The next big data center play for tech investors - battery power
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Tech companies racing to build their data centers for AI have to date relied mostly on natural gas because it is cheap and abundant and, well, ready to roll. But for some tech firms, the promise of 100% renewable energy to power their centers still holds sway, and investors are seeing that become reality this year in the form of battery deals.
This week, Form Energy, an eight-year-old Massachusetts battery startup run by the former head of Tesla’s TSLA 0.00%↑ Powerwall business, Mateo Jaramillo, announced a major deal to brings its 100-hour, iron-air battery to Minnesota to help grid giant Xcel Energy XEL 0.00%↑ install 300 megawatts of batteries at a plant that will in part help Google GOOGL 0.00%↑ power a new data center.
Form’s unique batteries, which hold power for much longer than traditional lithium batteries, will provide the missing link both Xcel and Google need to their solar and wind power usage by backing up the power centers when renewable sources go down. In a way, it is the holy grail of battery power and opens up an entire new market for fast-growing industrial battery startups.
Form, which is backed by more than $1 billion in funding from venture capital firms such as Breakthrough Energy and Prelude Ventures, is reportedly raising up to $500 million in new funding, in what some reports earlier this month described as a pre-IPO round. Several other battery companies, such as Redwood Materials, are also rushing to raise more funding, sensing a data center opportunity.
Battery power capacity represents about 20% of new renewable energy developed in the past several years, though is still only single digit in terms of power used by big utilities. Most of the deals to date have been in California, Arizona or Texas, The Form deal opens up the Midwest market, where Xcel supplies power to Minnesota and seven other states.
For investors, the pace of funding and deals could well mean a spate of IPOs later this year or next, if the AI and data center themes hold up in the market. More importantly, for climate change, they show that the move toward 100% renewable energy is taking another step closer to reality.
Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.
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Do genuinely green companies cut corners on their taxes?
. . . . Can a company’s greenwashing practices be a signal to investors of deeper corporate flaws than just taking marketing advantage of investor interest in climate change? It seems so, and the practices could even extend into how a company handles its corporate taxes, writes Mark Hulbert. A new academic study out of New Zealand purports to show that companies with significant reputations for over-touting their climate-fighting intentions also are more likely to play fast and loose with things like their taxes. Hulbert argues the study is important because it can signal deeper cultural problems within a company’s corporate governance that might be a red flag to investors. The study did not cite any correlations to stock performance, but for investors focused on companies with the right intentions, any flags on corporate culture could be important.
Thursday’s subscriber insights
Lucid regears for new EV era as investors lose patience
. . . . Even Saudi money doesn’t last forever. Lucid’s share price LCID 0.00%↑ has fallen by about 40% since it announced a huge deal with Uber in September to provide up to 20,000 Gravity SUVs in exchange for a $300 million investment. Last week the company announced layoffs of up to 12% of its staff, or hundreds of employees, and this week it missed its earnings targets.
Saudi Arabia’s Public Investment Fund owns about 65% of the company and while that has acted as a shield or sorts from the market-led chaos that has hit other electric vehicle companies, the pressure to perform will likely hit its apex this year.
Interim CEO Marc Winterhoff will provide an update for investors on March 12, which we expect will focus on how the company beat revenue targets in its fourth quarter — despite wider losses — and how it expects to meet new production guidance this year of up to 27,000 vehicles, which would be more than 50% higher than last year.
Lucid enjoys a popular following among car enthusiasts and its plan to introduce lower-priced vehicles will be well received. How it keeps to its robotaxi goals with Uber and automated system developer Nuro will be a key driver of investor interest in the coming year.
With the EV market in the U.S. under the gun of the current administration in Washington, now is arguably a good time to retool and invest for the inevitable other side of the valley when it comes. But Lucid has lived many lives already. The next several months will be key.
Editor’s picks: How climate regulation rollback could hit the U.S. auto industry; plus, billions for AI data centers
Watch the video: DW News reports about how the Trump administration has scrapped a landmark scientific finding that formed the legal basis for federal controls on greenhouse gas emissions. Known as the Endangerment Finding, the 2009 scientific determination classified carbon dioxide, methane and several other gases as threats to public health. Ford F 0.00%↑ has welcomed this move, but it could end up isolating the U.S. automobile industry on the global market.
Feds loan billions for utility expansion in Georgia and Alabama
Electric utility companies in Georgia and Alabama will receive a record $26 billion in loans aimed at saving customers money as the companies expand to meet demand from data centers. The Associated Press reports $22.4 billion will go to Georgia Power and $4.1 billion to Alabama Power. Both are subsidiaries of Atlanta-based Southern Company SO 0.00%↑, one of the country’s largest utilities. The AP reports the companies plan to use the cash to build new natural-gas fueled power plants, build new transmission lines and upgrade existing power plants. Energy Secretary Chris Wright said the loan will result in more than $7 billion in savings over decades from a lower, federally subsidized interest rate.
Latest findings: New research, studies and projects
Model helps identify those responsible for emissions
Researchers have created a new mathematical model to analyze how emission-intensive actors are responsible for increasing climate damage, Euronews reports. What is being called a groundbreaking study has provided more clear data on how much human-made climate change is impacting extreme weather across Europe. A team from the University of Graz in Austria, led by climate researcher Gottfried Kirchengast developed a new method for computing the hazards from extreme and damaging weather events. According to the report, the model can compute the frequency, duration, intensity, spatial extent and other variables of extreme events. The results also help researchers see the extent to which states or companies are responsible for increasing climate damages and risks. Researchers used the new method to investigate changes in extreme heat events in Austria and across Europe from 1961 to 2024. The study, published in the journal Weather and Climate Extremes, found that the total extremity of heat in Austria and most regions of Central and Southern Europe has increased about tenfold in the current climate period from 2010-2024 compared to 1961-1990, Euronews reports.
Words to live by . . . .
“I think calling it climate change is rather limiting. I would rather call it the everything change.” — Margaret Atwood.