Energy Transition
As a Director with Clarum Advisors, Molly Podolefsky leverages her experience in economics, decarbonization, corporate sustainability, corporate finance, and the power and utilities sector to help innovative, clean tech companies. Prior to Clarum, Molly spent a decade at Guidehouse working with utility clients managing EE and DSM EM&V portfolios, supporting regulatory compliance and conducting research focused on IoT, smart and connected devices, load flexibility and demand response.
Electricity demand in the United States is surging at an unprecedented rate — driven by industrial onshoring, building and transportation electrification, and the explosive rise of artificial intelligence. For two decades, electric load remained largely flat, but today projections suggest demand may rise twenty-five percent in the next five years, with data center demand nearly doubling.
This rapid acceleration presents challenges, but more importantly, it creates powerful tailwinds for the energy transition. Unlike policy-driven incentives of the past, today’s growth is market-driven — anchored in the real needs of hyperscalers, utilities, and consumers. This provides a stronger and more sustainable foundation for long-term investment.
Private capital has a pivotal role to play. With federal incentives volatile and supply-demand mismatches growing, the scale and speed of private investment will determine whether clean energy supply keeps pace.
Key Takeaways
Unprecedented Demand Growth: U.S. electricity demand may rise twenty-five percent in five years; data center demand nearly doubling. Hyperscalers demand clean, dispatchable energy — often willing to pay a premium.
Three Pathways to Meeting Demand: Expand existing technologies (solar, battery storage, nuclear); optimize current assets (energy orchestration, virtual power plants, and grid modernization); develop new technologies (small nuclear, geothermal, linear generators, fusion).
Existing Technology Growth: Solar and battery energy storage system (BESS) capacity both set to double within three years. Nuclear revival: utilities restarting dormant plants.
Grid Modernization Critical: Digital grid-enhancing technologies (GETs), such as virtual power plants (VPPs), can provide forty to sixty percent cheaper alternatives to peakers/BESS. Hardware GETs like HVDC and dynamic line ratings significantly increase throughput.
Emerging Technologies Rising: Small modular reactors (SMRs) and enhanced geothermal delivering 24/7 dispatchable power. Linear generators and fusion gaining venture capital traction.
Private Capital as Catalyst: Sixty billion dollars in U.S. energy M&A in 2024 (double pre-pandemic). Leading venture funds plus corporates collectively committing billions.
Demand-Driven Tailwinds
The current energy transition is defined less by temporary policy incentives and more by genuine market demand. Whereas in the past, federal tax credits and subsidies drove much of the growth in clean energy, today the force is the rapid surge in electricity demand from data centers, onshoring industries, and widespread electrification.
This demand is transforming the energy economy and providing a durable, long-term basis for investment opportunities. In this environment, private capital is positioned as the decisive factor in scaling solutions quickly enough to meet market needs.
Existing Technologies: Solar, Battery Storage, Nuclear
Existing technologies remain the backbone of near-term expansion. Solar continues to dominate U.S. generation growth and is expected to double capacity by 2027.
In parallel, advances in lithium-ion technology are driving down costs for battery energy storage systems, with capacity projected to exceed sixty-five gigawatts by 2027. These resources will be critical to balancing intermittent renewable generation with growing round-the-clock demand from hyperscalers and consumers alike.
Perhaps most striking is the revival of nuclear power. Once seen as a declining resource, traditional nuclear plants are being restarted and even repurposed to supply data centers.
Utilities and hyperscalers are making direct investments in this space, highlighting nuclear’s potential role as a stable, dispatchable clean energy source. Together, solar, storage, and nuclear form a powerful triad for meeting the first wave of new demand.
Optimizing Assets: Energy Orchestration, Grid Modernization
Given the long timelines required to build new generation and transmission, utilities are increasingly focused on squeezing more capacity out of existing systems. Energy orchestration and GETs are playing a pivotal role.
Digital solutions such as VPPs aggregate and control distributed energy resources, turning them into dispatchable assets. These platforms are expected to serve as much as twenty percent of U.S. peak load by 2030, at costs significantly below those of peaker plants and utility-scale storage.
Hardware-based GETs are equally transformative. High-voltage direct current lines can transmit power more efficiently over long distances, while dynamic line rating systems use real-time data to increase transmission capacity by more than forty percent at a fraction of the cost of new lines.
Combined, these solutions enable utilities to deliver more energy with existing infrastructure, alleviating bottlenecks and accelerating time-to-market. The scale of investment underscores this shift: U.S. utilities are projected to invest more than one trillion dollars between 2025 and 2029 in grid modernization alone.
One notable example is Renew Home, which is building residential-focused virtual power plant platforms that aggregate distributed assets like smart thermostats and home batteries, demonstrating how VPPs can unlock grid flexibility at scale.
New Technologies: SMR, Geothermal, Linear Generators, Fusion
Looking beyond existing solutions, a new wave of technologies is emerging to meet the demand for clean, dispatchable, and rapidly deployable power. SMRs offer a safer, faster, and more flexible alternative to traditional nuclear plants, attracting significant interest from utilities and hyperscalers alike.
Geothermal technologies are also advancing, with enhanced and solid-state solutions enabling flexible siting and providing around-the-clock power. Recent deals between Google, Meta, and geothermal startups highlight the growing traction of this sector.
Other frontier technologies are also coming into play. Linear generators, with their compact form factor and fuel flexibility, are well suited for microgrids and localized clean power needs.
Meanwhile, fusion — long seen as an elusive goal — is attracting billions in private capital investment, including from technology leaders betting on its eventual viability. The role of venture and growth equity funds is central here, as they deploy billions into these high-risk, high-reward opportunities that could reshape the energy landscape.
Geothermal startups such as XGS Energy are partnering with hyperscalers to deploy large-scale enhanced geothermal projects, underscoring the sector’s momentum. Linear generator innovator Mainspring has raised over eight hundred million dollars to commercialize its microgrid-ready systems, highlighting the scale of private capital commitments to this emerging class.
Conclusion and Investor Implications
The U.S. energy sector is at an inflection point. Demand growth is no longer hypothetical — it is here, and it is accelerating faster than traditional supply systems can respond. For investors, this creates one of the strongest backdrops in decades for clean energy deployment.
The opportunity set spans established technologies like solar and batteries, system-level innovations such as grid orchestration, and breakthrough frontiers including SMRs, geothermal, linear generators, and fusion. In every case, speed-to-power is critical. Private capital will determine whether the sector can scale at the pace required, bridging the gap between current infrastructure and the accelerating need for 24/7 clean power.
In sum, load growth should not be seen as a risk but as a catalyst. By harnessing these demand-driven tailwinds, investors have a unique opportunity to capture value while advancing the energy transition at scale.
