, Critical Loop has deployed about 50 megawatt-hours of microgrid assets, with plans to scale to over 100 megawatt-hours by year’s end.

DOE Announces $14 Million for Enhanced Geothermal Project in Pennsylvania

It’s been another exciting week for one of the few bipartisan bright spots in clean energy — geothermal development. My colleague Alexander C. Kaufman reported in this morning’s AM newsletter that the AI-native geothermal company Zanskar secured $40 million through one of the first development capital facilities for early-stage geothermal development, and now the technology has secured fresh capital from the fickle U.S. Department of Energy. Today, the DOE announced a $14 million grant to support an enhanced geothermal demonstration project in Pennsylvania that will convert an old shale gas well into a geothermal pilot plant.

Conventional geothermal systems depend on a highly specific set of subsurface conditions to be commercially viable, which includes naturally occurring underground reservoirs where fluid flows among hot rocks. By contrast, developers of enhanced geothermal systems effectively engineer their own reservoirs, hydraulically fracturing rock formations and then circulating water through those man-made fractures to extract heat that’s then used to generate electricity. A number of well-funded startups are advancing this approach using drilling techniques adapted from the oil and gas industry, such as Fervo Energy — which has an agreement with Google to supply electricity for its data centers — and Sage Geosystems, which has a similar tie-up with Meta.

“As the first enhanced geothermal systems demonstration site located in the eastern United States, this project offers an important opportunity to assess the ability of such systems to deliver reliable, affordable geothermal electricity to Americans nationwide,” Kyle Haustveit, the Assistant Secretary of the Hydrocarbons and Geothermal Energy Office, said in the DOE release. If successful, the Energy Department says the project could provide a replicable model for scaling the deployment of enhanced geothermal systems across a broader range of geographies.

Bonus: XPRIZE and Amazon Launch Critical Minerals Circularity Challenge

This week, the nonprofit XPRIZE organization announced that it’s partnering with Amazon to launch a new global competition focused on critical mineral circularity — redesigning how minerals such as lithium, cobalt, and nickel are recovered, processed, and reused. Demand for these minerals is projected to quadruple by 2040, but their supply chains remain largely concentrated in China, especially across refining, processing, and battery manufacturing.

The competition aims to catalyze breakthroughs in mineral recovery and recycling, materials solutions, and lower-impact extraction methods. It’s not yet open to submissions as organizers are still seeking philanthropic and corporate funding before entrepreneurs, startups, and research teams can submit their ideas for consideration. XPRIZE has been running challenges for three decades now, with past competitions revolving around carbon removal, adult literacy, and lunar exploration.

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Climate Tech

Funding Friday: Of Stellarators and SPACs

On Thea Energy’s $100 million Series B, plus more of the week’s big money moves.

Thea Energy.
Heatmap Illustration/Getty Images, Thea Energy

Nuclear is once again a dominant theme this week, with fusion startup Thea Energy landing a $100 million Series B that will help it expand its magnet manufacturing capabilities. While $100 million is nothing to scoff at, it somehow sounds modest alongside some of this year’s other deals, which include a $450 million Series A for Inertia Enterprises and $240 million for Shine Technologies. This week also brought the news that small modular reactor startup Newcleo plans to go public via SPAC later this year, bringing to mind the exuberance of the 2021 SPAC boom, in a deal expected to net a cool $429 million.

Elsewhere, gridtech company Utilidata raised fresh capital after (surprise!) pivoting to the data center market, while a standalone battery storage developer and operator is betting there’s still plenty of money to be made in the increasingly crowded ERCOT market.

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Spotlight

Democrats’ Growing Divide Over Data Centers

It’s pause vs pause-nots.

Data center protests.
Heatmap Illustration/Getty Images

The American climate movement is beginning to look a lot like AI doomers versus the techno-optimists. It’s a dynamic that is winning local bans – and very little else for now.

On one side, you’ve got the left-leaning insurgent grassroots movement against data centers. In many cases this push is in the name of climate action and environmental justice, with activists citing the risks of pollution from gas-fired power and the potential for strain on existing electricity supplies. But in many, many other cases, this movement is decidedly not about climate action; instead it’s a movement addressing everything from energy prices and power over large corporations to AI use generally.

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Hotspots

Local Police Targeted Data Center Opponent, Law Firm Alleges

And more of the week’s top news around development fights.

The United States.
Heatmap Illustration/Getty Images

1. Jefferson County, Alabama – A law firm is alleging that police in the city of Birmingham retaliated against a woman for suing developers of a data center. It might just be a wake-up call for data center developers.

  • Earlier this month, two individuals each with homes next to a proposed 300-megawatt data center in Birmingham filed a class action lawsuit against developer Nebius and the city of Birmingham. The lawsuit alleges “multiple independently fatal zoning violations” rooted in the city’s decision to let Nebius’s project move forward while also finalizing a moratorium, and claims the city has granted approvals in violation of the existing moratorium.
  • On May 18, days after the lawsuit was filed, lawyers for one of the individuals – Madelyn Greene – wrote the Birmingham Police Department stating officers pulled her over while driving through the proposed project site without any lawful reason. According to the letter, which I obtained and was first reported by AL.com, the officers claimed she was harassing police and started filming her while in her car. When she took her own phone out, the officers “abruptly broke off contact, returned to their vehicles, and left the scene.”
  • The letter concludes the traffic stop “timing and location are not coincidental.” It warned that any additional attempts by city police to “stop, detain, surveil, follow, photograph, intimidate, or otherwise harass” people involved in the lawsuit will result in requests for restraining orders.
  • Situations like these vividly illustrate the problems around security forces and large infrastructure projects. Activists fighting the Thacker Pass lithium mine in Nevada were monitored for years. Conflicts between police and oil pipeline protestors are common and complaints about surveillance abound.
  • I feel compelled to say that data center developers and large tech firms would be wise to coordinate with local police on matters such as these – not just for their own benefit but for that of the public. It’s one thing when protesters are arrested at a hearing, but wholly another when members of the public are concerned voicing dissent will lead to retaliation. All that’ll do is aggravate the opposition further.
  • Nebius did not respond to a request for comment.

2. Mason County, Kentucky – This county is the site of yet another eminent domain debacle and I suggest you pay attention to it because it’s now represented by an outgoing congressman with nothing left to lose: Thomas Massie.

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