Getting California’s grid ready for the next big one

We’re talking heat waves, of course. The Golden State was fried to a crispy brown this week as a heat wave for the ages bore down. All-time records hit from Sacramento to Stockton to San Jose. That led to an all-time high electricity demand statewide as Californians cranked up the air conditioning to keep sweat at bay.

Climate change is making high temperatures more common and, well, higher, fueling heat waves like we’ve never seen before. And it’s happening as California is set to go through an energy system transformation unlike any in history. It’s a collision course that could make or break the state.

California is about to spend big on climate protection. On Tuesday, the heat hit with a fury. The next day, Gov. Gavin Newsom hit back, signing bills that include $54 billion in climate provisions to be spent over the next five years.

• That spending includes $1.4 billion in loans to extend the life of Diablo Canyon, the state’s last nuclear power plant and its biggest source of carbon-free energy.
• There’s also a new framework for carbon capture and storage.
• And the funding comes just two weeks after the state said it would ban the sale of new gas-powered cars by 2035.
• All of this comes with a new goal to cut greenhouse gas pollution at least 85% by 2045.

Funding for the grid could be the lynchpin that holds these plans together — or causes them to fall apart. The state appropriated $8 billion for upgrading the grid. And hoo boy, is it going to need every penny of that.

• The American Society of Civil Engineers gave California’s energy system a D- in its latest report card. It called out “[a]ging equipment, inferior design, and poor right-of-way vegetation management” for causing explosive wildfires and noted the cost to decarbonize the grid is “unknown.”
• The state’s gas-powered vehicle sale ban will put further pressure on the grid as electric vehicles show up in more driveways.
• And the hot weather isn’t going away. It’s going to get worse, in fact, because climate change has already baked in decades of extra heating and cooling demand.
• It also means more risk of grid-consuming wildfires, but that’s enough bad news for now.

How the state spends its grid money matters. “Reliability” is currently synonymous with fossil fuels, which you can burn for energy at any time of day. But California could start to turn that tide, if it wants to.

• The state has $2.2 billion set aside for a “strategic reserve” of energy for when demand peaks. That money can be spent on keeping coastal methane gas plants open, though, and the billion-dollar question is how much California relies on them as it tries to meet its climate goals.
• The state also has hundreds of millions at the ready to help reduce energy demand (that likely saved the grid this week), and zero- and low-emissions tech to retrofit existing power plants and roll out rooftop solar, including prioritizing low-income communities.
• Some utilities are already leaning into battery storage. Southern California Edison, a utility that provides electricity to 15 million Californians, has been on a utility-scale battery bender. PG&E, which serves large parts of Northern California, proposed a series of major battery storage projects earlier this year as well.

Ultimately, getting California’s grid ready for the impacts of climate change and coping with greater demand due to cooling and EVs is going to take a “yes and” approach. The new budget is the “yes” part. How it’s spent will be the “and.”

— Brian Kahn

Watershed’s moment

Half a billion tons of carbon pollution. That’s equal to the entire country of Mexico’s annual emissions. Yet one startup has set a country-sized goal to reduce or remove that amount of carbon dioxide every year for its net zero-focused corporate customers. And it’s enlisting new talent to ensure it does so.

Watershed is becoming a major player in carbon accounting. Founded in 2019, the company provides a platform that helps companies measure, reduce and report their emissions.

• It's already reeled in some big-name clients like Twitter, Airbnb and Stripe. Overall, Watershed is currently helping manage 35 million tons of climate pollution.
• Watershed also has a star-studded roster of backers, including Al Gore, Laurene Powell Jobs, Kleiner Perkins and Sequoia (Kleiner’s John Doerr and Sequoia’s Michael Moritz both joined the board).

Now, it’s ramping up its climate science bona fides. The company just announced a big get: Steve Davis, professor of earth system science at the University of California, Irvine, has joined Watershed as the company’s new head of climate science. He’s responsible for improving the vetting process for its marketplace of decarbonization offerings as well as improving the accuracy of its carbon footprint measurement technology.

Davis sat down for an exclusive interview with Protocol to chat about why he left academia to join a climate startup, how he believes Watershed will hit its ambitious 500-million-ton goal and how to do carbon removal and offsetting the right way.

