Ørsted, which maintains offices in Houston and Austin, just flipped the switch on its 468-megawatt Mockingbird Solar Center in Lamar County, a project that also established a nearby nature preserve. Photo courtesy of Ørsted

The largest solar project in the global portfolio of Danish renewable energy company Ørsted is now supplying power to the Electric Reliability Council of Texas (ERCOT) grid.

Ørsted, which maintains offices in Houston and Austin, just flipped the switch on its 468-megawatt Mockingbird Solar Center in Lamar County, which is northeast of Dallas-Fort Worth and directly south of the Texas-Oklahoma border. The $500 million project can produce enough power for 80,000 homes and businesses.

ERCOT provides power to more than 25 million Texas customers, representing 90 percent of the state’s electric load.

In conjunction with the solar project, Ørsted donated 953 acres to The Nature Conservancy to establish the Smiley Meadow Preserve. This area, adjacent to the Mockingbird facility, protects a tallgrass prairie habitat featuring more than 400 species of grasses and wildflowers. Accounting for land already owned by the conservancy, Smiley Meadow exceeds 1,000 acres.

“Through the power of partnership, Ørsted has helped The Nature Conservancy protect an irreplaceable landscape that might otherwise have been lost to development,” Suzanne Scott, The Nature Conservancy’s Texas state director, says in a news release.

Mockingbird Solar Center is part of Ørsted’s $20 billion investment in U.S. energy generation. With this project now online, Ørsted owns a portfolio of more than six gigawatts of onshore wind, solar, and battery storage projects that either are operating or are being built.

Investors in Houston and across Texas are proving to be transformational partners to finance and grow energy hardware startups. Photo via Getty Images

Experts: To power an energy revolution, a financing evolution is needed

guest column

Texas is a national leader in wind and solar, generating more energy in these categories than any other state since 2006 and double that of next placed California. As investment in renewable energy continues to skyrocket, the limitations of the 19th-century grid prevent the industry from realizing the benefits of this 21st-century technology.

For years, Texas has grappled with insufficient infrastructure for its current mix of energy sources, which includes surging renewables. The Alternating Current (AC) grid — the standard since the 1800s — requires matching supply and demand in real-time to maintain a stable frequency, which is complex and costly, especially with renewable energy when the sun doesn’t always shine and the wind doesn’t always blow.

Startup firms are busy developing technologies to solve this issue. For example, it’s possible to modernize the AC grid to control the voltage of the distribution network precisely, to ensure fast adjustments to demand, and to adapt to changes in supply from renewables. Enoda, a U.K.-based scale-up, is an example of an innovative company developing and delivering technology to enable the AC grid to accommodate much higher levels of renewable energy and electrification.

Equally important to these technical innovations are innovations in financing for energy startups. On two levels, investors in Houston and across Texas are proving to be transformational partners to finance and grow energy hardware startups.

1. Innovative Funding Structures

Because of the long timelines, hardware investing requires, in part, more patient capital than the typical Silicon Valley venture capital model prevalent in startup investments. Their playbook is best suited for software companies that develop new features in weeks or months. Energy hardware startups require a longer timeline because of the far greater complexity and upfront capital outlay.

Texas investment firms and family offices are, however, accustomed to investing in complex energy projects with longer development timelines. This complexity presents a high barrier to entry for competitors, which significantly increases the upside potential that risk-capital investors seek should the innovation find market traction. At the same time, up-front capital requirements have decreased considerably, making hardware more appealing to investors.

2. Visionary partnership

Attracting investors and demonstrating early-stage traction differs for hardware companies because of the lengthy pre-revenue R&D process. Software innovators can launch with a minimum viable product, gain a few early customers, and then grow incrementally. By contrast, energy hardware technology must be fully developed from launch. Each Enoda PRIME exchanger, from the first unit sold, represents a piece of critical infrastructure on which households will rely for their electricity supply for its 30-year lifespan. For venture investors who focus on software, it’s easy to assess the health of a software company based on well-established metrics related to customer growth and the cost of customer acquisition.

