Jakarta, INTI - As electricity prices rise due to AI-powered data centers, London-based startup Tem believes that AI could also offer a solution.
The company has developed an AI-driven energy transaction platform designed to lower prices compared to traditional energy traders. Tem has already signed over 2,600 business customers across the U.K., promising that its utility services can reduce energy bills by up to 30%.
Tem recently closed an oversubscribed $75 million Series B round led by Lightspeed Venture Partners, with participation from AlbionVC, Allianz, Atomico, Hitachi Ventures, Revent, Schroders Capital, and Voyager Ventures, according to an exclusive report by TechCrunch.
A source familiar with the deal told TechCrunch that the funding round values Tem at over $300 million. The startup intends to use the capital to expand into Australia and the U.S., beginning with Texas.
“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.”
Tem operates as a classic marketplace, connecting electricity generators with consumers. The company initially focused on renewable energy producers and small businesses to balance supply and demand.
“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.”
Among its customers are fast-fashion retailer Boohoo Group, soft drink company Fever-Tree, and Newcastle United FC.
Tem’s Dual Business Model
Currently, Tem operates essentially two separate businesses. The first, called Rosso, is the transaction engine that connects energy suppliers with buyers. Machine learning algorithms and large language models (LLMs) are used to forecast supply and demand.
The objective of Rosso, McDonald explained, is to reduce costs by removing multiple layers present 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, he added, “you now have an opportunity to replace the humans, the labor costs, and the disparate systems into one single transaction infrastructure.”
The ultimate aim is to bring the price customers pay for electricity closer to the wholesale cost.
The second part of Tem, known as RED, is a “neo-utility” designed to demonstrate the value of Rosso.
“When we first started, we tried to sell our infrastructure to the energy companies, and we got nowhere,” he said.
RED is currently the only utility using Rossi, and McDonald said its growth has led the company to focus on RED rather than opening Rosso to other users immediately.
Eventually, Tem plans to make Rosso available to other utilities.
“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.
“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.”
Conclusion
Tem’s approach illustrates how AI can streamline energy markets by integrating transaction processes, reducing costs, and enabling more efficient electricity pricing. By demonstrating Rosso through RED and planning eventual access for other utilities, Tem positions itself as a technology infrastructure provider rather than a traditional utility, echoing models like AWS and Stripe.
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