London-based energy technology company Tem has raised $75 million in new funding to expand internationally and accelerate the rollout of its AI-driven platform designed to reduce businesses’ electricity bills by up to 30 percent.
The funding round was led by Lightspeed Venture Partners and is expected to value the four-year-old company at around $300 million. Tem plans to use the capital to further develop its technology and expand its operations in the US.
Founded in 2021, Tem has built a platform called “Red,” which the company describes as a neo-utility company that uses artificial intelligence to directly match electricity supply and demand, bypassing the wholesale market and its numerous intermediaries.
Joe McDonald, Tem’s co-founder and chief executive, said the goal was to remove what he called unnecessary “middlemen” from the energy system. “We estimate that ‘Big Energy’ earns about $1 trillion in transaction fees each year,” he said. “Our mission is to reduce transaction costs to zero.”
Tem’s software is already used by around 2,600 companies, including Boohoo and Fever-Tree, to reduce electricity costs. Since launching Red in November 2024, the company says it has saved its customers $35 million in energy costs. Tem says two schools have also signed up, with one saving £55,000 a year.
McDonald said the inefficiencies of the current system made disruptions inevitable. “I don’t understand why every single electricity transaction in the next ten years shouldn’t be processed through an infrastructure like ours,” he said. “The outdated process that 99 percent of transactions currently rely on is too inefficient.”
Tem was founded by a team of energy specialists including Jason Stocks, Bartlomiej Szostek, Ross Mackay and McDonald. The latest capital increase brings total funding to $94 million. Existing investors include Hitachi Ventures and Atomico.
McDonald said Red was created in part to demonstrate what Tem’s technology could do. Longer term, the company plans to license its platform to utilities around the world to reduce their costs per transaction. Two utilities already use the software, but Tem declined to name names.
“The heart of the problem is the energy transaction itself,” McDonald said. “When I buy electricity as a company, I usually pay 25 to 30 percent more than the cost at which it was produced. This is because the transaction goes through up to seven intermediaries, each of whom receives a share.”
Tem says it has enabled around two terawatt-hours of electricity transactions so far, which is roughly equivalent to powering Liverpool for a year. The Red service is powered by two AI agents supported by a team of just four people.
“A traditional utility would need about 170 employees to serve the same number of customers,” McDonald said. “This shows how technology infrastructure can increase efficiency while 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 transform the way electricity is bought and sold.
