The challenge of integrating renewable energy sources onto the power grid is a burgeoning startup opportunity. UK-based Axle Energy founded the company early last year to jump on the chance to accelerate the decarbonization of the power grid.
The idea to build software to support the energy transition came about because of the high global energy prices caused by the war in Ukraine, says CEO and co-founder Karl Bach (pictured above, left, with co-founder and CTO Archie de Barker). The growing adoption of renewable energy was also a big catalyst in the decision. Before becoming entrepreneurs, the pair worked for energy suppliers and flexibility providers in the UK and overseas.
Their startup, Axle Energy, is a B2B backend infrastructure business focused on connecting flexible assets like electric vehicles, home batteries and heat pumps to energy markets that are not available to consumers. This allows users to be rewarded for balancing the fluctuations of wind and solar energy. For example, if a household delays charging their EV or switches to using a home battery, they can be rewarded for helping balance grid supply and demand.
Intermittent renewable energy supplies increase the uncertainty of the grid's energy supply, which the grid typically balances by using electricity generated by fossil fuels, and these backup plants are paid kickbacks. But Axle's software provides a non-fossil fuel alternative for the grid to balance supply and demand.
“Axle is an energy flexibility company,” Bach explains on a Zoom call. “We connect distributed assets like electric vehicles and batteries to the energy market. So we're here to decarbonize the grid. Of course, to do that, we have to stop using fossil fuels, and part of the solution is renewable energy. But it can't be the full solution, because the sun doesn't always shine and the wind doesn't always blow.”
The inability of renewables to provide a consistent and stable energy supply has been a long-standing target of attack by the fossil fuel industry. What's the point of building lots of wind and solar farms if we need to have gas-fired (or diesel) plants on standby as backup? The answer to this straw man argument is simple: think smarter.
As more industries and assets are electrified, we will be able to create a demand control infrastructure that can be used to dynamically reshape energy demand through granular control over different types of connected devices. This is what Axle means when it describes itself as an “energy flexibility company.”
Typically, only large commercial and industrial energy users are paid to shift demand when the grid is strained. Axle's software allows owners of smaller assets (like EVs) to play a role by aggregating overall power demand and essentially curtailing power on demand. The payments Axle receives from grid operators for shifting energy demand in this way are passed on to EV and other device owners through partner device manufacturers.
“Today the power grid is completely manual, top-down command and control. You literally have a human engineer in a control room pick up the phone, call the power plant and say, we're having some kind of problem, can you please turn down your output in 20 minutes? This works when you have a few big sites on the grid and it's all human monitored and human coordinated. But it doesn't work when you have distributed generation, distributed consumption, and everything is happening in real time,” Bach told TechCrunch.
“So we think the future power grid needs to change significantly. It needs to be decentralized. It needs to operate dynamically so that every node in the network can react to price signals in real time. And that's a revolution. Probably the biggest revolution in the power grid in the last 100 years. And that's really what we're working to unleash from a software infrastructure perspective.”
“We believe it is both possible and achievable to balance the grid away from fossil fuels by 2030,” he added, highlighting the scale of Axle's ambitions. “The UK grid will need around 40GW of flexibility by the end of the decade, all of which could potentially come from zero-carbon sources.”
As Bach says, there are no penalties for the device users themselves: Not only are they paid for helping with grid balancing, but they are also empowered to override the optimization, for example if their EV really needs to be charged immediately. “We're not taking control away from the users,” he stressed. “If they help us optimize the system, we get some benefits. But if it doesn't work, the control is still with the users.”
We believe it is possible and achievable to eliminate fossil fuels in balancing the electricity grid by 2030.
Carl Bach, CEO and co-founder of Axle Energy
Since launching its platform last year, Axle says it has connected over 15,000 flexible assets to the energy market, with a total capacity of over 85MW (reaching over 500,000 homes in the UK and over 6 million globally, through its partners). Partner asset manufacturers include SolarEdge, myenergi, Pod Point and GivEnergy, but it has not disclosed how many customers it has signed up yet.
Device manufacturers will benefit from being able to reward consumers for participating in grid balancing, helping to foster customer loyalty. Bach said that typically, customers are paid directly for their contributions (though the details of the rewards offered are up to Axle's partners).
“By the end of the year, we should be able to pass on the following savings to end users through our partners: [up to £400 per EV or home battery per year]” He said the company hopes to reach that level of payment by connecting to more of the UK's available energy market than it currently has access to.
To fully cover the UK energy market in this fast-paced timeframe, Axle needs to expand its engineering team, and the company has announced a $9 million seed round of funding to do just that, which will also be used to expand into other European markets (Bach declined to say where the next target is, as the company has yet to decide).
“We think this market is at a tipping point. In the next 12 to 18 months, we'll see massive expansion of this market, not just in the UK but in other countries, in Europe and around the world. And we want to build a complete software package to help our customers achieve that, so we've raised more capital so we can scale to meet their needs,” he said. “And when you look at the wider climate issue, of course there's no time to waste. This gives us the power to scale at the rate we need to meet the needs of the market.”
“We are scaling rapidly,” he added. “Our existing clients have sold over 6 million decentralized devices worldwide. If you look at the growth rate of people buying EVs, [home] “Demand for batteries will grow significantly over the coming years. We are improving the business case for consumers and contributing to further growth of this market.”
Could Axle's model work further afield, such as in the U.S. energy market? The answer is yes, but not yet. “The U.S. is in the plans, probably not in the next 12 months, but hopefully not too far away from that,” he said.
“The US market is a little bit different to the UK and Europe in terms of regulatory structures and encompasses a range of different regulatory structures, but we're already seeing some interesting innovation happening in Texas, for example,” he continues. “Tesla serves both battery customers and EV customers. They optimize their batteries to support the grid, and the customers get compensated for that. This is a great example of what we expect to see in other parts of the US, and especially as rates and EV adoption increase in the US as well.”
On the competition front, Bach suggests Axle is seizing a “white space” opportunity, but also notes increased startup attention to the energy transition, including competition for compensation adjustments from new energy suppliers like Octupus Energy in the UK. Another consumer-facing company focused on redistributing revenues from grid adjustments is Sweden's Greenely. However, Axle is not competing directly with either, as it has taken the B2B route.
Some traditional players that have focused on large commercial industrial assets for grid balancing are starting to look at smaller assets as well, according to Bach, but he argues that their focus on building the back-end infrastructure for distributed energy flexibility sets them apart.
The $9 million seed round was led by Accel, with participation from existing investors Eka Ventures and Picus Capital, and includes notable angel investors including Amit Gudka (founder and CEO of Field Energy), Sierra Peterson (founder and CEO of Voyager Ventures), Hanno Renner (founder and CEO of Personio) and Nico Rosberg (Formula 1 World Champion and sustainability entrepreneur).
The seed funding brings the total amount Axle has raised since it was founded in February 2023 to around $10 million (£8 million).
“If you look at the challenges facing grid operators around the world — in the U.S., Australia, Japan — they're all working to decarbonize. They're all facing very similar challenges. So even if the exact regulatory structures are a little different, they're all learning from each other in this new transition,” he said. “We're entering a brave new world that none of us have fully seen before, so we're all working together to make it happen.”