AI Energy Boom Defies Political Headwinds, Climate Tech Investment Holds Firm

The political winds shifted hard against climate policy in 2025. Yet venture investment in climate tech did not collapse. According to data from CTVC, funding in the U.S. and Europe remained essentially flat year-over-year. This resilience defies widespread expectations of a major downturn.Here’s what happened. The relentless demand for power from artificial intelligence data centers created a massive new market. At the same time, technologies like solar, wind, and batteries became cheaper than fossil fuels. These economic realities insulated the sector from policy volatility.

Data Center Demand Fuels a New Energy Race

Conversations about energy were dominated by data centers in 2025. That focus will intensify in 2026. TechCrunch surveyed leading climate tech investors, and they were nearly unanimous. The AI-driven thirst for electricity is a durable, long-term trend, not a short-term bubble.“They are creating their own financial ecosystem,” said Tom Chi of At One Ventures. He sees no pullback from major tech companies next year. The financial scale is immense. Hyperscalers have budgets in the tens of billions dedicated to securing power and chips.This demand is reshaping priorities. Lisa Coca from Toyota Ventures predicts a key shift. The 2026 conversation will move from sheer demand to resilience and decoupling from the traditional grid. This addresses public pushback and interconnection delays that can last for years.

Geothermal and Nuclear Lead the Charge for New Power

Where will all this new power come from? Investors point to a mix of established and next-generation sources. Enhanced geothermal and advanced nuclear fission are at the forefront. Both are seen as firm, dispatchable sources of carbon-free energy capable of scaling quickly.“Geothermal will be hot on solar’s heels in terms of new generation,” said Joshua Posamentier of Congruent Ventures. He notes that natural gas expansion is limited by manufacturing capacity. Meanwhile, geothermal projects are moving from pilot to commercial scale.Nuclear startups have raised over $1 billion recently, fueling IPO speculation. Grid-scale batteries, especially with new chemistries like sodium-ion, are also poised for massive growth. They provide critical flexibility for grids increasingly reliant on intermittent renewables.

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The story of 2025 was surprising stability. The outlook for 2026 is focused growth, driven by an unrelenting AI energy demand that is rewriting the rules for power generation and climate tech investment.

A quick knowledge drop for you

Q1: Why didn’t climate tech investment fall in 2025?

Two main forces provided a floor. Soaring electricity demand from AI data centers created a huge new market. Simultaneously, clean energy sources like solar and batteries became cost-competitive with fossil fuels, protecting their economic appeal.

Q2: Which energy technology is getting the most attention from investors?

Enhanced geothermal and next-generation nuclear fission are top picks. Investors cite their ability to provide reliable, 24/7 “firm” power, which is crucial for data centers and grid stability as coal plants retire.

Q3: Are there concerns about an AI bubble affecting energy?

Some investors acknowledge a potential bubble in data center construction. However, they separate that from the need for new power generation. The demand for electricity is seen as real and long-lasting, regardless of short-term market corrections.

Q4: Which startup is most likely to go public in 2026?

Geothermal leader Fervo Energy was named most frequently by investors. The company recently raised $462 million and is building major projects. Its path mirrors companies that are moving from demonstration to large-scale deployment.

Q5: What is the biggest hurdle to deploying new power?

Financing and interconnection are the twin challenges. Securing capital for first-of-a-kind projects remains difficult. Furthermore, connecting new generation to the overloaded grid can take many years, creating a major bottleneck for all new projects, including data centers.

Q6: What under-the-radar trend should we watch?

Investors point to grid-enabling software and robotics. Solutions that speed up permitting, optimize existing infrastructure, or use robots for tasks like burying power lines are becoming essential to overcome deployment delays and labor shortages.

Trusted Sources: TechCrunch, CTVC