• “You never really know when you write a paper if anyone’s actually basing a decision on it,” Davis said of his decision to join Watershed; in contrast, by joining the company, he felt like he could “actually help make those decisions go the right way.”
• As head of climate science, Davis is responsible for making sure that the products Watershed is selling are high-quality and not just capitalizing in the explosion of demand for carbon offsets and removal services. The two main things he’s looking for are additionality and durability.
• “It’s really going through all the documents in great detail to understand what exactly is the process that the project is proposing to do to store carbon. How are they measuring that carbon uptake? How are they verifying that? If that uptake doesn’t actually happen, what’s our recourse?” Davis said of his process.
• In terms of vetting, Watershed doesn’t have a strict checklist, but it does have some hard and fast rules, such as not investing in monoculture projects that might be harmful to local biospheres, he said.

When it comes to climate plans, Davis believes in the 90/10 rule. That is, 90% of a company’s net zero target should be reached via emissions reductions, and only 10% should be achieved through removal.

• Davis said that “it’s a pretty ambitious ratio,” but it’s something that he’s pushing for internally at Watershed. It’s also a ratio other experts have endorsed, too.
• For clients in certain industries, like aviation, reaching that emissions reduction target may be more difficult than for industries that can more easily convert to renewable energy sources, like cloud computing.
• Watershed’s job is not just helping companies reach net zero, but steering them towards reducing their emissions first, Davis said. For example, if the issue lies with a company’s suppliers, the startup might suggest that it buy renewable energy for the supplier in question or switch suppliers altogether.
• Oftentimes, Davis said, companies “don't really know where to start, and the easiest place is to go find some removals to buy.”

But Davis hopes to steer them away from that mentality. Carbon removal is still a mostly untested field, one that requires a lot of safeguards to make sure that local communities and ecosystems aren’t harmed in the process. That’s why it’s important, and heartening, that “all of a sudden, companies want climate science in house,” he said.

— Michelle Ma

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Make it rain

It might not quite be “to infinity and beyond,” but the Dutch startup Lightyear hopes its latest $80 million funding round will get its first solar electric vehicle to market by the year’s end. Invest-NL led the round.

It’s going to be increasingly difficult to hide methane in plain sight: Bridger Photonics, which uses airborne lidar sensors to detect emissions of the super-polluting greenhouse gas, raised $55 million in its latest funding round, entirely from local, Montana-based investors.

Populus, a mobility management platform for cities, raised $11 million in its oversubscribed series A funding round, led by Zero Infinity Partners and Climactic.

Flair, a smart vent and thermostat company angling to help cut home energy use, closed a $7.6 million series A investment round led by Active Impact Investments and Lowercarbon Capital.

Carbon credit marketplace Ceezerreceived roughly $4.2 million in its latest round of funding, led by Carbon Removal Partners.

Argentinian startup Puna Bio aims to use biotech to increase crop resilience in the face of water scarcity. It raised $3.7 million in its all-equity seed funding round, led by At One Ventures and Builders VC.

Battery recycling startup tozero says it has developed a way to extract critical minerals from the lithium-ion batteries that underpin the energy transition, and raised roughly $3.5 million in pre-seed funding. Atlantic Labs led the round.

Pathway Power, a utility-scale solar and battery storage company, raised $36 million via a strategic investment from Forest Road Renewables as it prepares to move into electricity merchant markets, which can be volatile but can come with greater financial gains than long-term contracts do.

Ionic Mineral Technologies emerged from stealth this week with the unique proposition of mining halloysite to develop nano-silicon for use in EV batteries. The company told Axios that its third fundraising round, which closed in July, gave it a post-money valuation of $300 million.

Hot links

Big Oil’s climate tech talk is just that. A new report shows major oil companies spend a lot on PR about how they’re helping the climate while spending a lot more on getting fossil fuels out of the ground.

Want to know if the solar boom is for real? Follow the money, which shows investors are betting on the polysilicon supply chain in a major way.

But if you think the supply chain is bad now? Just wait. Like seemingly everything, the climate crisis is set to make matters worse for everyone from manufacturers to distributors.

Gas bans could pick up steam. Funds in the Inflation Reduction Act could make it more attractive for cities to ban new methane gas hookups and easier for residents to put heat pumps in their basements and induction stoves in their kitchens.

Maybe we shouldn’t be turning old-growth forests into wood pellets. A new investigation reveals companies are chopping down ancient forests for fuel — and they’re getting clean energy subsidies to do it.

Snow could keep data centers cool year-round. The heat from servers at a Japanese data center is slowly melting a buried pile of snow, and the resulting cold water is used to keep temperatures inside the center steady and reduce cooling costs.

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