Energy Themes Outperform
Key takeaways
Tailwinds created by the European energy crisis, US Inflation Reduction Act and electricity market reforms are spurring venture investment in building and grid energy technologies.
Price volatility is here to stay, with this year seeing a wave of solutions come to market helping to democratise energy procurement and management for SME building owners and occupiers.
A range of solutions tailored to energy intensive commercial and industrial stakeholders are coming to market, from energy management systems to the procurement of certified green electricity.
The sheer size of the global building retrofit market has seen installers continue to experience significant funding across the capital stack.

Adapting to Energy Price Volatility

Sustained energy price volatility has seen European homeowners and businesses rush to monitor and reduce energy consumption like never before. Looking beyond recent gas price spikes, wholesale market volatility will continue to be a core feature of our future energy system – making energy resilience all the more critical for building owners and operators alike.

Here’s why. The transition to a low carbon society will see a greater component of renewables in the grid mix. Renewable energy is cheaper to produce than gas, but the intermittency of solar and wind mean the ability to fuel the grid on renewables alone varies intraday and seasonally, with expensive gas peaker plants fired up to plug in the gaps. Long term, flexibility resources – such as long duration storage and an electrified building stock - will help to reduce gas reliance.

One example is Field Energy, who raised £100M in venture investment this year to build and optimise a network of grid scale batteries. Meanwhile, Leap’s $12M round will enable excess energy generated from distributed energy resources (DERs) to be traded in wholesale markets, reducing gas reliance. For the time being, however, high price volatility is here to stay.As governments seek to protect ageing grid infrastructure from rapidly rising electricity loads, time of use rates are becoming the norm. These contracts charge customers based on real time prices, relaying variable pricing in the wholesale market to the end consumer.

If leveraged smartly, this enables building owners and operators to shift their load profile to capture cheaper electricity prices off peak. And when combined with onsite solar plus storage, building owners can avoid using the grid when electricity is at its most expensive. To ensure a diversified energy supply, it is essential for these levers to work in tandem. This is because leveraging smart grid technologies without first electrifying buildings can leave building owners exposed to price volatility. Lessons can be learned from Spain, where earlier this year EU regulators were forced to introduce the bloc’s most severe energy price cap dubbed the Iberian Exception. With dynamic tariffs accounting for over a third of the market (among the highest globally), building level solar and storage adoption sits at just 2%, much lower than Germany’s 11%.

Despite clean sources of energy meeting around two-thirds of electricity demand, the country’s non-renewables grid mix is almost entirely dominated by gas. Given merit order pricing [1], this meant that Spanish consumers on the dynamic tariff faced full exposure to the gas price spike, without the protection and flexibility provided by onsite generation and storage. Coupled with growing regulatory and investor pressure to reduce Scope 2 emissions, this year has underscored the importance of building a resilient, sustainable energy strategy through combining onsite, offsite and grid resources. Building owners and operators in some geographies – such as Spain, Germany and the UK - are more exposed than others [2], and this is reflected in the venture funding rounds seen this year.

Behind the Meter Optimisation for C&I

For commercial and industrial (C&I) businesses, creating and managing a diverse energy strategy is complex and resource intensive. This challenge is particularly acute for (i) energy intensive businesses - such as bakeries and cement manufacturers – where energy loads are greatest, and (ii) SMBs, who lack the resources to define and implement strategies. Combined with growing Scope 2 emissions reporting requirements for the European manufacturing sector, this year has seen early-stage industrial energy management platforms come to the fore.

Solutions such as Ecoplanet, Kerith, Nista, Elyos Energy and encentive disaggregate electric utility data using non-intrusive load monitoring (NILM) and consolidate with equipment sensor data to obtain a building’s load curves. Through visualising load curves and adding real time, actionable recommendations, customers can (i) adjust machinery or appliance schedules to optimise for when electricity is cheaper and lower carbon intensity, and (ii) access highly targeted retrofit proposals. From here, data can feed through to automate ESG reporting workflows, create predictive maintenance alerts, or serve as the basis for creating a portfolio wide power procurement plan. While some solutions leverage electric utility data alone, integration with a building’s energy assets – from solar plus storage and building HVAC appliances through to manufacturing line equipment – is key to delivering meaningful energy savings. While integrations with a wide range of OEMs can be built in-house, we have also seen companies partner with energy data APIs such as Enode to instantly unlock access to hundreds of devices.

For the most part, these solutions rely on manual interventions carried out by the user. This means that any cost savings are contingent on a high customer engagement rate. To maximise realised savings, automation will be critical. Yet for manufacturing businesses, handing over control of core business processes to a third-party solution can present significant risk. To navigate this, the best solutions will combine deep, granular insights with strong customisation features, allowing users to (i) select which processes to automate, and (ii) define the optimisation parameters. It is here we will see a divergence between specialised providers such as Metron, who dive deep into the nuances of a customer’s manufacturing workflow, and solutions such as encentive who automate auxiliary services consistent across a wider portion of the C&I market.

