Co-authored by Antonio Chidiac, MetaProp Investor.

Over the past 2 years, climate tech seems to have taken a nose dive in what some call a new "valley of death". A large chunk of funding has moved to AI. Some tech has taken longer to materialize. Other compliance-focused ventures have struggled to adapt. This week, MetaProp's Antonio Chidiac and I explore why demand remains strong and opportunities to invest in the new faces of the energy transition are no longer beyond the distant horizon.

The Big Picture

The transition isn't slowing... it's shape-shifting

Let's get the obvious out of the way: the political climate has changed. The current administration has blocked wind farm permits, fast-tracked oil and gas projects, and attempted to freeze IRA funds. Climate pledges are less fashionable than they were in 2021. In some boardrooms today, "ESG" labeling has even become a liability. While unfortunate from a market signaling standpoint, the reality is that both were in need of a revamp. Less headline-grabbing statements, more action, and real results.

But, here's the thing. The underlying momentum and opportunity has actually accelerated.

One of the most instructive and compelling case studies is that of California and Texas' solarification journeys. California built its solar dominance through top-down state incentives; credits, net metering, and renewable portfolio standards created demand. For over a decade, it worked - California led the nation in installed capacity and accelerated Swanson's Law. The approach's effectiveness waned slightly in later years: strict permitting requirements, interconnection delays, and regulatory complexity slowed deployment even as underlying hardware got cheaper (Wagner & Hoyos, 2025). Still, California paved the way for another model to follow... the Lone Star State.

Minimal state incentives. No capacity market. Deregulated pricing. In Texas, the only rule that applies is that of supply and demand. Prices are dictated in real time based on market forces. The result? By the time the economics made sense - which is exactly what happened, partly thanks to California - Texas' solar capacity growth rate outpaced California's in the mid-2010s. By 2024, Texas had surpassed California entirely - reaching 27.5 GW of utility-scale capacity, roughly one fifth of the national total. That year, Texas installed ~9 GW of new solar, over 25% of all U.S. additions that year. And, in March 2025, it even set records for solar generation, wind production, and energy storage discharge (Wagner & Hoyos, 2025).

The convergence of these two models tells a powerful story: whether the driver is policy or pure market economics, the destination is the same. Today, the levelized cost of energy (LCOE) for a solar plant has fallen to $30–$40/MWh, well below those of natural gas and coal plants which stand at $50–$150+ (Chamath Palihapitiya, 2026). When the cheapest source is also the cleanest one, political framing becomes secondary to reason. And, yes, the hope is that society benefits as a result.

The Built World Gap

The point? Well, the built world needs to catch up

The built environment accounts for roughly 42% of global emissions and remains one of the most under-optimized sectors in the economy (Proptech Jobs, 2025). Efficiency improvements in commercial real estate have been glacially slow. And, the cost of inaction is compounding fast. Climate-related property losses in the U.S. exceeded $100 billion for the sixth consecutive year in 2025, and the insurance industry is repricing risk accordingly (Swiss Re, 2025). Insurers have pulled back from high-exposure markets entirely, with State Farm and Allstate halting new homeowner policy issuance in California (CNBC, 2024).

For building owners and institutional real estate investors, the calculus is becoming inescapable: the cost of climate adaptation and energy optimization is now materially lower than the cost of inaction — through higher insurance premiums, stranded asset risk, tenant flight, and regulatory penalties. Risks will continue to materialize and those best prepared are likelier to transition unscathed.

In supply chain, the economic case for low-carbon, low-waste operations is maturing. This isn't just an environmental argument. It's a P&L argument. Companies that have invested in circular manufacturing, renewable energy procurement, and supply chain waste reduction are demonstrating measurable results, many achieving higher EBITDA margins than industry peers (McKinsey, 2024). Meanwhile, geopolitical fragmentation has made supply chain sovereignty a national priority. China controls at least 75% of the solar supply chain at every step - from polysilicon to final module assembly (Wagner et al., "Scaling Solar", 2025). The U.S. has proposed a $2.5 billion Strategic Resilience Reserve to buffer critical mineral supply disruptions (ML Strategies, 2026).

For startups, this creates a rare alignment between policy incentives, corporate procurement budgets, and raw economic advantage. Now, this doesn't imply that ventures from the 2020-23 era will once again soar. Some will struggle to adapt to a market forces-driven transition - in fact, some already have. By contrast, those with strategic data coffers, key operational learnings, and proven ways to boost margins via decarbonization will thrive. Of course, entirely new models will emerge along the way.

The framing has changed but the momentum has not. For venture, that's the kind of dislocation where outsized returns live. Here is where we see the opportunity across three critical areas at the crux of built environment and energy transition.

