Tem, a London-based energy technology firm, has secured $75 million in a funding round aimed at expanding its international presence and accelerating the rollout of its AI-driven platform, which is designed to reduce business electricity bills by up to 30%. The investment, led by Lightspeed Venture Partners, values the four-year-old company at approximately $300 million. Tem intends to utilize the capital to enhance its technology and scale operations in the U.S.
Founded in 2021, Tem has developed a platform known as “Red,” which it describes as a neo-utility that leverages artificial intelligence to directly align electricity supply and demand, bypassing the wholesale market and its numerous intermediaries. Co-founder and CEO Joe McDonald noted that the goal is to eliminate what he calls unnecessary “middle men” from the energy system, estimating that approximately $1 trillion is lost annually due to transaction fees imposed by traditional energy firms. “Our mission is to take that cost of transaction down to zero,” he said.
Tem’s software is already in use by around 2,600 businesses, including well-known brands such as Boohoo and Fever-Tree, helping them to reduce their electricity expenses. Since launching Red in November 2024, Tem claims to have saved its customers $35 million in energy bills. The platform has also attracted interest from educational institutions, with two schools signing up and one reportedly saving £55,000 annually.
McDonald expressed confidence in the need for disruption in the energy sector, stating, “I don’t see why every single electricity transaction won’t be run by infrastructure like ours over the next ten years.” He highlighted the inefficiencies of the current system, noting that 99% of transactions still rely on outdated processes. “There is too much inefficiency,” he added.
The company was established by a team of energy specialists including Jason Stocks, Bartlomiej Szostek, Ross Mackay, and McDonald. With this latest funding round, Tem’s total capital raised has reached $94 million, with existing investors such as Hitachi Ventures and Atomico supporting the company’s growth.
McDonald indicated that the launch of Red was partially intended to showcase the potential of Tem’s technology. In the long term, the company plans to license its platform to utilities worldwide to help reduce their transaction costs. Although Tem has already partnered with two utilities using its software, the names of these utilities have not been disclosed.
“At the heart of the problem is the energy transaction itself,” McDonald explained. “If I’m a business buying electricity, I’m typically paying 25 to 30 percent more than the cost at which it’s generated. That’s because the transaction passes through up to seven intermediaries, each taking a cut.” Tem reports that it has facilitated around two terawatt-hours of electricity transactions to date, equivalent to powering Liverpool for a year. Remarkably, Red operates with just two AI agents and a team of just four people.
“A traditional utility would need around 170 staff to serve the same number of customers,” McDonald stated, emphasizing how technological infrastructure can enhance efficiency while improving the customer experience. With energy costs remaining a critical issue for businesses in the UK and beyond, Tem is banking on its AI-driven infrastructure to transform the way electricity is bought and sold, rather than mere incremental reform.
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