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On Thea Energy’s $100 million Series B, plus more of the week’s big money moves.
The enhanced geothermal darling is spending big on capex, but its shares will be structured more like a software company’s.
How China emerged the victor of the war with Iran.
Chicago-based Clean Core is set to announce a pilot deal to manufacture thorium-based fuel.
The nearly California-based company is buying a pipeline of projects from an unnamed Japanese developer.
The losers are myriad and most definitely include Gulf oil producers.
That means more electrification, more stockpiling, and more coal.
Much of the world — or at least much of Asia — seems to be responding to the energy stress caused by the Iran War by attempting to reshape itself in China’s image.
The oil, refined products, and natural gas that is supposed to be flowing through the Strait of Hormuz was largely destined for Asian countries, which are now learning a harsh lesson in the dangers of foreign fossil fuel dependence.
One country whose economy has been relatively resilient to the crisis, however, is China.
That’s despite the fact that China is the world’s second-largest consumer of oil (and its largest importer) and its third-largest consumer of gas (and largest consumer of liquified natural gas). But it has not seen the same type of immediate crisis that other Asian energy importers have. It may be the No. 1 customer of oil coming through the Strait of Hormuz (and especially Iranian oil, which is still flowing), but its main policy adjustment the government has made since the United States and Israeli attack has been to limit exports of refined products. It also came into the crisis with stockpiles of oil estimated at 1.4 billion barrels, more than three times the amount of oil the International Energy Agency coordinated the release of.
In the short run, many Asian countries, especially poorer ones, are embracing energy use restrictions, including limitations on driving and raising temperatures in government buildings, while some richer countries are able to increase supply by rebooting nuclear plants and upping capacity limitations on coal-fired power plants.
In the longer run, several countries are making investments in energy sources that are less dependent on imported fossil fuels. In Vietnam, the developer behind a planned liquified natural gas project asked the government to allow it to instead build a solar and batteries project. The Southeast Asian nation also inked a deal with Russia to work on its first nuclear power project.
There’s also early data of bottom up as well as top down embracing of electrification, with exports from Chinese EV juggernaut BYD increasing and “bustling showrooms across Asia,” Bloomberg News reported.
This has largely been China’s playbook. China’s energy policy has seen huge pushes in electrification, renewables, and clean energy, both at home (38% of its electricity comes from clean sources, and it’s responsible for more than half of world solar and wind capacity additions) and abroad, where China is the leading supplier of solar panels, batteries, and electric vehicles, and has made deliberate efforts to dominate global supply of clean energy technology through exports.
But the country is not pursuing a crash decarbonization policy in order to bring emissions down as fast as possible, in line with global targets. Instead, as Heatmap’s Robinson Meyer and Lauri Myllyvirta of the Centre for Research on Energy and Clean Air explained on a recent episode of Shift Key, China’s energy policy is based around several goals, some of which line up with decarbonization, and some of which don’t.
The first is energy security, and specifically mitigating dependence on seaborne imports of fossil fuels, which can mean both stockpiling oil and embracing renewables. The second is domestic air quality, which means strict particulate pollution policies, moving heavy industry closer to power sources in the south and west of the country and away from large cities in the east, and seeking to replace coal home heating with natural gas. And the third, as Myllyvirta put it, is “wanting to make sure that China has technological leadership [and] market leadership” in the energy technologies of the future, which can explain the industrial policy efforts around solar, batteries, and electric vehicles and their development into world-leading export industries.
This is also an approach to energy policy that’s perfectly consistent with burning and buying a lot of fossil fuels, as many Asian countries are looking to do today, with coal utilization going up as countries scramble to find new sources of imported natural gas.
Several energy analysts have forecasted that China’s experience of the Iran crisis will lead to increased stockpiling worldwide, and thus become a new source of incremental demand for oil, even if global demand for oil in transportation plateaus or falls.
“Countries that have been building their strategic storage — most notably China — look prescient today. Others may respond by starting to do the same,” a team of Morgan Stanley analysts wrote in a note to clients in the early weeks of the Hormuz crisis. “On paper, that is ‘inventory building.’ In practice, it behaves like incremental demand: persistent buying on dips, greater willingness to pay for security of supply, and a higher floor under the price distribution than we assumed before the Strait went quiet.”
And you can’t build stockpiles of oil to cushion disruptions to global trade without buying the oil in the first place. Those stockpiles presume that your economy maintains some base-level dependence on oil, which has become increasingly undesirable of late. China is also investing heavily in the coal-to-chemical sector, using coal as a feedstock for petrochemicals instead of oil or natural gas, which is carbon-intensive in the extreme.
Other countries are looking in the short run to increase coal output. While China has a largely domestic supply of coal, there are fewer bottlenecks for seaborne coal like the Strait of Hormuz for oil, as the former is available at scale from several countries (Indonesia, South Africa, Australia) that are not stuck behind a narrow and geopolitically volatile strait.
