2025 will be the year climate technology learns to love artificial intelligence

A lot can change in a few months.

The world of climate technology hasn’t exactly been turned upside down, but it definitely is more crooked than in the summer. The outcome of the US federal election could jeopardize the start-up-friendly Inflationary Reduction Act, which is likely to seriously affect the business plans of many companies.

However, the growing computing needs of artificial intelligence have led data center operators to scour the earth for sources of electricity and fueled interest in a range of energy sources, including nuclear, renewables, batteries and even fusion.

As 2025 dawns, it’s a good time to look at the trends that will define the coming 12 months.

Advanced core

From Microsoft restarting a reactor at Three Mile Island to a deal signed by Google, nuclear power got a lot of love this year. 500 megawatt contract with startup Kairos. Driver? Data centers, data centers, data centers. With AI servers facing power shortages Until 2027tech companies are racing to get electricity wherever they can find it.

Nuclear energy is one such place. Historically, adding nuclear power meant large power plants that took a decade or more to build. But a new wave of startups is offering smaller designs that can be more easily mass-produced, or so the thinking goes. They have yet to be tested at scale, and the success of nuclear startups will depend on how the first few fare.

To their advantage, those companies benefit from a new streamlined regulatory process that helps speed the time from proposal to construction.

But they also face stiff competition from renewable energy sourcesproven and quick deployment. Expect to hear more about the tech’s love affair with nuclear in the coming year, unless there’s an improvement in AI model training or efficiency to draw conclusions.

Fusion power

We are just over two years away from the National Ignition Mechanism groundbreaking announcement he created the world’s first controlled, net-positive coupling reaction. Fusion startups have certainly used this news to jump-start their fundraising efforts. This year’s winners include: Acceleron Fusion, Marvel Fusion, Marathon Fusion, A kind of energy, Xcimer Energyand Zap Energy.

Expect more this year as well. Building a fusion power plant, even a demonstration unit, is expensive. Several startups have begun work on prototypes, demos, and even commercial reactors. Commonwealth Fusion System and Zap Energy. Many have goals of connecting power plants to the grid in the early 2030s, which means they have a lot of work to do in the coming years. And that means they’ll need more money soon.

It’s a risky technology, but the rewards include restructuring the trillion-dollar energy sector. If companies can hit science and engineering milestones, expect more investors to line up in 2025.

hydrogen

Few sectors are subject to potential changes in the Inflation Relief Act, such as hydrogen. Many startups hope to get gas to $1 a kilogram, but not until the end of this decade or early next year.

To get there, they were optimistic that the two-year-old IRA could help them close the gap by providing a $3 per kilogram subsidy for hydrogen produced with renewable electricity. If this provision is repealed, a number of hydrogen startups may be in danger of going belly-up. Big companies already exist grew quickly.

At the same time, scientists and investors have warmed to so-called geological hydrogen, or hydrogen produced naturally on Earth. Can it save the industry? The next 12 months could be a make or break moment.

What else?

Next year will almost certainly bring more change, especially as policymakers and regulators grapple with the growing demand for power from artificial intelligence. Changes to the permitting process could spark a wave of investment in grid-connected technologies, but if those efforts stall, expect more companies to sign deals with energy providers to bypass the power grid and connect directly to data centers.

Investors have told me that it will probably be difficult for many startups to raise new funding next year. The most exposed companies are those overly dependent on sensitive subsidies.

But 2025 is just as likely to throw a curveball—it’s useful to remember that the current climate tech wave emerged during the first Trump administration. There may be some surprises next year as well.