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“I don’t think that there has been a slam dunk case on a company that we’re excited about yet.”
At San Francisco Climate Week, everyone wanted to talk about artificial intelligence.
“I was looking through all of the events on SF Climate Week, and it seemed like every single one of them had AI somewhere in the name,” joked (sort of) Rohan Nuttell of OpenAI last week, while moderating a panel called AI for Climate.
Sure, with over 300 events, there were opportunities for climate nerds to learn about carbon dioxide removal or sustainable fashion or grid infrastructure. But AI was inescapable. I heard from companies using AI to monitor flood risk, model forest carbon sequestration, and help utilities identify vulnerabilities from climate threats. I even learned about a company using AI to decarbonize pet food.
Yet one notable section of the climate world wasn’t buying the hype: Investors. In my one-on-one conversations with venture capitalists and other financiers throughout the week, the prevailing approach was wait and see. It was a striking departure from the rest of Silicon Valley, where 6-month-old AI startups are getting multi-billion-dollar valuations.
“I think there are very few large business opportunities that have single-handedly been unlocked,” Sophie Purdom, managing Partner at climate tech VC Planeteer Capital, told me, with regards to AI. “Maybe they make it better or faster or whatnot. But I don’t think we’ve seen a whole lot of new large markets that have suddenly been uniquely unlocked in climate.”
One problem is that AI can mean anything from “we have a machine learning algorithm” to “we use a large language model to help write your climate grant applications,” as this company does. But that distinction is important. Generative AI, which takes in reams of data and spits out brand-new content (think ChatGPT or DALL-E), is what’s been driving the AI hype machine since OpenAI released ChatGPT in November 2022. Eventually, generative AI could have powerful climate implications — think the development of novel EV battery chemistries or synthesis of new, more climate-friendly proteins.
But not quite yet, Shawn Xu, a partner at climate tech VC Lowercarbon Capital, told me.
Xu said he was left disappointed after a Climate AI hackathon that Lowercarbon hosted with OpenAI last year. “To be honest there was a lag between the number of interesting AI engineers and founders who wanted to go build real climate applications coming out of that hackathon.”
In the last couple of months though, Xu has been excited to see AI companies proposing “foundational models” for sectors like materials science and biology. These are generative models trained on large datasets that can perform a wide variety of tasks, like a ChatGPT for meteorology or architecture that could build weather models or design green buildings. “But I don’t think that there has been a slam dunk case on a company that we’re excited about yet,” Xu said.
This doesn’t mean that Lowercarbon and other climate tech investors are avoiding AI investments. There are plenty of well-funded climate tech companies using increasingly powerful machine learning models and algorithms to analyze patterns in large datasets and predict outcomes. It’s just that this isn’t exactly new. Companies across many industries have been using this type of predictive AI for much of the last decade. Now incorporating generative AI in the form of large language models is becoming relatively common too.
“Anything that’s solving workflow inefficiencies, anything that’s helping you get context from somewhere else, anything that’s helping you understand more data,” are well understood applications of AI that Juan Muldoon, a partner at climate software VC Energize Capital, told me he’s excited about.
“I think you’re going to see it materially impact long-running operational costs for [energy] projects,” Scott Jacobs, co-founder and CEO of the sustainable infrastructure investment firm Generate Capital, told me. “It’s just another use of technology replacing humans.”
That doesn’t always make for a particularly flashy business. Muldoon cited one of Energize’s portfolio companies, Jupiter Intelligence, which “takes very, very large amounts of climate, weather, and terrain data to be able to more accurately predict asset level risks associated with particular climate events,” he explained. “So that’s a data AI company. But it’s not really marketed that way.”
Maybe that’s because in this era, the term is almost self-evident. As an old editor once told me, writing that a tech company uses “machine learning” or “AI” to perform data analysis can be as mundane and obvious as advertising that a company uses “the internet.” But as generative AI moves beyond advanced chatbots and towards the type of broader foundational models that Xu is most excited about, investment could heat up.
