Behind-the-meter energy systems are entering a new phase—one defined by optimization, institutional investment, and state-level incentives filling federal gaps. Here’s what energy decision-makers need to know heading into 2026.
For the third time, Bill Nussey—venture capitalist at Tech Square Ventures, author of Freeing Energy and VECKTA board member—joined us on Renewable Rides to review 2025 predictions and forecast what’s ahead for energy, including commercial and industrial onsite energy.
The conversation covered everything from geothermal’s breakout year to the looming AI data center bubble. Several themes emerged that will directly impact how enterprises approach energy procurement, resilience, and asset optimization in 2026.
Reviewing 2025: What Played Out
Geothermal’s Breakout Moment
Bill’s 2025 prediction that geothermal would have a banner year proved remarkably accurate. Geothermal investment soared 85% in Q1 2025 alone, reaching $1.7 billion—representing 85% of 2024’s entire annual allocation. High-profile projects from companies like Fervo captured headlines and secured commitments from major corporations.
“I think if we go forward in five or 10 years, geothermal is going to be more consequential and impactful than nuclear,” Bill noted. “It’s almost crazy to say that today, but if you just look at the numbers, you look at the reality of everything else, it really should be further ahead and getting more attention than it’s getting at the moment.”
Despite the progress, permitting remains a significant barrier. Regulators still approach geothermal cautiously due to outdated concerns about seismic activity, even though most historical issues were attributed to other causes.
Behind-the-Meter Batteries Gain Traction (But Not Quite Breakout Status)
VECKTA’s Co-Founder and SVP of Sales, Dan Roberts’, predicted that behind-the-meter energy storage would see big gains. However, in reality, during 2025, BTM storage didn’t see the explosive growth anticipated despite battery costs dropping 40-45% between 2024 and 2025, which made the economics increasingly compelling for owner-occupiers and operators.
“The owner occupiers, the operators, manufacturing firms, companies that are deploying a behind-the-meter system to serve their own load is really where we’ve seen the growth,” Dan explained. “For the commercial real estate asset owners that are looking to deploy systems to participate in markets or engage with their tenants, we’ve still really just seen the solar side of things.”
Bill shared a personal anecdote on the residential side that perfectly captured the paradigm shift batteries represent: “This morning in my cul-de-sac, there were a couple of power trucks with flashing lights. I walked outside and asked what was going on. They said the cul-de-sac lost its power. I looked at my house, and all my power was on. I opened up my home battery app, and it said, ‘You are off grid.’ My neighbors couldn’t open their garage doors—they were stuck. I didn’t even notice.”
Energy-as-a-Service Contracts Accelerate
VECKTA CEO Gareth Evans’ prediction about energy-as-a-service contracts and green leases gaining momentum largely played out. Commercial and industrial operators became increasingly willing to protect their capital expenditures and explore solar-as-a-service, microgrids-as-a-service, and battery-as-a-service contracts. Years of deployment experience have made financiers more comfortable and businesses are becoming more aware of both the opportunity and the need for these solutions.
On the green lease front, 9 billion square feet of commercial space is now covered under green lease agreements, according to IMT. This is a surprisingly large number for an activity that’s happening largely behind the scenes. These agreements solve the classic split incentive problem, and set it up so that landlords and tenants share both costs and savings, leading to extended lease terms and helping real estate operators avoid stranded assets.
Scope 3 Emissions: Less Talk, More Action
While Gareth’s 2025 prediction about Scope 3 emissions having a “bull run” didn’t materialize in terms of public discourse, something more interesting happened. The SEC removed mandatory Scope 3 reporting requirements, but the EU maintained theirs through CSRD and supply chain due diligence rules, as did California. Companies spoke less about climate change and net zero but continued pushing forward with their strategies, focusing more on rising energy demands, protecting value, and responding to customer expectations rather than what they thought the market needed to hear. Major companies like Walmart, Prologis, and several automakers began rolling decarbonization requirements into supplier contracts, requesting disclosure of energy use data and commitments—moving from aspirational goals to contractual obligations.
