Every discussion of clean energy investment eventually gravitates toward solar panels and wind turbines. These are, without question, the central pillars of the decarbonisation narrative - and appropriately so, given the extraordinary cost reductions achieved over the past decade. But in our focus on generation, we risk systematically underinvesting in the components of the energy system that will determine whether intermittent renewables can actually replace fossil fuels at scale. The real action, from a deep technology and venture capital perspective, is in what happens after the electrons are generated.
At Lumino Capital, we have spent the past six years developing a thesis around what we call the full-system energy transition. Our conviction is that the most compelling investment opportunities lie not in incremental improvements to solar panel efficiency, but in the enabling technologies that allow a grid powered primarily by variable renewable sources to be reliable, affordable, and resilient. This article attempts to lay out that thesis in some detail.
The Intermittency Problem is Not Solved
The fundamental challenge of a renewable-dominated electricity system is well understood: the sun does not always shine, and the wind does not always blow. Managing this intermittency requires either storage (capturing energy when supply exceeds demand and releasing it when the reverse is true), demand response (adjusting consumption patterns to match available supply), or interconnection (moving energy across geographic distances to match regional supply and demand imbalances). In practice, a mature renewable-dominant grid requires all three, deployed at scale and managed with extraordinary precision.
The current state of grid-scale energy storage is deeply inadequate for the task ahead. Lithium-ion batteries - the same technology that powers electric vehicles and consumer electronics - have achieved remarkable cost reductions and are now widely deployed for short-duration storage applications. But they are poorly suited to long-duration storage, which is what a renewable-dominant grid actually requires. A grid that needs to store energy from a week of high wind to cover a week of low wind is not served by a battery system designed to discharge over four hours.
This gap creates the investment opportunity. The technologies that will enable long-duration grid storage - flow batteries, metal-air batteries, compressed air energy storage, thermal energy storage, gravitational storage - are at various stages of development and commercialisation. Many are backed by compelling science and promising early results. None has yet achieved the cost and performance targets required for widespread adoption. The companies that solve this problem will be extraordinarily valuable.
Grid Intelligence: The Unsexy Trillion-Dollar Opportunity
The physical electricity grid was designed around a model of centralised, dispatchable generation - power stations that could be turned on and off in response to demand. The transition to renewables, and the concurrent proliferation of distributed energy resources including rooftop solar, electric vehicle batteries, and smart appliances, is fundamentally disrupting this model. The grid of 2035 will have millions of nodes that are simultaneously consumers and producers of electricity, and managing the resulting complexity will require intelligence that does not currently exist.
Grid management software is an obvious response to this challenge, and there are many companies building in this space. But the deepest opportunity lies in the physical infrastructure - the hardware and materials that enable the grid to handle the two-way flows, higher voltages, and faster switching speeds required by a distributed energy system. Advanced power electronics, high-temperature superconducting cables, wide-bandgap semiconductor switches - these are the enabling technologies for a next-generation grid, and the companies building them represent genuine deep tech investment opportunities.
We have also been closely watching the emergence of virtual power plants as a commercial model. A virtual power plant aggregates the distributed energy resources of thousands of individual customers - batteries, flexible loads, small generators - and manages them as a single controllable resource that can be dispatched in response to grid signals. The companies that build the software and commercial infrastructure for this model are essentially creating a new category of energy asset, with no capital investment in physical generation. At scale, the value is enormous. We made our first investment in this space with VoltarIQ in early 2024 and have been extremely pleased with the commercial progress to date.
The Industrial Heat Problem
One of the most underappreciated dimensions of the energy transition is the challenge of industrial heat. Approximately 25% of global final energy consumption is used to produce heat for industrial processes - steel, cement, chemicals, glass, ceramics, and dozens of other sectors that are essential to modern civilisation. A large proportion of this heat is at temperatures exceeding 400 degrees Celsius, which cannot be economically delivered by current heat pump technology or by most direct electrification approaches. Decarbonising industrial heat is one of the hardest problems in the energy transition, and it remains chronically underfunded.
