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The government agency is quietly funding some of the industry’s most exciting early stage companies.
When the George W. Bush administration established the Advanced Research Projects Agency - Energy, better known as ARPA-E, the number one goal for the new agency sounded an ambitious and patriotic note: “To enhance the economic and energy security of the United States through the development of energy technologies.” And from that uncontroversial foundation, a bipartisan bastion of cleantech innovation was born.
I knew I wanted to dig into the critical role that ARPA-E plays in the climate tech funding landscape after Rajesh Swaminathan, a partner at Khosla Ventures, told me that he views the agency as the “least talked about VC in town.” So I reached out to ARPA-E’s director, Evelyn Wang, to learn more.
Of course, ARPA-E isn’t actually a venture capital firm — it provides no-strings-attached funding to promising energy projects rather than aiming for a return on investment. “So a little bit different,” Wang told me. “Our mission is very much focused on energy independence, reducing greenhouse gas emissions, and enhancing energy efficiency.”
The Bush administration established ARPA-E in 2007 with the passage of the America COMPETES Act, which aimed to improve the technological competitiveness of the United States via investments in research and development. But the agency was funded for the first time in 2009, under Obama, as a part of an $800 billion stimulus package in response to the Great Recession. A substantial chunk of that funding — $90 billion — was allocated for clean energy, which the administration would go on to boast amounted to the “largest single investment in clean energy in history.”
Yet whether it’s been Bush or Obama — or Trump or Biden — in the White House, the messaging around ARPA-E has always trended less towards renewables and climate mitigation and more towards energy security and economic competitiveness. As the name suggests, ARPA-E is modeled after the Defense Advanced Research Projects Agency, or DARPA, which was established in 1958 in response to the Soviet’s launch of the Sputnik satellite. DARPA has since helped birth such little-known tech as the entire internet, GPS, automated voice recognition, and self-driving cars.
But while the de facto customer for DARPA-developed tech is always the Department of Defense, the pathway to commercialization for ARPA-E projects mainly relies on private sector interest. In that sense, the goal of ARPA-E is neatly aligned with that of venture capitalists: Get tech to market. Because while scientific learnings are all well and good, Wang said that “ultimately, we need to see these technologies commercialized — to actually be out there — to actually affect the ecosystem and change the energy landscape.”
Since ARPA-E can eschew the profit motive, it’s able to fund high-risk, high-reward projects at the earliest stages, when most investors would be reluctant to take on that level of uncertainty. Yet the inherent risk means the success rate for ARPA-E projects as measured by metrics such as the number of companies it’s spawned (157), exits via mergers, acquisitions or IPOs (30), and additional partnerships with other government agencies (360), can seem low compared to the 1,590 projects that the agency has funded over the past 15 years. A climate tech investor I spoke with on background told me that while they love ARPA-E and are glad it exists, they were expecting more success stories by now.
That’s at least partially because even after a project is funded and proof-of-concept has been demonstrated, there’s often still a ways to go before investors are ready to jump in. “I think when we first stood up ARPA-E, the idea was that at that point, it would be sufficiently de-risked for the private sector to then pick it up and invest,” Wang told me. But frequently, that hasn’t been the case. ARPA-E usually funds projects for one to three years, but often climate tech innovation relies on deeply complex and thus inherently slow advancements in science and engineering — think fusion energy, novel battery development, or direct air capture. Many venture funds have 10 year time horizons, so if investors don’t see a payoff happening in that timeframe, they’ll probably hold back.
The investor I spoke with on background told me that ARPA-E has become more effective in partnership with the Office of Clean Energy Demonstrations, established in 2021 under the Department of Energy, which uses its $25 billion budget to create model buildouts of new technology with private sector partners. Earlier this year, OCED selected six ARPA-E awardees focused on industrial decarbonization to receive a combined total of up to $775 million.
Even so, the investor told me, ARPA-E funding alone still might not be enough to get companies to a place where OCED would be interested. To help close that gap, ARPA-E started a program called SCALEUP, a mouthful of an acronym for The Seeding Critical Advances for Leading Energy (Technologies) with Untapped Potential, in 2019. It provides a small number of ARPA-E projects with follow-on funding to further prove out their concepts — provided they can identify at least one commercialization partner such as a potential customer, end-user, or supplier willing to take a stake in the development of the tech and help it get to market.
