🌎 Summer in review #211

Happy Tuesday!

It might feel like summer vacation, but we're back in your inbox with a recap of the season's highlights and a sneak peek at what's falling into place for autumn. We've got the top trends of climate investment in 2024 so far, a roundup of New York Climate Week events, and what’s on the ballot for climate tech come November.

In deals, $200m for solar tech, $89m for residential energy, and $85m for low-carbon cement.

In other news, an underwater cable to bring renewable energy from Australia to Singapore; Ford's canceled electric SUV; and China's new nuclear push.

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Our summer break(down)

We’ve had a busy summer here at CTVC, and things are only heating up as fall quickly approaches. This week, we’re taking a look back at some of the top hits this summer and a look forward to what’s up next on the climate tech playlist.

CTVC's halftime report

Just last month, we published our semiannual report on climate tech investment for the first half of 2024. As we hit halftime for 2024, the climate tech market was feeling the summer heat — but not necessarily in a good way.

The first half of the year saw a stark drop in investment, with H1'24 clocking in at a muted $11.3 billion, a 20% dip from the same period last year. And the slowdown has finally seeped into the early stages, marking a significant shift from the resilience we've seen in Seed and Series A rounds over the past few years. This downturn mirrors broader venture capital trends, where sticky inflation, high interest rates, and geopolitical unrest have kept investors on the sidelines.

But the game isn't over yet. While climate tech funding has cooled, it's not completely iced. Deals are still happening, and although they're fewer, round sizes for early-stage deals have actually seen a modest increase, suggesting a “flight to quality” as investors become more selective. However, the notorious "Valley of Death" between Series A and Series B has widened, with the average time to raise a Series B doubling since 2021, as startups are facing heightened expectations for commercialization and revenue.

Looking ahead to the fall, we expect this cautious climate to persist, particularly with the looming U.S. presidential election casting a long shadow over the market. But as investors tighten their purse strings, we're also seeing a shift away from reliance on venture capital alone — startups, especially those building FOAKs, are increasingly turning to catalytic capital, project finance, and debt to fuel their growth.

Getting ready for Q3 and NYCW

So what’s up next? We’re expecting a big meeting of the minds next month at New York Climate Week. The week embodies everything that makes the city unique — fast-paced, decentralized, and packed with back-to-back events. And just like navigating New York itself, having the right connections can make all the difference. But we believe that Climate Week shouldn’t be an insider’s game.

To save you the hassle of juggling calendars, we've created an open tracker of NYCW events specifically for climate tech founders, funders, and more. Earlier this summer, we asked for your input, and thanks to your submissions, the list is growing by the day. Find it here, and keep submitting events for inclusion here.

Plus, Sightline Climate will be hosting our inaugural NYCW event, Sightlive. Investors, corporates offtakers, developers, governments, and financial institutions focused on financing and procuring in climate tech should reach out to us if you’re interested in attending.

On the horizon: 2024 US elections

Last week, we published an in-depth feature on the climate tech tax credits hanging in the balance of what’s on the ballot this November. ICYMI, we’re bringing you a recap of the highlights of the elections’ potential impacts on the Inflation Reduction Act (IRA), the cornerstone of US climate policy.

The election presents a range of scenarios, from a unified Republican government likely seeking to repeal or roll back the IRA, to a fully Democratic government poised to preserve and potentially expand it. In scenarios involving split control of the presidency and Congress, outcomes could vary from legislative gridlock to targeted adjustments of tax credits.

Some key takeaways:

Difficulty of repeal. A wholesale repeal of the IRA is only possible in the event of a Republican sweep of the presidency and Congress, with wide margins — but even in this event would still face legal and political challenges, such as lawsuits and overcoming bipartisan support for several provisions.
Margins matter. The size of the majority in Congress can make or break efforts to repeal, modify, or expand the IRA. A slim majority might struggle to push through significant changes, especially with the potential for filibusters in the Senate or vetoes from the president, and entail a fight for votes.
Still, certain provisions are already targets. EV tax credits are already unpopular among Republican lawmakers, who see them as a part of the liberal agenda, so they’re likely to become concessions during budget negotiations. On the other hand, credits like the Renewable Energy Production Tax Credit and the Energy Investment Tax Credit have historically enjoyed bipartisan support.
Tax cuts up in 2025. The 2017 Tax Cuts and Jobs Act, passed by then-president Trump, was the largest tax code overhaul in three decades, and is set to expire in 2025. Both sides of the aisle are gearing up for a fight over which parts of it to extend, and how to compromise in other budget negotiations — including parts of the IRA. Expect the federal deficit to be a major talking point, even in the absence of direct legislative repeal.