The technologies that could address industrial heat decarbonisation include advanced electrolysis for green hydrogen production (which can be combusted at high temperatures with no carbon emissions), concentrating solar thermal systems for process heat, high-temperature heat pumps based on novel working fluids and compressor designs, and advanced nuclear reactors as a source of clean process heat. Each of these represents a potential deep tech investment category, and each has seen meaningful scientific progress in the past five years.
We have made investments across two of these categories. Protium Systems is developing high-performance proton exchange membrane electrolysers for green hydrogen production, with a catalyst formulation that dramatically reduces the platinum group metal content of the membrane electrode assembly. ThermoLogic is working on phase-change materials for thermal energy storage in buildings, which while not directly addressing high-temperature industrial heat, represents an important piece of the broader demand reduction puzzle.
The Carbon Removal Imperative
It has become increasingly clear that achieving net-zero emissions by mid-century will require not only the elimination of current emissions but the active removal of carbon dioxide that has already been emitted. The scale of carbon removal required - potentially several billion tonnes per year by 2050 - cannot be achieved through natural solutions alone. It will require engineered carbon removal at a scale that does not currently exist.
Direct air capture is the technology that has received the most attention, and the cost reduction curves being achieved by companies in this space are genuinely impressive. The challenge is that even at the most optimistic projections, the cost of direct air capture remains well above the prices currently available in the voluntary carbon market. Bridging this gap requires either significant policy support, breakthrough improvements in sorbent materials and process efficiency, or both.
We have backed one company in this space - Atmosphera Carbon - whose novel sorbent materials represent a genuine scientific advance over current direct air capture approaches. The founders have a credible pathway to costs below $180 per tonne, which would represent a significant step toward commercial viability. More important than any individual investment, we believe the carbon removal sector will be one of the most active areas of deep tech investment over the next decade, as policy frameworks mature and the urgency of the climate challenge becomes impossible to ignore.
Nuclear Energy: The Return of the Atom
No discussion of the energy investment landscape would be complete without addressing the extraordinary renaissance of interest in nuclear energy. After decades in which nuclear was regarded as a dying technology, burdened by high costs, long construction timelines, and the legacy of a small number of high-profile accidents, the conversation has shifted dramatically.
The driver of this shift is partly the urgency of decarbonisation and partly a genuine technological advance: the emergence of a new generation of reactor designs that promise to address many of the historical weaknesses of nuclear power. Small modular reactors use standardised, factory-manufactured components that can be assembled on-site more quickly and cheaply than conventional large reactors. Advanced fission designs using novel coolants and fuel types offer improved safety characteristics. And fusion energy, while still further from commercial deployment, has attracted billions of dollars of private investment and is beginning to show the kind of progress that suggests commercial viability within the next fifteen years.
We invested in Helion Path in late 2024. The company is developing a compact fusion reactor design based on a novel magnetic confinement geometry that the team believes can achieve net energy production with significantly less capital investment than conventional fusion approaches. The science is credible, the founding team has deep domain expertise, and the commercial pathway - industrial process heat and electricity generation - is well-defined. It is exactly the kind of long-duration, potentially enormous-impact bet that seed investors should be making in this domain.
What We Are Looking For
In summary, our investment focus in the energy transition is deliberately broader than the conventional clean energy investment categories. We are looking for companies that address parts of the energy system that are currently broken, with solutions that are genuinely novel and defensible. Specifically, we prioritise companies where the scientific differentiation is clear and verifiable, where the founding team has the technical depth to execute, and where there is a credible pathway to commercial scale that does not depend on heroic assumptions about policy support or cost reduction.
We are not looking for incremental improvements to known approaches. We are not looking for software layers on top of existing hardware. We are looking for companies that are doing something that was previously impossible - that are removing a fundamental constraint on the energy transition rather than working around it. The demand for these solutions is structural, the customers are large and creditworthy, and the time pressure created by the climate crisis is creating a policy environment that is more supportive of novel energy technology than at any point in history.
If you are building in this space, we want to hear from you.