Hardware investing requires investors to have a much deeper understanding of the problem being solved and assess the quality of the solution objectively rather than rely on early customers for a minimum viable product. Texas investors have been quick to understand the problems that the energy industry must solve around energy balancing and keeping the frequency of a system stable in order to grow renewable energy. Why the keen insight? Because that problem is being solved today by gas power plants. A visionary investor with many years of deep industry perspective is far more likely to appreciate that than a VC firm looking across many industries based on a standard set of metrics.

Visionary partnership is precisely what energy startups need because it’s important not to evaluate the company as it is today but what it will be in five years. Hardware startups need visionary investor partners who understand the importance of parallel pathing fundamental innovation, product development and delivery, and customer development to grow and succeed. Hardware startups succeed only when they can do these things simultaneously—and require investors who can imagine a possible future and understand the path to reach it.

Changing the way investment works

Many energy startups are worthy inheritors of Houston’s bold entrepreneurial spirit that led to technological innovations like deep-sea drilling and hydraulic fracturing. They will continue to need equally bold investors who recognize the world of opportunities at their doorstep.

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Paul Domjan is the founder and chief policy and global affairs officer at Enoda. Derek Jones and Paul Morico are partners at Baker Botts.

Things are heating up in Utah for Fervo Energy. Photo via fervoenergy.com

Houston company breaks ground on 'world's largest' geothermal project with next-generation tech

coming soon

Houston-based cleantech startup Fervo Energy has broken ground on what it's describing as the "world’s largest next-gen geothermal project."

Fervo says the a 400-milliwatt geothermal energy project in Cape Station, Utah, will start delivering carbon-free power to the grid in 2026, with full-scale production beginning in 2028.

The project, in southwest Utah, is about 240 miles southwest of Salt Lake City and about 240 miles northeast of Las Vegas. Cape Station is adjacent to the U.S. Department of Energy’s Frontier Observatory for Research in Geothermal Energy (FORGE) and near the Blundell geothermal power plant.

The company says Cape Station will generate about 6,600 construction jobs and 160 full-time jobs.

“Beaver County, Utah, is the perfect place to deploy our next-generation geothermal technology,” Tim Latimer, co-founder and CEO of Fervo, says in a news release. “The warmth and hospitality we have experienced from the communities of Milford and Beaver have allowed us to embark on a clean energy journey none of us could have imagined just a few years ago.”

In February, the U.S. Bureau of Land Management gave its blessing to the project, allowing Fervo to undertake exploration activities at the site.

“Geothermal innovations like those pioneered by Fervo will play a critical role in extending Utah’s energy leadership for generations to come,” says Utah Gov. Spencer Cox, who attended the groundbreaking ceremony.

Since being founded in 2017, Fervo has raised more than $180 million in funding. Its highest-profile investors are billionaires Jeff Bezos, Richard Branson and Bill Gates. They’re backing Fervo through Breakthrough Energy Ventures, whose managing director sits on Fervo’s board of directors.

Other investors include the Canada Pension Plan Investment Board (CPP Investments), DCVC, Devon Energy, Liberty Energy, Helmerich & Payne, Macquarie, the Grantham Foundation for the Protection of the Environment, Impact Science Ventures, and Prelude Ventures.

Fervo aims to generate more than one gigawatt of geothermal energy by 2030. On average, one gigawatt of power can provide electricity for 750,000 homes. Two coal-fired power plants can generate roughly the same amount of electricity.

Earlier this year, Fervo announced results of a test at Nevada’s Project Red site, which will supply power to Google data centers in the Las Vegas area. Fervo says the 30-day well test established Project Red as the “most productive enhanced geothermal system in history,” the company says. The test generated 3.5 megawatts of electricity.

In 2021, Fervo and Google signed the world’s first corporate agreement to produce geothermal power. Under the deal, Fervo will generate five megawatts of geothermal energy for Google through the Nevada project, which is set to go online later this year.

