New York Climate Week 2025 is in the rearview mirror and COP30 is fast approaching. This is a good time to summarize the topics that are most vital in the conversations I had with founders, operators and other investors in the space industry.
So it’s no surprise that the theme of 2025 is artificial intelligence, but there’s just one catch.
Artificial intelligence will soon break the grid
For the first time in two a long time, demand for electricity is increasing, largely due to the development of information centers and computers. It doesn’t decelerate: demand does expected to increase by over 30% over the next decade, but the current energy grid is not equipped to cope with this transformation.
The network is already under strain, and Americans are feeling the pain in a variety of the way: Average electricity prices across the country increased by 5% from July 2024 to July 2025, and in some states greater than 20%. Crashes have also increased among the average American experiences 61% longer downtime in 2023 vs. 2013. We pay more for less.
But the query is not whether we will afford it. The issue is whether our top-down model of centralized utilities will have the opportunity to build fast enough to meet demand. The way forward requires each optimizing what we already have and building what we’ll need in the future.
Modernization of the network we already have
While this may occasionally be true, the fundamental issue is to be certain that existing energy assets operate efficiently and reliably. Investment money is flowing to modernize the existing network and mitigate vulnerabilities to be certain that physical network assets are resilient enough to withstand the stresses of increased energy demand and extreme weather. Fortunately, many firms are innovating in this critical space to address these challenges.
Key players include: Rhizome offers AI-powered climate risk evaluation and resilience planning for utilities, while ThreeV Technologies provides solutions for visual data management and resource evaluation. Mesh software has developed a continuous network monitoring platform that helps utilities maintain real-time awareness of their infrastructure. Together, these firms represent some of the most cutting-edge grid modernization efforts, combining advanced technologies resembling artificial intelligence, visual analytics and continuous monitoring to strengthen the backbone of our energy system.
Investment in this space is crucial to reverse the trend of more frequent utility outages that has already occurred has increased significantly over the last decade (mainly partly due to the weather).
Increasing energy efficiency is the second order of business, and yet we are lagging behind. The US will add approximately 63 GW industrial-scale production capability in 2025, while China added approx 429 GW capability in 2024 – almost 7 times greater than in the USA
The solution is on the brink
Fortunately, innovation is starting to emerge and there is a lot of interest in scaling energy in a decentralized way – the solution is to increase efficiency from the bottom up through distributed energy resources resembling rooftop storage systems and batteries – which is quite different from the legacy systems that currently exist.
The development of distributed solar is proof that it really works: of the 32 GW of solar installed capability in 2024, 5.4 GW was distributed (defined as residential, business and industrial solar and community-based solar). Connection rates for battery storage systems, which address solar intermittency issues, also proceed to increase, at over 79% and 61% attachment aspects in California and Texas, respectively, in the first half of 2025.
These statistics prove that distributed energy is doable, and the onus is now on scaling it. Cost has traditionally been a large barrier to consumer adoption, although this is changing as the cost of residential solar energy declines over 60% from 2010 to 2020. However, soft costs (sales and marketing expenses) and financing costs masked many of those efficiencies. This has been partially offset by federal tax credits, but under OBBB regulations, these will likely be phased out soon and leave behind significant barriers to adoption.
Decentralization as coordination infrastructure
Startups are reacting. Consumer energy firms prefer it Daylight energy 1 they use cryptocurrency-based networks to align incentives between homeowners and the network. Instead of waiting for utilities or governments to fund recent infrastructure, the Daylight network rewards consumers in exchange for a share of their virtual power plant. The aim is to bypass a variety of expenses – equipment purchases, soft costs and financing costs – that have so far hindered consumer adoption and the transformation of energy consumers into energetic network participants.
In a world where we can’t wait for governments to catch up and solve the array of problems that are straining the grid (and getting worse every yr), startups need to step up by using organic, grassroots tools to scale energy generation.
There are many opportunities for improvement, from device coordination to financing to higher energy management systems. As a result, there is also a good likelihood that enterprise dollars will help these firms, whether or not they be investments in firms that directly manage electrical load or supply picks and shovels.
The private sector can speed up transformation than public systems. Artificial intelligence is not slowing down, and neither is climate variability. We need to scale the energy infrastructure that forms its backbone.