Global Resilience

Systems of Power

Global Energy Resilience & Our Investment in Alsym Energy
Published
April 3, 2024
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min read

Just over a year ago, our team convened with Fareed Zakaria to explore the macro and geopolitical trends that we believed would inexorably alter the technology and venture capital landscapes. From these reflections, we solidified our views on modern defense and intelligence and the burgeoning industrial renaissance, which form key pillars of our Global Resilience thesis. 

But these sectors reveal only part of this unfolding story. Energy forms the backbone of economic modernization and has represented one of the most critical drivers of geopolitical power over the last two centuries. As Vaclav Smil elegantly states in How the World Really Works, “modern history can be seen as an unusually rapid sequence of transitions to new energy sources and the modern world is the cumulative result of their conversions”. Access to energy resources has enabled technological advancement, social stability, and critically, hard power, among countries, regions and civilizations for centuries. Robert Ayres went so far as to declare, “[an] economic system is essentially a system for extracting, processing and transforming energy as resources into energy embodied in products and services”.1

From the discovery and exploitation of fire among early hominids to the coal-powered steam engines of the Industrial Revolution and through the oil & gas booms of the 20th century, ownership of the “Systems of Power” has driven technical and economic progress and meaningfully shaped geopolitics. In many ways, the “developed” world has been thus defined by its ability to generate and exploit energy resources, thus driving industrial production, economic growth, and hard power.

The Advent of a Global Energy Transition

We now find ourselves in the early stages of a global energy transition that will redefine the technologies, market structures, and “Systems of Power” that governed our prior world order. It is through this lens that we have approached climate and energy investing at General Catalyst over the last year. Having lived through the challenges and disappointments of the CleanTech  “1.0” era in the early 2000s, we remain cautiously optimistic that we are, in fact, in a new paradigm where energy and climate technologies can economically scale to drive impact, particularly due to the profound geopolitical implications of building energy resilience.

We need only look to Europe and the impact of the Russia-Ukraine war to see the consequences of ceding the “Systems of Power” to foreign nations. Ursula von der Leyen best articulates these repercussions saying, “we [the E.U.] must become independent from Russian oil, coal and gas. We simply cannot rely on a supplier who explicitly threatens us…the quicker we switch to renewables and hydrogen, combined with more energy efficiency, the quicker we will be truly independent and master our energy system”.2 In our view, it is no coincidence that Europe’s plan for developing affordable, secure, and sustainable energy resources after the Russia-Ukraine War is called “RePowerEU” — a double-entendre that harkens back to our own “Systems of Power” thesis. By relying on Russian oil and natural gas, Europe ceded control over its systems of power and lost critical economic and political leverage as a result. Renewable energy generation, supply chain resiliency, and optimized production are no longer normative issues of environmental concern, but rather, carry profound implications for economic, and increasingly, geopolitical strength.

But the ability of these macro forces (no matter how existential) to foster the sustainable development of a new global energy system can neither be naively accepted nor taken as fact. 

Towards Global Energy Resilience

We believe there is still a significant amount of work to be done to (1) develop technologies and processes that will enable a more sustainable energy future; (2) support and drive policy decisions that will continue to reduce the cost of renewable energy technologies; and (3) fortify the climate capital stack beyond venture capital and infrastructure financing to support the development and distribution of innovative technologies, enabling them to reach economies of scale and thus drive commercial impact.  

We appreciate that this is a distinct space for venture capital. The technology risks, development timelines, and capital required to scale, as well as the radical collaboration required between existing industry players and powerful (and increasingly divisive) political forces, are dynamics unlike those we encounter in our more traditional investment sectors, with the exception of healthcare, where we have taken a similarly holistic approach to driving Health Assurance.

As in healthcare, we believe that to durably and “successfully” (based on the potential for positive environmental impact and strong economic returns) transition the global energy system, we will need to rely on audacity of ambition and creativity of approach, two of the most central aspects of our investment strategy in this space and among the key qualities we look for in the founders and companies that we back.

