As artificial intelligence data centers contribute to rising electricity prices, a London-based startup named Tem believes AI can also be part of the solution. Tem has developed an energy transaction engine that uses AI to secure lower prices compared to traditional energy traders. The company has already attracted over 2,600 business customers across the U.K. with the promise of saving up to 30 percent on their energy bills by purchasing through its utility division.
Tem recently secured an oversubscribed 75 million dollar Series B funding round. The investment was led by Lightspeed Venture Partners and included participation from AlbionVC, Allianz, Atomico, Hitachi Ventures, Revent, Schroders Capital, and Voyager Ventures. This financing round values the startup at over 300 million dollars. Tem plans to use the new capital to support its expansion into Australia and the United States, beginning with the Texas market.
The company’s co-founder and CEO, Joe McDonald, explained that while Tem could have remained a profitable bootstrap business, the team has larger ambitions, including a future public listing. Tem operates as a marketplace, connecting electricity generators with consumers. It initially focused on renewable energy generators and small businesses to build both sides of its platform. According to McDonald, a more decentralized and distributed energy landscape is ideal for its algorithms, though the system also scales to serve large enterprise clients. Notable customers include the Boohoo Group, Fever-Tree, and Newcastle United FC.
Tem currently runs two interconnected businesses. The first is Rosso, the AI-powered transaction engine that matches suppliers with buyers. Machine learning algorithms and large language models forecast supply and demand. McDonald states that Rosso aims to reduce costs by eliminating multiple intermediary layers present in conventional energy markets, thereby bringing the price customers pay closer to the wholesale cost.
The second business is RED, a neo-utility created to demonstrate the value of the Rosso platform. After initially struggling to sell its infrastructure to established energy companies, Tem launched RED as its own utility, which is currently the sole user of the Rosso engine. The rapid growth of RED has led the company to prioritize it over licensing Rosso to other utilities in the short term.
However, the long-term vision remains to open the Rosso infrastructure to other utilities. McDonald acknowledges that no single utility should hold a monopoly, and Tem’s ultimate goal is to become a foundational infrastructure provider for the energy market. He compares the ambition to companies like AWS or Stripe, emphasizing that Tem aims to facilitate transactions regardless of who owns the customer or the generation assets.