Grid Tech Software
The energy we use to live our lives, to build our materials and to warm our homes is the single biggest driver of greenhouse gas emissions. 75% of it to be precise.
We can reduce these emissions in multiple ways:
- More clean energy — we just need to build more of it, while the many developments in clean tech will improve efficiency
- Consume less — through the many efforts done in the circular economy and better resource management
- Better balance supply & demand of energy — in part through grid tech
But what the hell is grid tech??
Our grid:
Managing the electrical grid of a country is a constant effort of balancing supply and demand — at every 30-min slot! For every 30-min slot, the grid operator (in the UK, the National Grid Electricity System Operator) needs to ensure the demand is met by supply (and the supply is met by demand). The grid operator is in constant negotiations with energy suppliers to supply more or supply less energy to the grid depending on forecasted demand.
Lots of forecasting goes into this analysis, trying to predict as accurately as possible both demand and supply. Any unexpected peaks and drops need to be minimised at all costs. Either can result in chaos through power outages. Energy forecasts incorporate weather (and its impact on renewable generation), historic demand patterns, unexpected large social events, planned maintenance, etc. etc. There is a whole industry behind these estimates, serving the national grid, the utilities, and power trading firms.
Managing the grid in a balanced way — avoiding sudden imbalances in supply and demand — isn’t as simple as it seems due to the growing levels of uncertainty linked to (a) the growing role of weather-dependent renewable energy sources, and the (b) increased complexity of forms of demand (e.g. consumer commanded EV chargers, household solar independence, etc.).
Adapting last minute to imbalances is extremely expensive and carbon-intensive.
A short refresher on pros/cons of each energy source might be of help:
In the event things get imbalaced, the grid operator will desperately need more supply [or, as we’ll see further down the line, desperately need less demand]. To acquire that supply, the only immediately responsive energy source available is fossil fuel-dependent — coal and gas plants that are easy to switch ON/OFF but carry the downsides of being carbon intense and carrying tangible marginal costs from burning extra coal or gas.
These moments of urgent need for energy naturally lead to higher energy prices.
Put it simply: an unbalanced grid = a carbon intense grid
Putting two and two together, the grid carbon intensity is known to be very well correlated with the grid energy prices. See here a worked-out example for the UK grid in 2020, where correlation between the two ranged from 0.7 to 0.9 across the year.
This is where grid technologies come in. There is a whole school of tech companies working towards helping the grid maintain its balance. Some through adapting the grid to respond from the demand side, others through offering better and more flexible energy contracts, and others enabling the transition from an old rigid grid infrastructure into a smart flexible grid infrastructure.
We map these below:
Missing your company, or any other players? Drop me a line!
What we find most interesting in each of the categories:
Demand response through EVs:
In 2021, ~190,000 EVs were sold in the UK. The average capacity of these sits around 40kWh. That’s 7.6 GWh across all EVs in the UK. Even considering cars sit most frequently unused (over 90% according to some surveys) — that’s more than the currently installed home, large-scale and industrial battery storage capacity of Germany (4.4GWh).
Technologies enabling EVs to become a hyper decentralised battery storage unit have a tremendous potential to help the grid in becoming more flexible.
Demand response through households:
Will we one day be paid not to consume in peak times? Groups of households in high numbers might become distributed agents for grid flexibility — imagine thousands of households turning off their ovens right at peak time to balance the grid!
Peak times energy prices can reach as high as £3–6 per kWh, when its usual tariff prices sit usually as just a few cents per kWh (£0.05–0.30). We might one day see the grid paying a portion of those £3–6 per kWh to the user not to consume a kWh at those very tight times. For reference, your oven is probably consuming somewhere between 2-4 kWh (in 1 hour of use) — £6 to £24 for you to cook your dinner a bit earlier or a bit later, not bad!
This will of course only be possible as a greater granularity of the electricity tariffing comes through — as we, in the UK, move closer to real-time pricing with half-hourly tariffs coming in with the developments of the Market-Wide Half-Hourly Settlement (MWHHS).
Demand response through commercial buildings
In the heating and air ventilation space, we’ve seen buildings turning into potential heating storage facilities. Think of Blue Frontier’s smart HVAC solutions helping buildings ambient their facilities ahead of grid peak times.
Commercial buildings are attractive because of their scale (i.e. each commercial building represents several households in terms of energy intensity). That scale better justifies the cost-benefit of demand-response adjustments! We are watching this space closely, and are keen to learn more about what is the impact of commercial buildings on the grid during peak times (vs. households) — is the grid most stressed in periods when commercial buildings might be negligible?
Data infrastructure that enables demand response
Any of these solutions requires a clear picture of real-time energy use in our lives — the more granular the better. Whether that’s combining real-time data on the grid energy mix and live prices for investment planning or adapting real-time consumption, or that’s connecting real-time energy demand per appliance, we are actively looking for opportunities in this space — where we see a great fit for our data and software strategy.
Tech helping installers install
Is this the next vertical SaaS market opportunity? We think so, where we see lots of greenfield for venture scalable opportunities.
In the UK, Nesta reports that we are missing 24,000-ish professional installers (for context, we’ve got 3,000 at the moment). Today we’ve got approx. 35k EV charge points in the UK, whilst there is a budget to reach 300,000 by 2030 — considering only the public EV charging stations. Solar isn’t expected to go in any other direction. We expect to see SaaS players come in and replicate what some have built in the solar US market, in other verticals and geographies.
Enablers of a flexible grid
The resurgence of utility providers offering flexible electricity tariffs is highly dependent on local policy and the adoption of smart meters. More broadly, we’ve seen tools helping developers and investors better plan their projects taking into consideration the grid flexibility needs.
My name is Manuel Antunes and I am a b2b software investor with Triple Point. We are a £3bn asset manager with a mandate in PE and b2b tech VC. In the VC team we’ve backed players like Credit Kudos, Ably and Quit Genius, having done a lot in infrastructure SaaS, fintech, health and climate. You can see more of our work here. We have ~50 cos in the portfolio, investing in 12–15 companies per year. We invest at pre-seed to series A stages of businesses with a UK team.
We are actively looking to learn with founders within the grid tech space, and would love to hear from you if you’re building something in this space with venture-scale potential and that sits within our b2b tech mandate.
