AI Isn’t Just Driving Up Electricity Demand – It’s Building a Smarter Grid
As AI data centers surge in number, straining power grids worldwide, a London-based startup, tem., is betting that artificial intelligence can likewise be the solution. The company has developed an AI-powered energy transaction engine designed to slash costs and accelerate the transition to renewable energy, recently securing a $75 million Series B funding round and a valuation exceeding $300 million.
The Problem: A Complex and Costly Energy Market
The traditional energy market is notoriously complex, riddled with intermediaries and inefficiencies. According to tem. CEO Joe McDonald, “five to six intermediaries” typically take a cut as money flows from energy generators to consumers. This layered system drives up costs and hinders the adoption of renewable energy sources. The current infrastructure struggles to adapt to the increasing demands of AI, creating a feedback loop where the incredibly technology meant to innovate is contributing to higher energy prices.
tem.’s Two-Pronged Approach: Rosso and RED
tem. Is tackling this challenge with a dual strategy. The core of their innovation lies in “Rosso,” an AI-driven transaction engine. Rosso utilizes machine learning algorithms and Large Language Models (LLMs) to predict energy supply and demand, matching generators directly with buyers in real-time. The goal is to eliminate the layers of overhead and reduce prices to closer to wholesale costs.
But, simply building the technology wasn’t enough. McDonald found energy companies reluctant to adopt a new system. This led to the creation of “RED,” a “neo-utility” powered by Rosso. RED serves as a proof-of-concept, demonstrating the cost savings and efficiency gains achievable with tem.’s technology. Currently, RED is the sole utility leveraging Rosso, and its success is driving the company’s strategy.
The Power of Decentralization
tem.’s approach is particularly effective with decentralized renewable energy sources. McDonald explains that “the more decentralized and the more distributed, the better it is for the algorithms.” This focus on renewable energy isn’t just an ethical choice; it’s a strategic one, allowing Rosso to thrive in a more dynamic and fragmented market. The company already serves over 2,600 business customers in the U.K., including Boohoo Group, Fever-Tree, and Newcastle United FC, with reported savings of up to 30% on energy bills.
Beyond the UK: Expansion to Australia and the US
The recent $75 million funding round, led by Lightspeed Venture Partners with participation from a diverse group of investors including Allianz and Atomico, will fuel tem.’s expansion plans. The company is targeting Australia and the United States, with a particular focus on Texas. This expansion signals a broader ambition to reshape energy markets globally, not just in the UK.
An Infrastructure Play: The AWS and Stripe Parallel
McDonald envisions tem. As an infrastructure provider, similar to Amazon Web Services (AWS) or Stripe. “Long term, we really don’t mind who owns the customer, who owns the generation as long as our infrastructure is being used,” he stated. This suggests a business model focused on providing the underlying technology, allowing others to build services on top of it. This approach could unlock significant scalability and network effects, positioning tem. As a critical component of the future energy landscape.
The Future of Energy Transactions is Intelligent
tem.’s success highlights a growing trend: the application of AI to optimize complex systems. As energy demands continue to rise, and the demand for sustainable solutions becomes increasingly urgent, companies like tem. Are poised to play a pivotal role. The company isn’t just responding to the energy crisis; it’s building the infrastructure for a smarter, more efficient, and more sustainable energy future. What role will AI play in *your* organization’s energy strategy? Share your thoughts in the comments below!
