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Freezing temperatures plus late sunrises have led to some close calls in Texas.
The Texas grid has had two close calls already this week, leading ERCOT, the electricity market that covers about 90% of the state, to ask households, businesses, and government agencies to conserve energy due to high demand. These calls for moderation are nothing new — ERCOT issued several of them issued this summer, when temperatures were over 100 degrees Fahrenheit in much of the state. What’s new is that these calls weren’t coming on sweltering afternoons, but rather on freezing mornings.
Traditionally, we start to get nervous about the electric grid in the summertime around sunset. With air conditioners running and people getting home from work, demand for electricity goes up just as a major source of it (that is, solar power) starts to taper off. This effect is known in California as the “duck curve,” and in Texas as the “dead armadillo curve,” referring to the shape of graphs showing hourly demand on the grid.
The basic issue on very cold days like the ones Texas has been experiencing is that people wake up and start consuming electricity — especially heat, which is largely electric in Texas — before the sun comes up. Solar power provides around a fifth of the state’s electricity in the afternoon, even in winter. But at 7 a.m. on a January morning in Austin, the sun is nowhere to be found. Add on the fact that the rest of the system, especially its natural gas production system and power plants, is at risk of weather-related issues — sometimes literally freezing — and winter, especially winter mornings, become very touch-and-go.
While the Texas grid is unique in its relatively free-market organization and isolation from the rest of the country, it is certainly not unique in experiencing winter — if anything, more of the country may start to look like Texas. Not every decarbonized energy system would be at the mercy of very cold mornings, and batteries for storing excess electricity on the grid can help fill gaps when solar is unavailable. But decarbonization nationwide will necessarily lead to load growth, which means that making it so you can get out of bed and keep your toes warm will put pressure on electricity systems everywhere.
New England’s grid is forecasting that its winter peak demand will increase around 3% per year, three times faster than the summer peak, with some 3,000 megawatts of that 6,000 to 9,000 MW projected increase coming from electrification of home heating. In New York, grid planners expect heating-related demand to double over 30 years, and even surpass summer demand by around 2040 thanks to a combination of electric vehicle adoption and the use of heat pumps for home heating. In Quebec, which features a unique combination of extremely cold winter temperatures and plentiful green energy in the form of hydropower from its massive dams, plus home heating systems that are mostly electric already, demand tends to peak on very cold winter days.
While Texas is unlikely to pursue climate policy as aggressive as New England, New York, or (shudders) Canada, it does have a burgeoning renewables sector and an incumbent electrified home heating system that leaves it vulnerable to weather-dictated swings in demand.
And Texas has been uncommonly cold lately. In Austin, temperatures have remained below freezing since very early Sunday morning, dipping as low as 18 degrees on Monday and Tuesday mornings. In Houston, temperatures got as low as 20 on Tuesday morning. The system burst through its January demand record by 5,000 megawatts early this week, breaking a record set in late 2022 during Winter Storm Elliott.
This time, the grid was able to meet the high winter demand without malfunctioning, unlike during 2021’s Winter Storm Uri, when much of the state’s generation system tripped offline for days, resulting in prolonged blackouts and hundreds of deaths.
Since Winter Storm Uri, advocates and analysts have bemoaned that while Texas does have electrified heating, it tends to be inefficient resistance heat (think electric furnaces and baseboard heating) instead of more efficient heat pumps, which is then called upon to heat homes built with little or sometimes no insulation. At very low temperatures, according to one expert report on Winter Storm Uri, “uninsulated homes cannot be heated effectively.” Texas only adopted a mandatory building code in 2001; last year, the state’s Governor Greg Abbott vetoed a bill that would have updated codes for new buildings in the course of a fight with the state legislature over property taxes.
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Artificial intelligence wants the energy and has the money, and climate tech companies need buyers.
Their founders wanted to make transmission lines, powertrains, and electrical switches more efficient. Or maybe they wanted to unlock the potential of geothermal energy or low-carbon cement. Wherever they began, a bevy of deep tech climate startups, clean energy producers, and sustainable materials companies have found their way to the same destination: Building and powering data centers in the most energy efficient way possible.