While the audacity of our ambition will lead us to make investments in both hardware and software and across levels of Technical Readiness in a horizontal landscape spanning Energy Generation & Systems, Natural Resources, “Industrial” Decarbonization, and Orchestration & Markets, we will aim to leverage what we believe are unique investment and partnership structures to seek to maximize value for our companies, returns for our limited partners, and impact for the broader ecosystem and environment. While these investments may take different forms, there are a few fundamental principles that guide our investment framework:

  1. Exceptionally strong founding teams that demonstrate powerful systems thinking, sophisticated commercial acumen, and high-velocity learning cycles;
  2. Ideas that support the advancement of new “Systems of Power” — whether in the literal sense (i.e., new means of energy generation and/or technologies that enable novel natural resource development and use) — or in a more figurative sense — companies that enable or broadly innovate efficiencies in, or market structures around, the Systems of Power that will define a new global renewable energy sector;
  3. Companies that enable truly global energy resilience with a desire and ability to collaborate with key international partners to efficiently scale and drive impact; and
  4. Technologies that can, relatively efficiently and largely through systems engineering efforts, reach learning curves that will meaningfully improve their cost structures, enabling them to compete with existing technologies on a Levelized Cost of Energy (LCOE) basis 

In each of their own ways, our recent investments in Fourier, Charm Industrial, Fever Energy, and First Street reflect our commitment to these principles and involved investment characteristics and/or structures that have helped us build a broad portfolio across technologies, Technical Readiness Levels (TRLs) and end-market use cases. 

It is in that spirit of creativity of approach that we are thrilled to announce our investment today in Alsym Energy — an embodiment of the radical collaboration that we believe is necessary to reach the scale required for true global energy security.

Our Investment in Alsym Energy

Enhancing energy security is a core part of our Systems of Power thesis. Finding solutions that balance cost, safety, and supply chain stability to ensure access to abundant clean energy is an increasingly urgent and strategic geopolitical imperative and the resulting pace of renewable energy deployment has been staggering. In just the last two decades, the amount of installed wind and solar has increased by over 50x and 850x, respectively.3,4

Unprecedented levels of renewable deployments have made our grids more volatile, requiring advanced load balancing capabilities and battery storage capacity to successfully manage and distribute the generation of these intermittent solar and wind assets. As a result, the amount of energy storage in the US tripled from 2021-22.5 

While much of the current energy storage narrative focuses on lithium-ion batteries, these chemistries can be impractically expensive and unsuitable for several high-impact applications given their volatility and tendency towards thermal runaway, particularly when densely packed. If we seek genuine energy resilience, we must pursue a diverse strategy beyond chemistries that carry operational risk and leave customers vulnerable to supply chain instabilities and geopolitical threats. After all, the majority of the world’s lithium comes from just four countries, and most lithium refining and battery manufacturing occurs in China.6 In fact, of the top 10 lithium-ion battery makers, six are Chinese-owned and none are headquartered in the US.7 Beyond the geopolitical considerations around this supply chain, the potential seven-fold increase in demand for lithium that we could see by 20308 may lead to a worldwide shortage of this critical element over the coming decade.9

In light of the technical constraints and the implications of the lithium-ion supply chain, we are excited to announce our investment in Alsym Energy, a Boston-based company building performant non-lithium batteries, with a strong focus on global accessibility.

Alsym’s CEO, Mukesh Chatter, is a repeat entrepreneur who previously built a $1B company commercializing high-speed network switches. His experience in complex technology manufacturing is complemented by his Co-Founder and Chief Scientist, Kripa Varanasi, an MIT professor of Mechanical Engineering that has focused his work on developing novel materials with enhanced performance properties for a variety of end markets, including energy.

As we underscored in our energy resilience thesis, to achieve the scale required to drive meaningful impact in a new renewable energy ecosystem, we will need to channel creativity of approach and embrace radical collaboration — particularly with existing industrial players that have production systems, distribution advantages, and supply chain networks to efficiently scale new technologies. Technical innovations are vital, but the larger systems that they need to integrate with, are equally important. 

Alsym shares this philosophy. The company has emphasized international partnership from its early days, and built formative commercial relationships with large logistics companies, automakers, and utilities from India to Japan to accelerate its impact. 

Additionally, we are honored to make this investment alongside Tata Industries, an aligned partner in the development of the U.S./India technology corridor.  While global energy transition challenges can look different between the U.S. and India, we can leverage each others' expertise and knowledge to build the India-U.S. flywheel. With over 90 subsidiaries, and operations in 150 countries, Tata provides a significant global industrial platform to help Alsym scale its manufacturing base and reach diverse end-market customers.

