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TPG’s $ 5.4 billion climate fund has made its first clean energy investment, joining investors including Bill Gates with a bet on a start-up developing a cheap battery that allows power grids to better integrate renewable energies.
The TPG Rise Climate, launched last month, joined Massachusetts-based Form Energy’s $ 240 million fundraiser alongside steelmaker ArcelorMittal, the company said. The sum was not disclosed.
The investment is part of a growing push for private equity in clean energy. Brookfield Asset Management launched a $ 7.5 billion climate change fund last month, while General Atlantic also created an industry-focused company led by John Browne, former CEO of BP.
“Private capital has a critical role to play in supporting the creation and growth of innovative climate-focused solutions like that of Form Energy,” said Marc Mezvinsky, member of the climate investment team at TPG Rise.
Former US Treasury Secretary Hank Paulson is the executive chairman of TPG Rise Climate alongside TPG co-founder James Coulter.
Form Energy has developed a battery that uses iron and air to store energy for days rather than hours like lithium-ion batteries currently do. The company says the cheaper energy storage will allow the use of intermittent renewables year-round, such as a coal-fired or gas-fired power plant.
“What we’re betting on is a mega-trend that’s not going to go away,” said Mateo Jaramillo, a former Tesla executive who co-founded Form Energy in 2017.
The company says its iron battery can deliver electricity for 100 hours at a cost competitive with conventional power plants and less than a tenth the cost of lithium-ion batteries.
This would provide power during times of extreme weather conditions, grid outages or when there is little wind or sunshine. The battery costs less than $ 20 per kilowatt hour, but Jaramillo says the company aims to bring it down to $ 10 / KWh by the end of the decade.
The type of iron the battery needs is already being produced on a large scale by the steel industry, according to Jaramillo. “Iron is extremely abundant,” he said. “We don’t have to start from scratch and create this production process on a global scale to get the iron we need. ”
The company has reached an agreement to provide 150 MWh of storage to Great River Energy in Minnesota and is finalizing “many more” projects with other utilities that are using more renewable energy or are replacing coal-fired power plants, a- he added.
“There is still a lot of coal production in the electricity sector and it is all coming out of the system, it is no longer economical,” he said. “A big question is what do you replace it with? More and more, the trade that has been done over the past 20 years, natural gas, is not really trade in the future. ”
The fundraiser brings the total amount raised by Form Energy to more than $ 360 million.
Private equity firm Perry Creek Capital also joined the round, along with existing investors including Temasek of Singapore, Breakthrough Energy Ventures, backed by Bill Gates, Prelude Ventures, NGP Energy Technology Partners III, Coatue, The Engine from MIT, Capricorn Investment Group, Eni Next and Macquarie Capital.
The company will manufacture the batteries in the markets where they are deployed, but will continue to manufacture its proprietary air electrode, which looks like a thick piece of rubber, at its headquarters, Jaramillo said.