Procuring Certified Green Power

From energy intensive industrial sites to unpredictable weather patterns, onsite capacity alone is rarely sufficient to deliver year-long stable energy prices and enable ultra-low Scope 2 emissions. Global tech companies have long relied on PPAs to decarbonise energy intensive operations. To date, access has been restricted to large corporates who have i) capacity and certainty for high energy consumption over the contract’s 5–10-year period ii) strong purchasing power to meet the project’s financing partner requirements; and iii) significant resources to plan, manage and optimise a PPA strategy. As companies race to hedge against volatile spot prices, a range of tech first solutions are making it easier for smaller businesses to create procure low cost, green energy. A new generation of companies are seeking to:

  • (i) Digitise power procurement planning workflows, reducing the need for vast in-house energy teams or consultancy fees.
  • (ii) Aggregate demand across smaller providers, enabling minimum consumption and financing thresholds to be met.
  • (iii) Provide verified certification, enabling corporate net zero targets to be met.

Power procurement workflow tools such as Verse and Ren Energy enable portfolio owners to generate an optimised roadmap of energy purchases through bundling demand across a company’s sites and provide a platform for PPA developers and investors to bid on RFPs. Meanwhile, aggregated PPA providers such as trawa, Reel, UrbanChain and tem pool demand across multiple businesses, regardless of size. In bypassing merit order pricing, customers gain access to green electricity at a lower cost than through the wholesale market. Serving as registered electricity providers allows companies to procure energy via conventional grid sources at times when solar or wind generation is unavailable.

While a company might hold a renewables PPA (and/or associated RECs [3]) covering annual energy needs, this does not correspond to zero annual energy emissions. This is because of renewables’ inherent intermittency, whereby non-renewable grid sources are required to plug the gap. For companies looking to demonstrate Scope 2 emissions reductions, reliable and certified accounting is complex. End to end certificate management platform solutions such as Granular Energy and Renewabl are streamlining certification processes and enabling transparency at the annual, monthly, daily or sub-hourly level.

Navigating High CAC & Installer Shortages

Installing onsite renewables and storage is the first step to energy resilience. The home retrofit customer journey and broader supply chain is fragmented, inefficient and opaque. Tech-first installer solutions seek to provide customers an easy-to-use interface with integrated design tools and upfront quotes, combined with installer upskilling and vendor workflow software, and complete with streamlined access to financing and grants. While the offering is relatively similar across providers, implementation is key.

This is because, with 1.7 vacancies for every available energy technician in Germany alone, the average time to fill a vacancy for this role is more than six months. Not only do companies need to consolidate the existing fragmented and disparate workforce but boost the network of skilled labour supply. From installer rollups (such as 1Komma5) to franchise models and end to end vertical integration, there are a number of approaches to growing the skilled installer base.

With homeowners across the continent exposed to high energy bills, tech first installer platforms are emerging in new European markets such as Spain (Sunhero), France (Effy) and the UK (Skoon). Even in mature markets such as Germany and the US, where large players such as Enpal have raised billions of dollars, we will continue to see pre-seed and seed stage companies. This is because even in the most mature markets the largest retrofit installers account for a small portion of the wider installer base, leaving room for multiple winners.

In the early days, low-cost word-of-mouth referrals and small scale digital marketing campaigns keep customer acquisition costs (CAC) low. But as installers move to new markets, it’s common to see a ramp up in CAC. Long term, partnering with banks, utilities and real estate funds will provide platforms with access to much larger customer bases at zero marketing spend. For existing customers, this can provide a degree of trust and comfort. And for banks and electric utilities, the partnership can simply fulfil a CSR budget, create greater customer satisfaction, or even help to protect against transition risk (through facilitating green mortgages).



[1] In wholesale markets, electricity generators bid to supply power, bids are accepted from lowest to highest cost, creating a 'merit order.' Cheaper renewables are used first, and more expensive gas and coal plants are last. Prices are set by the cost of the last generator used, following a 'pay as you clear' model.

[2] Renewable energy adoption varies based on country-specific factors. Countries investing most rapidly in renewables tend to have low nuclear and hydro energy shares, a history of relying on Russian energy imports, favourable environmental conditions, and green policies. Weather also plays an important factor for potential solar and wind generation.

[3] Renewable energy certificates (RECs), also known as certificates of origin, are used to claim the rights to previously generated green electricity. Many green energy offerings rely on RECs. However, this method can be complex and misleading, as it doesn't always result in the addition of new renewable electricity to the grid, leading to misconceptions about its environmental impact.

Heading 1

Heading 2

Heading 3

Heading 4

Heading 5
Heading 6

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur.

Block quote

Ordered list

  1. Item 1
  2. Item 2
  3. Item 3

Unordered list

  • Item A
  • Item B
  • Item C
Text link

Bold text