Artificial intelligence was the buzzword across technology investment in 2023 thanks to developments in generative AI, and various sectors of the energy industry saw interest from venture capital and private equity.
Data on specific AI investment in climate technology and the energy transition is scarce, but there are still positive signs for climate technology investors despite economic turmoil in 2023. BloombergNEF’s Energy Investment Trends in 2024 report showed growth in U.S. investments into electrified transport, renewable energy and power grids contributed to $303.1 billion in total investment. That figure is surpassed only by the European Union, which invested $341 billion last year, and China, with $675.9 billion invested.
Part of the challenge for investors looking into AI is separating out how much of a company’s technology offerings are centered around the technology. More than half of the 22 companies in Chicago-based climate technology investment firm Energize Capital's active portfolio have some form of AI-enabled offering in their technology stack, but that wasn't due to a specific strategy on the firm’s part, Tyler Lancaster, a partner with Energize Capital, told the Houston Business Journal.
“We joke internally that without ever intending to, our focus on customer solutions has led us to a majority of companies including AI-enabled solutions,” Lancaster said. “[AI] isn’t a purposeful investment strategy on our part yet, but a good portion of our companies have access to proprietary data which can then feed machine learning models. AI is in a bit of a hype cycle [for investors] now, but there’s a lot of companies that pitch AI without having a clear vision for it.”
Lancaster also predicted that technologies surrounding AI infrastructure, such as support for data centers and ways to ease computing burdens on power grids, would be on the rise.
The number of Energize portfolio companies offering AI-enabled solutions is up 30% to 40% since 2020, a spokesperson confirmed, and many of those companies had been exploring AI before its growth in popularity.
One of those early explorers is Houston-based Amperon, which closed a $20 million Series B round in late 2023 featuring investment from Energize and other firms. Amperon uses artificial intelligence to forecast electricity demand, and its latest funding round is intended to expand its scope to include forecasts for grid decarbonization.
“You’ve got companies that are now doing data down to the millisecond, and it’s only going to get more granular,” Amperon CEO and co-founder Sean Kelly told the HBJ in an interview. “I don’t think every company needs to be branding itself as AI-enabled, but if you don’t use it, you’re going to be left behind.”
Kelly founded Amperon in 2018 after observing a void in the space for predictive technology for power traders and customers exposed to volatile power markets.
Amperon was recently named in Menlo Park, California-based capital markets firm Andreesen Horowitz’s American Dynamism 50 list, highlighting groundbreaking technology companies in 2024. All 50 companies on the list are using AI to tackle issues in energy and other sectors, such as aerospace and transportation.
Software giants eye energy analytics to meet decarbonization goals
As businesses invest in meeting decarbonization goals, some companies are developing AI-enabled solutions to help filter existing emissions data more efficiently. One of those is Cambridge, Massachusetts-based Context Labs, which is moving into an office in Williams Tower in Houston's Galleria area, though an opening date has not been set yet.
That move comes on the back of a partnership with Microsoft that was born out of its new technology center presence in Houston, according to Context Labs CEO Dan Harple. Context Labs formally announced the partnership in October.
“We are providing our computational AI solutions to Microsoft’s customers in their Azure marketplace,” Harple told the HBJ. “That partnership is a massive scale-up for Context Labs because the amount of inflow we’re getting with customer demand is pretty amazing.”
Context Labs is developing a computational AI platform that allows its customers to track each individual asset they own, such as wells or drilling sites, by the amount of carbon emissions it generates. Harple said customers can receive customized reports based on their own data as well as alerts for leaks and faulty emissions, and those reports can be generated through Azure.
“It’s kind of a natural symbiotic relationship with Microsoft,” Harple said. “We’ve got a pool of what we call asset-grade data that they can leverage.”
Kelly said Amperon also has been exploring Microsoft’s Azure platform offerings to scale up its grid-forecasting technology.
Other energy analytics companies exploring the AI space include Houston-based Welligence, which specializes in tracking oil and gas production activity. In January, Welligence closed a $41 million equity funding round featuring investment from former Tudor, Pickering & Holt Co. leader Maynard Holt’s new firm, Veriten.
