Rising electricity costs linked to AI data centres have opened a new opportunity for London based startup Tem, which believes artificial intelligence can also be part of the solution. The company has developed an AI powered energy transaction engine designed to lower electricity prices by making energy trading more efficient.
Tem says its platform helps businesses buy power at lower rates compared to traditional energy traders. Through its utility arm, the company has signed up more than 2600 business customers across the UK, promising savings of up to 30% on electricity bills. The startup recently closed 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 a report.
The funding round values Tem at more than $300 million, a source familiar with the deal said. The company plans to use the fresh capital to expand into Australia and the US, starting with Texas. Tem Co-Founder and CEO, Joe McDonald said, “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. 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.”
At its core, Tem operates as a marketplace that connects electricity generators with consumers. It initially focused on renewable energy producers and small businesses. “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.” Customers include Boohoo Group, Fever Tree and Newcastle United FC. Tem currently runs two businesses. Rosso is its transaction engine, where machine learning models and large language models predict supply and demand to cut out multiple intermediaries. “You now have an opportunity to replace the humans, the labour costs and the disparate systems into one single transaction infrastructure,” McDonald said. The second business, RED, is a neo utility built to showcase Rosso. While RED is currently the only utility using the system, Tem plans to open the platform to others in the future. “Long term, we really don’t mind who owns the customer, who owns the generation as long as our infrastructure is being used,” McDonald said. “This is just an infrastructure play in the same way AWS was, or Stripe was.”
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