So far, Wang says the program has yielded some successes. The list includes LongPath Technologies, which monitors methane emissions and leaks in the oil and gas industry and received a conditional loan last year from the DOE’s Loan Programs Office; Natron Energy, which just opened the first commercial-scale sodium-ion battery production facility in the U.S.; and Sila, a battery materials manufacturer that has raised over $1.3 billion in total, and secured contracts with Mercedes-Benz and Panasonic.
When you look at ARPA-E’s success rate in terms of dollars in and dollars out, though, it starts to look pretty darn efficacious as is. Since 2009, ARPA-E has provided more than $3.8 billion for research and development, leading to over $12.6 billion in private-sector follow-on funding, while the 30 exits to date have yielded a combined market valuation of $22.2 billion. And since it often takes climate tech companies around a decade to mature to the point where they’re ready for an exit event, many of ARPA-E’s companies have yet to reach the acquisition or IPO threshold.
These days, ARPA-E projects are facing a completely different funding landscape than in the 2000s — one ripe with both excitement and cash as well as increasing competition. So while Wang told me that the agency’s goal is always to look for “technological whitespace” in the energy landscape, “it's getting more crowded,” she said. “And I think in that context, we've strategically decided that we should also think about broader vision type efforts.” To that end, ARPA-E has identified three comprehensive focus areas: developing clean primary energy sources such as geothermal, small modular nuclear reactors, fusion and geologic hydrogen; power delivery for non-electrical sources, such as energy transported via hydrogen or heat; and figuring out how to source carbon sustainably, such as via engineered plants and algae.
Now that ARPA-E has been supporting projects for a decade and a half, it’s getting more experimental when it comes to developing novel testbeds for its tech. Exhibit A is the San Antonio International Airport, which recently signed a memorandum of understanding with the agency to deploy a series of ARPA-E backed technologies.
Many major airports are actually higher tech than passengers may realize, and given the mounting pressure on the aviation industry to decarbonize, they’re also open to novel sustainability solutions. In San Antonio, the airport is deploying EV chargers from Imagen Energy and sodium-ion battery tech from Natron Energy, both of which could help electrify their ground vehicles, as well as a distributed energy management system from Autogrid, which allows airports to control their virtual power plants, microgrids, EV fleet, and demand response measures. Other tech, such as hybrid-electric planes from Ampaire, could be integrated into the airport in the future.
That’s a lot of technology development for not many headlines. And when a company raises a major round or goes public, sometimes you have to dig deep to discover their ARPA-E origins. Hence, the “least talked about VC in town” comment. In some sense, Wang says, this is intentional.
“When we think about success, if our teams, our companies are successful, and they shine, then we shine,” she told me, and maybe that’s the way it should continue to be. Because while advertising government investment in anything seen as “clean” or “green” can immediately draw both partisan praise and ire, funding for ARPA-E has been steadily creeping up nearly every year since 2015. And yes, that includes the Trump era, even though the former president seemingly wanted to axe the agency altogether. Congress, it turned out, was not on board with that plan.
“Our mission is about energy independence and bolstering our economy and I think everyone agrees with this mission,” Wang told me. “Everyone,” of course, will always be an overstatement. But perhaps Wang is right that the agency does function better as a behind-the-scenes player. As she put it, speaking of the companies the agency funds, “It’s more about them, right? And how that affects the ecosystem, and helps our nation in terms of what we need to do as a country, and how that sets an example for the world.”
Editor’s note: This story initially misstated the size of the American Recovery and Reinvestment Act and the amount of funding allocated to clean energy.
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The company, Nuclearn, aims to speed development and licensing processes with the help of a specially trained large language model.
You’d be hard-pressed to dream up a buzzier clean tech concept than an AI platform custom-designed for the nuclear industry. Yet Phoenix-based startup Nuclearn has been betting on the role of artificial intelligence in the booming nuclear sector since 2021 — predating the wide launch of ChatGPT and the Trump administration’s recent embrace of nuclear energy.
Now the funds are rolling in. The company announced today that it raised a $10.5 million Series A round led by the climate tech venture fund Blue Bear Capital. With this cash, Nuclearn plans to expand its repertoire of AI offerings, which spans everything from identifying and documenting faults in a reactor to project scheduling, engineering evaluations, and licensing and permitting for new or modified reactors.
To expedite these processes, the company has developed its own, nuclear-specific language model, built atop existing open source models and trained on public data from the Nuclear Regulatory Commission and other government agencies, Nuclearn’s cofounder and CFO, Jerrold Vincent, told me. This allows the model to pick up on “a lot of nuclear specifics, whether it’s the acronyms, vernacular, specific processes, even just sometimes the way [the nuclear industry] thinks about certain types of issues and the level of scrutiny they put on one thing versus another,” he explained.
