Six Principles for Energy Tech Investing - B Capital
Six Principles for EnergyTech Investing
April 8, 2026
A Framework for Deploying Growth Capital Across the Energy Value Chain
By: Jeff Johnson, General Partner & Head of Energy Tech, B Capital
Introduction
The AI revolution has created an energy problem of historic proportions. Data, compute and capital are all scaling exponentially to power the next generation of artificial intelligence. But energy supply is essentially flat. This widening gap between surging demand for compute and an energy supply that has failed to keep pace defines what we believe is a generational investment opportunity. Hyperscaler capital expenditures have grown over 250% since 2019. U.S. data center electricity consumption is projected to exceed 10% of national supply by 2028. Power prices and interconnection wait times have both surged.
In this environment, we believe the companies that will create the most value are those that can deliver power faster, cheaper, and more efficiently, while navigating the complex local realities of energy markets around the world. The six principles that follow are our guide to finding them.
Guiding Principles For Energy Tech Investing
Figure 1: Guiding Principles for Energy Tech Investing
I. Speed and Cost Win
The AI revolution has made energy an urgent problem, not a theoretical one. Hyperscalers need power now to keep pace with compute demand. Consumers are facing electricity costs that have risen sharply over the past several years. And regulators and policymakers recognize that near-term solutions are critical.
This urgency is why speed and cost sit at the top of our investment framework. We believe first-movers who can deliver power faster and cheaper will capture outsized market share, and the market is rewarding them for it.
Today, speed matters more than cost. When a hyperscaler is willing to pay a premium for power delivered in 18 months rather than waiting five years for a cheaper alternative, the company that can execute wins the contract. Over time, however, cost will reassert itself as the dominant driver. The companies that endure will be those that move fast today and drive costs down as they scale.
This is one of the reasons behind our investment leading Fervo Energy’s Series E round. Fervo Energy has demonstrated the ability to bring new geothermal capacity online quickly, delivering firm, clean power to customers on timelines that compete with natural gas while maintaining a cost structure that positions the company for long-term competitiveness.
II. End Customer Costs Matter
Much of today’s energy conversation centers on how to power hyperscalers and data centers. That focus is understandable as these are the customers driving demand and, in many cases, willing to pay significant premiums for access to power. But that willingness to pay is part of the problem. Hyperscaler demand is a major driver of the electricity price inflation now hitting consumers across the country.
The pressure is building from all directions. Data center operators have been called to the White House over rising energy costs. Community opposition to new data center projects is growing as residents worry about the impact on local electricity rates. The social license to continue building energy infrastructure for AI is not guaranteed and must be earned.
This is why end customer costs are another central theme in our investment framework. The energy transition cannot succeed if it raises prices for the average ratepayer. Solutions that reduce electricity costs for consumers, not just serve hyperscalers, will win regulatory support, public backing, and long-term market position.
For us, this principle directly informed our investment in Lunar Energy. Lunar Energy is a residential energy storage platform, both hardware and software, built around helping homeowners lower their electricity bills while improving reliability.
III. Efficiency Compounds
We think about power in three buckets: you make electrons, you move them, and you use them. Most of the energy conversation today focuses on generating more power and producing it at lower cost. But an electron that never needed to be used is just as valuable as one that was generated.
Getting more from less has always been a compelling investment thesis, especially now. As demand accelerates and new generation takes time to come online, efficiency gains at the consumption layer compound the impact of every new megawatt added to the grid.
Efficiency also takes a less obvious form: load shifting, moving consumption to times when power is cheaper or cleaner. Lunar Energy’s AI platform is a good example. By enabling homeowners to shift consumption away from peak pricing and drawing from battery storage when grid electrons are expensive and charging when they are cheap, the system captures efficiency gains without reducing usage.
The middle bucket deserves its own attention. Moving electrons efficiently — reducing transmission losses, relieving congestion, and maximizing the capacity of existing infrastructure — is a capital-efficient way to add effective supply to the grid.
IV. Value Accrues to Solutions
Energy tech has long been driven by technological breakthroughs. These advances matter. But if you study the companies that have created the most value, they share a common trait: they integrated technologies into turnkey solutions that solve everyday problems for customers.
Most customers are not buying a technology. Instead, they are buying a solution. This insight is not new to our thinking. In our work on the Adoption Readiness Level framework, we argued that the energy tech sector had over-indexed on technical development at the expense of commercial readiness.
Technology is a necessary ingredient, but it is rarely sufficient. We expect the winners in energy tech will be the companies that work backwards from real customer pain points, packaging proven technologies into full-stack products that are easy to buy, deploy, and use.
V. Local Nuances Drive Outcomes
It would be easy to look at the energy opportunity as a single, global problem. But when you delve into the details of building companies and deploying capital, you discover that energy is one of the most locally defined markets.
This variability is not just country to country, but region to region and even state to state. A retail electricity solution that thrives in one market looks nothing like what wins in another. Companies face the challenge of building a solution that can adapt across multiple jurisdictions without being rebuilt from scratch each time.
For investors, the implication is clear: you cannot underwrite energy tech companies from a spreadsheet. Understanding the local dynamics that define a company’s go-to-market, technology choices, and competitive positioning in each region is critical.
VI. Grids Will Transform
The power grid of the future may look radically different from the one we have today. We are at a unique inflection point; electricity demand is accelerating, and a wave of innovation is reshaping energy markets.
Several shifts are already underway. Generation is moving from centralized to distributed models. New technologies are unlocking more value from existing infrastructure.
Our job as investors is to understand the likely trajectories of grid evolution and invest with those outcomes in mind. Companies and investors who anchor their strategies to the grid of the past will miss opportunities and potentially take on risks.
Conclusion
The energy landscape is being reshaped by structural forces. The exponential growth of AI and the aging of legacy grid infrastructure are converging to create what we believe is a generational investment opportunity.
These six principles represent how we think about deploying growth capital across the energy tech value chain.