The other short-term lever some Asian countries can pull is nuclear power. Taiwan is looking to restart nuclear plants that it shut down last year, while several Southeast Asian countries had already made plans to build up their nuclear power resources. And earlier this week, Sri Lanka announced plans to rush forward a solar and batteries project and to look abroad for funding for a hydroelectricity project.
To the extent that any of these countries now experiencing energy hardship may be able to imitate the Chinese model, it will come at a substantial cost, not just in building up stockpiles that may go unused or infrastructure projects that are abandoned, but in closer links — and even dependency on outside sources for energy technology, cars, and critical minerals — on a rising regional hegemon instead of the vagaries of the world oil and gas market.
Countries may try to become more Chinese, but to China, they may just be customers.
News from Octopus Energy, Crusoe, Arbor, and Scalvy, plus more of the biggest money moves of the week.
I’ve said it before and I’ll say it again. It feels like overnight, every climate tech startup has suddenly become a data center startup. They’re either supplying power to hyperscalers, optimizing their operations, or divining ever more creative ways for them to circumvent the backlogged interconnection queue. Nearly all of the companies I highlight this week are helping data centers get up and running as quickly (not to mention cleanly) as possible, whether that was their original mission or not.
We’ve got Arbor, an energy startup built on rocket engine tech targeting data center customers as it signs a major power deal with GridMarket; power electronics startup Scalvy raising capital to bring its power electronics to server racks; renewable energy company and U.K. utility Octopus Energy acquiring a controlling stake in another VPP company that promises to help data centers come online faster; and data center developer Crusoe cutting two major battery deals at the CERAWeek energy conference.
In an attempt at balance, I’ve also included two pieces of non-data center news: A big fundraise for a fossil fuel industry-backed climate investment firm, and a report on a scrappy artificial intelligence startup, Everstar, which is partnering with the federal government to accelerate licensing for new nuclear reactors.
The energy company Arbor recently signed a deal with GridMarket, a company that helps facilitate the design and deployment of distributed energy projects for data centers and other industrial users, worth somewhere “in the single-digit billions of dollars,” Techcrunch reports. The nonbinding agreement will see Arbor providing up to 5 gigawatts of zero-carbon power to GridMarket beginning in 2029, contingent on its ability to hit manufacturing milestones.
Like so many other energy businesses, Arbor has adapted its strategy in response to the data center boom. Founded by SpaceX alums in 2021, the company developed a small, highly efficient turbine inspired by advances in rocket engine turbomachinery that gasifies biomass and combusts the resultant syngas with pure oxygen to generate electricity. The waste CO2 is then transported via pipeline for permanent storage. Because biomass has already sequestered carbon from the atmosphere, the process counts as carbon negative. But to meet soaring data center electricity demand, Arbor has now evolved its strategy to burn natural gas, too — making data center deployments easier to finance and build, while allowing projects to scale beyond the inherent fuel limitations of waste biomass.
Theoretically, Arbor’s data center customers could switch between different fuel sources if they so wish. “We see fuel flexibility as really important,” Arbor’s CEO Brad Hartwig told me earlier this month. “You can actually start at zero-emissions and then later go carbon negative. So we expect that will actually be a pretty compelling and central part of our offering, is this ability to not be locked into one fuel source.”
Arbor’s natural gas-fueled turbines will still be low-carbon because of the sequestered emissions, but not fully neutral due to unavoidable methane leaks in the natural gas supply chain. The 3D-printed machines ship as pre-assembled, 25-megawatt units, which can be combined into larger systems as needed. By 2030, the company aims to deliver over a gigawatt of new power capacity annually — still only a fifth of the total capacity outlined in its deal with GridMarket.
Like Arbor, distributed power company Scalvy wasn’t founded with data centers in mind. Its initial mission was to build modular powertrain electronics for electric vehicles, but the company has since pivoted to managing power flow on data center server racks. While power electronics typically take up their own shelves, Scalvy’s small, distributed units can work within the racks themselves to convert the AC power coming off the grid to DC directly at the load point, conserving space and thus allowing for higher-density computing.
Scalvy’s push into the booming AI data center market is looking like a wise move, as it announced an oversubscribed $13.9 million Series A funding round this week, which included participation from some climate tech venture firms such as Azolla Ventures and Climate Capital. The company hasn’t abandoned its roots, though, as it still lists electric mobility and energy storage among its priorities.
The value proposition is essentially the same across all these industries, Mohamed Badawy, Scalvy’s co-founder and CEO, explained in a statement — higher power without sacrificing space, cost, or system design. The startup will use this new capital to accelerate product certification, run field tests, and begin deployments with real-world customers. While Scalvy hasn’t disclosed any names, Azolla Ventures’ Matthew Nordan told me last year that the company has an agreement in place with a major data center operator that, as he put it, is “one of the large names that you would expect.”
