While the energy transition is often associated with simply building more solar panels and wind turbines, the recent large-scale blackout in Spain exposed a crucial but often overlooked truth: a successful energy transition is not just about generating more renewable power, but also about ensuring that the electricity grid can keep pace with this transformation. When an unforeseen grid failure triggered the blackout in Spain, tens of millions of people were left without access to electricity and had to experience the severe consequences firsthand: mobile communication collapsed, businesses shut down, flights were grounded, and access to critical healthcare services was disrupted. To prevent an increased number of similar events in the coming years, our electricity grid must be robust, flexible, and intelligent enough to handle the rising complexity, volatility, and demand of a fully electrified future.

Our European electricity grid is one of the most vital systems underpinning modern society. It powers not just our homes and hospitals, but also our factories, transport systems, and increasingly, our digital lives. With such high relevance and responsibility, it's no surprise that the grid is vast, complex, and capital-intensive. Today, the European electricity grid connects over 266 million households and companies, spanning 11.3m km of lines, enough to encircle the Earth 282 times (ECA). But even systems as fundamental as the grid are not spared from change. As we enter a new era marked by electrification, digitalization, and decentralization, the grid is under mounting pressure, and its limitations are starting to show.

The state of the European electricity grid

We currently see five key long-term developments substantially shaping the future of the European electricity grid:

• Electrification: Electricity demand across Europe is projected to increase by 60% by 2030 (European Commission), largely driven by the electrification of transport, heating, and industrial processes. This surge will place unprecedented stress on grid infrastructure, risking congestion and reliability issues if grid reinforcement fails to keep pace.
• Complex Load Patterns: The growing number of electric vehicles, heat pumps, and smart appliances is creating highly volatile and localized demand patterns. With over 50 million EVs expected by 2030 (EnerData), unmanaged peaks could strain local grids and trigger outages.
• Fluctuating Generation: Renewable energy sources like wind and solar, currently supplying 22% of Europe's electricity, are expected to exceed 40% by 2030 (EIB). Their intermittency introduces volatility that could compromise grid stability without adequate forecasting and flexibility.
• Bidirectional Energy Flows: The growing adoption of rooftop solar, home batteries, and electric vehicles is transforming the grid into a dynamic two-way system. Traditional infrastructure was designed for one-directional flows, so adapting operations is now essential to avoid instability and the inefficient use of energy.
• Interconnection Queues: Approximately 1,700 GW of renewable energy projects across 16 European countries are currently awaiting grid connection due to limited grid planning capacity, lengthy permitting procedures, and slow, manual interconnection study processes. This backlog is more than three times the capacity additions needed to meet the EU's 2030 energy and climate targets, posing a serious threat to Europe’s clean energy transition (Beyond Fossil Fuels).

The above-described long-term developments create an urgent need for innovative, scalable solutions that can help modernize the grid without rebuilding it from scratch. It needs to be smarter, more resilient, and more efficient than ever before. That's exactly where GridTech comes in - technology that enhances grid planning, operation, and flexibility, enabling the electricity system to meet future demands with greater intelligence and agility.

Market Map

To provide an overview of the current startup ecosystem in GridTech, we’ve broken down the market along two major dimensions: 1) Grid Buildout Software and 2) Grid Management Software.

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Grid Buildout Software

Grid buildout software refers to digital tools that support the physical expansion of our electricity grid. As demand for electrification grows and renewable energy projects scale, the need for smarter, faster, and more cost-effective grid buildout solutions has become critical. We see startups in this space primarily coming from three angles: 

1. Interconnection, demand, and capacity modelling
2. Expansion planning
3. Grid capacity/energy flexibility-as-a-service.

1. Interconnection, Demand, and Capacity Modeling: Understanding electricity demand and grid headroom

To expand the grid and connect new energy sources like EV chargers, companies use interconnection, demand, and capacity modeling tools. These platforms are used by developers, DSOs, and TSOs to assess where generation or loads can be added without causing local overloads or violating grid code requirements. Some startups working in this space include Gridmo and Nira Energy. While Gridmo and Nira Energy concentrate on interconnection studies specifically for the electricity grid, companies like AlphaGrid and ElectroTempo focus on modeling the balance of demand and supply for EV charging stations. While these solutions may seem highly specific, the market is sizable as tens of thousands of interconnection studies are conducted across Europe each year.

2. Expansion Planning: Guiding efficient grid investments

Expansion planning tools are essential for managing the full lifecycle of grid expansion and renewable energy projects. These platforms typically combine project management features with tools for optimal site selection, financing workflows, and risk assessment. A great example of startups in this area is the YC-backed Astro Energy. Their main product is an AI-powered platform that analyzes thousands of data points related to power markets, permits, and environmental factors to pinpoint the best locations for renewable energy projects. While Astro Energy follows a more horizontal approach, simplifying planning for a range of renewable energy projects, other providers like PVcase are building more verticalized solutions, for example, focusing solely on photovoltaic project development.