And stay tuned for the next part of our series, which will dive into the funding mechanisms within the IRA and how they might be affected by the election results.

Deals of the Week (8/19-8/26)

Late-Stage / Growth

🧱 Fortera, a San Jose, CA-based low-carbon cement manufacturer, raised $85m in Series C funding from Alumni Ventures, Khosla Ventures, NOVA by Saint-Gobain, Presidio Ventures, and Wollemi Capital.

📦 The Rounds, a Philadelphia, PA-based zero waste marketplace, raised $24m in Series B funding from Moderne Ventures and FJ Labs.

⚡ Piclo, a London, UK-based flexible electricity marketplace, raised an undisclosed amount from Clean Growth Fund, EDP Ventures, and Future Energy Ventures.

Early-Stage

⚡ Power to Hydrogen, a Columbus, OH-based AEM hydrogen electrolyzer developer, raised $18m in Series A funding from Rev1 Ventures, American Electric Power, Asahi Kasei, E.ON, EDP Ventures, and other investors.

⚡ LIS Technologies, a New York City, NY-based laser spectroscopy solutions provider, raised $12m in Seed funding from 28 Ventures Fund.

🌱 Root, a Berlin, Germany-based food industry emissions reduction platform, raised $9m in Seed funding from Point Nine, Helloworld VC, Project A Ventures, and arc investors.

🔋 Cache Energy, a Champaign, IL-based long duration energy storage provider, raised $9m in Seed funding from Cantos, Climate Capital, Evergreen Climate Innovations, Grantham Foundation, and Voyager Ventures.

⚡ Grid Status, a Chicago, IL-based grid data and analytics platform, raised $8m from Energize Capital, Rayburn Electric Cooperative, Evergreen Climate Innovations, and angel investors.

☀️ Enteligent, a San Jose, CA-based solar optimization service, raised $6m from Taronga Ventures.

🌱 Optiml, a Zürich, Switzerland-based real estate decarbonization platform, raised $4m in Pre-Seed funding from BitStone Capital and KOMPAS.

⚡ Deep Fission, a Berkeley, CA-based modular nuclear microreactor researcher, raised $4m in Pre-Seed funding from 8VC.

💨 Up Catalyst, a Tallinn, Estonia-based carbon utilization for nanomaterials, raised $3m in Seed funding from SmartCap and Warsaw Equity Group.

☔ Space Intelligence, an Edinburgh, UK-based MRV platform for nature-based projects, raised an undisclosed amount in Series A funding from AzurX Space Ventures and Intercontinental Exchange.

Other

☀️ Canadian Solar, a Guelph, Canada-based solar technology pure play developer, raised $200m in Convertible Note funding from PAG.

⚡ Eversource Energy, a Boston, MA-based residential energy provider, raised $89m in Grant funding from the US Department of Energy.

🔋 Electra Battery Materials, a Toronto, Canada-based battery materials refining and recycling service, raised $20m in Grant funding from the US Department of Defense.

🥩 De Novo Foodlabs, a Durham, NC-based precision fermentation producer, raised $4m from Joyful Ventures.

✈️ ZeroAvia, a Hollister, CA-based hydrogen plane manufacturer, raised $4m in Grant funding from U.S. Federal Aviation Administration (FAA).

✈️ Wright Electric, a New York City, NY-based electric aircraft components manufacturer, raised $3m in Grant funding from U.S. Federal Aviation Administration (FAA).

⚡ VulcanX, an Edmonton, Canada-based efficient hydrogen production producer, raised an undisclosed amount of Corporate Strategic funding from FortisBC.

