The Lone Star State, a long-known global energy hub, is emerging as a cleantech capital. A wave of innovation has rolled in, positioning Texas to the front of the energy transition. Already leaders in wind and solar, making use of the scorching hot sun, the Texas cleantech scene is getting even hotter.
Cleantech Group’s Members Hub features over 900 Texas-based cleantech innovators, with a majority concentrated in Houston, Austin, Dallas, and San Antonio. Leading universities are shaping a pipeline of talent from business leaders to much-needed scientists for deeptech solutions.
- Austin-based EnergyX partnered with The University of Texas at Austin to develop lithium processing solutions
- Tech incubators and accelerators like Greentown Labs provide critical resources and mentorship to innovators during scale up
- The start-up communities in Texas are collaborative and friendly with frequent networking events popping up all over
- Key events like Austin’s South by Southwest (SXSW) and Houston’s Energy & Climate Week (last week) highlight the growing cleantech innovation
Building on its legacy, Texas is enabling scale up across every cleantech sector. Perhaps the most important piece of the Texas puzzle: energy. Building out these giant hubs requires significant energy infrastructure and access to reliable, low-cost renewables.
- The maritime industry in Corpus Christi is buzzing with green ammonia and low-carbon hydrogen projects
- Oil & Gas majors are applying their drilling expertise to lithium extraction from brine and deploying carbon capture at Smackover
- Nuclear facilities and long-duration battery storage solutions are picking up speed, e.g., Austin-based Alo Atomics’ micro-reactors raised a $100M Series B in August
- The Port of Brownsville is even getting a new hydrogen-powered refinery operational by 2027 to produce low-carbon fuels
The driving forces behind all of these are access to relatively inexpensive land with relaxed permitting requirements. Texas’ tax environment is favorable for corporations, among the lowest in the nation, relieving high tax burdens known in other states. Its government is pro-business, offering millions of dollars in tax breaks to major new facilities like:
- Tesla’s 2020 Austin facility to manufacture electric vehicles
- NVIDIA and Crusoe, among others, to build out a 1.6 GW capacity data center with 10 GW in development in Abilene
- Occidental Petroleum’s STRATOS Project in Ector County to build a direct air capture facility with 500,000 tons capacity by this year
Key Risk Exposure
Despite all of this good news, this booming infrastructure has a critical vulnerability. It’s actually quite fragile and vulnerable to widespread power outages. The 2021 freeze left 4.5M without power, some for more than two weeks, resulting in 246 deaths. This challenge is now a major driver for innovators working to both strengthen the grid and introduce new sources of energy, from energy-efficient materials to new energy sources that will redefine our energy landscape.
Innovators Forging a Path
Houston, TX is a global energy hub with players you likely already know.
Octopus Energy is one of the most valuable privately held start-ups in the world, valued at over $9B. It began expanding in North America with a solid foundation in Texas. Its energy platform provides integrated demand response fixed rate plans for customers to avoid surge pricing.
Solugen, with its engineered microbes for biobased chemicals production, has raised over $612M in equity and a $213M loan from the U.S. DoE. Part of Solugen’s success was gaining trust from industrial customers by testing and developing with no upfront capital requirements. This ‘Tech’-as-a-Service approach is becoming more common across cleantech.
Fervo Energy’s geothermal projects have raised over a total of $666M in equity, including $206M in equity and loans earlier this year from notable investors like Mercuria Energy and the Breakthrough Energy Catalyst Program. While its most significant project is located in Utah, Fervo is associated with the U.S. Army’s Fort Bliss Initiative in El Paso, TX to develop geothermal projects.
Hertha Metals cited Conroe’s collaborative private and public sectors as a big reason for its move to Conroe. It’s developed a hydrogen-direct reduced iron process that produces high purity iron or steel. Hertha recently attracted $17M to build out a pilot facility from Khosla Ventures, Breakthrough Energy, and others. Hertha is poised to become the first U.S. producer of high-purity iron for the magnets industry.
