Unlocking the Future of Energy: Why we continue to invest in Axle Energy
As 2022 drew to a close, we connected with Axle and instantly recognized we’d stumbled upon an extraordinary team with a bold ambition. Back then it was a rough idea of how Distributed energy resources — DERs — (e.g. EVs, heat pumps, home batteries etc.), can be connected to energy markets to decarbonize the grid. We sparred with Karl and Archy for several weeks and talked to multiple stakeholders and potential customers. Their sharpness, thoughtfulness, passion, and boldness excited us that after spending a week with them in Sheffield, we offered them a term sheet.
We are excited to share that we continue to invest in the 9 Mio seed USD round together with Accel, Eka Ventures and several high-quality angels such as Hanno Renner, founder of our portfolio company Personio, Nico Rosberg and many more. We remain incredibly excited by the opportunity and what the team has achieved in a short amount of time. Here is our take on what excites us:
The Renewable Energy Revolution
We are witnessing one of the largest transformations of all time — and it is not (just) AI: Move to renewables. Renewables account for an increasing share of electricity generation. Take, for example, Germany, in 2023 60% of electricity produced came from renewables, but Germany is not alone, in the US in 2023 21% of electricity was produced by renewable and by 2030 the US aims to have a share of 80%. While these renewable sources are sustainable in the way of not emitting GHG, they are inherently intermittent posing significant strain on our grids.
The Rise of Distributed Energy Resources (DERs)
At the same time, we add to the electric energy loads with energy-hungry (AI-)data centers and as the world around us is increasingly electrified. Consumers switch to electric technologies, DERs such as rooftop solar, EV, heating, and batteries. Electrification means we will consume less energy via coal and liquid (fossil) fuels and more via electricity.
We have seen an unprecedented growth of DERs, as EVs hitting record sales figures of 3.2m sold in 2023 in Europe (up 20+% from 2022) and home batteries having grown from 4GWh in 2021 to 12GWh in 2023 in Germany. This is just the beginning for example, the EU estimates that up to 130+GW of demand-side distributed flexibility will be added by 2030 to the grid. In the EU it is predicted that by 2050 demand for electricity will double from today’s levels. In 2023 in the UK electricity was 20% of the total primary energy demand, by 2050 it is predicted to be more than 60%. The way we generate, distribute, and consume energy is fundamentally shifting and the implications are severe, as the structural design and the demand we place on the grid are not set up for the future.
Challenges of a Centralized Grid
The grid as we know it today is centralized as gas, nuclear power, coal, and oil generate electricity that is then transmitted in a very linear manner to homes and businesses on a grid built as a 1-way street. With more and more electrification the cost of delivering the energy to the end consumer is getting more and more costly. In the last 10 years delivery costs for utilities in the US have increased by 65% — there is no sight of the costs getting less in the next years. The existing physical infrastructure, built 50–60 years ago, is not equipped to handle the massive surge in electricity demand, such as when everyone charges their EVs simultaneously. This surge creates new peak demands that exceed the capacity of the current grid. To meet the rising electricity needs, an estimated $60 billion in annual investment is required for upgrading existing lines and constructing new ones.
The Promise of Decentralization and Flexibility
Moreover, renewables are more intermittent (they only generate energy when the sun shines or the wind blows), making them a less controllable source of energy, that cannot be matched at all times with the peak demands of the energy grid (e.g., many EVs are charging at the same time in the evening when people come home from work). Matching the supply and demand of electricity becomes more and more of a challenge. With more and more DERs added to the grid, the grid becomes more decentralized. DERs can make the grid at the same time more flexible and enable a balancing of supply & demand of electricity. As these assets can serve both as the supply and demand (e.g., a home battery being able to consume and store electricity but also to optimize and provide electricity back to the grid, a concept called demand flexibility.
A solution is needed to reliably, scalably, and economically connect the vast amount of Distributed Energy Resources (DERs) to the energy markets. The goal is to leverage these decentralized and fragmented demand flexibility assets at scale, thereby avoiding costly infrastructure upgrades and smoothing the energy curve.
Enter Axle Energy
Axle Energy’s software platform orchestrates the complex dance between energy supply and demand, unleashing the power of DERs in a decentralized grid. Imagine a world where your electric vehicle, home battery, and heat pump become active participants in a greener, more resilient energy ecosystem, helping to decarbonize and reduce your energy bill. Axle Energy is making this vision a reality by bridging the gap between energy suppliers, manufacturers, and consumers. Their technology weaves these diverse elements into a tapestry of efficiency, connecting them to both local and national energy markets and various incentive schemes. As we stand at the crossroads of climate crisis and technological revolution, Axle Energy will play one of the crucial parts. Their platform is not just saving end-consumers money, it is fortifying our energy infrastructure, making it more resilient in the face of increasing demands and higher volatility.
A Bright Future
Working together with Karl and Archy and their growing team over the last 14 months has shown their dedication, force, and true capabilities. Their relentless focus, drive to execute and thoughtfulness are rare. We have been impressed by the execution of the whole team. In less than six months they have connected more than 15,000 flexible assets to energy markets, with over 85MW of capacity in the UK. Already today generating significant savings to end-consumers; creating a lot of customer love. Additionally, they closed partnerships with some of the largest OEM players such as Solar Edge, myenergi, PodPoint, and GivEnergy.
This is just the beginning. As energy markets, particularly flexibility markets, reach an inflection point and regulators catch up, Axle Energy will play a crucial role. We are excited to continue supporting them on this journey.