“The real leaders in the space are seeing that these are long-term strategies, particularly Scope 3, where you’re trying to influence third-party organizations,” Dan observed. “This takes years and years to track, influence, drive change, and change suppliers if needed. If they try to go with the whims of an administration, it doesn’t really matter. They want to build their strategy to stand the next several decades.”
Bill added perspective from his board position at Cloverly and his work with Engage: “While the public dialogue on carbon has gone down, the commitment to it remains surprisingly strong. Businesses may choose to be quieter about it, but the long-term incentives that the marketplaces, customers, stakeholders, and shareholders will be looking for are carbon reduction plans.”
The Nuclear Renaissance Continues (Despite the Economics)
Bill’s prediction that the nuclear energy renaissance would “fizzle” didn’t pan out—at least not yet. Political alignment across parties and inspiring technology continue to drive interest, even as the economic fundamentals remain challenging.
“I think the world continues to pay no attention to first principles of costs,” Bill noted. “I don’t think anyone’s looking at nuclear coming in above 6, 7 cents a kilowatt hour, and many of those systems are 10, 15 cents a kilowatt hour. So it’s the willingness to go to customers and say, ‘Your electricity bill is going to be three times what it is right now. But guess what? It’s going to be nuclear.'”
Bill pointed to 2025 EIA data showing that 95% of all new energy systems built in the United States were solar and battery systems. He also highlighted the insurance issue: nuclear in the U.S. is insured by the government rather than requiring commercial insurance like other generation sources, which is a significant but often overlooked subsidy.
“Even with that non-trivial subsidy, even without having to pay material amounts to deal with the waste long term, nuclear is still incredibly expensive,” Bill explained. “That’s going to dawn on people, and mostly you’re not going to be able to get commercial institutional project financing for those things.”
Dan raised an interesting question about why nuclear continues to capture so much attention despite the economics. Bill offered multiple perspectives: the inspiring science and engineering, the promise of “free, endless energy” promoted for 50 years, and the sheer scale of capital flowing through nuclear projects.
“There’s so much money involved that the whole community benefits,” Bill explained. “When you’re moving tens of billions of dollars around, there’s money flowing through the system that attracts people to just the size of it.”
2026 Predictions: What’s Coming
Batteries as the New Grid Backbone
Both Bill and Dan doubled down on batteries for 2026, with Dan specifically focusing on distributed batteries becoming a key lever for utilities to maximize distribution grid utilization.
“The distribution grids are largely underutilized,” Dan explained. “They’re built out for those five to 10 peak afternoons in the summer or deep winter, and the remainder of the time they’re utilized on average about 40%. Batteries fill that gap and fill that need.”
Dan pointed to emerging programs that signal the shift:
- Illinois: A $250 per kilowatt-hour rebate for systems committed to virtual power plant participation for five years, plus monetization opportunities during demand response events
- New Jersey: The Garden State Energy Storage Program’s Phase 2 is launching in 2026, focusing on distributed energy storage and offering both fixed incentives at installation and performance-based payments
“The incentives are both fixed at the time of install based on the nameplate capacity as well as performance-based when these programs come about,” Dan noted.
Bill emphasized the virtuous cycle this creates: “The same kind of batteries are useful in both settings, so you get the economies of volume as each of those markets progresses. They help each other in a virtuous cycle. That’s the kind of transformative, disruptive economics that’ll just accelerate battery penetration everywhere.”
Bill also coined a new term for the industry: “If you complete not just the hardware, but the software control—battery analog digital as a service—that’s BADASS.” (Yes, he spelled it out: B-A-D-A-S-S.)
The AI Data Center Bubble and Its Energy Implications
Bill delivered perhaps the most provocative prediction of the episode: the AI data center buildout represents a substantial bubble that could fundamentally reshape energy demand projections.
He outlined multiple factors converging to reduce projected data center energy demand by orders of magnitude:
1. Chip efficiency gains: Bill is currently evaluating four companies that reduce AI processing power demand by 100 to 1,000 times. “I’m talking to one that’s doing it with a chip, and it can process a neural network at a thousandth of the energy,” he explained. “That means your cell phone could do advanced processing that takes a supercomputer today.”
