Tem raises $75M to remake electricity markets using AI

Aiming to tackle the rising electricity costs driven by AI data centers, London-based startup Tem believes that artificial intelligence could also be part of the solution. The company has developed an innovative energy transaction platform that leverages AI to provide competitive pricing against traditional energy traders. With more than 2,600 business clients across the U.K., Tem promises potential savings of up to 30% on energy bills through its utility division. Recently, the startup successfully raised $75 million in an oversubscribed Series B funding round, led by Lightspeed Venture Partners, and supported by investors like AlbionVC, Allianz, Atomico, Hitachi Ventures, Revent, Schroders Capital, and Voyager Ventures. According to sources familiar with the deal, this funding round values Tem at over $300 million. The capital will be used to fuel Tem's expansion into the Australian and U.S. markets, specifically targeting Texas first. Joe McDonald, co-founder and CEO of Tem, expressed confidence in the company’s profitability, stating, "We could have opted to remain a bootstrap business, but we have ambitious goals aimed at going public in the future." Tem operates a marketplace that connects electricity producers with consumers, placing a strong emphasis on renewable energy sources and small businesses. McDonald noted that a decentralized approach benefits their algorithms, although the system is scalable up to enterprise levels. Notable clients include the Boohoo Group, Fever-Tree, and Newcastle United FC. The company manages two distinct operations. The first, named Rosso, serves as the transaction engine connecting suppliers with buyers, utilizing machine learning and large language models to forecast supply and demand. McDonald aims to streamline the energy market by reducing the many layers and intermediaries that inflate costs. He explained, "AI presents a unique opportunity to consolidate labor costs and disparate systems into a unified transaction framework, bringing customer electricity prices closer to wholesale rates." The second operation, referred to as RED, acts as a “neo-utility” to demonstrate the effectiveness of Rosso. Initially, Tem attempted to market its infrastructure to energy companies without success, leading to RED becoming the sole utility utilizing Rosso. McDonald indicated that while RED’s growth is a priority, the ultimate goal is to open up the platform to other utilities in the future. He remarked, "We don’t mind who owns the customer or the generation, as long as our infrastructure is in use. This is fundamentally an infrastructure play, akin to what AWS and Stripe have achieved."