Houston-based Rhythm Energy CEO and founder, PJ Popovic, discusses the landscape of Texas' energy market and how renewables should be incorporated. Photo courtesy of Rhythm

Houston exec breaks down Texas energy market, role of renewables, and more

Q&A

After experiencing the hottest day on record this past Fourth of July, PJ Popovic — CEO and founder of green energy retailer Rhythm Energy — explained what extreme temperatures like these mean for Texas’ energy market and the role renewables will play in addressing increased demand response.

Headquartered in Houston, Rhythm Energy launched two years ago and offers a variety of 100 percent renewable energy backed plans, from wind to solar. Popovic discussed with EnergyCapital where he thinks renewables fit into Texas’ energy consumption and grid reliability issues in an interview.

EnergyCapital: Let’s start with some background on Texas’ electricity and energy market. Can you explain ERCOT and PUC and the roles they play in our current market?

PJ Popovic: ERCOT first of all, it stands for Electric Reliability Council of Texas. So basically, the easiest way to explain it is it’s our transmission organization and it really coordinates movements of wholesale electricity in most of the state of Texas. It really manages the price of power and balances supply and demand. To make sure that we have power when we flip the light switch on, make sure that power is there. Besides ERCOT, we have something called transmission companies, which is if you know, centerpoint, or ENCORE as an example, they really transport the power and they're compensated by a fee on customers bills. So every customer bill, including the ones that we send with Rhythm, includes Centerpoint charge, which is really the cost of automated Centerpoint maintaining those, those transmission and distribution networks.

And then the Public Utility Commission — the best way and easiest way to explain it — is really responsible for regulating the whole electricity market. And besides the electricity market, they also regulate telecommunications and water and sewer utilities in Texas as well. And they are responsible for making sure we have a well functioning market. Lately there’s been a lot of news because of the market design changes, which really have to be okay with them because that really ties in to regulation of the market and they also resolve customer complaints. Maybe that's another function they do.

EC: What are renewables’ roles in Texas’ energy consumption? How do they play a part in the electric grid’s demand response?

PJP: We really talk a lot about the energy transition, and over the years, you're hearing that more and more in the news. One interesting thing about Texas is that we already went through a first phase — a huge phase — of energy transitions in the prior years. So we've kind of been there, done that.

When I think about energy transitioning, it's really a continuation and acceleration of what's already started. Texas has really secured the top spot right now, in being the biggest renewable provider or having the largest generation fleet powered by renewables in the United States, and really, there was a huge decline in coal, which didn't happen just in Texas, it was across the United States. It really was compensated and then some with the growth in wind and solar.

Renewables play an incredibly important role in Texas — with Texas being a very competitive, free market. It's able to attract a lot of investments and get renewables at scale, which ultimately does lower all of our electricity costs. Demand has been growing in Texas tremendously. Texas summer consumption, highest of the days, hit 79 to 80 gigawatts. Every single year Texas adds approximately one more gigawatt of demand. If you look at the grid growth, we're growing in summers, we're growing even more in winters between.

EC: Since the freeze and subsequent power crisis of 2021, have you noticed a shift in public opinion towards renewables?

PJP: Yes, we have as part of Rhythm. So the unfortunate reality is I think that renewables became a very political question and there's always the question like, “What is right thing versus what is left thing,” and that's the sad reality and I will come come back to it because just a long story short, renewables are and will become a major part of how we supply homes and businesses.

But the shift in public opinion was evident after winter storm Uri. We saw a combination of misinformation, lack of knowledge about how renewables work in the electricity kind of grid collapse we had during the winter storm. And there were a lot of questions about whether winds can support anything, whether it's going to be available when it's hot or cold.

There is still a lot of I would say speech that is not necessarily painting renewables correctly. For example, when we talk about dispatchable generation we tend to talk about gas power plants, about how we need gas power plants. One of the things that I think is beautiful about renewables is that really technology is evolving rapidly and it's advancing insanely fast. And when you talk about dispatchable generation, five years ago, yes, it was gas. But if you think about today, there are already batteries being installed in Texas, and if you think about the future, there's probably half a dozen or dozen different technologies that are going to be renewable based technologies that will potentially play the role of dispatchable generation.