“They might not have started out as data center companies, but they’ve been pulled — because of this huge market movement towards data centers — into being that,” Lee Larson, an investor at the venture firm Piva Capital, told me.
With power demand from artificial intelligence on track to grow as much as 30x from 2024 to 2035, and the Trump administration seeking to fast track data center buildout, there’s a wealth of opportunity — and literal cash — for startups that can help hyperscalers meet their clean energy targets while cramming as many high-powered computing chips into a data center as physically possible.
“I think the proportion of pitches that we see that reflects some kind of data center messaging has gone from maybe one out of 20 to one out of five,” Matthew Nordan, co-founder and general partner at Azolla Ventures told me. “It’s a lot.”
Perhaps the most obvious data center pitch is for companies offering clean, firm power or energy storage. In Azolla Ventures’ portfolio, that includes the geothermal exploration and development company Zanskar and the underground pumped hydro storage company Quidnet. While neither has announced any data center tie ups to date, both are having conversations with all the usual suspects — a group that includes Google, Microsoft, Amazon, and Meta. “Virtually any reasonably mature, ready to deploy clean, firm power technology company is talking to the same people,” Nordan told me.
Some big deals have already made headlines, especially in the nuclear and geothermal sectors. There’s Microsoft’s plan to reopen the Three Mile Island nuclear plant and Google’s deal with the small modular reactor startup Kairos, plus Fervo’s partnership with Google and Sage Geosystems’ partnership with Meta on the geothermal side. But fusion companies also see data centers as a viable option. Google already has an offtake agreement with Commonwealth Fusion Systems, while Microsoft has a deal with Helion Energy.
But it’s not just the big name cleantech companies that are turning into data center service providers. The AI boom also presents a major opportunity for deep tech startups working on electrical infrastructure. While companies in this sector might not scream “climate tech,” behind the curtain they’re driving significant gains in energy efficiency that data center operators are eager to tap into.
In Azolla’s portfolio, these include Scalvy, founded to build modular powertrain electronics for electric vehicles. The company’s small, distributed units connect directly to EV battery cells, converting DC power from the batteries into AC power for the motor. “The hyperscalers started coming to the company saying, can you do what you’ve done in reverse?” Nordan told me. “Can you take the AC coming in off the grid and then convert that to DC, and then interface with the load and energy storage systems?”
That proved easy, and now Scalvy’s small, building-block style approach allows data centers to control power flow on the server rack itself, as opposed to taking up valuable space with a separate power rack. While the details haven’t yet been announced, Nordan said the startup “has recently done their first agreement for data center power, and it’s with one of the large names that you would expect.”
Piva Capital has also invested in a number of under-the-radar companies in this arena — Veir, for instance, initially proposed to build “high-temperature superconducting transmission lines” that could carry electricity with near-zero resistance, and thus very low energy loss. But after seeing some early interest from data centers, the startup learned that hyperscalers were not only struggling to build transmission lines to their substations, but were also experiencing severe bottlenecks in their low-voltage distribution networks, responsible for getting power into and around data centers.
“We realized we can apply essentially the same superconducting technology that we’re targeting for transmission and distribution applications and build a low-voltage set of products for data centers, specifically, that can allow you to shrink the size and weight of conductors and bus bars [which distribute power within data centers] by 10 times,” Veir’s CEO Tim Heidel told me. With this newly refined focus, the company raised an oversubscribed $75 million Series B round in January, which included participation from Microsoft’s Climate Innovation Fund.
Piva is also an investor in Menlo Micro, a spinout from General Electric that uses a proprietary metal alloy to make high-performance electrical switches that are smaller, faster, and more energy efficient than the industry standard. The startup has already commercialized its tech for use in high-speed radio frequency devices, as well as for testing the performance of semiconductors.
