On Monday’s first part of this outlook in Global Corporate Venturing we covered genome-editing tools that could change life and their progeny and a possible future evolution of computing to support artificial intelligence through quantum computing. Tuesday’s second part looked at companies fuelling the mind and body through virtual reality and improved food production. Wednesday’s third part covered communications through emerging space and internet access providers and application platforms.
Today’s fourth part looks at the energy space, with a focus on the niche startup area of nuclear and batteries.
But first a bit of context as oil prices crash to a 12-year low of $35 per barrel from more than $100 but demand for energy has continued to rise over the decades as power needs and world population grows. BP’s energy outlook expected global demand for energy to rise by 37% from 2013 to 2035, or by an average of 1.4% a year.
In the US, petroleum is the largest energy source, accounting for 36% of all energy consumed in 2011 with the transportation sector accounting for over two-thirds (69.8%) of US petroleum consumption, according to the US Department of Energy in 2014. Globally, transportation accounts for 62.3% of petroleum consumption.
And plenty of cars are being bought, last year was expected to be a record in the US, even if US oil demand peaked in 2005 at 20.8 million barrels per day (b/d) and declined to 18.9 million b/d in 2013.
So why the oil price crash? Saudi Arabia and others have continued to supply record amounts of crude oil.
Understanding the why is more challenging. Theories have been postulated that low oil prices put economic pressure on other sources of energy, such as so-called tight oil, (or countries) supplying oil at a higher breakeven price, or that if all the proven reserves cannot be burned because of climate change concerns it is better to take what market share is possible now.
Still, the very gradual trend has been for hydrocarbons to lose market share, declining from 86.7% to 81.7% over the 30-year period between 1973 and 2012 even while energy use more than doubled, according to the International Energy Agency.
Most of this shift to non-hydrocarbons was to nuclear power going from 0.9% in 1973 to 4.8% in 2012.
Nuclear fusion
As of July 2015, 30 countries worldwide are operating 438 nuclear reactors for electricity generation and 67 new nuclear plants are under construction in 15 countries nearly five years after Japan’s Fukushima disaster.
These are fission reactors and researchers have been trying to emulate the Sun’s fusion. In December, Germany’s new Wendelstein 7-X stellarator was fired up for the first time, rounding off a construction effort that took nearly two decades and cost €1bn. But this cost and time was still less than the International Thermonuclear Experimental Reactor (ITER) reactor project in France, a €16bn project since the 1970s to create fusion using a different method called tokamak.
It would, therefore, be unsurprising if few entrepreneurs dared enter the field, even with the US government offering grants, including $4m to both Helion Energy and NumerEx, and $4.3m to Magneto-Inertial Fusion Technologies. However, most of the research and funding is still going into universities judging by the list of grantees.
There are, however, an estimated 55 nuclear startups with a total of $1.6bn in funding, according to Ray Rothrock, partner at Venrock in an article by Fortune in July, although a month earlier consultants Third Way counted 48 North America-based companies backed by $1.6bn, although a check of the projects listed shows many have had few updates over the past year, are from large corporations or universties.
Of the more active privately-funded group:
– Tri Alpa Energy has reportedly raised more than $200m from Venrock, the Russian government through Rusnano, Microsoft co-founder Paul Allen’s Vulcan Capital and investment bank Goldman Sachs to find a way to add the element boron into the hydrogen fuel.
– Canada-based nuclear energy technology company General Fusion last year raised C$27m ($22m) in what was expected to be the first tranche of its latest funding round, from investors including oil and gas company Cenovus Energy.
– The round was led by Khazanah Nasional Berhad, the strategic investment fund of Malaysia’s government, and included various existing investors in General Fusion, which has raised about $74m in total. Part of the money has gone on crowdsourcing answers to its technical challenges through Innocentive-run competitions.
– Founders Fund invested a $2m seed round and then a further $2.5m round last year for Transatomic Power, which was founded in 2011 by MIT nuclear scientists Leslie Dewan and Mark Massie. The other investors were Acadia Woods Partners and Daniel Aegerter of Armada Investment.
– Y Combinator has backed another MIT spin-out, UPower Technologies, which has designed a small modular fission reactor.
– Y Combinator has also backed Helion Energy, which raised $1.5m in its series A round also including Mithril Capital Management (run by Peter Thiel who also manages Founders Fund).