This institutional edge is paired with Alsym’s chemical and computational advantages. The company’s metal-oxide battery chemistry takes advantage of non-flammable and non-toxic materials with an aqueous electrolyte that is free of lithium, cobalt and other flammable solvents that can lead to thermal runaway. We believe this chemistry makes Alsym well-suited for grid storage, maritime, defense, and ultimately, EV use cases, and promotes greater levels of supply chain independence. Importantly, Alsym’s technology also performs comparably to lithium-ion across many dimensions and outperforms on cost and safety. It has also shown higher system-level energy density than other non-flammable, non-lithium chemistries, reducing the trade-offs that have traditionally inhibited non-lithium battery options. Beyond its chemical prowess, the Alsym team has also leveraged sophisticated AI/ML tooling to develop their initial chemistries, which they will continue to refine for a broader set of end markets and commercial use cases.  

While it is still early days, we are excited about the impact that Alsym will have on driving new Systems of Power — in the U.S. and beyond. It is truly a matter of Global Energy Resilience.

___________

1. Smil, Vaclav. How the World Really Works: The Science Behind How We Got Here and Where We're Going. Viking, 2022
2. European Commission. (2022, March 8).
REPowerEU: Joint European Action for More Affordable, Secure and Sustainable Energy
3 & 4  Our World in Data,
Installed Solar Energy Capacity, 12 Dec. 2023.
5. U.S. Energy Information Administration .”
Form EIA-860, 19 Sept. 2023.
6. Jaskula, Bryan. “
Lithium Statistics and Information.” Lithium Statistics and Information | U.S. Geological Survey, 2024
7. Bullard, Nat. “
Decarbonization:Stocks and flows, abundance and scarcity, net zero”, 31 Jan 2024
8. McKinsey. “
Battery 2030: Resilient, Sustainable, and Circular”. 16 Jan 2023.
9. CNBC. “
A Worldwide Lithium Shortage Could Come as Soon as 2025”. 29 August 2023.

Published
April 3, 2024
Share
#
min read

Just over a year ago, our team convened with Fareed Zakaria to explore the macro and geopolitical trends that we believed would inexorably alter the technology and venture capital landscapes. From these reflections, we solidified our views on modern defense and intelligence and the burgeoning industrial renaissance, which form key pillars of our Global Resilience thesis. 

But these sectors reveal only part of this unfolding story. Energy forms the backbone of economic modernization and has represented one of the most critical drivers of geopolitical power over the last two centuries. As Vaclav Smil elegantly states in How the World Really Works, “modern history can be seen as an unusually rapid sequence of transitions to new energy sources and the modern world is the cumulative result of their conversions”. Access to energy resources has enabled technological advancement, social stability, and critically, hard power, among countries, regions and civilizations for centuries. Robert Ayres went so far as to declare, “[an] economic system is essentially a system for extracting, processing and transforming energy as resources into energy embodied in products and services”.1

From the discovery and exploitation of fire among early hominids to the coal-powered steam engines of the Industrial Revolution and through the oil & gas booms of the 20th century, ownership of the “Systems of Power” has driven technical and economic progress and meaningfully shaped geopolitics. In many ways, the “developed” world has been thus defined by its ability to generate and exploit energy resources, thus driving industrial production, economic growth, and hard power.

The Advent of a Global Energy Transition

We now find ourselves in the early stages of a global energy transition that will redefine the technologies, market structures, and “Systems of Power” that governed our prior world order. It is through this lens that we have approached climate and energy investing at General Catalyst over the last year. Having lived through the challenges and disappointments of the CleanTech  “1.0” era in the early 2000s, we remain cautiously optimistic that we are, in fact, in a new paradigm where energy and climate technologies can economically scale to drive impact, particularly due to the profound geopolitical implications of building energy resilience.

