The British startup wants to do for utilities what neobanks have done for the financial sector for more than a decade: use technology to disrupt and streamline old industries and cut out middlemen.
London-based Tem is building a marketplace and platform that connects companies directly to renewable energy sources, working with existing Ofgem-regulated utility partners rather than applying for supply licences themselves. Ultimately, Tem aims to help companies avoid so-called “big energy” and their high prices, making it easier to meet climate targets.
“We see ourselves as the UK's first 'new utility company,'” Tem co-founder and CEO Joe McDonald told TechCrunch in an email.
Tem, which was founded in 2021, announced on Wednesday that it had raised £10.5 million ($13.7 million) in a Series A round led by European venture capital firm Atomico, which earlier this week closed two funds totaling $1.24 billion. The investment comes as countries across Europe and the rest of the world aim to reduce their carbon emissions and become “climate neutral” by 2050. The UK in particular has committed to reducing greenhouse gas emissions “by at least 100% of 1990 levels” within the next 25 years.
At the same time, rising oil and gas prices have highlighted the need to find alternative solutions to fossil fuels.
In addition to McDonald, Tem's founding team includes Chief Technology Officer Bartlomiej Szostek, Chief Commercial Officer Jason Stocks and Ross McKay. The three met at Limejump, a startup that was using big data to revolutionize the UK energy market, where the seed for Tem was sown.
“I've worked in the energy industry for over 12 years, and in that time the winners and losers in the energy market have remained largely the same,” says MacDonald. “Small businesses who buy from the big energy companies have always faced high fees, volatility, and no guarantee of true renewable energy. They're locked into a system that doesn't put people first. The lack of affordable clean energy is one of the biggest challenges for both businesses and the planet. We wanted to give every business access to the renewable energy they need, forever.”
New Energy
Tem's platform matches businesses' energy requirements with suitable renewable energy generators using an “AI matching algorithm” that predicts energy demand and supply for buyers and sellers in the startup's network. The company provides its own pricing and billing system, customer service, and an interface where customers can select their renewable energy priorities, their desired contract term, and view data on their power consumption and energy sources.
TeM currently claims to have around 200 customers, including Silverstone, home of the British Grand Prix.
Tem Platform Image credit: Tem
The startup operates a network of more than 50 renewable generators, including everything from solar and wind farms to anaerobic digestion plants like those offered by British biogas power company BioDynamic.
While companies can technically transact directly with many of these renewable energy sources, this typically involves long-term power purchase agreements (PPAs) and complex, costly administration that only works in practice for the largest companies.
In such a complex system, [power purchase] “Contracts can be hundreds of pages long, take months to negotiate and cost hundreds of thousands of pounds,” says MacDonald. “Plus, it only works for very large companies that use lots of energy, as the customer has to buy all the energy the generators produce. That's fine for giants like Google and Amazon, but what about the other 99%?”
Tem charges a “floating” percentage for each transaction but won't disclose what determines that percentage, though McDonald noted that energy prices are typically at least 10% lower than the wholesale market and can be up to 25% lower.
Tem could apply for its own supply licence and become a completely independent supplier, as some neobanks have done in the banking industry, but MacDonald says partnering with a third-party licence holder like P3P Partners allows the startup to focus on its raison d'être.
“we could [apply for a license]”But our focus is not on becoming a licensed utility, but on transforming the technology and buying and selling experience,” he said. “We believe that for our model to be at its full potential, it needs to go beyond individual market consolidation.”
current situation
Outside of the big energy companies and established wholesale markets, a number of young companies have emerged to tackle this exact problem: in Germany there are companies like Trawa, which recently closed a €10 million funding round, and in the UK there are companies like Al Gore-backed Octopus Energy, which bought renewable energy rival Valve, which collapsed in 2022 due in large part to high wholesale prices.
Tem says this is one thing that sets it apart from its competitors: Bulb was pitching itself on the premise that it would source its energy from renewable or offset sources, but in reality it was doing so through traditional electricity markets.
“The recent energy crisis has led to several company failures and created brand trust issues associated with energy start-ups,” MacDonald said. “But the reason many new suppliers fail is because they operate on a traditional utility model in the wholesale market, exposing them to large volatility and high transaction costs. We mitigate these risks with a carefully balanced engine that matches companies directly with generators.”
Tem's Series A round was led by lead investor Atomico, along with participation from AlbionVC, Revent and angel investors including Holly and Sam Branson, and Wise executives Harsh Sinha and Nilan Peiris. Tem has raised £13 million ($17 million) since its founding.
The company currently operates only in the UK but has its sights set on international expansion over the next few years and the new funding will help with those plans.
“The focus will initially be on Europe, particularly Germany and the Nordics, and then on markets with aggressive renewable energy targets, such as the United States,” MacDonald said.