Xu told me that Lowercarbon has made a yet-unannounced investment in a company that gathers vast amounts of earth observation data, which could hopefully one day be used to create a “foundational model for earth science.” This model could potentially do things such as generate custom maps to track natural disasters or the climate risks to crops and built infrastructure. Xu says a company like this would be “a holy grail.”
Yet the main holdup to some of these “holy grail” companies is that we often lack not only enough data but a comprehensive understanding of how to characterize that data, said Clea Kolster, partner and head of science at Lowercarbon.
“We’ve seen a lot of pitches on AI for chemistry,” she told me. And while AI could spit out new atomic and molecular combinations for use in novel battery cells, “the amount of those new things that are actually going to be good is probably very small until you actually start to have a better understanding of how many of these materials work in different structures and environments.”
Even if scientists and researchers get a better handle on the datasets they’re working with, Purdom told me she’s generally skeptical of investing in companies that use AI to do basic R&D, citing the buzzy example of AI being used in critical minerals exploration and extraction “The competency of the prospecting and the R&D approach seems distinct to me from the actual value extraction, physical resource extraction part of the business,” she told me. The same could be said of using AI for battery design or protein development. “I have seen few examples where the platform approach of just the research and identification part is where there’s been a big standalone business.”
Not to say everyone takes that point of view. Bay Area-based KoBold Metals, an AI-enabled minerals exploration company, has raised over a billion dollars, with Bill Gates’ climate tech VC, Breakthrough Energy Ventures as a leading investor.
But overall, the potential for novel applications of AI in the climate space is still largely being figured out. And in these early stages, many climate investors are treading carefully.
“I have talked to a number of these AI companies,” Jacobs told me. “They’re talking about climate impacts and they have real value propositions that they’re going after. Great! But they don’t have real success stories yet.”
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Keep an eye on the public utilities commission races in Arizona, Montana, and Louisiana.
On November 5, voters in a handful of states will cast their ballots not just for their next president and state and local lawmakers, but also for the members of an obscure body with outsized influence on the country’s energy mix.
It’s called a public utilities commission. Every state has one, usually composed of three to five officials who regulate the private companies that deliver water, power, gas, and other services to residents and businesses. Their job is to secure reliable energy at affordable rates, which means these power players also preside over how quickly utilities adopt clean energy and adapt to extreme weather, and how much companies can raise customers’ rates to do so. In most of the U.S., utility commissioners are appointed by the governor or legislature. But 10 states leave filling these roles up to the electorate.
The voting public has historically been pretty clueless when it comes to utility commission races. People often just ignore that part of the ballot. Charles Hua, the founder of a new nonprofit called Powerlines that aims to raise awareness about the importance of these regulators, told me his group has found that over the last decade, only about one in 10 voters in states with utility commission elections actually made a selection in those races.
But if the U.S. is to have any chance of cutting emissions in line with its global commitments, ensuring fossil fuel communities aren’t left behind, or improving our resilience to increasing heat waves, fires, and floods, utility commissioners have to be paid more attention — and held accountable.
Apathy or ignorance about utility commissions isn’t unique to states where commissioners are elected, but it’s not helped by the fact that many of these states are deeply red, and the races aren’t much of a competition. This year, although seats are opening up in eight states, many of them are unlikely to see a change from the status quo.
In Alabama and Nebraska, three current commissioners are running for re-election unopposed. There’s a clear frontrunner among the three candidates vying for one open seat in Oklahoma: a former Republican state lawmaker named Brian Bingman, who is endorsed by the governor and has raised nearly $450,000, much of which was donated by energy PACs and oil and gas company executives, according to state filings. He’s up against a lesser-known Libertarian candidate who, as of the last reporting period, had raised less than $2,000, and a 90-year-old Democrat who has raised zero dollars and already run for and lost commission races three times.
Whoever is elected to open seats in North and South Dakota will have a say in approving the permits for a contentious carbon dioxide pipeline — a project that has drawn opposition from both sides of the aisle and could have raised the stakes for the elections — but environmental advocates in those states told me they expected incumbent candidates to win.