We need only look to Europe and the impact of the Russia-Ukraine war to see the consequences of ceding the “Systems of Power” to foreign nations. Ursula von der Leyen best articulates these repercussions saying, “we [the E.U.] must become independent from Russian oil, coal and gas. We simply cannot rely on a supplier who explicitly threatens us…the quicker we switch to renewables and hydrogen, combined with more energy efficiency, the quicker we will be truly independent and master our energy system”.2 In our view, it is no coincidence that Europe’s plan for developing affordable, secure, and sustainable energy resources after the Russia-Ukraine War is called “RePowerEU” — a double-entendre that harkens back to our own “Systems of Power” thesis. By relying on Russian oil and natural gas, Europe ceded control over its systems of power and lost critical economic and political leverage as a result. Renewable energy generation, supply chain resiliency, and optimized production are no longer normative issues of environmental concern, but rather, carry profound implications for economic, and increasingly, geopolitical strength.

But the ability of these macro forces (no matter how existential) to foster the sustainable development of a new global energy system can neither be naively accepted nor taken as fact. 

Towards Global Energy Resilience

We believe there is still a significant amount of work to be done to (1) develop technologies and processes that will enable a more sustainable energy future; (2) support and drive policy decisions that will continue to reduce the cost of renewable energy technologies; and (3) fortify the climate capital stack beyond venture capital and infrastructure financing to support the development and distribution of innovative technologies, enabling them to reach economies of scale and thus drive commercial impact.  

We appreciate that this is a distinct space for venture capital. The technology risks, development timelines, and capital required to scale, as well as the radical collaboration required between existing industry players and powerful (and increasingly divisive) political forces, are dynamics unlike those we encounter in our more traditional investment sectors, with the exception of healthcare, where we have taken a similarly holistic approach to driving Health Assurance.

As in healthcare, we believe that to durably and “successfully” (based on the potential for positive environmental impact and strong economic returns) transition the global energy system, we will need to rely on audacity of ambition and creativity of approach, two of the most central aspects of our investment strategy in this space and among the key qualities we look for in the founders and companies that we back.

While the audacity of our ambition will lead us to make investments in both hardware and software and across levels of Technical Readiness in a horizontal landscape spanning Energy Generation & Systems, Natural Resources, “Industrial” Decarbonization, and Orchestration & Markets, we will aim to leverage what we believe are unique investment and partnership structures to seek to maximize value for our companies, returns for our limited partners, and impact for the broader ecosystem and environment. While these investments may take different forms, there are a few fundamental principles that guide our investment framework:

  1. Exceptionally strong founding teams that demonstrate powerful systems thinking, sophisticated commercial acumen, and high-velocity learning cycles;
  2. Ideas that support the advancement of new “Systems of Power” — whether in the literal sense (i.e., new means of energy generation and/or technologies that enable novel natural resource development and use) — or in a more figurative sense — companies that enable or broadly innovate efficiencies in, or market structures around, the Systems of Power that will define a new global renewable energy sector;
  3. Companies that enable truly global energy resilience with a desire and ability to collaborate with key international partners to efficiently scale and drive impact; and
  4. Technologies that can, relatively efficiently and largely through systems engineering efforts, reach learning curves that will meaningfully improve their cost structures, enabling them to compete with existing technologies on a Levelized Cost of Energy (LCOE) basis 

In each of their own ways, our recent investments in Fourier, Charm Industrial, Fever Energy, and First Street reflect our commitment to these principles and involved investment characteristics and/or structures that have helped us build a broad portfolio across technologies, Technical Readiness Levels (TRLs) and end-market use cases. 

It is in that spirit of creativity of approach that we are thrilled to announce our investment today in Alsym Energy — an embodiment of the radical collaboration that we believe is necessary to reach the scale required for true global energy security.

Our Investment in Alsym Energy

Enhancing energy security is a core part of our Systems of Power thesis. Finding solutions that balance cost, safety, and supply chain stability to ensure access to abundant clean energy is an increasingly urgent and strategic geopolitical imperative and the resulting pace of renewable energy deployment has been staggering. In just the last two decades, the amount of installed wind and solar has increased by over 50x and 850x, respectively.3,4

Unprecedented levels of renewable deployments have made our grids more volatile, requiring advanced load balancing capabilities and battery storage capacity to successfully manage and distribute the generation of these intermittent solar and wind assets. As a result, the amount of energy storage in the US tripled from 2021-22.5 

