Green Tech Growth Drivers and Opportunities in 2025

By: Jessie Chuang

Takeaways:

• The AI arms race is one of the strongest growth drivers for green tech. Grid tech, nuclear fusion, small modular nuclear reactors, geothermal developers, and all pursuits to level up AI computing energy efficiency and data center optimization will likely be high-growth green tech sub-sectors globally within 3-5 years.
  
• The global energy transition will continue, although it might be uneven across countries. Growth in emerging markets will be the bigger driver in the future of mature green tech such as solar. Pay special attention to India, a large and fast-growing economic body that is attracting many investors and pushing energy independence and emission reduction.

• At Enventure, we identify green tech startups with competitive unit economics to survive the current contraction in the sector and help them enter high-growth markets such as India.

Global investment in climate tech startups dropped significantly in 2024, falling by 40% YoY while mega-round funding fell by 47% (from CBInsights). The year saw high-profile bankruptcies of established climate tech startups like battery manufacturer Northvolt, as well as public players like Lilium and Arrival filing for insolvency/bankruptcy. These showed us the commercialization challenges facing capital-intensive industries like climate tech. Climate tech M&A exits dropped by 25% YoY to 284, the lowest count since 2020. At the quarterly level, M&A exits steadily declined over 2024, falling from 104 in Q1'24 to 39 in Q4'24 (from CBInsights). This was before 2025; climate tech isn’t that much different from the overall cooldown.

Now there is uncertainty for the US clean energy sector due to adjustments in funding programs valuing billions of dollars in grants, loans, and prizes. However, nuclear cleanup projects have already received special exemptions to continue receiving funding. The new leadership at the DOE has announced a focus on "baseload" and dispatchable power generation, including fossil fuels, advanced nuclear, geothermal, and hydropower, as well as initiatives to strengthen grid reliability and security. The DOE has also expressed a commitment to improving permitting efficiency to accelerate energy infrastructure development. The new EPA administration has introduced revisions to environmental policies. Similarly, the UK government also plans to ease nuclear rules to facilitate the construction of small modular reactors (SMRs) for powering data centers.

On-site power generation for AI-driven data centers has become popular. Exxon and Chevron recently announced plans to take their power-gen operations to the data center market. Big tech companies might experiment with more zero-carbon options because of their committed emission goals. Clean energy startups are leveraging AI's high energy demands to secure premium contracts with tech companies looking for clean power that can be rapidly deployed – short-term contracts at $100 per megawatt-hour, which is roughly double typical market rates. We're watching this trend closely since efforts to improve the energy efficiency of AI computing through many aspects are being actively pushed, especially after the shock wave of DeepSeek's demonstration of its model's energy efficiency.

Despite efficiency improvements, trends indicate that load growth forecasts are still growing significantly upward. The AI race has been ongoing between big tech companies, countries, and now, between the wealthiest individuals. Mukesh Ambani, the richest person in Asia, plans to build a massive data center in India, potentially the world's largest, with a capacity of 3 gigawatts. His enterprise, Reliance Industries, aims to complete the project in a record 24 months. The Adani Group, partnering with EdgeConneX, seeks to develop a network of hyperscale data centers across India, targeting 1 GW of data center capacity by powering facilities with 100% renewable energy.

We are seeing big news in AI investments every week. Here are some latest ones:

• At the AI Summit, French President Emmanuel Macron announced plans to invest €109 billion in AI infrastructure. France's nuclear capabilities are a strategic asset in AI innovation – they claim that in the coming decade, France will no longer export electricity; it will export intelligence.
• The EU just unveiled its biggest AI investment ever – InvestAI, a €200 billion initiative to create European AI gigafactories and computing hubs.
• South Korea has announced plans to acquire 10,000 high-performance GPUs by the end of 2025.
• Saudi Arabia is set to host one of the world's largest AI data centers with a $5 billion investment by DataVolt in Oxagon, NEOM’s industrial city. The facility will have a capacity of 1.5 gigawatts and will be powered entirely by renewable energy.

The growing demand for AI infrastructure is one of the strongest drivers for green tech globally.

The global energy transition will continue, although it might be uneven across countries. Annual solar installations grew an impressive 35% in 2024 and have quadrupled since 2020. However, it is forecasted to grow by just 11% in 2025 and more or less see linear growth from then on. Growth in emerging markets will be a bigger driver in the future of mature green tech such as solar. India, Pakistan, Turkey, Saudi Arabia, and Romania all posted more than 50% growth in solar installations in 2024, according to estimates from BloombergNEF. India in particular, is a large and fast-growing economic body attracting many investors. The country is pushing for energy independence and emission reduction – its E20 ethanol-blending policy targets 20% blending before the end of 2025, and several of its renewable energy programs give tailwinds for solar, wind, and green hydrogen.

In short, grid tech, nuclear fusion, small modular nuclear reactors, geothermal tech, and all pursuits to level up AI computing energy efficiency and data center optimization are likely to be high-growth green tech sub-sectors in the next 3-5 years. Aside from that, we predict the market won't favor the usual green premium from now on. Nascent emerging technologies might be impacted the most. At Enventure, we identify green tech startups with the competitive unit economics to survive the current contraction in the US and help them enter high-growth markets such as India.

One example of our deals:

Grain-based ethanol production in India: Backed by India’s E20 ethanol-blending policy with the government's strong commitment. The team is composed of veterans who have built 9 factories and proven their track records before. Lands and partnerships with suppliers and consumers are in place.

To learn more about our fund and deals, co-investing opportunities, please read Enventure Way, and book a 30-minute meeting to explore a partnership.