Venture capital (VC) investments in clean energy startups rebounded in 2024 to $12.5 billion, after dipping in 2023. The all-time high for the sector reflects 2024’s lower interest rates and expanding global economy, as well as the effects of incentive programs like the Inflation Reduction Act in the United States and the Green Deal in the European Union. The 8% increase was more than double the 3% rise in VC investments across all sectors.
The main drivers behind the comeback were next-generation nuclear, carbon capture, utilization, and storage (CCUS), and energy services and management solutions startups in North America and Europe. Asian VC investment declined last year, after seeing investments double in 2023.
Our 2025 edition of the “Clean Energy Startup Radar” is our third and is based on an analysis of early-stage investment data from Crunchbase. The report seeks to identify trends, promising technologies, and new business models of interest to VC investors, as well as investor opportunities and risks.
Energy security push fuels rise in nuclear and CCUS funding
Robust growth in next-generation nuclear energy investment in 2024 was dominated by a few bets with significant investment volumes. For instance, startup X-energy, which works on portable, modular nuclear reactors, attracted $700 million, while Pacific Fusion garnered $900 million for its work on energy generation through fusion power. Investments in next-generation technology prompted the nuclear category to expand to $2.4 billion, 12 times what it was the year before.
Last year, CCUS investments rose 139% to $700 million, recovering from a dip to $300 million in 2023. The funding increase was spread across many startups, with the number of transactions up 80%, reflecting 2024’s favorable political and regulatory environment for this technology.
This new support for technologies like nuclear and CCUS signals a growing realization, particularly in North America and Europe, that a bigger mix of technologies — including both CCUS and nuclear — is required to achieve a meaningful energy transition and meet mounting electricity demand. Depending on multiple technologies is also vital to maintain the affordability of energy and ensure energy security. For example, even the Green Party in Germany reversed its stance against CCUS technology and now supports its targeted use.
Investment in energy services and management solutions has increased by 34% to $2.1 billion, suggesting a renewed focus on energy efficiency and sustainability.
AI becomes a key driver in clean tech as legacy tools slip
In 2024, investment in battery technology and storage solutions decreased 39% to $3.3 billion, reflecting the failure of some startups to formulate a sustainable business model. The bankruptcy of Swedish battery manufacturer Northvolt is a notable example.
Investment in carbon analytics and accounting tools dropped to $200 million, down 50% from $400 million in 2023. There are smaller growth prospects for the now mature carbon management solutions market. The one exception: solutions that incorporated artificial intelligence (AI).
More than one-fifth (22%) of all startup investment in 2024 was made in companies that incorporate AI solutions as part of their core offerings. AI incorporation was most extensive in grid solutions, carbon analytics and accounting tools, and CCUS. Close to half of all investments in these categories went to startups with AI as a main offering.
Clean energy VC by region — North America up, Asia down, Europe rising
North America solidifies its position as the leader in VC investment in clean energy startups, with shifts in investment priorities and an increase to about $6.9 billion from $5.5 billion the year before. For instance, tech industry investments in nuclear generation, such as Microsoft’s investment in the Three Mile Island nuclear plant in Pennsylvania, appear to have opened the door to investment in nuclear startups in the region.
In 2024, the North American nuclear category attracted $2 billion, versus 2023 when it only garnered $100 million. This century’s nuclear power is different from the long lead-time, large capital-investment plants of the past, often involving nuclear reactors that can be transported by truck or fusion.
CCUS startups in North America also experienced a surge in investments, up 100% over the year before. Meanwhile, investments in hydrogen, carbon analytics, and battery development and storage declined.
Similarly, Europe also shows promising growth in nuclear and CCUS. In absolute numbers, the big winner in Europe was energy services and management solutions, which attracted well over $1 billion. The biggest growth was recorded by CCUS and hydrogen startups. Hydrogen alone garnered over $689 million. Nuclear went from zero in 2023 to almost $400 million last year.
In stark contrast, the Asia Pacific region experienced a notable decline in VC investment, after the record year the region had in 2023, with multiple $100 million-plus deals. Clean energy startup investments in Asia Pacific seem to be focused on newer technologies around energy services and management solutions, renewables, hydrogen, as well as battery and storage, while investments in CCUS and nuclear are almost non-existent. Hence, the Asia Pacific region appears to have chosen a different path than North America and Europe: focusing innovation on the newer technologies and using traditional ones as bridging technology, neglecting opportunities to make them more sustainable, as the non-existence of CCUS investments shows.
Clean energy sees long-term gains, short-term risks
The International Energy Agency (IEA) predicts a 4% year-over-year increase in global electricity demand, making it reasonable to predict ongoing investment growth in clean energy startups across all markets, at least over the medium and long term.
Short-term, because of the changing political climate, we may see some pullback on clean energy investment activity. This is particularly true in North America. Still, we expect the recent increased focus on nuclear and CCUS to continue, and it may even be expanded. This is due to an apparent strong consensus among regulators and economists that a full range of technologies will be required to meet future electricity demands. Europe appears fully committed to a low-carbon economy despite recent pullbacks on some reporting requirements. This has been underscored by recent pronouncements and actions in the United Kingdom and Germany. This also provides continued momentum for the continued growth of VC investments in clean energy startups. The same holds true for Asia Pacific with the region’s ongoing support for electric vehicles and renewables.
In the end, what should help clean energy startups and funding to the sector will be the universal desire for energy security and the ability to supply the needed electricity to underpin economic growth. Every region will struggle with that, and the answer will not be found by just expanding old technology.