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Next-gen climate and energy (Q2 2023): Fusion and climate risk analytics promises

This Quarterly Insight covers activities linked to seven SPEEDA Edge hubs: Alternative Energy; Carbon Management Software; Climate Risk Analytics; Carbon Capture, Utilization, & Storage (CCUS); Energy Optimization and Management Software; Conservation Tech; and Hydrogen Economy. As our focus is primarily on emerging technologies, more established climate and energy sectors such as traditional solar, wind, and hydropower have been excluded.

Key takeaways

  • Funding: Next-gen climate and energy startups raised USD 1.9 billion in Q2 2023 (-30.9% YoY and +29.8% QoQ). More than 70% of funding stemmed from the Alternative Energy hub. Notably, the US Department of Energy granted funding of USD 46 million to eight fusion companies. Climate Risk Analytics funding picked up (+927.1% QoQ and +189.5% YoY), while funding for the Carbon Management Software and CCUS industries was low compared with previous years. 
  • Product updates: Satellite launches from climate monitoring providers as well as several notable world firsts in hydrogen electrolyser technology and fusion energy were the highlight. While launches were seen from Unseenlabs and Ororatech, the most notable was from Tomorrow.io, which launched the world's first commercially built weather-radar satellite. We also noted the launch of several climate and sustainability disclosure tools, on the back of proposed US Securities and Exchange Commission (SEC) climate disclosure regulations, which make it mandatory for public companies to disclose their carbon footprints. Although the Alternative Energy, CCUS, and Hydrogen Economy hubs were relatively quiet this quarter, there were several notable world firsts that took place, including Enapter unveiling the world's first megawatt-scale AEM electrolyzer to produce green hydrogen and Avalanche Energy recording the highest-known operating voltage of any fusion device.
 
  • Partnerships: Fusion energy witnessed a landmark power purchase agreement between Microsoft and Helion Energy, while sustainable aviation fuel (SAF) and hydrogen mobility notched notable collaborations. In particular, partnerships to develop hydrogen fueling infrastructure gained traction in a favorable regulatory environment. Despite a slowdown in funding, the CCUS space also remained active with a number of operational agreements across flue-gas capture, direct air capture (DAC), and carbon sequestration. Carbon reporting startup Watershed partnered with KPMG to support companies on climate-related reporting, marking one of the first such partnerships with a Big Four accounting firm.
  • M&A: M&A activity picked up in Q2 2023 (seven deals) compared with the previous quarter (two deals). bp’s acquisition of a 40% stake in the Viking carbon capture and storage project by Harbour Energy was the most notable. Viking stands to fulfill one-third of the UK’s annual target to capture and store 30 million metric tons of carbon dioxide (MtCO2) by 2030. 
  • Regulation: The proposed US SEC regulations on climate disclosures are likely delayed until the end of 2023. Other news revolved around relaxing regulations to facilitate next-gen renewable energy developments. This included the Nuclear Regulatory Commission voting to draw up a regulatory framework for fusion energy systems, which would be less restrictive than previous fission regulations, and the European Commission adopting two delegated acts outlining rules on the EU definition of renewable hydrogen, which would provide regulatory certainty and support funding and growth targets.

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