By way of example, Vincent told me that one of the startup’s current customers is working on a licensing application and wanted to conduct some background research to identify potential gaps or areas where the NRC might raise additional questions. Every other time the company has pre-checked an application like this, Vincent said, it was a 400-hour process. Nuclearn helped reduce that timeline to less than a day.
It’s a deeply resonant win for Vincent and his cofounder, Bradley Fox, who are all too familiar with the inefficiencies of the industry themselves. Prior to founding Nuclearn, both worked in data science at the Palo Verde Nuclear Generating Station in Arizona, where employees spent thousands of hours every year on “a lot of documentation, a lot of paperwork, a lot of manual work,” Vincent told me.
Natural language processing had some very obvious applications for the nuclear industry. “Everything in nuclear is text. Everything’s written down,” Vincent said. So when some of the seminal research on novel deep learning models started coming out in 2017 and 2018, Vincent and Fox took note, exploring ways they could apply this to their own work. “Those were trends we jumped on very, very early, not because they were particularly fashionable at the time or because there was a lot of hype around it, but because that was the type of techniques we needed to be able to solve these problems,” Vincent told me. “That’s why we got into the language model space half a decade before ChatGPT.”
For the majority of jobs, such as working on permitting or license renewals, Nuclearn uses a software layer on top of its language model to coordinate various AI agents working on tasks linked to different data sets, such as analyzing design functions, safety protocols, or systems degradation over time. The software then integrates these various outputs to generate reports or summary analyses. On the operational side, the company has its own benchmarks to evaluate how its AI tools are performing on nuclear-specific tasks.
To date, the company has integrated its AI platform into the operations of more than 65 reactors both domestically and abroad, which Vincent told me represents a mix of standard commercial reactors and small modular reactors. As the market heats up, demand may well follow. With the Trump administration pushing to accelerate nuclear development, electricity demand rising, and tech giants prioritizing clean, firm power, it’s boom times for companies looking to build everything from conventional nuclear plants to small modular reactors, microreactors, and the long-elusive fusion reactor, each and every one of which will have to be licensed and permitted.
All this activity also means that the nuclear workforce is under strain, especially given that 25% set to retire in the coming decade. “We’ve had knowledge and workforce challenges for several years now, and now it’s getting exacerbated quite substantially from all the macro trends going on,” Vincent told me. Given this situation, he doesn’t anticipate that the adoption of AI tools will necessarily lead to layoffs. These days, he said, the industry is just wondering “how do we do the things we need to do to operate a nuclear power plant safely and efficiently with less people?”
With this new capital, the startup plans to scale its operations to encompass even more aspects of nuclear reactor management. One future use case Vincent anticipates is helping to automate the sourcing of unique, industry-specific parts. There are plants operating today, he told me, that rely on equipment from vendors that may be long out of business. Figuring out how and where to source equivalent components is the type of niche challenge he’s excited to take on.
“It just tends to be very manual, labor intensive, and very documentation heavy,” Vincent told me of the industry as a whole. Luckily, “those are all things that AI is very good at solving these days.”
On Tesla’s losses, Google’s storage push, and trans-Atlantic atomic consensus
Current conditions: Hurricane Kiko is soaking Hawaii and slashing the archipelago with giant waves • Nearly a foot of rain is forecast to fall on parts of Texas, risking flash floods • Dry, windy weather across broad swaths of South Africa is bringing “extremely high” fire risk.
China's clean-energy investments are paying green dividends. Ember
China’s clean energy boom is bringing a global decline in fossil fuel demand into sight amid declines in usage in the buildings, vehicles, and industries of the world’s second-largest economy, according to the think tank Ember’s latest China Energy Transition Review. The report, released Tuesday morning, found that exports of solar panels, batteries, electric vehicles, and heat pumps are soaring, particularly to emerging economies, making the possibility of developing nations making possible an “energy leapfrog” over the coal phase of growth. From 2015 to 2023, China’s end consumption of fossil fuels fell 1.7% across buildings, industry and transport, while electricity use as a replacement rose by 65%. In power generation, fossil output dropped 2% in the first half of 2025 compared to the same period last year, as wind and solar generation soared by 16% and 43%, respectively. Last year alone, Beijing invested $625 billion in clean energy, 31% of the global total.
“China is now the main engine of the global clean energy transition,” Muyi Yang, coordinating lead author of Ember’s 2025 analysis, said in a statement. “Policy and investment decisions made in China over the last two decades are fundamentally changing the basis of China’s own energy system, and enabling other countries to also move swiftly from fossil to clean.”
