The balance of climate tech investment trends is shifting. For the first time since 2020, energy investments have overtaken investments in transportation, according to a report published today by Sightline Climate.
The research found that in 2024 investments in energy totaled $9.4 billion, up 12% compared to the previous year. This represents over 20% of total climate tech investment, the largest single category evaluated.
Venture funding in particular “is now focusing on areas with real commercial pathways and high levels of demand, predominantly clean firm power,” the report found.
And the increase in energy funding paralleled an increase in load growth tied in part to artificial intelligence. And Sightline doesn’t expect that growth to abate in 2025: “unfettered energy demand from AI will create new opportunities for clean firm power,” as well as opportunities for data center tech, the report said.
In terms of deal counts, not only did energy deals hit an all-time high — up 26% compared to 2023 and averaging over a deal a day — but they also represent some of the biggest climate deals of the past months.
In December, Crusoe Energy, which brings power generation and data center development under one roof, announced a $600 million raise. And earlier in the fall, Scala Data Centers, a Brazilian startup dedicated to energy-efficient data centers, raised $550 million. Within energy, nuclear had a bit of a resurgence, with investments up a whopping 85% compared to 2023. X-Energy, for instance, which is working to commercialize small modular nuclear reactors, raised $500 million in a round led by Amazon.
Even more striking, investments in energy storage have gone up 184% compared to the previous year.
Together, the nuclear and storage subsectors made up 38% of all energy investments, up slightly from 2021, when they made up 36% of total investments. The gains come as investments in solar, renewable natural gas, distributed energy, hydrogen, and renewables all declined. Solar, in particular, saw a 59% drop compared to 2023.
Transportation, on the other hand, is going through a rough patch. Climate tech investments were down 36% compared to 2023. And the sector’s graduation rates — i.e. the percentage of startups making it to the following round once they’ve raised a seed — also decreased, especially for micromobility and battery companies.
The drop in investment is a sign both of market maturity, as bigger companies mature from venture capital to private equity and project financing, and of hesitation, after some high-profile bankruptcies rattled the sector. The downfall of battery manufacturer Northvolt in late 2024 was one particularly prominent example.
Energy exits saw a healthy increase from 93 at the end of 2023, to 191 by the end of last year, a 105% increase led by acquisitions.
Overall, climate tech venture and growth investments totaled $30 billion, a 14% decrease compared to 2023. The report characterized this drop as the “new normal” as the sector matures.
Co-founder and CEO Kim Zou said in a press release that “while venture investment may be settling in a more conservative financing era, there are positive signals that climate tech as a sector is maturing from one of ‘spray and pray’ to focusing on sectors with viable and rapidly growing commercial pathways.”