New Funds

MKB, a Québec, Canada-based investment firm, raised $145m for their third energy transition fund that will invest in growth-stage companies across clean energy, mobility, industrial decarbonization, and built environment.

BEVC, a Berkeley, CA-based investment firm, announced a $25m fund that will invest in climate-related companies.

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In the News

The Australian government approved a $20bn project to export renewable power to Singapore. The Sun Cable initiative will transport solar power via a 4,200 km underwater cable from the Northern Territory to Singapore, positioning Australia as a key player in the regional energy transition while providing Singapore with a cleaner energy supply.

Ford has canceled its plans to produce a three-row electric SUV, citing battery material sourcing costs and pressure to sell lower-priced models. Legacy automakers are finding lower-than-expected demand in the broader EV market.

China made a $31bn push into nuclear energy by approving a record 11 new reactor permits in a single day, surpassing the previous annual high of 10 permits. The move marks a significant acceleration in the country's nuclear energy ambitions, but building this higher number of reactors at once allows for economies of scale and can significantly cut costs of development.

US electricity generation rose by 20.2GW in the first half of the year, an expansion of capacity to meet AI-related demand, according to a new EIA report. This marks the largest increase since 2003, with solar energy accounting for over 60% of the projected capacity growth for the remainder of 2024.

New numbers show that in Q2 2024, BECCS (Bioenergy with Carbon Capture and Storage) has dominated the carbon dioxide removal market, accounting for 90% of all transactions and contributing 4.3 million tons of CO2 removed, largely driven by a major deal between Microsoft and Stockholm Exergi.

Maine leased federal waters in the Gulf of Maine for an offshore wind research array, in a significant step towards advancing floating offshore wind energy. Developer Diamond Offshore Wind is set to install 12 floating wind turbines there, capable of generating 144MW of clean electricity, which could set the stage for larger offshore wind.

The FAA announced $300m in grants to advance sustainable aviation technologies, which will support initiatives focused on accelerating the adoption of sustainable aviation fuels, improving fuel efficiency, and reducing greenhouse gas emissions.

Pop-up

Data center construction in North America is powering up with a 70% surge compared to last year.

Meanwhile, crypto and data centers’ global electricity demand is set to grow from 2% to 3.5% in the next three years.

A troubling tale of transmission turmoil in the Midwest.

Frontier put out its offtake agreement template.

Climate tech VCs now raising for Kamala Harris.

California’s power grid charges on amid summer heat waves due to an uptick in battery storage.

AI is making waves in marine conservation by listening for biodiversity in coral reefs.

Just launched: Satellite Tanager-1, to monitor carbon and methane emissions.

Climeworks' Orca Direct Air Capture (DAC) project to gets a BeZero AAA on the report card.

Opportunities & Events

📅 US Market Insight Summit: Register to attend the US Market Insight Summit focused on Workforce Development in Green Building from September 3-5th to hear from non-profit and government leaders on how to overcome workforce recruitment and training challenges.

📅 ACCEL Showcase: Register to attend the ACCEL Showcase on September 5th to celebrate the second year of Greentown’s BIPOC-led startup accelerator program.

💡 OPF Academy: Apply by September 8th to participate in the 6th cohort of One Point Five Academy and advance your career by gaining a sustainability advisory skill set.

📅 Houston Energy & Climate Week: Register to attend the Houston Energy and Climate Week from September 9-13th to network with leaders and educational institutions across the greater Houston area and address key themes such as policy and environmental justice.

📅 Decarb TechInvest: Register to attend Decarb TechInvest on September 10-11th for an opportunity to connect with series B+ investors and professionals working toward industrial decarbonization. Quote SIGHTLINE-25 for 25% off.

📅 Climate Capital Stack: RSVP to join Anthropocene Ventures, Camber Road, and Stifel Bank on September 11th for a conversation about the financing options in the climate capital stack.

📅 Carbon Unbound Europe and West Coast: Join CDR experts, business leaders, and politicians on September 11-12th and October 24-25th, in London and San Francisco, respectively, for senior leadership summits on advancing climate goals through carbon removal. Use the code CTVC24 for a 10% discount on either site.