EC: So, if solar continues to grow in market share and sizzling summers continue, why isn't solar taking a larger role in supporting Texas' grid?

PJP: Let's talk about the challenges as well of solar and renewables as they stand today. First of all, one thing I want to set clear, none of the situations we're in should be a surprise. It should not be a surprise at all that we question whether we're going to have electricity in, for example, cold winter days. We've been going through this transition for years. And what happened, we kept retiring dispatchable generation such as coal, which is a good thing, because of the pollution and other other impacts it has on our communities. At the same time, we kept building renewables and there is a continued retirement of generation acids today, and there is at the same time significant upward pressure on the low data centers, electrification and so forth. We also have really great incentives to build more renewables through the inflation Reduction Act, so you're gonna see that acceleration.

However, this is not sustainable. There are periods of time where we do need dispatchable generation, solar and renewables are not dispatchable so there is the famous saying, "if the wind is not blowing or the sun is not shining, we're not gonna get any electricity." So the changes in mix where you switch from more dispatchable generation to more just renewable generation is a dangerous one, if you do not have appropriate balance and appropriately view how much generation you need for some really specific hours or specific days with some extreme weather temperatures. So we're quite keen on getting appropriate market design that will incentivize the buildup of dispatchable generation. We love solar, we love wind intermittency, but not being able to turn it on and off is not a bug. It's a feature of that generation. We knew that all along. So the question is really, how do you compliment that with some dispatchable generation that will allow you to secure a well functioning and cost competitive grid?

​EC: What real incentives for consumers should be considered to improve demand response?

PJP: Demand response is one of those components that we really love because we believe that that's definitely again a feature of the grid of the future. I would say maybe before we even go about demand response, first of all, there's a number of solutions that need to be done on the generation side. And those solutions, we are firm believers, should not be locking us into a certain technology. I would say you have to have the right incentives to incentivize the build out to dispatchable generation. However, don't lock us into one technology because technology is rapidly advancing.

We in Texas have to take energy efficiency seriously. If you look at the growth of the load of the demand in Texas, our winters are growing more rapidly than summer peaks. So summer peaks, approximately two and a half gigawatts year over year growth. Winter peaks are growing three and a half gigawatts, and that's not sustainable because at one point you're not going to be able to build out enough generation and enough demand response to be able to supply power to those homes in the cold winter days if we have inefficient electric heating, which is what we're seeing in Texas. Energy efficiency standards have to be raised and that's something that's going to pay dividends in the next several years already.

Demand response is something we're quite keen to see more of. At Rhythm for example, we serve close to 20,000 solar customers with rooftop solar, a lot of them have batteries. So the pulling of those batteries is an example. Being able to dispatch those batteries provides electricity not just for those homes, but also sending the electricity back to the grid is becoming immense. And it's not only a question about what we have today, it's a question about the growth we're seeing in solar and battery installations. The homes are installing solar at a really rapid pace and we're getting to some serious size in terms of what we have behind the meters.

EC: What do you want people to know about how Rhythm addresses grid instability?

PJP: At Rhythm, we really take having a reliable and cost effective grid seriously, so there are a number of solutions we're putting in place and solutions that are coming up that we're going to hopefully be able to announce within the next couple of weeks. We started this 100 percent renewable company, to support energy, movement to renewables and we want to support specific assets that are built in Texas. We are huge believers that renewables are part of the overall solution because every megawatt hour we have from renewable generation is a megawatt hour we do not have to produce from coal or gas. We all know, especially after last year and this year's events, which is the war in Ukraine, how important that is because energy and commodity prices can skyrocket.

Rhythm supports that build up to renewables. At the same time we do advocate for really responsible solutions in the market. So we are actively advocating on behalf of our customers to make sure we have a reliable and well functioning grid. How do we do that? We do that through conversations around performance credit mechanisms, making sure we implement it in a way that benefits Texas consumers. We are the face of Texas customers, we have to explain anything that's not logical that gets implemented. So we take personal responsibility around how those solutions are being really developed and what makes sense for the consumer.