But there are three races that are being closely watched by climate and clean energy advocates. In Louisiana, a swing voter on the commission is stepping down, throwing into question recent momentum against business-as-usual operations in the gas-heavy state. In Arizona and Montana, the current commissions have been skeptical of, if not outright hostile to supporting the development of the two states’ big untapped solar and wind resources. In each state, however, momentum is building behind candidates who could change that paradigm.
“If you can unlock Montana's renewable energy potential, you can help the western part of the country decarbonize,” Anne Hedges, the director of policy and legislative affairs at the Montana Environmental Information Center told me. “This is a really important race.”
Here’s what’s at stake.
During the two years since the last election for the Arizona Corporation Commission, the confusing name of the body in Arizona that regulates utilities, its four-to-one Republican majority has been on a tear dismantling what little clean energy policy there was in the state. In February, the group voted to scrap the state’s meager Renewable Energy Standard, which was enacted in 2006 and required utilities to get 15% of their energy from renewables by 2025, as well as energy efficiency standards. According to Autumn Johnson, executive director of the Arizona Solar Energy Industries Association, the commission has been more resistant to renewable energy than the utilities. She told me that in a recent proceeding to plan for the closure of the Four Corners coal plant in 2031, the commission tried to prevent the state’s biggest utility from considering renewables paired with batteries as part of the replacement mix.
Solar development has been obstructed at every level. The commission quashed efforts to create a market for community solar, small-scale photovoltaic installations that offer low-income customers and renters access to low-cost clean energy. It adopted a community solar policy that “had so many poison pills in it that it made it impossible for a market to actually form,” said Johnson. “We should for sure have a community solar market. I think it's kind of crazy we wouldn't do that in the sunniest state in the country.” It also gummed up the economics of rooftop solar by decreasing the amount homeowners get paid for exporting solar to the grid and burdening them with fixed fees. Johnson said the market is down 40%, and that “a whole bunch of companies are going bankrupt” because of the commission’s policies.
Whoever lands on the commission come January will have a big opportunity to change course. The renewable energy and efficiency standards have not yet been fully repealed, and will see another vote early next year. Johnson said the new commission will vote on rules for virtual power plants, which could help get more distributed solar and batteries on the grid. As in many states, Arizona utilities are anticipating large load growth in the coming years and proposing a lot of new natural gas power plant development to meet it — but the commission has a chance to get them to consider alternatives.
The race is competitive, with three Democrats, two Green party candidates, and three Republicans, including one incumbent, running to fill three seats. During a recent debate, the main split between the two major political parties was over support for renewables. Five of them took public funding for their campaigns through the state’s Clean Elections fund, so they're nearly all working with the same amount of capital, which means there is little to help signal who's likely to come out on top. The AFL-CIO has endorsed the three Democrats in the race, but Arizona has one of the lowest union densities in the country. The state Chamber of Commerce, meanwhile, has endorsed the Republicans running, and one of them, Rachel Waldman, has been endorsed by three current commissioners.
Voters can choose three candidates, and the three with the most votes will be elected.
Montana also has three seats opening up on its five-member Public Service Commission, but the elections there are divided by district, and all eyes are on one of the races in particular. Elena Evans, a geologist who works as the environmental health manager for Missoula County, is running as an Independent to unseat Jennifer Fielder, a Republican incumbent running for her second term. Evans has raised nearly $100,000 since she registered to run in April, while Fielder has raised less than $10,000 since January.
The headline issue in the race is affordability. Last year, the commission approved a 28% rate increase for Northwestern Energy, the biggest utility in the state. Molly Bell, political director for Montana Conservation Voters, told me regulators have been “asleep at the wheel.” She said the commission has been “rubber stamping rate increases, not asking questions about [our utilities’] resource plans, and really not holding our energy companies accountable to making plans for the future.”
Environmental advocates are also worried about Northwestern’s recent decision to acquire a larger stake in the Colstrip power plant, a coal-fired facility built in the 1970s and 80s. Northwestern called the plant “a dependable bridge to a cleaner energy future,” but it will require nearly $200 million in retrofits to comply with new federal air pollution regulations, a cost that Northwestern is now trying to recoup from ratepayers with a new 26% rate increase.