About a decade ago, a multinational consortium of 12 oil and gas majors including ExxonMobil, Chevron, Saudi Aramco, and Shell, started the venture firm Climate Investment with a mission to back the next generation of infrastructure, which they supposedly believe will be “climate-based.” It can be hard to take the fossil fuel industry seriously on things like this, as the biggest companies in the space continually walk back their climate commitments and investments. But this week, Climate Investment announced a new commitment to climate initiatives — a $450 million growth fund intended to scale-up decarbonization technologies and help them bridge the dreaded “missing middle,” the gap in climate financing between a company’s early-stage funding rounds and its commercial deployment.
This is the firm’s second fund. The first — a $1 billion vehicle — focused primarily on carbon capture and storage as well as methane abatement across the natural gas value chain. This second fund, however, suggests a shift in priorities. Its four initial investments span AI-enabled infrastructure modeling, data center cooling systems, offshore geospatial data collection, and vapor recovery tech for oilfield emissions control.
To date, Climate Investment has backed more than 40 companies that it says have delivered over 150 million metric tons of cumulative emissions reductions.
Renewables-focused Octopus Energy has extended its tentacles across the U.K. to become the state’s largest energy supplier. Now it’s looking to further expand its footprint in the U.S., where it’s currently confined to Texas’ deregulated electricity market. With its recent acquisition of a majority stake in the distributed energy resource platform Uplight, Octopus is now positioned to become a key partner for a whole host of U.S. utilities seeking innovative ways to manage the rapid growth in data center-driven electricity demand.
Uplight, last valued at $1.5 billion in 2021, builds platforms for utilities and energy providers that aggregate distributed energy resources into so-called virtual power plants. VPPs respond in real-time to grid demands by ramping these distributed resources up or down, coordinating them to operate like traditional power plants while also shifting energy to off-peak hours as needed. If data center operators can finance or otherwise support the buildout of VPP infrastructure in their communities, they can essentially bring their own capacity to the market, making it faster to get online by avoiding the need to build additional energy infrastructure.
Octopus now has access to Uplight’s 85 utility partners and 8.5 gigawatts of distributed energy resources. Also participating in the deal was Schneider Electric, a previous investor that will remain a minority partner in Uplight, although the deal amount and other financial details have not been disclosed.
Data center developer Crusoe — which is reportedly eyeing a pre-IPO fundraise — cut two big deals at the CERAWeek conference this week. The first is a contract with Form Energy to buy 120 megawatts of its iron-air batteries, which would provide 12 gigawatt-hours of multi-day battery storage for AI data centers starting in 2027. Form — which has raised $1.4 billion to date — is on a tear recently, having just announced that it’s going to build a 30-gigawatt-hour battery for a Google data center in Minnesota.
Second, Crusoe announced an expansion of its existing partnership with the battery recycling-turned-energy storage company Redwood Materials, which recently raised a $425 million Series E round following its pivot to using second-life EV batteries for data center power. Redwood is already operating its first microgrid pilot in partnership with Crusoe in Nevada, where a 12-megawatt battery system with 63 megawatt-hours of energy storage supplies four of Crusoe’s modular, off-grid, and renewable-powered data centers.
Having deemed this initial deployment a success, Crusoe now plans to add an additional 20 modular data centers onsite, increasing the total compute capacity by nearly sevenfold.
Taken together, these two deals underscore just how far Crusoe has come from its original model of utilizing stranded natural gas from oilfields — which would otherwise be flared — to power bitcoin-mining operations.
Crusoe didn’t disclose terms for either deal.
Everstar, a startup building AI software to help nuclear companies speed up their regulatory timelines, announced a collaboration with the Department of Energy, multiple national labs, and Microsoft as a part of DOE’s Genesis Mission, a program designed to leverage advanced AI and other tools to accelerate scientific discoveries, including how energy systems are designed, tested, and deployed.
To demonstrate its capabilities, Everstar converted a required DOE safety analysis document into Nuclear Regulator Commission licensing documents in a single day — a process that typically takes a team four to six weeks. “We’re often looking at like 5,000- to 10,000-page documents submitted ad nauseam, until you reach 2 million pages to get approval,” Everstar’s CEO and founder Kevin Kong told me. Licensing applications are the first problem the startup has trained its models to handle, but it aims to extend into other areas of the nuclear value chain such as streamlining reactor design, plant operations, and manufacturing workflows.
“The ultimate goal of the company is to reduce costs of building American reactors on American soil by an order of magnitude, so we’ve got a much longer journey ahead of us,” Kong told me.