As Americans scramble to buy electric vehicles ahead of the expiration of the $7,500 consumer tax credit at the end of this month, fewer of those cars are Teslas. The preliminary August data Cox Automotive released on Monday showed the best month for EVs in U.S. history was the worst for Tesla ever recorded. EVs climbed to almost 10% of total car sales last month, but Tesla’s share fell to 38%, with 55,000 cars sold all month. That’s up just 3% compared to July and down 6% from the year prior, while the company’s total market share fell from just over 40% in July and 45% in the first half of the year. By contrast, Heatmap’s Matthew Zeitlin noted, Tesla commanded about 80% of U.S. EV sales in 2020.
Also on Tuesday, the company unveiled two new energy storage products that could boost its utility division. At the RE+ conference in Las Vegas, Tesla presented the Megapack 3, the latest generation of its utility-scale battery system, and the Megablock, which integrates the Megapack 3 with transformers and switchgear. Batteries were Tesla’s fastest growing business in the first quarter of this year, as Matthew reported in April, but the company feared that tariffs would affect the business. “The energy segment — which includes the company’s battery energy storage businesses for residences (Powerwall) and for utility-scale generation (Megapack) — has recently been a bright spot for the company, even as its car sales have leveled off and declined.”
Google inked a deal with the Salt River Project, the utility serving much of Arizona’s largest metropolis, to test the performance of long-duration energy storage projects. The first-of-a-kind research collaboration aims to “better understand the real-world performance of emerging non-lithium ion long duration energy storage technologies” in the Phoenix area, the power company said in a press release. Google will fund a portion of the costs and evaluate data on the pilot projects’ operational success. “We believe that long duration energy storage will play an essential role in meeting SRP’s sustainability goals and ensuring grid reliability,” Chico Hunter, the nonprofit Salt River Project’s manager of innovation and development, said in a statement.
As I reported in this newsletter in July, Google also backed the Italian carbon dioxide-based storage startup Energy Dome as the tech giant pushes to expand its portfolio of technologies to power its data centers 24/7.
The European Union has been a solid backer of fusion energy research. But the anti-nuclear trifecta of Germany, Austria, and Luxembourg has long thwarted bloc-wide efforts to bolster fission, which provides the bulk of the continent’s electricity. With Berlin finally joining Paris in backing traditional nuclear power, that blockade is no longer holding. The European Commission has proposed spending $11.5 billion on bolstering research in both fusion and fission, the trade publication NucNet reported Monday.
Meanwhile in the United States, where nuclear power remains broadly supported across the political spectrum, the biggest question is how quickly new reactors can come online. The data center industry has now called on the Nuclear Regulatory Commission to streamline licensing of new reactors to help meet its surging demand for electricity. In a letter to NRC Chair David Wright shared with E&E News, the Data Center Coalition, a trade group representing server farms, urged the agency to update its regulations to ensure quicker deployment of advanced reactors. “Increasingly, DCC members are forming strategic partnerships and committing to offtake agreements with utilities and nuclear technology developers, injecting new momentum into this strategic sector,” wrote Cy McNeill, the group’s director of federal affairs. “We are approaching the cusp of a truly revitalized nuclear sector.”
The push comes amid what Heatmap’s Katie Brigham called a “nuclear power dealmaking boom.”
Patagonia’s billionaire founder helped popularize the greenest trend in apparel — buying less of higher quality, longer-lasting clothing. Now the retailer is pushing to bring that same ethos to the food business. The company’s edible offerings of tinned fish and crackers designed for hiking is now expanding into baby foods, oils, and sauces, The New York Times reported in a new profile of the retailer. Fifty years from now, founder Yvon Chouinard told the newsletter, “I could see the food business being bigger than the apparel business.”
U.S. EV sales have been way up — just not for the domestic champion, which sank to its worst-ever market share in August.
Americans are rushing to buy electric vehicles ahead of the expiration of the $7,500 consumer tax credit at the end of this month.
And fewer of those cars are Teslas.
Preliminary data from Cox Automotive for August, first shared with Reuters, shows that the month was the best for EVs in U.S. history, with just over 146,000 units sold, comprising almost 10% of total car sales that month. At the same time, Tesla’s share of the EV market hit its lowest recorded level, down to a (still sizable) 38%.
Cox’s data puts Tesla sales at 55,000 for the month, which is up a little more than 3% from July but down over 6% from a year prior, while the company’s total market share fell from just over 40% in July and 45% in the first half of the year. In 2020, by contrast, Tesla’s share of U.S. EV sales was about 80%. Overall, Cox estimated that Tesla sales in the U.S. are down about 9% so far this year.
