The creator utilized a raymarching shader and a NoiseTexture to set up the effect.

A developer from Miskatonic Studio, an indie gamedev studio known for its free-to-play adventure Intrepid, has demonstrated a beautiful and realistic Aurora Borealis effect set up with Godot Engine. According to the creator, the effect was created using a raymarching shader and a NoiseTexture in the engine and is memory-efficient. In the future, the developer also plans to add a gradient texture to make the lights change colors and upload the effect to Godot Shaders.

And here are some more projects made by Miskatonic Studio using Godot:

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