⚡️ New grid wanted ⚡️
Frst is a seed-stage VC firm focused on supporting a new generation of French entrepreneurs with global ambitions.
As we shift from a production based on fossil fuels to renewables, our grid needs to adapt. Here is an overview of what the new grid will look like and new ventures trying to build it.
1. The modern grid will be hybrid
Fossil fuel energy sources have traditionally provided the baseload power. They are gradually/increasingly being replaced by renewable sources — In 2018, renewable energy were preponderant in new capacity additions for the 7th year in a row .
It has been extensively pointed out: renewables are intermittent — meaning they are less reliable.
To compensate for intermittency, future plants will be equipped with massive batteries to store the energy and take over when the sun is not shining or the wind has stopped blowing.
Battery energy storage systems (‘BESS’) are already taking off in many places as an excellent complement to energy generation from solar and wind : the first wind-solar-battery ‘hybrid’ plant has already opened its doors in Oregon and will power 100k homes.
In the UK, startups such as Tesseract and Field Energy have raised massive rounds to build a hybrid grid, at scale.
While the Oregon power plant relies on massive lithium batteries, I find super interesting companies developing new technologies to break free from increasingly expensive materials (e.g. lithium price has been multiplied by 7 over the last 2 years):
Energy Vault’s batteries rely on kinetic forces for instance, while Malta, develops pumped heat storage technology and Form Energy and Zinc8 explore respectively iron-air and zinc-air batteries.
On top of the development of massive batteries, it seems that nuclear is experiencing a resurgence as it is viewed as a solution to buy more time for renewable capacity to ramp up and to provide an increasing share of baseload power.
Countries weary of nuclear energy, like Germany and Japan, are extending old plants and considering new investments, while other countries are announcing massive investments. France is planning 6 new nuclear plants, the UK eight, and South Korea announced a goal to reach 30% of power generation to come from nuclear by 2030.
Newcleo ($300m raised) in the UK, NuScale Power ($500m) and Oklo in the US are building next-gen, micro nuclear reactors that run off nuclear waste. Less mature technologies like nuclear fusion have also received massive interests from investors, like Commonwealth Fusion ($2bn), TAE Technologies ($1.2bn), TerraPower ($800m) or Helion Energy ($578M).
2. The modern grid will be decentralized
Historically, the grid worked in one direction: energy would flow from generators to the final consumer.
Tomorrow’s grid will look like the Internet — a decentralized, powerful network of integrated energy sources that communicate and rapidly adapt to changing needs.
Rooftop solar but also EVs work as decentralized energy sources : through vehicle-to-grid mechanisms, EVs owners can sell the energy stored into their vehicle battery back to the grid.
Synop ($10m raised), in the US, has provided energy stored in electric school buses back to the grid for more than 80 hours this summer. Vehicle-to-grid completely changes the lifetime value of vehicles: while fossil fuel-powered vehicles provide no value when idle, EVs, on the other hand can become profitable assets. Weave ($15m) is building a vehicle-to-grid interface to time EV charging times for periods when power is the most abundant, cleanest and cheapest.
In paralell, we see the apparition of private grid management systems, such as Solarize ($5m), building an OS to help real estate owners manage, bill, report and pay taxes on the energy they generate locally.
3. Demand management systems will play a key role
Energy demand is becoming increasingly “peaky’’, as we shift to EVs and get increasingly equipped with ACs or electric heat pumps.
On top of the pressure it adds to energy providers, peaks in demand also results in more real-time price volatility for customers.
In these circumstances, the rewards for intelligently managing power usage have never been higher.
While traditional energy operators reacted to a change in electricity prices by controlling supply (flexing up/down last-minute, carbon-intensive generation or buying additional energy on the spot market), next-gen energy distributors are now looking to turn demand up/down instead of supply.
Demand management techniques involve:
- Manage demand by asking customers to give power back to the grid, as explained above.
- Manage demand by streamlining the peaks. Streamlining peaks can be achieved by incentivising electricity users to shift their usage to times when renewable production is high and decrease their consumption when the grid is strained.
Don de Chaleur in France, Tibber Energy ($180m raised) in the Nordics and David Energy ($40m) help customers curtail their energy use (e.g. turn off their AC) when prices are high.
These major changes mean that we’ll see a wave of innovation in both hardware (energy production, storage, transmission) and software (to manage the feedback loops between baseload power, intermittent renewables, and distributed energy resources).
Frst is one of the rare funds operating in the French ecosystem actively investing in pre-product teams. If you’re working on these topics or know someone who is, please reach out to louise@frst.vc :)