– Retired Microsoft co-founder Bill Gates chairs and has backed TerraPower, which was a spin off from intellectual property manager Intellectual Ventures, and last year signed a partnership with teaming up with China National Nuclear Corporation (CNNC) to build a new type of nuclear reactor.
Other smaller ones to watch include:
In 2014, Terrestrial Energy closed its final seed round of financing from undisclosed investors; last year Martingale unveiled its reactor design while Gen4 Energy submitted a project for testing; and people are awaiting further results from SuperCritical Technologies’s Chal Davidson, the former lead engineer at TerraPower; Nasdaq-listed Lightbridge Corporation gained a $10m commitment from Aspire Capital Fund after its patents were approved. NuScale Power, which is now majority-owned by US-based energy services company Fluor was sole winner of the second round of the US Department of Energy’s (DOE) competitively-bid, cost-sharing program to develop nuclear small modular reactor (SMR) technology.
Batteries
As Peter Diamandis noted in his top 10 breakthroughs of 2015: “Battery technology is critically important (and remains a key limiting factor) for the development of exponential technologies and computing devices.
“As our computers become more complex and distributed, so too do our demands for efficient and reliable sources of power. These developments will enable the convergence and distribution of key technologies like robotics, sensors, networks, AI, 3D printing and more.
“This [past] year, research teams, universities and startups made strides in advancing battery technology. Soon, we will begin to see batteries that charge in seconds, last months and even charge over the air. Laser-made supercapacitors are 50 times faster than current batteries, more durable and discharge even slower than current supercapacitors.
“Companies like Prieto are using copper foam to create 3D structures in batteries, resulting in longer life, faster charging, five times higher density, and are cheaper to make and smaller than current offerings. Tesla released their Powerwall to store solar energy in homes. The list goes on.”
Notable venturing deals in the past year, which was covered in our Global Corporate Venturing sector review by Thierry Heles in October, include:
- US-based energy storage technology provider Younicos agreed a $50m growth equity investment by solar power producer First Solar, private equity firm Grupo Ecos and an unnamed strategic lead investor. Founded in Germany in 2005, Younicos produces grid-scale batteries that are used to store energy generated by solar plants and wind farms. It has installed more than 100 MW of battery storage across more than 20 installations around the world and has raised about $200m in funding from investors including General Electric and nuclear and renewable power producer Areva as of January 2015, according to Bloomberg.
- Statoil Technology Invest, the corporate venturing unit belonging to oil and gas firm Statoil, has invested an undisclosed sum in Canada-based Corvus Energy, which builds lithium ion battery-based systems used in maritime hybrid and electric propulsion systems. The technology powers more than 35 commercial hybrid and electric vessels around the world.
- Cleaning and climate management equipment manufacturer Dyson acquired one of its corporate venturing portfolio companies, US-based solid-state battery technology developer Sakti3, for $90m giving exits to investors also including trading conglomerate Iotchu and automotive manufacturer General Motors.
- US-based intelligent energy storage technology provider Stem closed a $45m series C round in August, backed by RWE Supply & Trading, the energy trading subsidiary of utility RWE. The company raised a first tranche of $12m in April, following a $27m series B round in January and featuring GE Ventures, the investment arm of General Electric, Total Energy Ventures and Constellation Technology Ventures, the respective corporate venturing units of petroleum producers Total and Shell, as well as utility Iberdrola and investment firm Angeleno Group.
- Enevate, a US-based developer of batteries for smartphones, raised a $30m series C round from Presidio Ventures, an investment unit of conglomerate Sumitomo. The round was co-led by Tsing Capital, Mission Ventures and Infinite Potential Technologies. The company is a spinout from University of California Irvine, and was called Carbon Micro Battery until 2010.
- Primus Power, a US-based grid-scale battery developer, raised a $25m series D round led by I2BF Global Ventures and featuring platinum mining company Anglo American Platinum, Chrysalix Energy Venture Capital and DBL Partners. I2BF also invested through its Russia-Kazakhstan Nanotechnology Fund.
- S-based grid-scale energy storage company Eos Energy Storage closed a $23m series C round including utility NRG Energy, real estate firm Fisher Brothers, OCI and unnamed existing shareholders. The round was led by investment firm AltEnergy.