TCL #49: Power Plays and Carbon Bets
From Texas oil fields to Indian rice paddies, this week's deals reveal how capital chases the twin imperatives of the energy transition. Power demand surges while the world seeks to decarbonise where possible. Investors wager that profits and climate solutions might yet prove companions rather than adversaries. Meanwhile, gold miners and drug makers are making their own moves.
Energy
Chevron is increasing its focus on the power business, in addition to its core oil-and-gas operations. During an annual presentation to investors on Wednesday, the company said it plans to build a power plant by 2027 to serve an AI data center in West Texas. This power plant is expected to generate 2.5 gigawatts of off-grid power, with potential for expansion to 5 gigawatts. The company said that it is in exclusive negotiations with a major customer for this power project. The project involves partnerships with Engine No. 1, an investment firm, and GE Vernova, which builds natural-gas turbines. Final investment decision on this project is expected to be made by early next year.
Meanwhile, in the renewable energy sector, Exowatt, a startup based in Miami, secured $50 million in additional funding to accelerate the US rollout of its dispatchable solar technology. The company has raised a total of $140 million in under two years. Exowatt's P3 system captures solar heat using proprietary Fresnel lenses and heat exchangers. The captured solar heat is stored in a high-efficiency thermal battery, which is converted into electricity on demand using a proprietary heat engine. The additional funding will support the expansion of US manufacturing and accelerate deployments of the P3 system.
Carbon Credits
Mirova, a French climate-focused investment firm backed by Kering, a global luxury group, has invested $30.5 million in the Indian climate tech startup Varaha. This investment is Mirova's first carbon investment in India and involves receiving a share of generated carbon credits rather than equity. Varaha's regenerative farming program aims to support approximately 337,000 farmers across 675,000 hectares in northern India. Regenerative farming practices focus on restoring soil health and enhancing biodiversity to make agriculture more climate-resilient.
This investment will fund Varaha's Kheti Project, which helps farmers in Haryana and Punjab adopt low-emission practices and generate verified carbon credits. Key practices promoted by Varaha include direct seeding of rice and incorporating crop residue into the soil, as alternatives to stubble burning. Varaha plans to use the investment to procure machinery necessary for implementing regenerative practices, such as direct seeders and residue incorporation machines. Carbon credits generated will be verified using Verra's VM0042 methodology, with a revenue-sharing model to benefit participating farmers.
Mining
Barrick Mining, a prominent player in the gold mining industry, has recently announced a 25% increase in its quarterly dividend and a $500 million expansion of its share buyback program. This move comes on the heels of a significant surge in gold prices, which has led to record third quarter free cash flow of $1.5 billion for the company, up 274% from the previous quarter.
Biotech
Merck is acquiring Cidara Therapeutics in a deal valued at approximately $9.2 billion. The acquisition aims to diversify Merck's portfolio by including a late-phase antiviral agent called CD388. CD388 is in Phase 3 trials and is being studied as an alternative to vaccines for vulnerable populations, including immunosuppressed patients and individuals aged 65 and over. The launch of the preventative treatment, anticipated as early as 2028, aligns strategically with the patent expiration of its cancer drug Keytruda, also set for 2028.