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There will be a lot of changes in the next few months.
The world of climate technology has not been accurately upside down, but it is definitely more oblique than in the summer. The outcome of the US federal election could be at risk for the startup-friendly Inflation Reduction Act (IRA), which could throw a wrench into the business plans of many companies.
At the same time, AI’s surge in computing needs have led to a surge in which data center operators have washed away the planet for power sources, and are interested in a variety of power sources, including nuclear, renewable energy, batteries, and even fusion.
As the dawn of 2025, it’s a good time to see a trend that is likely to define the next 12 months.
Advanced nuclear
Nuclear power has received a lot of love over the past year, from restarting a three-mile island reactor from Microsoft to signing a 500-megawatt deal with startup Kairos. driver? Data centers, data centers, data centers. With AI servers facing a power shortage soon in 2027, tech companies are competing to get power wherever they are.
Nuclear power is one of those places. Historically, adding nuclear power capabilities meant a large power plant that took over a decade to build. But a new wave of startups suggests smaller designs that can be more easily mass-produced. They have not yet been tested on a large scale, and the success of nuclear startups will depend on how the first few go.
Those companies benefit from a newly streamlined regulatory process. This should help speed up the time from proposal to construction.
But they also face tough competition with renewable power supplies, which has been proven and is being deployed quickly. Unless AI model training or reasoning efficiency is breakthrough, expect to hear more about Tech’s romantic relationship with Nuclear next year.
Fusion power
We are just over two years away from the groundbreaking announcement at the National Ignition Facilities to the groundbreaking announcement that it produced the world’s first managed net positive fusion reaction. Fusion Startups has undoubtedly used this news to launch its fundraising efforts. Among the winners this year are Axelaron Fusion, Marvel Fusion, Marathon Fusion, Type 1 Energy, Xcimer Energy, and ZAP Energy.
Please look forward to more this year. Even demonstration units are expensive to build a fusion power plant. Several startups are beginning to work on prototypes, demonstrations and even commercial nuclear reactors, such as Commonwealth Fusion Systems and ZAP Energy. Many have the goal of connecting power plants to the grid in the early 2030s. So there’s a lot to do in the next few years. And that means they need more money soon.
It’s dangerous technology, but rewards include reworking the trillion dollar energy sector. If companies can hit scientific and engineering milestones, expect more investors to line up in 2025.
hydrogen
Few sectors are exposed to potential changes in inflation reduction. Many startups want to ultimately deliver gas at $1 per kilogram, but that’s not the case until the second half of the decade or early next.
To get there, they were optimistic that the two-year-old IRA could help bridge the gap through $3 for each hydrogen subsidy produced by renewable electricity. If that clause is no longer needed, many hydrogen startups could risk getting mad. Large companies are already skittish.
At the same time, scientists and investors have warmed geological hydrogen or hydrogen naturally produced within the globe to what is called geological hydrogen. Can you save the industry? The next 12 months may be a moment of makers and breaks.
what else?
Next year will almost certainly bring about a lot of change, especially as politicians and regulators tackle increasing electricity demand from AI. Changes to the permitting process could drive a wave of investment in grid-related technologies, but if those efforts stall, expect more companies to sign transactions with power providers to avoid the grid and connect directly to the data center.
Investors have told me it will probably be difficult for many startups to raise new funds next year. The most exposed companies are those that rely too heavily on vulnerable subsidies.
However, there is a possibility that he will throw a curveball in 2025. It’s helpful to remember that current waves of climate technology emerged during the first Trump administration. There may be some surprises in the store next year.