Hedges, of the Montana Energy Information Center, told me the rate increases aren’t just hurting customers — major manufacturers like REC Silicon are leaving the state due to rising energy costs. She wants the commission to force Northwestern to invest in building out the transmission system so that more wind energy can get onto the grid. “We have a ton of wind energy, we have developers who are just clamoring to access that, but they can't because we don't have the transmission system,” she said. “Northwestern has no desire to build out that transmission system because that means competition for them. That’s why our rates are so high.”
Elena Evans isn’t campaigning on a platform of cutting down on fossil fuels or expanding renewables; she’s mainly telling voters she wants to bring costs down and increase transparency. But in interviews, she’s talked about the importance of ensuring utilities are prepared for climate impacts, criticized the sitting commission for being anti-technology, and expressed an interest in solutions such as reconductoring transmission lines to increase their capacity and installing batteries to make the grid more resilient against outages.
The commission is currently fully Republican, and switching out just one of those seats will not bring change overnight. But Stephanie Chase, a researcher at the Energy and Policy Institute, said that having even one person to ask different questions and bring new information to the public record can be meaningful. “Even if they don't have the votes, they still have a platform and ability to raise issues, which I think is really important in states where climate hasn't been at the forefront.”
Louisiana’s recent history proves the value of dissenting voices, even if they don’t have decisive influence. The state’s historically utility-friendly commission saw a big shakeup two years ago when Davante Lewis, a young progressive candidate, dethroned a Republican incumbent who had held his district’s seat for nearly two decades. Close to 80% of Louisiana’s electricity comes from natural gas, and Lewis campaigned on transitioning the state to renewables, in addition to hardening the grid against storms and lowering fees for customers. He has already made a few small inroads on clean energy, such as advancing an energy efficiency program that had been held up in negotiations with the utilities for more than a decade. The commission also recently approved the biggest expansion of renewable energy in state history.
But Lewis is one of two Democrats on the commission, and has been helped by a swing voter — a moderate Republican named Craig Greene — who’s stepping down this year.
Three candidates are vying for Greene’s spot, but one — State Senator Jean Paul Coussan — has a clear fundraising advantage. The big question around the election seems to be less about who will win, and more about what Coussan would do on the commission. In interviews with local media outlets, he has said he wants to ensure the state can keep pace with demand growth while keeping rates down. He’s expressed openness about renewables but also emphasized the importance of the state’s “abundant supply of natural gas.”
The clean energy advocates I spoke to weren’t sure what to make of him. “You just can’t tell based on what Coussan’s saying now,” Daniel Tait, who researches Southern utilities for the Energy and Policy Institute, a consumer watchdog, told me. He said that of the two Republicans running, Coussan seemed more willing to talk about clean energy and find common ground. But it’s unclear how he will compare to the outgoing commissioner.
Hua, of Powerlines, emphasized that whatever happens, it will have ripple effects through the region. “What Louisiana does is an indicator, in some ways, of what the rest of the Southeast can do,” he told me. “And the Southeast is a particularly important region because that's where we're seeing all this load growth, this gas build out, energy burden and environmental injustice challenges. What the Southeast does will make or break what the U.S. does in terms of the clean energy transition.”
An hour northwest of San Antonio, Texas, the small town of Bandera is home to fewer than 1,000 people. Complete with old-timey heritage buildings from the Old West, the town markets itself as a ranching tourism destination and the “cowboy capital of the world.”
And some residents really don’t want the solar farm coming to town: Pine Gate Renewables’ Rio Lago solar project, which would produce 132 megawatts of power. That’s enough renewable electricity to fuel almost 23,000 homes.
When the project first appeared on homeowners’ doorsteps, citizens concerned about building anything at industrial scale in their bucolic community rejected a local tax abatement and began speaking to local media. Eventually, roughly a dozen people living near the proposed Rio Lago site filed a lawsuit in state court seeking damages for alleged sediment runoff, along with a laundry list of other complaints. The state court judge was sympathetic to the individuals in Bandera, ordered construction to stop and sanctioned Pine Gate when residents said the company appeared to continue work on the project. The case is now pending in federal court.