Ultimately, the company is aiming to integrate its switches into a wide range of high-performance electrical equipment, data center power systems very much included. In this context, the startup’s switches could be embedded directly into semiconductor packages or circuit boards rather than installed on racks, leading to more compact and energy efficient data center power management. The switches’ small size and low resistance would also generate less heat than what’s used today, further increasing overall energy efficiency.
Menlo Micro’s CEO Russ Garcia told me that five years down the line, he expects a third of the company’s revenue to come from power applications such as data centers, growing to two-thirds in 10 years’ time.
Even sustainable materials companies are getting pulled in, Nordan told me. The primary example there is Sublime Systems, which inked a purchase agreement with Microsoft for up to 622,500 metric tons of low-carbon cement. The deal gives Microsoft the right to use the cement if and when it's useful, but more importantly, it entitles the tech giant to the cement's environmental attributes — that is, the carbon savings associated with producing it. The idea is that the tech giant can catalyze market demand without the emissions impact of shipping the cement to its data center sites.
Amazon has also invested in a number of companies in this sector, including Brimstone and CarbonCure, which are working to decarbonize cement and concrete, as well as Electra, which is working on green steel. The hyperscaler is also trialing products from Paebbl, which produces a carbon-negative mineral powder that can partially replace cement, on the construction of an Amazon Web Services data center in Europe.
While the current administration may not be exerting pressure on hyperscalers to reduce their emissions, Nordan told me that the tech giants are thinking about the long term. “If the tide turns and there will be real or effective costs to emissions in these data centers, they want to do everything they can to bankroll emissions reductions now. And that manifests itself in low-carbon cement, in green steel, in all sorts of technologies.”
At least some of the aforementioned investments — especially those that increase efficiency while decreasing the size of data center components — won’t necessarily lead to emissions reductions, however. Much as when the Chinese AI firm DeepSeek released its cheaper and more efficient AI model, the idea of Jevon’s Paradox looms large here. This is the theory that making products more efficient and cost-effective will lead to an overall increase in consumption that more than offsets the efficiency gains.
Heidel, for one, told me that Veir’s potential customers don’t see energy efficiency in itself as the startup’s main draw. “It’s actually the space savings, the real estate savings, the ability to lay out data centers and configure them in new ways,” he told me. Mainly what Heidel is focusing on with his customers-to-be is, “how much smaller can you make the building, or how many additional AI pods or servers could you fit into the same footprint, or how much higher of a server density could you achieve using our solution?”
Of course, one day Veir may fulfill its original dream of creating superior transmission infrastructure, just as Scalvy could circle back to its initial focus on EV drivetrains and Menlo Micro could wriggle its way into a whole host of electronic devices.
As Heidel told me, he sees this data center buildout as just the first push in what will be an ongoing effort to meet the world’s growing electricity demand. “If we can figure out how to serve all of this demand at the speed at which data centers are growing, and do so cost effectively, and do so in a low-carbon way, then we can take those learnings and apply them to all of the other industries that are coming in the future that'll also be facing enormous electricity demand,” he explained.
But for the time being, as Larson of Piva Capital told me, investors are simply trying to get their portfolio companies “to skate where the puck is going.” And that’s more than okay for Heidel. As he put it, there’s “so much enthusiasm for data centers today that we are having trouble just keeping up with all the interest in that market.”
On FERC’s ‘disastrous misstep,’ the World Court’s climate ruling, and 127 SMRs
Current conditions: West African countries including Guinea-Bissau, Guinea-Conakry, Senegal and The Gambia are facing flash flooding from heavy rainfall • The southwestern corner of New Mexico is suffering “exceptional” drought, the highest possible level in the U.S. Drought Monitor. • Already roasting in excessive heat, Des Moines, Iowa, is bracing for thunderstorms.
The Department of Energy canceled a nearly $5 billion loan guarantee for the Grain Belt Express, a transmission project designed to move wind power from Kansas to the industrial upper Midwest. After more than a decade of development, the power line won bipartisan support and secured $4.9 billion in federal financing late last year to fund the first phase of the project, running from Ford County in Kansas to Callaway County in Missouri.