Lastly, we want to look beyond just global energy credits and look at the real products that can make a true difference. So we are investing money now in building new products that are going to incentivize customers to move consumption from those very expensive periods into cheaper periods. Move away from those expensive periods where we pollute a lot, when there is a lot of dirty generation, into periods where we have more renewables. We're going to do that through smart plans that are coming up. We're going to do that to plans where people get a clear financial signal incentive of changes in behavior that will benefit both the grid overall Texas market and their bills. So that's one thing I'm really excited about. We should be launching in a week and a half to two weeks.

------

This conversation has been edited for brevity and clarity.

The United States Department of Energy is doling out over $200 million for grid improvements — and one of the largest portions will be coming to Texas. Photo via Getty Images

DOE announces over $60M in federal funding for power grid improvement

show me the money

Texas is getting $60.6 million in federal grants to bolster the state’s frequently taxed power grid.

The funding, announced July 6 by the U.S. Department of Energy, totals over $200 million to be distributed across the country. The Lone Star State's chunk will be earmarked for pinpointing gaps in the grid’s dependability and reducing weather-related grid disruptions. The Texas Division of Energy Management will decide how to dole out the money.

“By itself, is $60 million going to be determinative to make our grid reliable? Of course not,” Doug Lewin, president of Austin-based energy consulting firm Stoic Energy, tells the Austin American-Statesman. “It’ll cost more than that, but every bit counts, and $60 million is not a small amount of money, so [the state] could probably do a lot of good with that.”

The Texas grid infamously came under intense scrutiny in February 2021 during and after the statewide deep freeze. The cold snap caused power plants and natural gas facilities to fail, leading to blackouts around the state and at least 200 deaths.

The February 2021 disaster “exposed the inability of the state’s energy supply chain to withstand extremely cold temperatures,” the Federal Reserve Bank of Dallas observes. The bank adds that “questions remain whether the electrical grid is now more resilient to winter weather.”

Although the grid has held up during this year’s heat wave, some observers wonder how long the grid can handle record-setting demand and still keep the lights (and air conditioning) on. So far, an abundance of wind and solar power has rescued Texas from the same fate that crippled the state in February 2021.

All eyes then and now are on the quasi-governmental Electric Reliability Council of Texas (ERCOT), which delivers power to about 90 percent of the state.

Since ERCOT’s winter debacle two years ago, state officials have beefed up weatherization requirements for power generation, power transmission, and natural gas facilities. Meanwhile, ERCOT underwent a management overhaul and bumped up its backup supply of thermal power.

During the state legislative session in 2021, a measure that would have earmarked $2 billion for weatherization of Texas power facilities passed in the House but stalled in the Senate.

This year, Texas lawmakers created a fund containing as much as $10 billion for loans and grants to encourage construction and maintenance of gas-fueled power plants. Gov. Greg Abbott signed that bill. But separate legislation that would have set aside billions of dollars to build a network of gas-powered backup plants died in the House.

A report published in 2022 by Rice University’s Baker Institute for Public Policy faulted ERCOT for the previous year’s winter chaos but didn’t pin sole blame on the organization. The report recommended better coordination among state regulators regarding the power grid, including potential formation of a state agency dedicated solely to energy issues. Today, the Texas Railroad Commission and Public Utility Commission of Texas largely share oversight of energy matters in the state.

“All forms of generation capacity experienced failures,” says the institute’s report on the 2021 winter catastrophe, “but bureaucratic failure in identifying and addressing risks along fuel supply chains was a major failure.”

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Houston researchers earn $3.3M in DOE funding to develop safer underground power line installation

going under

Researchers from the University of Houston — along with a Hawaiian company — have received $3.3 million in funding to explore artificial intelligence-backed subsurface sensing system for safe and efficient underground power line installation.