2. Software optimization: Companies are developing software that intelligently trims nodes in large language model systems, reducing latency and power consumption by 60-98% while maintaining nearly the same accuracy levels.
3. Model consolidation: Hugging Face currently hosts 2.3 million foundational models—essentially 2.3 million ChatGPT wannabes. “We don’t need 2.3 million products, we need like 5,” Bill noted. “Maybe 10 if it’s crazy innovative. The data center power that’s being used to create these 2.3 million models is beyond comprehension.”
4. Inference shifting to edge devices: Most AI inference will move to personal devices rather than happening in data centers, driven by speed, privacy, and economics.
Bill’s rough calculations painted a stark picture: By 2030, even modest projections suggest we’ll need about 250 terawatt-hours of additional electricity for data centers, plus another 200 terawatt-hours for industrial electrification, EVs, and electric trucking—totaling 450 terawatt-hours.
But here’s the gap: “If every single nuclear power plant company that has promised to ship something by 2030 built their plants—which I would bet zero will—that’s 12 terawatt-hours. If we restart Three Mile Island and every other nuclear plant that’s trying to restart, perhaps you could achieve 40 or 50 terawatt-hours. Every single natural gas plant we plan to build adds maybe 30 or 40 terawatt-hours.”
“The gap between the projection and the reality is massive,” Bill concluded. “The only single thing you can deliver at scale is solar.”
Bill drew parallels to the internet data center buildout of the late 1990s, when massive investment created companies that went “spectacularly bankrupt”. At the same time, others were acquired at fire-sale prices by better-capitalized firms. He’s hopeful for a “soft landing” but acknowledged that 2026 could see the beginning of a reckoning.
Dan highlighted one silver lining: “This has put energy at the forefront of most people’s conversations. We’ve had this century-old system that everybody has relied upon, and now it’s a conversation in boardrooms, at C-suites, around family dinner tables. I think that’s a good thing.”
State and Utility Incentives Fill the Federal Gap
As the ITC credits phase down, Dan predicts a significant uptick in state and utility incentives to fill the gap. Illinois is leading the way with multiple programs:
- Illinois Shines SREC Program: $50 per megawatt-hour for solar renewable energy certificates (compared to $4-5 per MWh for generic RECs on the open market)
- Illinois DG Rebate: $250 per kilowatt-hour for behind-the-meter storage and $250 per kilowatt for solar nameplate capacity
- Virtual Power Plant Program: Additional monetization opportunities for demand response participation
Dan also raised an uncomfortable reality: “During this ramp-down period, buyers are going to be faced with a decision of whether they go with FEOC-compliant equipment or whether they choose to abandon the tax credits altogether and get non-compliant equipment. There’s a case to be made that the equipment’s going to be that much less expensive, particularly with batteries, that it may be a wash or you may end up benefiting in the long run.”
This creates a tension with the original policy goals: “Which, unfortunately, bastardizes the whole point of doing the FEOC compliance and reshoring. But economics are going to win 10 times out of 10.”
Gareth added optimism about overall project economics: “People were fearful that the cost of these systems was going to skyrocket as a result of the loss of tax credits and FEOC compliance. But the reality is between soft costs being compressed out of the market, the market getting better at deploying these systems, and equipment continuing to come down regardless of where you buy it—if you can layer in a few local incentives, that’s absolutely killer projects that are only going to get better.”
Re-Underwriting Existing Assets
With 47,000+ commercial and industrial properties now hosting behind-the-meter systems, Gareth predicts 2026 will be the year of asset re-underwriting and optimization.
“A lot of those companies that have been deploying these systems over the last 10 years are now looking at themselves, and their CFOs are asking: Did we make a good investment? Tell me whether the system is working as promised. If not, why not? And how can I continue to optimize this asset?”
This includes understanding financial performance, operational success, and modular improvement opportunities—particularly adding battery storage where new programs and incentives create additional monetization opportunities.