Opportunity Area 1

Grid optimization and security

The grid is the biggest structural bottleneck to the energy transition. Over 2,000 GW of generation capacity - 80% of it being solar and storage - sits stuck in the U.S. interconnection queue, waiting to be cleared by protocols designed for a bygone era (S&P Global, 2026). Now, it is important to acknowledge that a significant portion of capacity which has been promised in U.S. grid applications is unlikely to materialize as non-commercially viable applications are likely to be withdrawn. In fact, somewhere between 13% and 20% of capacity eventually makes it into grid-connected commercial operation (Berkley Lab, 2025). Nevertheless, data center power demand is projected to grow ~15% annually through 2030 — four times faster than other sectors combined and reaching roughly the entire energy consumption of Japan (IEA, 2025).

Two parallel venture investment-grade opportunity areas are emerging here: making the existing grid smarter and more accessible or bypassing it entirely.

Startups doing big things

Opportunity Area 2

Real estate efficiency and climate adaptation

Buildings aren't a secondary concern - for us, they're the main event. Today, they are still incredibly inefficient, with some estimates indicating that 20-30% of energy is wasted on cooling and heating empty spaces. Furthermore, gas heating is more common than more efficient electric heat pumps in the U.S. - structural reasons are the culprit. Despite this, soft costs like permitting, auditing, and client acquisition represent over 50% of solar system costs (Wagner et al., "Scaling Solar", 2025). That's a staggering inefficiency where software startups can carve out real value.

The 2026 thesis is straightforward: reframe climate compliance and adaptation as financial protection. Properties that are efficient and climate-protected attract more demand, run lower operational costs, and protect against stranded-asset risk. For institutional real estate investors, this isn't a nice-to-have. It's fiduciary responsibility. And, yes, it helps address climate mitigation and improve public health along the way.

Startups doing big things

Opportunity Area 3

Supply chain resilience and resource efficiency

Resource security has become a decisive factor in a fragmenting global order. The realization that economic interdependence can be weaponized has driven a global push for supply chain sovereignty. This opens up new investment avenues in material sciences and closed-loop sourcing. For instance, in 2025, researchers discovered how to use ionic liquids to make solar perovskite cells more durable and, potentially, enable retired or damaged panels to become reusable (Nature, 2025).

For built world venture, the investable surface area is enormous: sustainable sourcing, circular construction, alternative battery chemistry, and second-life material recovery.

Startups doing big things

Energy transition investment by the numbers

Climate tech capital has been concentrating on fewer companies with proven tech and commercial traction. Growth-stage investment jumped 78% in 2025 while early-stage lagged - a phenomenon dubbed the "new valley of death" (Trellis, 2026). Total VC funding hit $40.5B in 2025, with an 8% uptick driven by AI-energy convergence plays (Sightline Climate, 2025). Strategics also re-entered, using acquisitions to accelerate decarbonization and secure supply chains (Emerald Technology Ventures, 2026). What has yet to materialize is capital flowing into our 3 focus areas - 2026 could be the year.

Of course, one might ask, who are the leaders here? A core group of specialist firms shapes the early-stage landscape. Lowercarbon, Congruent, Climactic, Streetlife, Energize, and Energy Impact Partners have been among the most prolific climate tech investors backing 0-to-1 founders. Breakthrough Energy and DCVC have anchored significant rounds in climate's deep tech areas like alternative chemistry, grid AI/ML, and industrial decarbonization. At MetaProp, we have long supported founders building at the intersection of energy innovation and institutional real estate. We will continue to do so. Eyes on the horizon. Ears to the ground.

What this means for Venture

For now, the energy transition has decoupled from its roots and grounded itself in the balance sheet. For built world ventures, this is a multi-decade opportunity structured around three durable investment theses.

Grid optimization & security: Smarter grids, infra update for renewable energy, faster interconnection and onboarding, and better bypass options.

Real estate efficiency & climate adaptation: Real energy usage efficiency, embedded smart building integrations, better retrofits, and more risk mitigation.

Supply chain resilience & resource efficiency: Enhanced material sourcing, low-waste low-cost resource usage, and circular supply chain adoption.

Some final thoughts

The narrative has changed. But look past the rhetoric and the underlying problems haven't gone anywhere. If anything, the security and resilience lens has broadened the addressable market and strengthened the economic case. The most recent war in the middle east has just reminded us of how a major shock to the global energy system can trigger wide-ranging economic effects that reverberate across the globe.

All in all, increased scientific precision around climate risk strengthens the case for mitigation. In a Bayesian framework, as evidence accumulates and uncertainty narrows, the expected value of early investment rises for every reasonable starting position (Wagner et al., "Beliefs, evidence, and action towards the green energy transition", 2026).

For investors and, more importantly, innovators navigating the noise, the signal in the data has never been clearer. Founders solving these problems with technical rigor, fiscal clarity, and an eye for deployment should attract capital. Investors who spot convergences early are poised to reap the rewards of the transformation.