Rising Power Consumption Meets Sluggish Investment

Power consumption is climbing quickly worldwide. According to the International Energy Agency, global electricity demand grew by 2.2% last year—more than 40% above the average increase over the past decade.

This upward trend isn’t slowing down. The expansion of energy-intensive AI platforms, increased demand in developing economies, and higher usage of air conditioning during extreme heat are all pushing power consumption even higher.

But despite growing demand, investment in energy startups is moving in the opposite direction.

Energy Startup Funding Hits a Low

In 2024, global funding for energy startups fell to its lowest point in four years. And the first quarter of 2025 continued that trend, marking the weakest quarter for energy startup investment in over a year.

Still, there’s been a small uptick in April, offering a glimmer of hope.

A Few Notable Deals Spark Interest

Recent weeks have brought a handful of large funding rounds in the energy sector:

• Mainspring Energy, based in Silicon Valley, raised $258 million in Series F funding. The company builds onsite power systems for businesses, utilities, and data centers.
• Silicon Ranch, a solar energy provider from Nashville, secured $500 million from AIP Management. The company focuses on large-scale solar projects across the Southeastern U.S.
• Base Power, an Austin startup offering battery backup systems for homes, raised $200 million in Series B funding. Investors included Addition, Andreessen Horowitz, Lightspeed Venture Partners, and Valor Equity Partners.

The AI Factor: Powering New Opportunities

While funding for traditional energy startups remains low, companies tied to energy efficiency and infrastructure are attracting serious capital.

A standout example is The Stargate Project, a joint venture involving OpenAI, SoftBank, Oracle, and MGX. The group plans to invest $500 billion in U.S.-based AI infrastructure over the next four years.

This includes a proposed $100 billion allocation toward building multigigawatt infrastructure to support AI’s massive power consumption needs.

What’s Next for Energy Startups?

Given the current low levels of funding and the rising pressure from growing power consumption, there’s clear potential for a rebound in energy startup investment.

As demand increases and new technologies emerge—especially in areas like fusion and energy storage—investors may soon return to the sector in a big way.

It may only take a few major rounds to reignite momentum.