Taken together this outcry, lawsuit, and all of the resulting local news coverage coverage add up to a crucial test: Can a handful of people block carbon-free power to so many homes?
In this circumstance, probably not. Last week, the federal judge now overseeing the case – Richard Farrer, who was appointed under Trump in 2017 – told the aggrieved homeowners and their lawyer that while the allegations of damages may still proceed to trial, there was “not sufficient evidence of imminent irreparable harm to support” an order to stop construction, according to a transcript of the hearing.
But still, this case still fascinates. That’s because despite Texas’ conservative political leaning the Lone Star state is a panacea for renewables development. It produces 16% of the nation’s total renewable energy but accounts for only 2.5% of the contested projects, restrictive ordinances, and moratoriums in Heatmap Pro’s database. Part of the reason Texas is so receptive is that energy production overall is pretty welcome – when you’re so used to oil rigs, a solar farm isn’t that big of a deal. For its part, Pine Gate clearly thinks it’s a great place to build as the company claims to have forty projects at various stages in the state.
The case of Bandera and the Rio Lago solar project ultimately illustrates NIMBYism – historically understood as more of an issue amongst liberals – can occur in even the most staunchly conservative parts of the country: the town is represented in Congress by Rep. Chip Roy, who has a 96% lifetime score from the Heritage Foundation’s political arm and a month ago called to fully defund the Energy Department’s Office of Energy Efficiency and Renewable Energy.
Ultimately, while renewable energy and decarbonization capital is pouring into culturally red areas across the U.S., this conflict demonstrates how a backlash can really rear its ugly head.
Jennifer Rosenblatt, a lawyer representing the homeowners opposed to the solar farm, told me her litigation isn’t “anti-solar” and “simply a construction issue.” But she acknowledged the residents are motivated by a simple and familiar adage: “Nobody wants it in their backyard.”
“All things being equal, they don’t want it there,” Rosenblatt said. “Everybody wants to say it’s a lawsuit about ‘not in my backyard,’ but in Texas you can’t control what somebody does on their property next door. There’s no lawsuit about that.”
We’ll keep you updated on the status of this lawsuit in future editions of The Fight.
The week’s most important conflicts around the energy transition.
1. Madison County, Ohio – All eyes are now on the Ohio Supreme Court, after opponents of the nation’s largest agri-voltaics project – Savion’s Oak Run solar farm – yesterday formally appealed a key approval from the state Power Siting Board.
2. Nassau County, New York – RWE and National Grid submitted the nation’s biggest offshore wind proposal to date to be built in the New York Bight with interconnection points in Brooklyn and Long Island …
3. Swift County, Minnesota – Rarely do we talk pro-renewables decisions here in The Fight’s Hotspots… but that changes today thanks to a rural Minnesota county rejecting a moratorium.
4. Fayette County, Pennsylvania – Another spot to watch for an anti-solar and wind ordinance is this county where developers are vying to stop restrictive property setback requirements.
5. Carroll County, Maryland – Developers have released the route for the Piedmont Reliability Project, a transmission proposal that will connect to a nuclear plant in Pennsylvania and will criss-cross Maryland. Some of the power will feed to data centers in Northern Virginia.
Here’s what else we’ve been watching…
In Idaho, regulators approved a solar project on state endowment land – and of course, some Republican politicians are grousing about it.
In Kentucky, only three people showed up to oppose NextEra’s Weirs Creek solar project.
In Maine, state regulators were rejected by federal officials after a request for money to fund a proposed offshore wind construction site on Sears Island.
In Michigan, towns are sounding like they’re going to sue over a local control law intended to speed up renewables deployment.
In Virginia, county regulators are battling one another over a 2,200 acre solar farm proposed by AES Corporation in Isle of Wight county.
In New York, the upstate village of Wilson has enacted a battery storage moratorium.
Also in New York, Attentive Energy pulled out of the fifth offshore wind solicitation.