AI Meets Energy Markets as Power Prices Climb
As artificial intelligence continues to fuel the rapid expansion of data centers worldwide, electricity demand — and prices — are climbing alongside it. A London-based startup, Tem, believes the same technology driving this surge can also be part of the solution.
Tem has developed an AI-powered energy transaction engine designed to reduce electricity costs compared to traditional energy traders. Through its utility arm, the company says business customers can save up to 30% on their energy bills, a promise that has already attracted more than 2,600 businesses across the U.K.
$75M Series B Signals Strong Investor Confidence
The company recently secured an oversubscribed $75 million Series B funding round, led by Lightspeed Venture Partners, with participation from AlbionVC, Allianz, Atomico, Hitachi Ventures, Revent, Schroders Capital, and Voyager Ventures, according to information shared exclusively with TechCrunch.
The new funding round values Tem at more than $300 million, a source familiar with the deal told TechCrunch. Tem plans to deploy the capital to support its international expansion, with Australia and the United States — starting in Texas — identified as priority markets.
“We’re in a nice position where we kind of have control over our own profitability. So I could have chosen not to raise at all and had a lovely, nice bootstrap business in some ways,” Joe McDonald, co-founder and CEO of Tem, told TechCrunch. “Well, we’re not that kind of business. We know what we want to achieve as someone who wants to go public over the years.”
A Marketplace Built for Renewable Energy
At its core, Tem operates as a marketplace, connecting electricity generators directly with consumers. The company initially focused on renewable energy producers and small businesses, creating balance on both sides of the platform.
“The more decentralized and the more distributed, the better it is for the algorithms,” McDonald said. “But this works all the way up to enterprise.”
Tem’s growing customer base includes well-known names such as Boohoo Group, Fever-Tree, and Newcastle United FC, highlighting its appeal across different industries.
Rosso: Cutting Out the Middle Layers With AI
Tem currently runs two closely linked businesses. The first, Rosso, is its AI-driven transaction engine that matches electricity supply with demand. The platform uses machine learning algorithms and large language models (LLMs) to forecast market conditions.
According to McDonald, Rosso’s mission is to reduce costs by removing multiple layers that exist in traditional energy markets.
“In each of them, you’ve got different teams doing different jobs, taking different levels of profit from back office to trading, trading desks to other trading desks, and probably five to six intermediaries in total that enable the flow of money to move from one side to the other,” he said.
With AI, McDonald explained, “you now have an opportunity to replace the humans, the labor costs, and the disparate systems into one single transaction infrastructure.” The aim is to bring the price paid by customers closer to wholesale electricity costs.
RED: A Neo-Utility to Prove the Model
The second part of the business, RED, operates as a “neo-utility” created to demonstrate Rosso’s capabilities in the real world.
“When we first started, we tried to sell our infrastructure to the energy companies, and we got nowhere,” McDonald said.
At present, RED is the only utility using Rosso, and its rapid growth has led Tem to prioritize scaling RED before opening the transaction engine to other utilities.
Long-Term Vision: Infrastructure Over Ownership
While RED plays a critical role today, Tem does not intend to dominate the utility market indefinitely.
“In reality, it doesn’t matter how good [RED] is; it’s not going to get above a 40% market share. And it shouldn’t, because that becomes a monopoly in itself. So, me, I’d much rather go to get access to all the transaction flow,” McDonald said.
Looking further ahead, Tem sees itself as a foundational technology provider rather than a consumer-facing energy brand.
“Long term, we really don’t mind who owns the customer, who owns the generation as long as our infrastructure is being used,” he added. “This is just an infrastructure play in the same way AWS was, or Stripe was.”
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