A lot can change in a few months.
The world of climate change technology hasn't completely turned upside down, but it's certainly more tilted than it was in the summer. The outcome of the US federal election could jeopardize startup-friendly anti-inflation laws and could hurt the business plans of many companies.
But at the same time, the surge in AI-driven computing needs has data center operators scouring the earth for power sources, with increased interest in a variety of power sources including nuclear, renewables, batteries, and even fusion. .
As 2025 dawns, it's a good time to take note of the trends that are likely to define the next 12 months.
advanced nuclear power
Nuclear power has gotten a lot of love over the past year, from Microsoft restarting its Three Mile Island reactor to Google signing a 500-megawatt deal with startup Kairos. Driver? data center, data center, data center. With AI servers facing power shortages as early as 2027, tech companies are scrambling to grab power wherever they can.
Nuclear power is one of them. Historically, increasing nuclear capacity meant larger power plants that took more than a decade to build. But a new wave of startups is proposing smaller designs that can be more easily mass-produced, or so it seems. Large-scale experiments have yet to take place, and the success of nuclear startups will depend on how the first few go.
These companies are benefiting from a newly streamlined regulatory process, which should reduce the time from proposal to construction.
But it also faces stiff competition from renewable power sources that are proven and fast to deploy. Unless there are breakthroughs in the efficiency of AI model training and inference, we'll likely see a lot more news about the tech industry's relationship with nuclear power over the next year.
nuclear fusion power
It's been just over two years since the National Ignition Facility's groundbreaking announcement that it had produced the world's first controlled net-positive fusion reaction. There is no doubt that the Fusion startup has taken advantage of this news to launch its fundraising efforts. This year's winners include Acceleron Fusion, Marvel Fusion, Marathon Fusion, Type One Energy, Xcimer Energy, and Zap Energy.
Expectations are even higher this year. Building a fusion power plant is expensive, even for a demonstrator. Several startups, including Commonwealth Fusion System and Zap Energy, have begun developing prototypes, demos, and even commercial reactors. Many companies have a goal of connecting power plants to the grid in the early 2030s, which means there is a lot of work to do in the coming years. That means you'll need more money soon.
It's a risky technology, but the payoff is a multitrillion-dollar restructuring of the energy sector. If companies can achieve scientific and engineering milestones, more investors are expected to line up in 2025.
hydrogen
Few sectors are more exposed to potential changes to anti-inflation laws than hydrogen. Many startups hope to eventually offer gas for $1 a kilogram, but that could be late this decade or early next year.
To get there, they are optimistic that a two-year IRA that provides a subsidy of $3 per kilogram for hydrogen produced by renewable electricity will help close the gap. I'm here. If this provision is repealed, many hydrogen-related startups may be at risk of bankruptcy. Big companies are already nervous.
At the same time, scientists and investors are focusing on so-called geological hydrogen, or hydrogen that is naturally produced within the Earth. Could it save the industry? The next 12 months could be a make-or-break moment.
what else?
The next year is almost certain to bring further changes, especially as politicians and regulators grapple with the growing demand for electricity driven by AI. Changes to the permitting process could spark a wave of investment in grid-related technology, but if those efforts stall, more companies will bypass the grid and connect directly to data centers. It is expected that a contract will be concluded with the power company.
Investors told me that it will likely be difficult for many startups to raise new funding next year. The companies most at risk are those that rely too heavily on weak subsidies.
But 2025 is likely to be a curve ball as well. It's helpful to remember that the current wave of climate change technologies emerged during the first Trump administration. Next year may also have some surprises in store.