Houston's power lines are above ground, but studies show underground power is more reliable. Installing underground power lines is costly and disruptive, but the U.S. Department of Energy, in an effort to find a solution, has put $34 million into its new GOPHURRS program, which stands for Grid Overhaul with Proactive, High-speed Undergrounding for Reliability, Resilience, and Security. The funding has been distributed across 12 projects in 11 states.

“Modernizing our nation’s power grid is essential to building a clean energy future that lowers energy costs for working Americans and strengthens our national security,” U.S. Secretary of Energy Jennifer M. Granholm says in a DOE press release.

UH and Hawaii-based Oceanit are behind one of the funded projects, entitled “Artificial Intelligence and Unmanned Aerial Vehicle Real-Time Advanced Look-Ahead Subsurface Sensor.”

The researchers are looking a developing a subsurface sensing system for underground power line installation, potentially using machine learning, electromagnetic resistivity well logging, and drone technology to predict and sense obstacles to installation.

Jiefu Chen, associate professor of electrical and computer engineering at UH, is a key collaborator on the project, focused on electromagnetic antennas installed on UAV and HDD drilling string. He's working with Yueqin Huang, assistant professor of information science technology, who leads the geophysical signal processing and Xuqing Wu, associate professor of computer information systems, responsible for integrating machine learning.

“Advanced subsurface sensing and characterization technologies are essential for the undergrounding of power lines,” says Chen in the release. “This initiative can enhance the grid's resilience against natural hazards such as wildfires and hurricanes.”

“If proven successful, our proposed look-ahead subsurface sensing system could significantly reduce the costs of horizontal directional drilling for installing underground utilities,” Chen continues. “Promoting HDD offers environmental advantages over traditional trenching methods and enhances the power grid’s resilience.”

Aramco partners to demonstrate compact carbon capture technology for gas turbines

dream team

Integrated energy and chemicals company Aramco has signed a collaboration agreement with Carbon Clean and SAMSUNG E&A in an effort to showcase new carbon capture technology.

The technology demonstration will be used to deploy Carbon Clean’s novel CycloneCC technology to capture CO2 from natural gas turbine exhaust streams containing approximately 4 percent CO2, according to Aramco.

Carbon Clean, which U.S. headquarters are located in Houston at the Ion, boasts technology that has captured nearly two million tons of carbon dioxide at almost 50 sites around the world. Aramco’s U.S. headquarters is also in Houston.

“The potential for CycloneCC in the US and Houston area is huge,” Aniruddha Sharma, chair and CEO of Carbon Clean, previously shared with EnergyCapital. “It is optimised for low to medium scale industrial emitters and recent Rice University research on the US Gulf Coast, for example, found that it is well suited to 73 percent of Gulf Coast emitters.”

The modular CycloneCC unit has a 50 percent smaller footprint compared to conventional carbon capture processes. The CycloneCC technology is estimated to reduce the total installed cost of carbon capture systems by up to 50 percent compared to conventional systems if successful. The goal is to also maintain process efficiency even at low CO2 concentrations. CycloneCC’s performance is achieved through two process intensification technologies, rotating packed beds (RPBs) and Carbon Clean’s proprietary APBS-CDRMax solvent.

“Its compact, modular design should be easily integrated with gas turbines, delivering high performance carbon capture in an industrial setting where space is typically limited,” Sharma says in a news release.

The engineering, procurement and construction of the plant will be done by SAMSUNG E&A .The unit will be installed on the sales gas compressor turbine exhaust gas stack,which can provide performance data under real-world conditions.

“Aramco and Samsung Ventures are investors in Carbon Clean, so we’re proud to deepen our relationship through this partnership,” Sharma adds. “This first-of-a-kind deployment capturing very low concentrations of CO2 is a key milestone in scaling up and commercializing CycloneCC.”

In September, Carbon Clean also announced a deal with PETRONAS CCS Solution to collaborate and evaluate Carbon Clean’s carbon capture and storage technology with Carbon Clean's CycloneCC tech. Last year, Abu Dhabi National Oil Co. (ADNOC) selected Carbon Clean for a carbon capture project in Abu Dhabi.