Valo Viewpoints - November 2024
Dear Friends of Valo,
Last month we gathered as a team for our annual retreat on the coast of Maine. It offered time to reflect, rest, reciprocate, renew and regenerate. We harvested from the land and sea, lit fires (literally and metaphorically), planned our priorities for the coming year, challenged ourselves with the Catan: New Energies game, and discussed insights from Entangled Life, a book by Merlin Sheldrake about the pervasive and integrative role of fungi with plants, soil and human health.
Our portfolio teams achieved a number of exciting commercial and fundraising successes this past quarter. Equilibrium Energy and Basecamp raised Series B rounds, Simbe raised a Series C round, PlanetiQ won a large contract from NOAA, and Novoloop and Granular Energy were named to the Norskeen 100 Impact List. See below for more details and links to relevant articles on their accomplishments.
Recent Valo Insights
Systems Thinking in Action: Strengthening Collaboration between Startups and Established Players
Every six months, Valo welcomes a rotation partner from one of our LPs, Fortum, in the spirit of sharing insights, initiating pilots with startups, and accelerating commercialization of technology innovations. We believe that close ties with strategic asset owners is a vital part of being a great climate tech investor, as it hones our research, sourcing, and diligence processes. This article is a reflection from a recent rotation partner, Anton Gustavsson.
Current Themes
McKinsey Global Institute’s energy transition report. MGI is well regarded for its independent, fact-based research. Their latest report, “Hard Stuff,” highlights the 25 interlinked challenges to developing and deploying new low-emissions technologies, as well as the promising ways many of them exceed the performance of fossil-fuel-based ones. “For instance, batteries can provide quicker dispatchability than even gas-fired peaking plants. Nuclear plants often have higher capacity factors than gas plants. Hydrogen has higher gravimetric energy density and burns at higher temperatures than natural gas. Electric cars and heat pumps often have double the efficiency of fossil-fuel combustion-based assets.”
This is exactly why we’re investing in the energy transition. Our startups are commercializing technologies that are better, cheaper, faster, and lower friction—all while reducing emissions and waste.
Data Center Flexibility. ?With over 8,000 data centers spread across the world today, and future construction forecasted to reach $100B annually for the rest of the decade, data center power demand is expected to grow substantially. Various sources estimate that it may make up between 30-40% of all net new demand added until 2030. According to Arshad Mansoor, CEO of Electric Power Research Institute (EPRI), “the potential of load flexibility as a resource remains largely untapped and highly valuable.”
At Valo we are evaluating startups turning data centers into grid assets using AI itself, storage, microgrids, software, digital twins, renewables, and better energy consumption data to optimize operations.
Unlocking the Grid. ?Rapidly increasing grid costs are negating significant decreases in the cost of renewable generation in many parts of the world. In the US for example, grid congestion costs doubled in just one year from 2020-2021. Jesse Jenkins, who leads Princeton’s ZERO Lab, has warned that we will lose 80% of the benefit of the IRA if we don’t address transmission.
Advanced conductor projects are among the 58 projects that won a collective $3.5B in DOE grants last year, and the agency recently announced that it is channeling another $2B into transmission projects across 42 states to bolster the power grid to withstand extreme weather this year. We are sourcing startups developing various grid enhancing technologies such as sensors, AI, data analytics, software, DLR, reconductoring, and grid forming inverters.
Events
Climate Week NYC
This year’s Climate Week NYC attracted over 100,000 people to 900+ events (up 50% from last year), ranging from startup pitch fests to political rallies to film festivals. Many of the sessions focused on how to practically overcome the commonly cited hurdles in the energy transition, namely:
Yotta’s Future of Digital Infrastructure
Even though data centers are now widely regarded as strategic energy assets, this year’s Yotta conference cited how much uncertainty there is in the sector. Emerging government oversight, clean power shortages, social license debates, scarce data on energy consumption, and a proposed AI additionality framework all add up to an industry in flux. In addition, some experts reminded us that data centers were forecasted to exceed 10% of power 10 years ago, but chip and compute innovations curbed that growth.
The greatest near-term opportunity is to optimize energy use within data center operations. Methods include building digital twins, shifting delay-tolerant workloads such as AI training, developing new thermal interface materials that reduce cooling needs for chips, deploying AI-based tools to monitor systems in real time, and creating more domain-specific AI models with lower compute needs.
Climate Underground
This event was the sixth annual gathering to discuss how to more rapidly scale and deploy regenerative agriculture. Hosted by former Vice President Al Gore, it convened an incredibly diverse group of farmers, scientists, investors, policy makers and researchers. We discussed high-performing fungi, fungible carbon offsets, improved soil health measurement, and stark facts on how much CO2 deforestation emits (3Gt CO2e, the highest of all agrifood system categories).
Given that extreme weather generated $21B in US crop losses last year, atmospheric CO2 decreases mineral content in food, and microplastics inhibit plants’ ability to take up water and nutrients, practices to improve carbon sequestration in the soil are on the rise. But regenerative agriculture requires clearer standards from regulators and more involvement from larger corporates to take hold across more acreage
Join our team at the following 2024 conferences:
Portfolio Progress
Basecamp Research raised a $60M Series B led by Singular, was named one of Bloomberg’s Top 25 UK Startups to Watch, and was featured in the Financial Times.
Equilibrium Energy closed its Series B, celebrated its market leading performance in Texas, and entered the California battery market.?
Granular Energy was named to the Norskeen 100 Impact List.
Inlyte Energy received an inaugural Storage Acceleration Voucher from the Department of Energy’s Office of Electricity.
Modern Hydrogen was featured in the Economist, debuted a new Carbon Sequestered Asphalt, and partnered with Northwest Natural.
Novoloop was named to the Norskeen 100 Impact List.
PlanetiQ was awarded a $6.5M NOAA contract.
Simbe closed a $50M Series C led by Goldman Sachs and expanded into Turkey with CarrefourSA.
UrbanFootprint earned a spot on the Top 20 Tech for Impact list.
Career Opportunities
Many of our portfolio companies are actively hiring across a range of positions.
We’d like to leave you with a recommendation to watch an exceptional short film called The Last Ice Age by Icelandic writer and documentary filmmaker Andri Sn?r Magnason. Magnason is a truly gifted storyteller. His film brings a calm, powerful and distinct voice to the climate crisis from the perspective of his family's history exploring the Icelandic glaciers over the last 75 years. The film reiterated for us why we must approach our work with humility and resilience, and also fill our lives with fun and find the beauty all around us.
Optimistically yours,
-The Valo Team
Copyright (C) 2024 Valo Ventures. All rights reserved.
Group Executive Board Member @ Fortum (FI) | President @ Fortum Consumer Solutions AS (NO) | EVP @ Fortum Innovation & Venturing | Board Member @ Valo Ventures (US) | Advisor @ EQT (SE) | Alumni @ IMD (CH) & Hanken (FI)
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