Follow The #Climatetech Money - Week 7

FTCM - 1st to 7th August, 2022

The cost of utility-scale solar projects has rapidly fallen over the last 10 years. Most of the cost savings over that period have come from reduced module costs and the declining cost of capital. Terabase Energy is one of the innovative companies developing solutions to make it cheaper and faster to build the next generation of solar farms.

This week I also take a look at two different approaches producing zero-CO2 hydrogen, as well as deals in battery recycling and emissions detection technology.

Please read on for coverage of all the deals that mattered in #cleantech,?#climatetech?and the?#energytransition. Be sure to read all the way to the end to access a special offer.

DEAL OF THE WEEK - Terabase Energy

Terabase Energy ("Terabase") was formed in 2018 as a spin-out from SunPower. Their mission is to reduce the cost and increase the scalability of utility-scale solar. They are doing this by building an end-to-end platform for development, construction, and operation of utility-scale solar projects. The company is aiming to reduce delivered energy prices from utility-scale solar to US$0.01/kWh in the next few years.

What's the deal?

Terabase have raised a $44 million Series B financing, co-led by?heavyweight #climatetech investors Breakthrough Energy Ventures?and?Prelude Ventures and with participation by?SJF Ventures?and other existing investors. The funds will be used to continue developing the platform (particularly the hardware automation) and scale from 10's to 100's of MW of construction.

Why is this interesting?

• Software and hardware - Terabase is building a digital (software) and automation (hardware) platform for a specific use case. The software stack is made up of a development platform for design, a modelling tool for production estimates (PlantPredict, acquired from First Solar) and a monitoring tool (REPlantSolutions, an acquired SCADA solution). The hardware component (discussed further below) relates to the automation of construction. Offering and end-to-end solution made up of both software and hardware is a relatively unique model, with most venture-backed companies usually sticking to either software or hardware. I like the technology moat and the rapid learning that this approach should deliver.
• On site automation - Terabase will set up a pop-up factory on site. In the factory, a robotic arm will attach solar panels to a solar tracker, the steel structure that rotates panels to face the sun. The whole structure is then delivered to the solar array using special vehicles, which are not yet but may one day be fully automated. The company has tested this system on a recent project, where robots installed 10 MW. The objective is to scale production to hundreds of MW. Automation allows construction to continue in a wider range of environmental conditions and with fewer staff, reducing both labour costs and total construction time.
• $0.01/kWh target is within reach - even taking into account cost escalation in raw materials and shipping, the company believes this price point is achievable. This may be closer that it seems. Terabase provided optimisation and engineering for an 800 MW project in Qatar, backed by a 25 year power purchase agreement at $0.016/kWh. Looking at the capital costs associated with a utility-scale solar project (see the WoodMac chart below), it is apparent there are material savings opportunities in the expenditure associated with labour, logistics and civil works.

Further reading

SJF Ventures provided an overview of their Series A investment. The CEO, Matt Campbell, has given some insightful interviews to pv magazine, the Clean Power Hour podcast and the Carbotnic podcast.

TWO DIFFERENT APPROACHES TO GREEN HYDROGEN

This week saw venture investments into two new hydrogen production technologies that imply very different futures for hydrogen generation. Hysata is developing an energy-efficient electrolysis cell for mass production, which may be well suited to large-scale and centralised production. Aurora Hydrogen is using methane pyrolysis to convert natural gas to hydrogen and carbon black, best suited to a decentralised process at small scale.

It's hard to ignore the flow of big money into centralised hydrogen technologies (e.g. Electric Hydrogen, Monolith, Verdagy) and the pull from governments for the development of large-scale hydrogen hubs. If we follow the #climatetech money, it appears that large-scale centralised technologies will win this race. I expect that distributed technologies will still find a market however, and it may be bigger than most people seem to expect. The best value investment may very well be in companies like Aurora Hydrogen.