“The U.S. EV market is in a far more dynamic place than a few years ago,” Corey Cantor, the research director at the Zero Emission Transportation Association, told me in an email. “Most automakers now offer electric vehicle models in multiple segments. There are multiple electric vehicles available below the average price point of a new car at $48,000.”
Entering this new phase means that the EV market is getting less Tesla-centric, almost by definition. Morgan Stanley reported that electric vehicle sales were up 23% in August from a year ago, while overall car sales were up 7.5% — although even amidst this industry-wide growth, Tesla sales fell more than 3% year over year, while electric vehicle sales were up 42%.
Much of that EV market growth comes down to timing. “Early indications are that EV sales are in fact surging over the past two months, following the changes that will phase the credit out at the end of this month. We’ve seen record sales for EV models last month, such as the Honda Prologue,” Cantor said. This likely means some portion of these sales are being “pulled forward” from buyers trying to beat the deadline and these sales numbers will not persist through the rest of the year.
As Tesla’s stranglehold over the U.S. EV market may be weakening, so too is its hold on the international market. Thanks to CEO Elon Musk’s association with right wing politics in the U.S. and abroad, and to fierce competition from Chinese EV leader BYD, Tesla’s sales have fallen dramatically in Europe. Globally, BYD overtook Tesla in sales last year.
None of that seems to matter much to Tesla’s leadership, or to its shareholders. On Friday, the company’s board of directors put forward a new compensation plan for Musk that would boost his ownership of the company to around 25% and put him in line for a $1 trillion payday if he meets growth and performance targets over the next decade.
A Delaware court last year threw out an earlier Musk pay package, arguing that Musk was too close to the board of directors for them to objectively determine his pay in the interest of all the company’s shareholders. (He subsequently relocated Tesla’s official headquarters to Austin, Texas, explicitly to avoid Delaware jurisdiction.) Musk has said that he wants to own about 25% of the company, a significant upgrade from the roughly 15% he owns currently.
Tesla’s board said in a recent regulatory disclosure that Musk had “reiterated that, if he were to remain at Tesla, it was a critical consideration that he have at least a 25% voting interest in Tesla,” and that “Mr. Musk also raised the possibility that he may pursue other interests that may afford him greater influence if he did not receive such assurances.”
The board’s disclosure also confirmed that Musk sees the future of Tesla as going far beyond selling cars to people. The filing said that “through its discussions with Mr. Musk,” the special committee in charge of coming up with his compensation had “identified four core product lines that would drive Tesla’s future transformation”: Tesla’s vehicle fleet, automation (i.e. Full Self-Driving) software, its robotaxi product, and humanoid robots. Tesla’s robotaxi service is available on a select basis in Austin, with no date yet indicated for a wider rollout, while its humanoid robots — which Musk has said will one day make up 80% of the company’s value — are due to reach “scale production” next year, Musk said on a recent earnings call.
Tesla stock actually rose on the news of the proposed compensation package, likely because Tesla shareholders viewed it as a way to retain Musk and keep his attention on the company.
Longtime Tesla bull Adam Jonas, an analyst at Morgan Stanley, said in note to investors that the compensation deal now means that Musk “has an incentive to focus on Tesla more than ever.” Jonas also, like many Tesla bulls, sees its business of selling cars to people as just a small portion of its overall value — in his case, $76 a share, compared to his $410 a share price target or the roughly $346 a share price the stock was trading at on Monday afternoon.
Still, the company today is largely a pretty normal car company, at least according to its income statement. In the second quarter of its current fiscal year, some $16.6 billion of Tesla’s $22.5 billion in revenue came from cars, with $2.8 billion coming from its energy business and $3 billion coming from “services and other revenues.”
Declining market share in its biggest product line isn’t completely meaningless, even if many Tesla shareholders see a glorious future for the company beyond the automobile trade.
Looking ahead, Cantor said to expect the EV market to get even more diverse.
“Moving forward, we will continue to see automakers innovate in the EV space. Timelines may change and models will vary by automaker, but high-profile launches expected over the next year include the Rivian R2, a new version of the Chevrolet Bolt EV, as well as more affordable models by Lucid and Kia,” Cantor said in his email.
“While the 30D [consumer electric vehicle tax] credit’s phase out will have a real impact on sales the next quarter or two here in the U.S.,” he added, “the long-term trend of excitement and innovation continues to be in the launch of new electric vehicles.”