Why we’re excited about Gridcog
By Adam Chirkowski
Posted
We are delighted to announce that AlbionVC has led the £3.3m Seed round of Gridcog, a distributed energy resource (DER) modelling platform which provides customers across the energy value chain with the ability to accurately analyse, design, invest in and track their clean energy projects.
In 1935 the UK’s National Grid became the world’s first integrated national electricity grid. The rest of the world followed suit, setting up similar systems enabling a small number of fossil fuel based, large power stations to distribute energy to the outer reaches of each region over progressively decreasing voltage power lines.
This system worked well; business and households could largely rely on their energy supply to keep the lights on and keep their homes warm. Unfortunately, it turned out that this system was also playing a major part in the destruction of the planet through climate change and that if something wasn’t done to address it, any hopes of achieving net zero would be out of the window. The world needed to start shifting away from centralised fossil fuel generation to more decentralised renewable, cleaner forms of energy generation for the survival of the planet.
Enter the energy transition.
The energy transition is no less than a global revolution which is effectively turning the energy systems of the world on their heads. Rather than small numbers of large, centralised power stations, clean energy requires high numbers or smaller scale renewable energy generating assets which are geographically distributed all over the place. From wind power, both off and on shore, solar power in fields and on rooftops across the world, to hydro projects in remote areas, these projects feed into the grid in thousands of places.
Herein lies a problem. The grid was set up to take power from those large power stations and flow it outwards, not to take power from all over the shop. As more and more renewables come online, it is struggling to cope.
The result? Grid constraints, curtailments, negative pricing, and queues for grid connections stretching out for years. For those that have invested, or are looking to invest in renewable energy projects, be it large utility scale projects, smaller behind the meter projects, this poses real problems. The assumptions needed to build investment cases for projects are blown out of the water by these dynamics. They block the ability to sell the amount of power expected at the prices expected, which means returns dive and ‘bankability’ goes with them.
So, how is it addressed? One of the trends is for the co-location of different DERs on the same site becoming the new norm. No longer do you just build a solar array, or a wind project on its own, but pair it with a battery to enable the flexibility to store, use or sell power when it makes the most economic sense. What’s more, given the rise of EVs, it’s also becoming common for behind the meter projects to also add EV charging infrastructure on site to enable the electrification of fleets.
The problem then becomes that, as each project becomes more and more intricate and complex with different types of DERs working in sync, modelling how each of these systems work together, what types of systems are optimal for any given site, or which site is best attributed to benefit from these systems has become equally as complex an exercise.
When you also consider the different commercial flows for a project (ownership, PPAs, offtake agreements etc), and that all of these factors are interacting with dynamics energy markets, the complexities involved in finding the most investable solutions increase exponentially.
The traditional approach has been to spend a large sum of money building large scale excel models to try and chew through as much scenario modelling as possible. However, the reality is that the complexity of these projects has exceeded the practical capabilities of excel spreadsheets. Afterall, excel only has so many rows & columns, like the grid itself it is struggling to cope and so this process has become arduous, expensive and inaccurate.
This is where Gridcog comes in.
Gridcog’s intelligent technology platform enables multi-market, multi-site, and multi-asset energy project simulation, optimisation, and tracking. It enables energy players across the chain to design the optimal DER set up for a site or choose which sites are most amenable. This enables customers to better understand the ensuing cashflow potential and therefore form more accurate investment profiles. They can then continuously track whether these projects are performing as anticipated, identify situations where they aren’t, understand why and adjust them accordingly.
Given the complexities involved, you’d be forgiven for thinking that an engineering degree would be required to use something like Gridcog’s platform, let alone understand the outputs. However, Gidcog puts user experience at its core ensuring that it’s easy to pick up for organisations and users of all types and backgrounds.
This is important. The energy transition is ensuring it’s not only the energy incumbents and experts are the ones considering these projects. It is making energy players of companies for whom, up until now, energy was simply a cost line in the P&L. Building managers, logistics companies, manufacturers and many more are starting to take energy into their own hands to electrify their businesses, generate on-site and ensure they have the infrastructure to charge their EV fleets.
As a result, Gridcog’s potential customers are numerous and continue to expand as the transition continues to scale. That means addressing what are already large markets, that are growing into massive potential markets across the world.
Energy as a sector is so fundamental to the world in which we live that it’s vast in terms of scale and value. However, counterintuitively, the number of people who truly understand how it works and all its complexities, is relatively small. But deep domain expertise is essential here; in order for a start up to successfully disrupt the energy space, they first need to understand how it works.
The Gridcog team certainly ticks that box. Fabian and Pete have been involved in energy for the past two decades and have one successful EnergyTech business under their belts already. They have the knowledge, vision and drive to address the opportunity on a global scale. Backed up by Genna with her background at Limejump and many of the pieces are in place for a very exciting journey ahead.
Adam Chirkowski, Investment Director
2023 marked the first year that the UK generated more power from renewable sources than it did from fossil fuels, a trend which is only set to accelerate over the coming decades. The transition is underway, it’s happening as we speak, and Gridcog have the potential to create a category leader as part of the biggest and fastest infrastructure replacement project in history and help to advance clean energy investments.
Vive la revolution.
