Powering the future: The search for sustainable energy technologies
As energy needs grow exponentially due to AI data centers and other advancements, finding new reliable, sustainable power sources to meet demand is a necessity.
9 minute read
Key takeaways
- Energy needs are already massive and growing rapidly.
- Small modular nuclear reactors with batteries could be an answer.
- It will be imperative to have a diversified portfolio of sustainable energy sources.
As AI rapidly gains a foothold in Americans’ business and personal lives, tech companies and investors are asking the next, inevitable question: Where will the power come from? It’s a question that’s moved into the spotlight as the national AI infrastructure expands — with economic, social and even political considerations for AI firms, investors, energy providers and municipalities.
AI hyperscalers’ energy needs are massive and growing rapidly. Data centers are popping up around the country, often driving up the cost of electricity for local residents and creating headaches for municipalities.
U.S. electrical demand is forecast to grow at a 2.5% compound annual rate overall through 2035, according to Bank of America Global Research1 Although there will be expanded demand from industrial facilities, new residential construction and the slow but steady adoption of EVs, the research predicts data centers will account for an increasing percentage of the country’s total electrical demand each year.2
“Energy needs are a critical component as new data centers are planned.”
“Energy needs are a critical component as new data centers are planned,” says Scott Olmsted, National Transformative Technology Group executive for Bank of America.
Whatever the source, AI companies and hyperscalers say they require energy resources that are available 99.999% of the time, to keep their data centers running virtually 24/7 — and very few energy sources have the ability to do that. At present, data centers are relying on traditional electrical power sources and battery power. But increasingly, Olmsted says, the future answer for AI power needs looks like nuclear power — with a battery assist.
“Rediscovering” nuclear power
Nuclear already is becoming a go-to power source globally. “European countries have been deploying nuclear power for their electricity needs, finding it’s more reliable,” Olmsted says. Research shows that nuclear power can allow AI centers to remain online 93% of the time on average, he says. “And as a bonus, nuclear generates less pollution than other options,” he says.
“European countries have been deploying nuclear power for their electricity needs, finding it’s more reliable.”
As Olmsted points out, nuclear power has already been more broadly “rediscovered” as the world faces surging electrical demand.3 But the tipping point for deploying nuclear power on a smaller scale and for AI uses may be technological advancements that have led to small modular nuclear reactors, or SMRs. These are promoted as safer, more affordable zero-carbon reactors, factory-built versions of larger reactors — with a smaller footprint, often designed to serve a single location like a data center. About 80 different SMR designs are in development; manufacturers are aiming to have these commercially available by 2030.4
These small reactors could be used in tandem with battery backups to satisfy AI data center demands for uninterrupted power. For its part, battery technology also continues pushing forward, with new faster-charging, longer-lasting solid-state batteries rolling out in the automotive industry but promising other potential uses. For data centers, experts say solid-state battery technology may provide smaller, faster, more intelligent power sources with a larger energy storage capacity.5
Energy demands are expected to continue increasing
Beyond the more established energy sources — nuclear, battery, solar and wind power — companies continue to explore other renewable power technology, including geothermal energy. Geothermal holds a lot of promise, Olmsted says, but up until now has entailed a higher capital investment and a longer-term yield.
Olmsted says all these new energy sources will be sought after as worldwide electricity demand continues to grow. Future projects in transportation, industry, heating and technology will require as much additional electricity by 2030 as the current annual energy demand of the U.S. and European Union combined, according to the International Energy Agency’s 2024 World Energy Outlook.6 In the U.S., that also demands greater investment in the grid used to deliver power across the country.
Energy demand could also be affected by future developments in the tech industry — although the impact on the electrical supply is less clear. Some experts speculate that advanced chips may make data centers more energy efficient, while quantum computing’s energy needs are yet to be determined. Bank of America researchers also expect AI’s electricity demand to shift from the heavier power needs of training AI bots to the power needed for those bots to satisfy customer queries and requests.7
Affordable. Reliable. Scalable. Sustainable.
In a world where demand is high, and politics and regional conflicts can affect access to energy resources, the bottom line is clear: Having a diversified portfolio of energy sources can provide secure and ready access to the electricity needed to power our modern, technology-dependent lives.
2025 was a record year
for climate fundraising
$92 BILLION
in new capital across 179 funds
That also means significant demand for capital. 2025 was a record year for climate funds, which raised $92 billion in new capital across 179 funds, according to Sightline Climate.8 Increasingly, the investor focus has shifted from startups to established energy technology companies, nuclear and battery companies, and other firms developing renewable energy that are ready to scale, Olmsted says.
“Bank of America is helping to fund new energy sources to power all the new technologies we have in the pipeline,” he says. “The goal is to identify and help grow energy sources that are cost efficient, durable and sustainable, to meet the world’s expanding needs.”
1 Vanessa Cook, Andrew Obin, David Ridley-Lane, Sabrina Abrams and Devin Leonard, “Power check: What’s going on with the grid?,”
Bank of America Institute, July 22, 2025.
2 Ibid.
3 Lynelle Huskey, Felix Tran, Haim Israel, Martyn Briggs, Lauren-Nicole Kung and Jared Woodward, “Nuclear energy: Who, what,
where, when, why?,” Bank of America Institute, January 12, 2026.
4 Lynelle Huskey, Taylor Bowley, Joon-Ho Lee, Taekyoung Ha, Sun Jung Lee, KJ Hwang, Ross Fowler, Andrew Obin, Kenjin Hotta and
Dongho Shin, “Q&A quick guide: Small nuclear reactors,” Bank of America Institute, July 29, 2025.
5 Anna Demeo, “Solid state power will rewrite the rules of infrastructure,” Latitude Media, October 6, 2025.
6 Huskey et al., “Nuclear Energy.”
7 Cook et al., “Power check.”
8 Sightline Climate, “Dry powder and new funds,” April 2026.
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