Climate Tech Funding Shifts to Grid Storage as Carbon Capture Shrinks

Where the money went this month

Climate tech venture funding hasn't dried up. It has narrowed. Across the deal flow of late September and October 2026, the largest checks went to companies that store electricity, shift it or move it around the grid. Carbon capture startups raised smaller rounds and showed up less often. Our reading is that investors are now funding the parts of climate tech that also solve the electricity squeeze created by AI data centers.

The biggest disclosed deal of October was Voltus. The virtual power plant operator raised $225 million in a round backed by Vitol, NGP Energy Technology Partners, Generation Investment Management and others.5 Voltus pays energy users to cut or shift their electricity use when the grid is strained, and it also sells battery monetization and market-access tools.7 The trackers don't agree on what to call the round. One lists it as a Series B+ closed October 95, and another lists it as a Series D announced October 14.7 The amount is the same in both, so the label matters less than the fact that grid flexibility drew the month's largest climate check.

The week ending October 17 followed the same pattern. Rabot Energy, a German company that links homes into virtual power plants, raised a $50 million Series B led by Endeit.2 Switched Source, a Chicago grid-automation startup, raised $17 million with ABB and Southwire among its backers.2 French thermal-storage company Epyr closed a €15 million Series A led by SlateVC.2 Siemens, already an investor, put new money into Estonian fast-storage maker Skeleton Technologies at a valuation above $1 billion.2 Skeleton now markets power systems for AI infrastructure, from server-rack backup units to supercapacitor modules for the grid.7

Grid-scale storage takes the lead

The late-September deals pointed the same way. GridStor raised $220 million, backed by Goldman Sachs Asset Management, to keep building grid-scale batteries across North America. The company says its pipeline exceeds 3 GW of projects in development, construction and operation.21 A separate tally of a dozen climate deals from late September and early October found about $553.9 million in disclosed equity. That money was concentrated: Reverion, Rainmaker and Ultraviolette took roughly 65% of it.1 Reverion's $175 million Series B led the group. The company builds reversible solid-oxide fuel-cell plants that generate power from renewable gases and can run in reverse to store electricity as gas. Most of the money will go toward a German factory that increases its manufacturing capacity about tenfold.11

That detail reflects a wider change. The same tally noted that several of the largest rounds paid for manufacturing rather than basic research. That suggests parts of the sector are moving from proving their technology to producing it at industrial scale.1

Long-duration storage shows both the promise and the risk of this phase. Form Energy has raised more than $2 billion in total, including an August financing, to scale its iron-air batteries, which can discharge for 100 hours.29 One market summary put that August round at $750 million, labeled a Series G.24 Form is building a 150 MWh system for Great River Energy in Minnesota, due online in 2027. It also has a project with Xcel Energy in which 30 GWh of its batteries would help supply a Google data center.29 The constraint is manufacturing. Form can currently make about 2 GWh of batteries a year, but it has promised about 80 GWh under commercial agreements.29

Energy Dome, the Milan company that stores energy in compressed carbon dioxide, has a similar gap. It has about 30 GWh of plants in its pipeline and only one commercial project in operation. It says its systems cost about 10% to 15% less than lithium-ion for eight hours of storage. The trade-off is efficiency: it returns about 70% of the energy it stores, compared with about 90% for lithium-ion. In June it signed a deal with Google for a 200 MWh plant in Ireland, scheduled for 2028.

Google appears in both projects, which says a lot about where demand is coming from. Data center operators are becoming major buyers of long-duration storage. Their purchases could carry these technologies past the point where earlier clean-energy startups often stalled.

