By Evan Caron
While Silicon Valley obsesses over the latest AI hallucinations, the real revolution is powering the computer you’re reading this on. It’s the electron economy — where electricity becomes as programmable as software.
The $21 trillion gold rush
Twenty-one trillion dollars. That’s how much will be invested in the energy transition, according to BloombergNEF. For context, that’s 20x investments in AI to date and more than the combined market cap of every FAANG — Facebook, Amazon, Apple, Netflix and Google — stock.
And here’s the kicker: the biggest returns won’t come from solar panels. They’ll come from making our electrons intelligent, tradable and valuable through software.
The infrastructure era is outdated
Recently, many investors have highlighted that security concerns will reshape energy markets, prompting countries to diversify their energy mix. It’s the kind of incremental thinking you’d expect from traditional firms.
Here’s what the old-guard investors don’t get: We’re not just swapping one commodity for another — we’re witnessing the transformation of a utility into a technology platform. While they debate the optimal mix of natural gas vs solar, they completely miss the digital forest for the physical trees.
The difference is profound. The electron economy recognizes that adding intelligence to our grid creates entirely new business models and market opportunities, dwarfing the commodity value of electrons themselves.
It’s the same old pattern: Traditional hotel investors debated occupancy rates while Airbnb built a $100 billion platform. Taxi-medallion owners argued about gas prices while Uber created a trillion-dollar mobility ecosystem. And now energy conglomerates fixate on commodity prices while software companies build platforms controlling how electrons flow.
This isn’t just about climate
Let’s be brutally honest. The clean energy boom started with climate concerns, but it’s now supercharged by much more immediate forces: AI is an electricity monster. A single ChatGPT query uses 10x the electricity of a Google search. Nvidia‘s GPU farms consume as much power as small cities.
China gets it. American politicians argued about wind turbines while China built 80% of the world’s battery manufacturing capacity. China realized that controlling the electron supply chain means controlling the future.
Our grid is embarrassingly antiquated. Our electrical system was designed in the 1890s. Most power plants operate at 50% capacity. Blackouts cost Americans $150 billion annually. These are massive inefficiencies waiting to be arbitraged.
The three trends creating your next unicorn
There are three overarching trends to know in all this.
Hardware economics have flipped. Solar, batteries and EVs have seen 90% cost reductions in the past decade.
Everything is an energy endpoint. Your thermostat, car and fridge are now energy traders. The average American home has 25-plus energy-connected devices, up from just 3 in 2010.
Markets are finally opening. Deregulation has created entirely new markets for energy services, allowing startups into what was once a utility monopoly.
The electric unicorn breeding grounds
The overlooked goldmines where future energy tech giants are born include:
Digital twins for the grid: This is a $50 billion sweet spot. Our electrical grid is flying blind. Grid operators learn about outages when customers call to complain. The company that creates the “Google Maps of electricity” will be the backbone of the entire energy transition.
Electron trading platforms: Wall Street 2.0. Electricity markets transact $1 trillion annually using technology older than Craigslist. When blackouts hit Texas in 2021, prices spiked 400x — but most consumers had no way to respond because market signals never reached them. The first company to tokenize demand response (saved electricity) will print money faster than the Fed.
Virtual power plants: Creating billions from thin air. The dirty secret of renewable energy is intermittency. Companies that can aggregate batteries, EVs and smart devices into dispatchable power resources create value from nothing. A Virtual Power Plant in California recently generated $3,000 per customer in one day during a heat wave.
AI-to-grid optimization: The perfect symbiosis. AI requires enormous power to train and run models. But what if AI could optimize its own energy consumption? The startups building autonomous energy agents — software shifting AI workloads to match renewable energy availability or provide grid services — create the ultimate symbiotic relationship.
The most successful founders and investors of the next decade will understand that software is eating the world, but electrons are powering that software. The electron economy isn’t coming — it’s already here. The only question is whether you’ll be part of it or watching from the sidelines.
Evan Caron is the chief investment officer at Montauk Climate, a venture capital firm investing in the digital infrastructure of the energy transition. He was previously head of venture investments at Riverstone Holdings, a $40 billion-plus energy investment and infrastructure firm. Prior to that, he was CEO and co-founder of ClearTrace. He is also a co-founder of Daylight Energy, an early-stage community energy software network, and HGP Storage, where he was active in building an in-front-of-the-meter utility scale battery storage business. He serves on the board of RPower and previously held a board position in a large retail energy provider, MP2 Energy, that was acquired by Shell Oil Co.
Illustration: Dom Guzman
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