Dan added another dimension: “A lot of commercial real estate asset owners have either entered into a long-term lease with a developer or inherited a long-term lease when they purchased an asset or portfolio. They’re now looking to determine: Do we keep that structure or do we buy this system outright and start to gain more value by bringing it onto our own balance sheets?”
This requires thorough analysis: understanding when the system was built, what the nameplate expectations were, how it’s actually performing, and how it could participate in future markets.
Institutional Capital Floods Behind-the-Meter
Gareth’s boldest prediction is that institutional capital—sovereign wealth funds, insurance companies, pension funds—will shift focus from utility-scale projects to behind-the-meter and onsite energy markets in 2026.
The logic is compelling: “Up until now, they’ve been chasing large utility-scale projects, which, as a result of changing tax credits and market dynamics, are becoming harder to invest in. You’re placing one massive bet on a multi-billion-dollar project instead of spreading risk across smaller projects.”
Behind-the-meter systems offer what institutional investors increasingly value:
- Long-term revenues backed by corporate off-takers
- Contracts with escalation rates spanning 10-30 years
- De-risked equipment and proven solutions
- Ability to spread risk across diversified portfolios
- Predictable returns in an uncertain economy
“The challenge is solving the ability to originate, develop, and aggregate these into portfolios that institutions can back,” Gareth noted. “They’re not going to place one or two million-dollar checks. They want to place hundreds of millions to billions of dollars, and to do that, we need scale in the market.”
Gareth added a spicy bonus prediction: cryptocurrency and blockchain technology will play a role in facilitating this institutional investment through co-funding mechanisms, simplified investment processes, and more traceable revenue distribution via smart contracts and stablecoins.
Bill and Dan diplomatically reserved judgment on the crypto angle, with Dan calling it a “prickly hot take” they’d revisit in 2026.
What This Means for Energy Decision-Makers
Several clear themes emerge for enterprises evaluating their energy strategies:
1. Batteries are no longer optional. Whether for resilience, grid services participation, or demand charge management, battery storage is becoming foundational infrastructure. The combination of falling costs, improving incentive programs, and utility support for virtual power plants makes the case increasingly compelling.
2. State and local incentives matter more than ever. As federal support becomes less certain, understanding your state’s programs—and timing projects to maximize combined incentives—will separate winners from laggards in project economics.
3. Existing assets deserve fresh analysis. If you deployed solar and it’s been operating for more than 5 years, 2026 is the year to audit performance, explore battery additions, and consider whether ownership structures still serve your interests.
4. Solar remains the only scalable near-term solution. Despite political headwinds and changing incentives, solar is the only generation technology that can deploy at the speed and scale required to meet projected demand growth. Projects may be more expensive than they would have been because of the end of the ITC, but they’re still the most viable option.
5. Behind-the-meter systems are becoming institutional-grade assets. The market is maturing from entrepreneurial deployment to institutional ownership. Companies with strong corporate off-takers and proven operations should expect increased interest from large capital providers.
6. Energy is finally getting the attention it deserves. Whether driven by AI data centers, electrification, or EVs, energy strategy is moving from facilities management to the C-suite and boardroom—where it belongs.
Looking Ahead
Bill, Gareth, and Dan will reconvene in 2026 to assess how these predictions played out. If history is any guide, some will prove remarkably prescient while others serve as important reminders that energy transitions rarely follow straight lines.
What’s certain is that 2026 will be a pivotal year for behind-the-meter energy systems. The combination of maturing technology, shifting incentive structures, growing institutional interest, and fundamental questions about grid capacity and data center demand will reshape how enterprises think about energy procurement, resilience, and value creation.
The companies that thrive will be those that view energy not as a cost center to be minimized but as a strategic asset to be optimized—and that recognize the window for action, while challenged by policy uncertainty, has never been more important.
Listen to the full episode of Renewable Rides for deeper insights into each prediction, Bill’s contrarian takes on nuclear and AI, and the debate about whether “BADASS” (Battery Analog Digital As a Service) will catch on as industry terminology.