While much of the current energy storage narrative focuses on lithium-ion batteries, these chemistries can be impractically expensive and unsuitable for several high-impact applications given their volatility and tendency towards thermal runaway, particularly when densely packed. If we seek genuine energy resilience, we must pursue a diverse strategy beyond chemistries that carry operational risk and leave customers vulnerable to supply chain instabilities and geopolitical threats. After all, the majority of the world’s lithium comes from just four countries, and most lithium refining and battery manufacturing occurs in China.6 In fact, of the top 10 lithium-ion battery makers, six are Chinese-owned and none are headquartered in the US.7 Beyond the geopolitical considerations around this supply chain, the potential seven-fold increase in demand for lithium that we could see by 20308 may lead to a worldwide shortage of this critical element over the coming decade.9

In light of the technical constraints and the implications of the lithium-ion supply chain, we are excited to announce our investment in Alsym Energy, a Boston-based company building performant non-lithium batteries, with a strong focus on global accessibility.

Alsym’s CEO, Mukesh Chatter, is a repeat entrepreneur who previously built a $1B company commercializing high-speed network switches. His experience in complex technology manufacturing is complemented by his Co-Founder and Chief Scientist, Kripa Varanasi, an MIT professor of Mechanical Engineering that has focused his work on developing novel materials with enhanced performance properties for a variety of end markets, including energy.

As we underscored in our energy resilience thesis, to achieve the scale required to drive meaningful impact in a new renewable energy ecosystem, we will need to channel creativity of approach and embrace radical collaboration — particularly with existing industrial players that have production systems, distribution advantages, and supply chain networks to efficiently scale new technologies. Technical innovations are vital, but the larger systems that they need to integrate with, are equally important. 

Alsym shares this philosophy. The company has emphasized international partnership from its early days, and built formative commercial relationships with large logistics companies, automakers, and utilities from India to Japan to accelerate its impact. 

Additionally, we are honored to make this investment alongside Tata Industries, an aligned partner in the development of the U.S./India technology corridor.  While global energy transition challenges can look different between the U.S. and India, we can leverage each others' expertise and knowledge to build the India-U.S. flywheel. With over 90 subsidiaries, and operations in 150 countries, Tata provides a significant global industrial platform to help Alsym scale its manufacturing base and reach diverse end-market customers.

This institutional edge is paired with Alsym’s chemical and computational advantages. The company’s metal-oxide battery chemistry takes advantage of non-flammable and non-toxic materials with an aqueous electrolyte that is free of lithium, cobalt and other flammable solvents that can lead to thermal runaway. We believe this chemistry makes Alsym well-suited for grid storage, maritime, defense, and ultimately, EV use cases, and promotes greater levels of supply chain independence. Importantly, Alsym’s technology also performs comparably to lithium-ion across many dimensions and outperforms on cost and safety. It has also shown higher system-level energy density than other non-flammable, non-lithium chemistries, reducing the trade-offs that have traditionally inhibited non-lithium battery options. Beyond its chemical prowess, the Alsym team has also leveraged sophisticated AI/ML tooling to develop their initial chemistries, which they will continue to refine for a broader set of end markets and commercial use cases.  

While it is still early days, we are excited about the impact that Alsym will have on driving new Systems of Power — in the U.S. and beyond. It is truly a matter of Global Energy Resilience.

___________

1. Smil, Vaclav. How the World Really Works: The Science Behind How We Got Here and Where We're Going. Viking, 2022
2. European Commission. (2022, March 8).
REPowerEU: Joint European Action for More Affordable, Secure and Sustainable Energy
3 & 4  Our World in Data,
Installed Solar Energy Capacity, 12 Dec. 2023.
5. U.S. Energy Information Administration .”
Form EIA-860, 19 Sept. 2023.
6. Jaskula, Bryan. “
Lithium Statistics and Information.” Lithium Statistics and Information | U.S. Geological Survey, 2024
7. Bullard, Nat. “
Decarbonization:Stocks and flows, abundance and scarcity, net zero”, 31 Jan 2024
8. McKinsey. “
Battery 2030: Resilient, Sustainable, and Circular”. 16 Jan 2023.
9. CNBC. “
A Worldwide Lithium Shortage Could Come as Soon as 2025”. 29 August 2023.