This month, we’re looking at how the grid needs to adapt for new electric vehicles, a generational opportunity for American manufacturing, teleoperations, new catalytic climate funding, an extreme weather funding emergency, and more!
Readying the Grid for EVs
Utility Dive highlighted some of the challenges and opportunities related to adopting electric vehicles without breaking the electric grid. My own view on this is similar to that of the relevant trade group, the Zero Emission Transportation Association, which is essentially that there are totally real and legitimate, but surmountable challenges in readying the grid for the EV transition. We need to upgrade a bunch of stuff, do more managed charging, and at least 15 other things over the next decade. The consequences of failing are dire, but we can continue to work on this on a decadal time scale. For example, we might need 30% more peak power capacity to handle electrifying transportation in 10 or 15 years, but that could be accomplished by increasing power generation by 2 or 3 percent a year. And we’ll need to encourage consumers to use energy when it is cheapest to do so, but we’re already starting to do that: Missouri utilities are in the process of transitioning customers to time-based rates currently.
That is not to say that we don’t need new solutions, and to scale up existing ones – we do! Just that these innovative solutions are the reason that it is not going to be a disaster in 10 years. For anyone who is up nights worrying about this, I suggest you reference the anguish over the “utility death spiral” last decade – which worried that solar adoption would drive utility defections and make the model unsustainable. Spoiler alert: that did not happen.
The American Manufacturing Generation
Samir Mayekar, former Deputy Mayor of Chicago and Co-Founder of Evergreen portfolio company NanoGraf, spoke at a recent University Chicago event discussing the unique confluence of factors that have led to a generational opportunity for new entrepreneurship and economic growth. Samir flagged pandemic-related investments, geopolitics reordering supply chains, and new legislation in the United States encouraging investments in domestic clean energy manufacturing.
Indeed, the landscape for American manufacturing looks vastly different than it did just five years ago. And some things that present as challenges today (such as grid congestion complicating the deployment of renewables and the departure of some manufacturing base from the Midwest region) could serve as catalysts for the future, as more energy and transportation industry manufacturing capacity is set up close to where companies can find cheap renewable power and a ready supply of skilled workers.
Have Office Chair, Will Travel
Vay is a teleoperations company that delivers rental EVs to customers (by driving them to and from their destination remotely). The business started in Europe but has recently made its way over to Nevada to grow its US presence (where the regulatory climate, if not the weather climate, is favorable). While autonomous vehicles have made big strides in the last 12 months in real-world activity, I think teleoperations is actually more interesting over the next few years and perhaps longer. Similar to how a drone pilot remotely pilots a drone, these vehicles are driven by real people, they just aren’t in the car.
It presents an opportunity to be a bridge between the social and regulatory expectations that we have for vehicles today, and a future in which we’d like more flexibility. And the technological challenges are less daunting – instead of ironing out all the edge cases and lining up affordable LIDAR component supply, the teleoperations folks just need some cameras and a good internet connection.
Longer term, I see interesting potential for teleoperations in commercial trucking as well. For an industry facing severe driver shortages, being able to offer a job that allows you to sleep in your own bed could be extremely valuable. One could imagine a new hub-and-spoke ecosystem emerging where most of the drivers are remote, while different geographies have their own set of flexible local drivers for a company that can pop over to deal with edge cases or troubleshoot a vehicle (perhaps delivered in a car that is teleoperated on the return trip?).
New Azolla Ventures Fund
Evergreen ecosystem partner and coinvestor Azolla Ventures, launched by Prime Coalition, recently announced a $239 million climate tech investment fund. This fund leverages catalytic capital (philanthropic funding) as part of its investment strategy, to be able to be more patient and risk tolerant in the investments it makes.
While it has been great to see the increase in venture investors in the climate tech space in general, what has really been needed is more folks willing to take more more risk – this is indeed why Evergreen exists. So, it is great to see an ecosystem partner bringing more funds to the table to help advance the commercialization of important climate solutions technologies.
One For the Wildfire, Two for the Hurricane…
There have been so many extreme weather events that FEMA is expected to run out of money in August. It can run a deficit so we’ll still address emergencies, but it’s not a great sign for either the climate or a functioning federal budget process.
Got Supply Chain Security?
We’ve previously discussed the major ramp up in EV minerals supply chain deals with big automakers. The New York Times recently covered how US automakers are making big deals with mining companies to ensure they have a steady supply of raw materials (like lithium) that are essential for electric vehicles.
This is a big change from the status quo – after all, most automakers don’t actually make the batteries themselves (or most parts for that matter) – this is a little bit like Ford buying an iron ore mine. Automotive soothsayer Reilly Brennan of Trucks VC flagged this in his newsletter and also pointed out that these companies are typically just getting dibs on the right to buy the materials, rather than getting into the business of minerals mining in particular (which they have no experience or interest in doing). Exceptions seem to be Tesla and Volkswagen, who have or are bringing battery manufacturing in house.
Decarbonization That Money Can’t Buy
Canary Media highlighted how large corporations such as GM, Meta, and Walmart are looking at new approaches to reducing their carbon footprint. For the larger players that have been working on decarbonizing their businesses, they’ve already picked most of the low hanging fruit and can’t just buy decarbonization on the market (they can buy carbon offsets, but that is of course not the same as actually eliminating their emissions). So, these companies are looking at additional areas that may unlock additional decarbonization for them, such as delving into trickier grid topics like transmission and virtual power plants.
Oil + Oil = Cleantech?
ExxonMobil is buying oil company Denbury. The cleantech angle? Denbury has the largest CO2 pipeline network in the US, with a big concentration in the Gulf Coast region, where ExxonMobil seems likely to expand its carbon capture and storage business.
We Tried To Send Cash Back To DC, They Said No, No, No
If states decide to reject funding (like they did for health insurance support as part of the Affordable Care Act), the Inflation Reduction Act was designed so that cities could receive the money in lieu of the state. While not necessarily just as good, large cities have the scale to do useful things in the absence of state action. Another example of the smart little details included in the IRA.
Adaptation in Climate Tech
Mazarine Ventures shared their perspective on climate adaptation solutions in the climate tech funding landscape. For our part, Evergreen Climate Innovations is broadly interested in innovations that address climate mitigation, adaptation, or natural resource conservation. So, while reducing and eliminating emissions is an important part of our work, there is more to the story.