As Heatmap’s Matthew Zeitlin explained, the project eventually drew the ire of Missouri Senator Josh Hawley, who recently stepped up his attacks in the hopes that a more friendly administration could help scrap the project. The transmission line’s developer, Invenergy, told Heatmap in a statement that “a privately financed Grain Belt Express transmission superhighway will advance President Trump’s agenda of American energy and technology dominance.”
The microreactor startup Oklo inked a deal with Liberty Energy, the fracking giant where Secretary of Energy Chris Wright served as chief executive before entering government. Liberty was already an early investor in Oklo, and Wright served on the nuclear company’s board. But the new deal is a strategic partnership with a plan to deploy Liberty’s gas equipment alongside Oklo’s reactors, mirroring similar pairings that other small modular reactor developers have promoted.
Oklo is among 127 small modular reactor designs currently under development worldwide, according to a new tally from the Nuclear Energy Agency at the Organisation for Economic Co-operation and Development, the 38-member club of rich countries. Of those designs, 51 are in pre-licensing or licensing processes, and 85 are in active discussion between SMR developers and site owners. Just seven are either operating or under construction.
The Federal Energy Regulatory Commission approved fast-track interconnection processes proposed by the Midcontinent Independent System Operator and the Southwest Power Pool. The new processes will allow power plants to sidestep the standard reviews for a grid hookup. Gas-fired power plants are “likely to be the main beneficiary of the fast-track processes, with standalone batteries also potentially being included,” Utility Dive reported. The American Clean Power Association, the biggest renewable energy lobby, called the decision “a dangerous misstep.”
Southern California’s landmark rule to spur the electrification of certain boilers and water heaters survived a major court challenge. A federal court last week upheld the first-in-the-nation regulation that applies to light-industrial and commercial boilers, steam generators, process heaters, residential pool heaters and tankless water heaters. The ruling, which only applies to the 17 million people in large parts of Los Angeles and its surrounding suburbs, could “help reenergize efforts around the country to replace fossil-fuel-burning equipment with electric heat pumps and other clean technologies,” Canary Media’s Maria Gallucci wrote.
Heatmap’s Emily Pontecorvo reported earlier this week on an effort in Newton, Massachusetts to beat back new gas pipelines block by block. But overall, the fight for electrification has recently faced repeated setbacks. In 2023, a federal court struck down the northern California city of Berkeley’s pioneering ban on new gas hookups, which was replicated in cities across the country. Last year, gas utilities staged something of a coup at the quasi-governmental organization that writes the building codes used in nearly every state.
Children stand outside a church destroyed in a cyclone in Vanuatu.Mario Tama/Getty Images
In a historic decision on Wednesday morning, the International Court of Justice ruled that countries must act on climate change. While non-binding, the verdict from the United Nations’ high court was dubbed “the biggest climate case in history,” as it established the first international legal precedent of a nation state’s responsibility to curb planet-heating emissions.
The tiny South Pacific island republic of Vanuatu called the ruling a “milestone in the fight for climate justice” and vowed to “take the ICJ ruling back to the United Nations General Assembly, and pursue a resolution that will support implementation of this decision,” said Vanuatuan climate minister Ralph Regenvanu. He anticipated opposition from Washington. “Even as fossil fuel expansion continues under the U.S.’s influence, along with the loss of climate finance and technology transfer, and the lack of climate ambition following the U.S.’s withdrawal from the Paris Agreement,” he said, “major polluters — past and present — cannot continue to act with impunity and treat developing countries as sacrifice zones to further feed corporate greed.”
Researchers at Japan’s Shinshu University have demonstrated for the first time that a new eco-friendly plastic made from microbes safely decomposes in deep ocean conditions
“This research addresses one of the most critical limitations of current bioplastics—their lack of biodegradability in marine environments,” said Professor Seiichi Taguchi at the Shinshu’s Institute for Aqua Regeneration. “The study provides a pathway for safer alternatives to conventional plastics and supports the transition to a circular bioeconomy.”