Syzygy Plasmonics developed a photocatalyst solution for low-cost, low-emissions production of hydrogen, methanol, SAF, and other chemicals. It’s raised over $134M from major players including Mitsubishi Heavy Industries, Chevron, Lotte Chemical, Equinor, Aramco, and more.
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Vaulted Deep developed a slurry sequestration technology that injects organic waste underground for permanent carbon removal. It’s raised over $40M from Lowercarbon Capital, Prelude Ventures, and others.
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Austin, TX has a friendly start-up culture with deep roots in tech.
Workrise (fka RigUp) raised over $707M ($3B valuation) for its software and services to streamline oil rig logistics and operations. The company is transitioning its operations to renewables and other infrastructure projects.
The Nuclear Company’s fission reactors have raised over $51.3M from leading investors like MCJ Collective. Funding will be used to build out 1GW of capacity with 6GW in the pipeline for it’s first fleet.
Base Power Company raised over $268M for its lithium iron phosphate residential battery storage systems to back up homes during outages.
EnergyX is poised to be among the first producing lithium from brine at commercial volumes. It’s raised over $500M, including by UT Austin and General Motors. EnergyX’s latest manufacturing facility in Austin will satisfy its high-risk, high-reward vertical integration strategy to produce battery-grade lithium.
Hexium developed a laser-based solution for enriching lithium for use as a fuel source in fusion reactors. It’s raised $9.5M in equity and $2.5M credit facility to build a pilot plant.
Noveon Magnetics is helping the U.S. achieve rare earth metals independence. Having raised well over $100M in equity, it’s already a leader in magnet-to-magnet rare earth recycling. It’s recently secured a major partnership with General Motors to supply neodymium magnets.
Maverick Biometals relocated to Austin this summer, citing a favorable start-up culture. It’s developed an in-situ process to extract minerals, rare earths, and other metals from hard rock using microbes. Maverick has raised over $28M.
Climate Wells provides plugging and wellsite reclamation to stop emissions and restore the native landscape of marginal oil and gas wells. These wells make up less than 5% of production but produce over 50% of all oilfield methane emissions.
San Antonio, TX
Founded in 2008, Solidia is one of the low-carbon cement/concrete industry’s first movers. It’s raised over $135M in equity for its solution that slashes concrete emissions by 70%. Solidia’s demonstrated its technology in over 50 projects across 10 countries.
CarbonFree Chemicals is a producer of calcium carbonate and other chemicals from captured carbon emissions. Its solution has caught the eye of major emitters like US Steel, BP, Hitachi Zosen Inova, Fluor, and others.
Looking Ahead
Texas is ahead of the game in these key themes:
- Business friendly atmosphere
- Huge diverse workforce that can translate skills to cleantech
- Massive corporations who can throw their weight behind projects
- Incredible university institutions deep in research and support
But while Texas’ cleantech ecosystem is booming, there are significant and growing challenges regarding resource consumption. It’s a bit of a ‘clean’ paradox where many cleantech solutions enable a low-carbon future but actually consume vast amounts of resources. Water, for example, is a limited resource in this drought-prone state. Industrial solutions like datacenters and even semiconductor manufacturers use millions of gallons of (ultrapure) freshwater per year. Avina Clean Hydrogen purchased the equivalent of 5.5M gallons of water per day from the Nueces River for 25 years, raising concerns about regional water scarcity. Ramping up energy is top priority for the already vulnerable grid. Strict oversight of resource availability and consumption should be undertaken to protect both local environments and communities.
Texas’ cleantech ecosystem is ramping up with many challenges yet to be overcome. These challenges aren’t roadblocks, but rather opportunities for further innovation. Upgrading our infrastructure’s resilience is a step-by-step process with no silver bullet. At its core, the cleantech thesis is a pragmatic, business-savvy approach that in many instances enhances the economic competitiveness of a business or technology. In Texas, sustainability and profitability are often linked.