Even so, lithium-ion remains the low-cost option that every alternative is measured against. Average prices for energy-storage batteries reached $70 per kilowatt-hour in early 2026.22 Moment Energy turns used EV batteries into grid storage, and it says its systems now cost under $90 per kilowatt-hour. It concedes that some new imported batteries may still be cheaper even after tariffs and shipping.22 Lithium-ion's lead is also squeezing the companies that sell finished systems. Fluence cut its fiscal 2026 revenue outlook to $2.4 billion in September, largely because of delays at its Houston manufacturing operations.25

The battery-chemistry race moves to the lab

In EV and stationary batteries, the clearest theme is the search for chemistries that avoid China's supply chains. Stockholm-based Holyvolt raised $45 million in equity from Fifth Wall, Zone II, CC.VC and angel investors, at a reported valuation of $245 million.28 The company's case starts with China's market share: it makes about 85% of the world's cathode active material and about 80% of battery cells.28 Holyvolt doesn't plan to compete on today's dominant chemistries. It is working on disordered rocksalt (DRX) cathodes that use no nickel or cobalt. Its executives say DRX can match the performance of nickel-based cells at roughly the landed cost of LFP in North America.28 Those claims haven't been proven at commercial scale. The company plans to license its technology or form partnerships rather than build its own factories, and one of its executives called the jump to industrial scale "the killer."28

Sodium is another route. Broomfield, Colorado-based Mana Battery raised $10.5 million in a round led by Voyager Ventures.2 At much larger scale, CATL and HyperStrong signed a three-year agreement in April covering 60 GWh of sodium-ion battery supply.25 Analysts caution that buyers still need to check the performance, warranties and delivery schedules of these alternatives before using them in financed projects.25

Carbon capture: more deals, smaller checks

Carbon capture is a weaker story. One analysis of pure-play carbon capture, utilization and storage (CCUS) companies counted 15 equity deals in 2026 through early July, up from 12 in the same period of 2025. Total capital over the same window fell from about $440 million to about $178 million.12 The median round size dropped from about $24 million to $7.5 million. No qualifying Series B or later round closed in that window.12 Investors are also changing what they fund. Companies that turn CO2 into products such as fuels, concrete and materials accounted for 10 of the 15 deals and about two-thirds of the capital. Direct air capture got one deal, about 8% of the total.12

October's carbon deals fit that picture. A Swiss company that captures CO2 from industrial exhaust without using heat raised $9 million, bringing its total to $25 million.13 Pennsylvania's Jeevan Climate Solutions disclosed about $700,000 in equity for its modular sorbent capture systems.11 Switzerland's Tivano raised €537,000 for CO2 removal in Namibia.10 One tracker estimates that carbon removal startups now account for only 5% of climate tech funding rounds.1

Advance purchases of carbon removal are helping fill the gap. Frontier's buyers committed $11.7 million to buy 20,932 tonnes of removal from 44.01. The money supports underground mineralization trials in the UAE that are meant to show the process can run continuously for several years.19 The setbacks continue too. Cheshire East Council unanimously rejected the $6.6 billion Peak Cluster CO2 pipeline.19

Methane drew more attention than CO2 this month. Paris-based CarbonFarm closed an oversubscribed €7 million Series A to measure and finance lower-emission rice farming.1517 The company says rice accounts for about 12% of human-caused methane emissions. It also says better water management can cut those emissions by up to 50% without lowering yields.15 Reports don't agree on the spelling of the lead investor's name: most say Colam Impact154, and one weekly roundup says "Colom."2 CarbonFarm follows Mitti Labs' $9.5 million and Rize's $31 million raises in the same niche.16

What it adds up to

The sources agree on the overall direction. Most climate capital is going to physical hardware, and especially to companies that make electricity grids more flexible.12 One analysis put it bluntly: climate money has moved toward whatever powers AI data centers, and founders whose technology doesn't do that are likely waiting longer for a check.8

We see that as a real but conditional win for the sector. Demand from data centers is helping finance storage technologies that were stuck at the pilot stage. The main risk now is execution, not lack of interest. Form's order book is far larger than its factory capacity29, Fluence's manufacturing problems cut its revenue outlook25, and carbon capture's shrinking rounds show what happens to a category without a buyer as motivated as the AI industry.12 Over the next year, investors will find out which of these companies can turn signed contracts into delivered capacity.