Tem Raises $75M to Use AI & Cut Energy Costs for Businesses | TechCrunch

As demand from AI data centers strains electricity grids and drives up prices, a London-based startup called Tem is betting that artificial intelligence can also be part of the solution. The company has developed an AI-powered energy transaction engine designed to cut costs and increase efficiency in electricity markets, and has just secured February 9, 2026, a $75 million Series B funding round.

Tem’s approach centers around a marketplace model, directly connecting electricity generators with consumers. This isn’t a new concept, but Tem differentiates itself through the extensive use of AI and machine learning to optimize transactions and reduce the number of intermediaries traditionally involved in energy trading. The company currently operates two core businesses: Rosso, the AI-driven transaction engine, and RED, a “neo-utility” built to demonstrate the value of the Rosso platform.

According to Joe McDonald, co-founder and CEO of Tem, the traditional energy market is burdened by layers of fees and markups. “In each of them, you’ve got different teams doing different jobs, taking different levels of profit from back office to trading, trading desks to other trading desks, and probably five to six intermediaries in total that enable the flow of money to move from one side to the other,” he explained to TechCrunch. Rosso aims to eliminate these layers by leveraging AI to automate processes and reduce labor costs, bringing the price paid by consumers closer to the wholesale cost of electricity.

The technology underpinning Rosso utilizes machine learning algorithms and Large Language Models (LLMs) to predict supply and demand, facilitating more efficient matching of generators and consumers. This predictive capability is particularly valuable in a market increasingly influenced by the fluctuating demands of AI data centers. The more decentralized the energy sources and consumers, the more effective the algorithms become, McDonald noted, but the system is designed to scale from small businesses to large enterprises.

RED, the company’s neo-utility, was born out of an initial struggle to sell the Rosso infrastructure directly to existing energy companies. “When we first started, we tried to sell our infrastructure to the energy companies, and we got nowhere,” McDonald said. RED currently serves as the sole utility utilizing Rosso, and its success has led Tem to prioritize its growth over immediately opening the platform to other utilities. However, the long-term vision involves expanding access to Rosso, recognizing that a single utility dominating the market would create a new form of monopoly.

“Long term, we really don’t mind who owns the customer, who owns the generation as long as our infrastructure is being used,” McDonald stated. He draws a parallel to infrastructure-as-a-service providers like Amazon Web Services (AWS) and Stripe, positioning Tem as a foundational layer for the future of energy trading. “Here’s just an infrastructure play in the same way AWS was, or Stripe was.”

Tem has already gained traction in the UK market, serving over 2,600 business customers. These include prominent names like fast-fashion retailer Boohoo Group, soft drink company Fever-Tree, and even Newcastle United Football Club. The company claims customers can save up to 30% on their energy bills by utilizing its services. This cost savings is achieved by removing markups and providing greater transparency into energy pricing, breaking down charges line by line on customer bills.

The $75 million Series B funding round, led by Lightspeed Venture Partners with participation from a diverse group of investors including AlbionVC, Allianz, Atomico, Hitachi Ventures, Revent, Schroders Capital, and Voyager Ventures, values Tem at over $300 million. The company intends to use the funding to expand its operations to Australia and the United States, with a particular focus on the Texas market. This expansion signals Tem’s ambition to become a significant player in global energy markets.

While Tem’s focus currently leans heavily towards renewable energy generators and small businesses, the platform is designed to accommodate a broader range of energy sources and customer sizes. The company’s RED utility provides a real-world testbed for the Rosso infrastructure, demonstrating its capabilities and paving the way for wider adoption. The success of this model will likely determine whether Tem can truly “remake electricity markets” as it intends, or simply become another player within the existing system.

The company’s billing system, built on half-hourly meter data, aims to provide customers with predictable pricing and eliminate surprises. This contrasts with traditional energy bills that often bundle charges together, making it difficult to understand the true cost of electricity. By providing detailed breakdowns and transparent pricing, Tem hopes to build trust and empower businesses to make informed energy decisions.