As we reflect on 2025, our team has been reviewing the shifting landscape of the energy transition. It was a year defined by sharp contrasts: real progress in core technologies, unexpected policy reversals, geopolitical reordering, and an unprecedented surge in energy demand driven by AI. Below is a distilled look at what we observed and the insights we’re carrying into 2026.

If 2024 was about momentum, 2025 was about fundamentals. We watched markets recalibrate around cost, reliability, and energy security, especially as grids strained under accelerating load growth. Industrial heat, storage, and domestic supply-chain solutions gained ground as institutions prioritized technologies that stand on economics, not optimism. Geothermal even began to “go mainstream,” a signal that under-appreciated, deep-infrastructure solutions are gaining real traction as reliability becomes paramount.

Our takeaway: The next phase of the transition will reward durability, cost advantage, and system-level reliability above all else.

One of the biggest shocks this year was the sudden rollback of several federal incentives, upending expectations across many parts of the transition. At the same time, federal support for legacy fossil assets reappeared in ways that surprised many in the sector.

These swings served as a reminder that policy is an accelerant, not a safety net. Technologies and business models must be built to withstand shifting political winds, and investors must underwrite accordingly.

Our takeaway: Agility and strong fundamentals matter more than policy tailwinds; the transition is not linear.

Perhaps the single biggest driver reshaping the energy transition in 2025 was the explosive growth of AI and data centers. Power and thermal loads grew faster than expected, stressing regional grids and revealing the limits of current infrastructure. This created real opportunity for technologies that can scale fast and deliver dependable performance, but it also amplified hype.

We saw pockets of exuberance form around:

The underlying demand is real, but narratives often outpaced fundamentals.

Our takeaway: The energy–compute nexus is one of the most exciting frontiers, but also where discipline matters most.

This year also highlighted how deeply the energy transition is intertwined with geopolitics, materials access, and national security. From critical minerals stockpiling to tightening export controls, countries moved aggressively to safeguard strategic energy and materials capacity. These shifts are reshaping where projects get built, what technologies scale fastest, and how investors price risk.

Our takeaway: The energy transition is now a geopolitical transition; supply-chain resilience is becoming a source of competitive advantage.

Across our work this year, one theme was unmistakable: founder quality remained the strongest predictor of performance. The teams that excelled were those that:

Our takeaway: Execution discipline and creativity matter more than ever in a transition shaped by uncertainty.

A recurring theme in our reflections: uncertainty is no longer episodic — it’s structural. From policy swings to geopolitical tension and infrastructure bottlenecks, the transition now operates in a volatile environment by default.

Our takeaway: The ability to build, invest, and operate through uncertainty will be one of the most valuable capabilities in the next decade of the energy transition.

We enter 2026 clear-eyed about the challenges — political noise, grid congestion, financing pressure — but also optimistic about the opportunities for technologies that truly strengthen the energy system.

We see potential in:

Our core belief heading into 2026: Technologies that reduce cost, improve resilience, and scale without policy guarantees will define the next wave of the energy transition.

Despite volatility, 2025 sharpened our conviction. The transition is accelerating because the world needs more energy that is clean, reliable, affordable, and resilient. AI, geopolitics, and infrastructure demand are raising the stakes and expanding the opportunity set. And the founders building in this environment are proving that uncertainty is not a barrier — it’s the backdrop against which the next generation of energy leaders will emerge.

We’re excited for the year ahead and grateful to continue this work alongside you.

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Australia’s Solar Boom Could Deliver Free Electricity
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Mega-Batteries and the Grid of the Future
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Pentagon Ramps Up Critical Minerals Stockpiling
The U.S. government’s $1B push to build strategic mineral reserves signals intensifying global competition for materials critical to national security and the energy transition, reinforcing the importance of resilient, asset-light enabling technologies.

China Introduces Export Controls on Lithium Batteries & Materials
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What’s Next for Climate Tech
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Climate Resilience Market Sized at $1T by 2030
McKinsey also published a bottom-up estimate valuing the climate resilience technology market at up to $1 trillion by 2030, reflecting rising demand for tools that protect infrastructure, supply chains, and communities.

Energy Implementation Playbook
A new practitioner-focused resource authored by several of Partner Elaine Hsieh’s former U.S Department of Energy colleagues outlines tested approaches for effective energy deployment, implementation, and policy design — offering a practical guide for scaling real-world solutions.