This was supposed to be the year that climate tech died. President Donald Trump and the Republican Party have done their best to dismantle the Biden administration’s hallmark industrial and climate policies. Even the European Union has begun to ease off its most aggressive goals.
And yet, as the year closes, the receipts provide a different view of climate and clean energy investing in the U.S. and Europe. Instead of tanking, venture bets in the sector remained essentially flat relative to 2024, according to CTVC, far from the slide some had expected.
That resiliency is due in part to the continued threat of climate change. Perhaps a bigger contributing factor is that many climate technologies have become either cheaper or better than the fossil fuel alternatives, or are on the cusp of being so. The incredible cost reductions of solar, wind, and batteries continue to fill climate tech’s sails. Not every new technology will follow the same path, but it does provide evidence that fossil fuels aren’t invincible and that ample opportunities to fund companies providing cleaner, cheaper replacements do exist.
Data centers continue to dominate. Last year, I predicted that 2025 would be the year that climate tech learned to love AI and its thirst for electricity, a prediction that has largely borne out. It’s not entirely surprising, as cheap, clean energy is the cornerstone of the climate tech world.
Interest in data centers has only increased in the last year. Investors surveyed were nearly unanimous in their agreement that data centers will remain at the center of the conversation in 2026. They are creating their own financial ecosystem, and there is enough actual momentum in current AI efforts that the hyperscalers are unlikely to pull back.
In 2025, data centers were obsessed with securing new sources of power. The conversation in 2026 is likely to shift from demand to resilience and the need to accelerate plans to decouple from the grid. Decoupling could solve challenges like resistance from grid operators and a public increasingly worried that new loads are driving up electricity prices.
There will still be a need for more power, and investors saw geothermal, nuclear, solar, and batteries as having benefitted from the boom. Zero-carbon generation is already among the cheapest sources of power, and growing demand for both grid-scale and distributed batteries is accelerating cost reductions faster than expected.
Investors also acknowledged the AI bubble might burst, with some skepticism about whether it would drag the energy sector down with it. The spending for 2026 is already budgeted. The train has left the station. While the data center bubble might burst, no such bubble exists in electricity generation. We still need a lot more power.
Outside of AI and data centers, reindustrialization will take more of the spotlight. We need to rebuild supply chains for systems that require multiple components and complex flowsheets, such as robotics, batteries, and power electronics.
Thanks to new data center announcements, energy-related startups have gotten a boost, perhaps none more than those working on nuclear fission. In recent weeks, nuclear startups have announced rounds totaling over $1 billion, leading to speculation that many will go public in 2026. Nuclear everything is in vogue right now.
But it will take a while for nuclear power to make a dent in electricity demand. In the meantime, tech companies have been turning to solar and batteries as inexpensive, rapidly deployable power sources. Grid-scale batteries, in particular, saw record-setting deployments in 2025. As alternative battery chemistries like sodium-ion and zinc come to market, they stand to lower costs and drive further adoption.
Several investors felt geothermal would step in to help fill the void in the coming years. Enhanced geothermal is seen as a relatively mature technology ready to deploy at larger scales. Geothermal will be hot on solar’s heels in terms of new generation.
And while AI is helping to drive demand, companies and technologies that think beyond the data center will benefit the most. Data centers are one demand driver, not the whole market.
When asked which startup is most likely to go public in 2026, several investors said nuclear or geothermal startups were the most likely. The name mentioned most was Fervo Energy, the enhanced geothermal startup that recently raised a $462 million round. The company is widely seen as a leader and is building a major development in Utah. Tapping the public markets would give it more reserves to tackle additional projects.
Beyond data centers, investors are interested in a range of technologies and sectors, including critical minerals, robotics, and software to manage the electrical grid. We should be paying more attention to grid execution as a category. The quiet winners are companies that make interconnection, planning, and deployment faster.
Resiliency and adaptation will be big themes in 2026. One potential application is robots that bury electrical transmission lines quicker and more cheaply than humans, mitigating wildfire risks and increasing grid reliability.
EV trucking will also be an area to watch. The release and specs behind the Tesla Semi will change that industry in powerful ways.
AI is likely to play a role in climate tech’s transformation. We will see massive innovation where AI meets the physical world in 2026 on both the infrastructure and consumer app layers. Combining AI with smart hardware and physical infrastructure will ensure the transformation of trillion-dollar industries.
But it might also pay to keep an eye on technologies that have already been written off. When investors finally get tired of a sector and conclude it won’t pan out, that’s when the real breakthroughs finally happen.