TCL #65: Off Shore Data Centers

Energy

-Panthalassa, an Oregon-based renewable energy and ocean technology company, has raised $140mn in Series B financing. The round was led by Peter Thiel with new and returning investors. Panthalassa uses wave motion to generate electricity for AI chips. The company's data center "nodes" are large, 85 meter (mostly) submerged steel structures cooled by seawater. The nodes generate electricity through a turbine that harnesses the motion of waves and powers AI chips that are housed in a hermetically sealed container. These nodes are also self-propelling due to the design of their hulls, which drive them to their destination without any engine. The new funding will help Panthalassa to expand its pilot facility and aim for a commercial launch as early as 2027.

-Houston-based geothermal startup, Fervo Energy, plans to raise up to $1.3bn in its initial public offering on Nasdaq under the ticker FRVO. Fervo's goal is to reduce the cost of geothermal electricity generation to $3000 per kilowatt of capacity and make it cost-competitive with natural gas. Fervo's first large-scale project, called Cape Station in Utah, has electricity generation costs of $7000 per kilowatt of installed capacity. Cape Station is on track to start delivering clean power to the grid by late 2026 and will achieve approximately 100 MW of operating capacity by early 2027.

Nuclear Tech

Type One Energy plans to build the UK's first commercial fusion plant by the mid 2030s. It is teaming up with US engineering firm Aecom and UK-based Tokamak Energy to develop the project, which is modelled on a 400 MW facility design. Type One Energy uses a stellarator which is a distinct approach to magnetic fusion and differs from the more common tokamak design used by most other fusion companies.

Oil & Gas

-Norway will reopen three long-dormant North Sea gas fields. The fields are located off Norway's south coast. These fields originally produced from 1977 to 1988 and were fully shut down by 1998. They still hold an estimated 90mn to 120mn barrels of oil equivalent in gas and condensate. Set to restart in 2028, the fields will produce for roughly two more decades. The primary target markets are Germany and the UK.

-Shell posted adjusted profits of $6.92bn for Q1, up ~25% year-on-year and beat analyst forecasts of $6.36bn. This is the company's biggest quarterly profit in two years. Net debt rose to $52.6bn, up $11bn year-on-year. Shell has stakes in 4 refineries in Europe and 3 in North America. These refineries generated over $2bn in profit converting crude into diesel, gasoline, and jet fuel. However, there are some headwinds expected in the future. Gas production is expected to fall at least 30% in Q2, with zero output assumed from Qatar (~300,000 barrels/day equivalent).

Hydrogen Production

Shell is campaigning to delay planned EU rules that would tighten the definition of green hydrogen. As per the current rule, producers can label hydrogen "green" if they buy enough renewable energy over a month to match any fossil fuel consumption of an electrolyzer. From 2030, the rule will be changed to require hourly matching, wherein electricity use must align with renewables generation on an hourly basis. Shell argues that hourly matching would add ~€2/kg to production costs on top of the current average of €8/kg. Shell wants the rule to be delayed by a decade to provide the industry sufficient time to adapt.