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By Michael Hytha and Dani Burger
The Trump administration’s cancellation of climate initiatives and the artificial intelligence boom have combined to create a private investment opportunity for clean energy.
Power-hungry data centers are under increasing pressure to secure their own power supplies and are turning to climate-friendly sources, with solar and battery storage accounting for 70% of the capacity added in the first half of the year.
That’s generated investment in the infrastructure supporting alternative energy sources that has gone beyond earlier efforts based on addressing climate change itself, said Vinay Shandal, Boston Consulting Group’s global head of sustainable investing.
“Climate went from being the trend to climate now being the beneficiary of the trend,” Shandal said Wednesday on Bloomberg TV. “A bunch of these trends that are much more durable and not policy reliant are creating second-order benefits for opportunities to deploy capital in climate.”
Jan Vesely, the head of AI infrastructure and transition infrastructure at EQT AB, said the private equity firm is “heavily doubling down” on renewables and the grid that enables them. Data centers should develop their own energy sources, rather than raising costs for consumers by drawing on existing capacity, he said.
“With $4 trillion coming into energy for AI, it’s really an exciting time for us,” Vesely said. “I firmly believe that all energy will have to be additional when you want to build a data center.”
Tenzin Seldon, managing partner and founder of the Pulse Fund, said venture capital investments in climate technology have outperformed internal rate of return by 9% for 2020 to 2024 vintages. She said her venture firm’s new $63 million fund will focus on four verticals: energy, infrastructure, mobility and food and agriculture.
“We believe that when you do vertically integrated solutions in climate technology, you’re able to better de-risk and get the higher outcomes,” Seldon said. “We are a financial fund first and climate stabilization comes as a result of the impact.”
Read More: Where to Invest in Climate as AI Trade, High Rates Dominate
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