Hysata - a step change improvement in alkaline electrolysis

Hydrogen electrolysers come in several basic variants; alkaline, anion exchange membrane (AEM), proton-exchange membrane (PEM) and solid oxide. Alkaline electrolysers are the least expensive and the largest systems deployed so far (in China) utilise this technology.

Hysata has rearchitected the core cell used in alkaline electrolysis, producing a cell that the company claims will operate at 95% system efficiency. This represents a step-change in performance and cost over current alkaline electrolyser technologies, which typically operate at 75% or less. The technology is shown in a simplified diagram below, or check out this paper for a technical description.

The company has raised a $29.5 million Series A round, which will be used to grow the team and develop a pilot manufacturing facility. Notable investors include the Clean Energy Finance Corporation (CEFC, via Virescent Ventures), Kiko Ventures and IP Group.

Aurora Hydrogen - producing CO2 zero hydrogen from natural gas

Aurora Hydrogen is using methane pyrolysis to produce hydrogen without producing CO2. This process uses methane (aka natural gas) as a feedstock, but unlike Steam Methane Reforming (SMR) the process is driven by heat produced with electricity rather than through the combustion of fossil fuels. Methane pyrolysis produces hydrogen and carbon as outputs, however, unlike SMR, the carbon is in solid form rather than CO2. Although Aurora Hydrogen have not claimed to produce carbon black, it is expected that would be achievable through refinement of the solid carbon product.

The company claims that their process is also highly energy efficient, using 80 percent less electricity than electrolysis. Unlike electrolysis, Aurora’s processes also don’t require water as a feedstock, but it obviously does require natural gas. See below for a simplified overview of the technology, sourced from the company.

The advantage of this approach is the ability to produce zero emissions hydrogen at the point of use, at the scale required. By shifting to a decentralised model and using electricity and natural gas as inputs, existing infrastructure is used to transport energy inputs, then produce hydrogen where it’s needed. This removes the requirement for new hydrogen transportation infrastructure, one of the greatest barriers to the widespread adoption of hydrogen as an energy carrier. I can see a solution such as this being a better fit in small sites such as hydrogen refuelling stations for heavy duty transport.

The company has raised a $10 million Series A round, which will be used to build and operate a small (200kg/day) demonstration plant for field trials. The funding was led by Energy Innovation Capital, with heavy-hitters Shell Ventures and Chevron Technology Ventures notable strategic participants.

OTHER NOTABLE #CLEANTECH AND #CLIMATETECH DEALS

?? QLM Technology - QLM has developed a new type of LiDAR camera based on quantum technology. The gas imager enables customers to monitor, detect and accurately locate and quantify greenhouse gas emission sources for rapid repair. The company claims the technology is inherently scalable to low cost at high volume, enabling wide deployment. They raised a GBP12 million Series A, led by Schlumberger who have also signed a collaboration agreement to trial the technology.

?? LI Industries - a lithium-ion battery recycling company has raised $7M in Series A financing. It's notable that the round was led by Khosla Ventures, with participation from Xerox Ventures and Shell Ventures. The company claims to have developed an innovative process of automated battery sorting by chemistry type and a novel direct recycling process that recovers battery electrode materials suitable for direct re-use by battery manufacturers. I had an (ill-formed) view that battery recycling had already produced some very big winners (e.g. Redwood Materials, Li-cycle) and it was therefore perhaps too late to invest in a new technology company. I think I got that one wrong.

I tracked 17 deals and $228 million in equity funding last week. For the full list, please LIKE THIS POST (it's an honour system) and then click on the image below. The password is FTCM#1.

A SPECIAL OFFER

If you want to raise a funding round for your #climatetech startup, but don't know where to start, Dr Chris Wedding might be able to help. He is running the second cohort of his #climatetech fundraising course in September. Click on the image below to check it out. Enrol by Friday using the promo code CLIMATE250 and you'll save $250.

Until next week,

David Pethick