NextEra CEO John Ketchum projected serenity during the company’s earnings call Wednesday.
The business of renewable energy development in the United States is the business of NextEra. The company’s renewable division is one of the country’s largest and most sophisticated, with almost 30 gigawatts in its project backlog — including 3.2 gigawatts added in the past three months.
NextEra’s financial results and outlook for the future can be a guide to how the sector is thinking — or wants people to think it’s thinking — about the state of the development landscape. Now especially, that landscape looks confusing and contradictory, with power demand increasing sharply alongside hostility to wind and solar development.
The way NextEra sees it, NextEra will come through fine. But many other — especially many other smaller — players may struggle.
“Bottom line, America needs more electricity, not less,” NextEra Chief Executive John Ketchum told analysts during the company’s earnings presentation Wednesday.
“America needs it now, not just in the future. We are firmly aligned with the administration’s goal to unleash American energy dominance. And to do so, we need all of the electrons we can get on the grid. There’s truly no time to wait.”
That alignment may be one way, however. From sunsetting tax credits to ordering enhanced reviews of wind and solar projects by federal regulators, the Trump administration has made it clear that it does not see wind and solar as part of its energy strategy.
The rhetoric coming from Washington hasn’t been particularly constructive, either, no matter how often renewable energy companies try to label their work as part and parcel of an “energy dominance” agenda. Just in the past few weeks, Trump has claimed that China has “very, very few” wind farms (in fact it has very, very many), and Secretary of Energy Chris Wright called wind and solar a “parasite on the grid.”
NextEra is not unaware of the tone and policy emanating from the administration. The company issued a new risk disclosure, first noticed by analysts at Jefferies, saying that its guidance on future performance assumes “no changes to governmental policies or incentives, including continued applicability of existing Internal Revenue Service tax credit safe harbor guidance,” i.e. that it can “commence construction” the way it always has, by following existing IRS guidance.
Although that would be awfully nice, it may not be the case for much longer. Soon after signing the One Big Beautiful Bill Act, President Trump issued an executive order calling for “new and revised” tax guidance “to ensure that policies concerning the ‘beginning of construction’ are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
It doesn’t take a terribly close reading to intuit that Trump wants to narrow the window for renewables developers to claim tax credits even beyond what Congress has already done. According to conservative members of Congress who wanted the tax credits to phase out even sooner, the president was merely fulfilling a promise he’d made to win their vote.
Ketchum at least projected serenity about the safe harbor situation, telling analysts that the definition of construction has been understood “for well over a decade,” that it “is informed by longstanding Treasury Department guidance,” and that the OBBBA’s language “definition is consistent with the settled meeting.”
He also noted that NextEra had “made significant financial commitments over the last few years, including in the first half of 2025, to begin construction under these rules that were in effect at the time those commitments were made,” i.e. before the bill was signed.
“We believe that we’ve begun construction on a sufficient number of projects to cover our development expectations through 2029,” Ketchum continued, adding that the company has determined it will be eligible for tax credits based on “our belief as to what the statute provides based on our experience in this industry over the last couple of decades.”
If anything, Ketchum suggested, NextEra might be advantaged by the harsh deadlines for commencing construction (July 4, 2026) or being placed in service (the end of 2027) in the new law. “It comes down to who’s safe harbor, right?” Ketchum said. “We know we compete against a lot of really small developers who don’t have the balance sheet, the construction financing to do things around safe harbor.”
In this kind of environment, Ketchum said, size matters.
“If you’re in a market where you have folks drop out, right, because they didn’t plan ahead, they don’t have the ability to get construction financing, they don’t have the ability to safe harbor. It obviously creates bigger opportunities for us.”
NextEra could be left to pick up the pieces from smaller developers that don’t make it, Ketchum said. “If we do see some small developers kind of fall away, there’ll be more projects that could potentially hit the market and come up for sale.”