TPG’s $5.4bn climate fund has made its first investment in clean energy, and has partnered with investors, including Bill Gates, to develop a low-cost battery that enables electricity networks to better integrate renewable energy.
Launched last month, TPG Rise Climate, along with steelmaker ArcelorMittal, joined the $240m Massachusetts-based Form Energy fundraiser, the firm said. The amount was unknown.
The investment is part of a growing increase through private equity to clean energy. Brookfield Asset Management last month set up a $7.5bn fund focusing on climate change, while General Atlantic also set up a business-focused business led by former BP CEO John Browne.
“Private capital plays a key role in supporting the creation and growth of innovative climate-oriented solutions such as Form Energy,” said Marc Mezvinsky, member of the TPG Rise climate investment team.
Former US Treasury Secretary Hank Paulson serves as executive chairman of TPG Rise Climate with TPGs co-founder, James Coulter.
Form Energy has developed a battery that uses iron and air to store energy for days rather than hours, as lithium-ion batteries currently do. The company says cheaper energy storage will be made possible by intermittent renewable energy throughout the year, similar to a coal- or gas-fired power station.
“What we’re betting on is a mega-trend that is not disappearing,” said Mateo Jaramillo, a former Tesla CEO who founded Form Energy in 2017.
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The company says its iron battery can supply 100 hours of electricity at a competitive price with conventional power stations and less than a tenth of the cost of lithium-ion batteries.
This will allow the supply of energy during periods of extreme weather, power outages or when there is little wind or sun. The battery costs less than $20 per kilowatt-hour, but Jaramillo says the company wants to reduce it to $10/KWh by the end of the decade.
According to Jaramillo, the type of iron required for the battery is already being manufactured on a large scale by the steel industry. “Iron is very plentiful,” he said. “We do not have to start from scratch and create this global production process to get the iron we need.”
The company has an agreement to provide 150 MWh of storage space to the Great River Energy utility in Minnesota, and is completing “many other” projects with other utilities using more renewable energy or replacing coal-fired power plants, he added.
“There is still a lot of coal generation in the power sector, and it’s all coming out of the system, it’s not economical anymore,” he said. A big question: what do you replace it with? The trade that has been done with natural gas over the last 20 years is not really the trade.”
The fundraiser brings the total amount raised by Form Energy to more than $360m.
Private equity firm Perry Creek Capital also joined the round of financing, as did existing investors, including Temasek, Bill Gates-backed Breakthrough Energy Ventures, Prelude Ventures, NGP Energy Technology Partners III, Coatue, MIT’s The Engine, Capricorn Investment Group, Eni Next, and Macquarie Capital.
The company will manufacture the batteries in the markets where it will be deployed, but will continue to manufacture its own air electrode, which is like a thick piece of rubber, at its headquarters, Jaramillo said.
Source: AFE games
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