London-based energy technology company Tem has raised $75 million in fresh funding as it looks to expand internationally and accelerate the rollout of its AI-driven platform designed to cut business electricity bills by up to 30 per cent.
The funding round was led by Lightspeed Venture Partners and is understood to value the four-year-old company at around $300 million. Tem plans to use the capital to further develop its technology and scale its operations in the US.
Founded in 2021, Tem has built a platform it calls “Red”, described by the company as a neo-utility that uses artificial intelligence to match electricity supply and demand directly, bypassing the wholesale market and its multiple intermediaries.
Joe McDonald, Tem’s co-founder and chief executive, said the aim was to remove what he described as unnecessary “middle men” from the energy system. “We calculate that about $1 trillion is taken out every year in transaction fees by ‘Big Energy’,” he said. “Our mission is to take that cost of transaction down to zero.”
Tem’s software is already being used by around 2,600 businesses, including Boohoo and Fever-Tree, to reduce electricity costs. Since launching Red in November 2024, the company says it has saved customers $35 million in energy bills. Two schools have also signed up, with one saving £55,000 a year, according to Tem.
McDonald said the inefficiencies of the current system made disruption inevitable. “I don’t see why every single electricity transaction won’t be run by infrastructure like ours over the next ten years,” he said. “There is too much inefficiency in the outdated process that 99 per cent of transactions currently rely on.”
Tem was founded by a team of energy specialists including Jason Stocks, Bartlomiej Szostek, Ross Mackay and McDonald. The latest raise takes total funding to $94 million, with existing investors including Hitachi Ventures and Atomico.
McDonald said Red had been launched partly to demonstrate what Tem’s technology could achieve. Over the longer term, the company plans to license its platform to utilities globally to reduce their cost per transaction. Two utilities are already using the software, although Tem has declined to name them.
“At the heart of the problem is the energy transaction itself,” McDonald said. “If I’m a business buying electricity, I’m typically paying 25 to 30 per cent 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 says it has facilitated around two terawatt hours of electricity transactions so far, roughly equivalent to powering Liverpool for a year. Its Red service is run by two AI agents supported by a team of just four people.
“A traditional utility would need around 170 staff to serve the same number of customers,” McDonald said. “That shows how technology infrastructure can transform efficiency, while also improving the customer experience.”
With energy costs still a major concern for UK and international businesses, Tem is betting that AI-driven infrastructure, rather than incremental reform, will reshape how electricity is bought and sold.
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AI energy start-up Tem raises $75m to cut business power bills