There is no sugarâcoating it: 2025 was a rough year for many climate tech founders. Headlines focused on policy rollbacks and IRA uncertainty, while total climate tech venture and growth investment only inched up to about 40.5 billion dollars, an 8% rise that felt more like stabilization than the 2021â2022 boom. Deal count actually fell 18% and investor participation dropped 19%, with especially steep pullbacks in carbon and transportation, as capital concentrated in fewer, larger, âsaferâ bets. Growth-stage funding jumped 78% while early-stage seed rounds dropped 20%.
On top of that, tariff battles and shifting trade rules added real supplyâchain friction. In the first half of 2025, solar and wind were still 91% of new U.S. capacity additions, but interconnection delays, equipment uncertainty, and changing incentive structures meant many projects stalled or were repriced midâstream. Founders who had raised on 2021âstyle valuations and policy optimism suddenly found themselves stuck in limbo, extending runway or shutting down.
The bright spots were teams positioned at the intersection of climate and the AI power surge. Power demand from data centers is now a primary driver of new climateâaligned offtake, pulling capital toward firm, 24/7 resources. Geothermal developers like Fervo Energy, Sage Geosystems and XGS did well. Googleâs enhancedâgeothermal deal in Nevada scales from a 3.5 MW pilot to about 115 MW under a clean transition tariff, nearly 30Ă growth in geothermal capacity enabled by a single corporate buyer. Meta and others are exploring similar pathways to secure roundâtheâclock lowâcarbon power for hyperscale loads.
Beyond geothermal, nuclear is clearly back on the strategic menu. In 2024, Google announced the first U.S. corporate nuclear offtake, committing to purchase 500 MW from Kairos Powerâs SMR fleet by 2035, a signal that big tech is willing to underwrite new firmâpower technologies when the decarbonization and reliability story is compelling. Meta just locked in 6.6GW of nuclear capacity through deals with Vistra, Oklo, and TerraPower.
Growth investors and corporates are increasingly clustering around platforms that can monetize longâduration PPAs into dataâcenter demand rather than purely policyâdriven arbitrage.
Looking into 2026, the same trends will continue:
Solar and wind
Even with policy headwinds, solar and wind continue to dominate new capacity. In the first half of 2025 they made up about 90% of new U.S. electricity capacity. Over the 2025â2028 period, FERCâs âhighâprobabilityâ pipeline points to on the order of 90â93 GW of new utilityâscale solar and roughly 20â23 GW of new wind, far outpacing other resources.
Storage and flexibility
Solar plus batteries is now the default buildâsolar and storage together account for about 81% of expected 2025 U.S. capacity additions, with storage deployments scaling alongside renewables to keep grids flexible. Thermal storage and other gridâedge flexibility solutions are also attracting growing attention as ways to smooth volatile load.
EVs and transport
EV uptake continues to anchor longâterm battery demand; while transportation funding cooled in 2025, EV sales and charging buildâout are still major components of cleanâenergy demandâside investment
Buildings
Heat pumps, smart HVAC, and efficient water heating are now the dominant vectors for buildingâsector decarbonization. Heating and cooling startups alone have raised billions since 2020, with nearly 700 million dollars going into HVACâfocused companies in 2024, and that momentum carried into 2025.
Hydrogen
The green hydrogen narrative has faded, but analysts still see hydrogen as essential for steel, chemicals, and other hardâtoâabate sectors, with largeâscale projects and offtake frameworks under development rather than headline hype.
CCS/CCUS
After years of skepticism, more large CCS projects are finally reaching FID and coming online, helped by a mix of tax credits and industrial demand, which makes CCS look more investable than it did in the preâIRA era.
So, yes, 2025 was a downer from the easyâmoney, policyâeuphoria years. But the signal beneath the noise is clear: capital is rotating toward technologies with proven unit economics, real offtake (especially from AIâdriven power loads), and credible paths to scaleânot away from climate altogether.
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Nada Ahmed is the founding partner at Houston-based Energy Tech Nexus.