3. Grid Capacity / Energy Flexibility-as-a-Service: Unlocking flexibility to ease grid stress

Even though they work in a fundamentally different way than the previous two areas, energy flexibility-as-a-service solutions also help us increase our grid capacity. These platforms provide energy flexibility to a wide range of users without the need for any CapEx investment, either by connecting and marketing existing battery capacity like Terralayr or by developing and financing battery storage projects for their clients like Scale Energy, which are making significant strides in this space. Scale Energy specializes in deploying fully financed battery systems at industrial sites, leveraging underutilized grid connections to provide grid services such as congestion relief and balancing energy.

Grid Management Software

Grid management software refers to solutions that optimize the operation, maintenance, and reliability of our existing electricity grid. Startups we have seen in this category typically fall into five areas: 

1. Monitoring / Maintenance
2. Analytics
3. Asset Management / Connectivity 
4. Forecasting 
5. Grid- and asset optimization 

1. Monitoring / Maintenance: Keeping a close watch on the grid

Monitoring / Maintenance tools use sensors, drones, satellite imagery, and AI-powered vision systems to detect faults, identify vegetation risks, and enable predictive maintenance for electricity grids and assets. Within this category, there are both purely digital solutions that analyze existing data streams (e.g., Eneryield, Safegrid) and hardware-enabled ones that collect new data through proprietary sensor systems. One interesting approach is followed by Hylight, which uses hydrogen-powered drones equipped with high-precision sensors to inspect overhead lines efficiently and with minimal emissions.

2. Analytics: Turning Data into actionable insights

These platforms act as the grid's intelligence hub, ingesting data from various sources like SCADA systems, smart meters, substations, and weather feeds to generate actionable insights on grid health and performance. By analyzing this data, utilities can identify congestion risks, power losses, voltage violations, and areas of high carbon intensity, enabling them to make data-driven decisions to improve grid efficiency and reliability. A standout example is Thinklabs, which offers a digital twin of the electricity grid that tracks power flow, congestion, and voltage violations in real time.

3. Asset Management & Connectivity: Unifying control in a fragmented landscape

A key challenge in today’s energy systems is that each asset, like a battery, solar panel, or EV charger often comes with its own software, making it difficult to connect and manage everything together. In light of this, we’ve seen the rise of Asset Management & Connectivity solutions that help unify control across different energy devices. Companies like HEAT offer easy-to-use control software that works with energy assets from various manufacturers, simplifying the setup, monitoring, and operation of hybrid energy systems. This allows installers to manage all components in one place, reducing complexity and improving overall efficiency.

4. Forecasting and Grid and Asset Optimization: Predicting the future and taking action

Forecasting solutions are crucial for anticipating how energy systems will behave in a rapidly changing environment. These platforms provide short- and long-term predictions for electricity demand, solar and wind generation, and overall grid conditions. Accurate forecasting is essential for grid stability and cost efficiency, especially as the adoption of variable renewable energy sources increases.

Startups like Jua and Balun are aiming to disrupt the legacy forecasting landscape. Jua focuses on ultra-accurate weather forecasting using physics-informed AI models, while Balun provides production forecasting tools for wind and photovoltaics companies based on SCADA data and weather information.

5. Grid and Asset Optimization: Taking action for a more efficient grid

While forecasting tells us what to expect, the next logical step is acting on that information. That’s where Grid and Asset Optimization solutions come in. These tools go beyond monitoring and prediction by automating operational decisions, improving performance, reducing costs, and ensuring system stability across the grid. One notable startup in this space is Keeling Labs, which is building optimization software to autonomously manage and improve the operation of grid-connected assets. Their tools aim to help grid operators, asset owners, and energy service providers make smarter, faster decisions by continuously analyzing system conditions and recommending or executing optimal actions.

Remaining challenges and potential of agentic AI

Our market map illustrates that many promising companies have already set out to solve the complex problems of our electricity grid. From expansion planning and forecasting to asset management and optimization, a wide range of solutions is emerging. However, significant hurdles remain, including modernizing aging infrastructure, managing the impacts of climate change, and ensuring robust cybersecurity in an increasingly digitalized system.

Addressing these issues will require not only better tools but also smarter, more autonomous systems. This is where the potential of agentic AI comes into play. Despite the growing buzz around AI agents, the grid space has been slow to adopt fully autonomous systems. The risks are high, and mistakes can mean blackouts. But the potential is enormous: AI agents that handle forecasting, dispatch, and optimization autonomously could massively increase efficiency and lower costs. So far, only a handful of startups are exploring agentic AI-first approaches in the grid. But with increasing data availability and improved models, this could be the next frontier.

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As investors deeply interested in the evolution of GridTech, we believe the convergence of energy infrastructure and AI presents one of the most exciting opportunities in Europe’s energy transition. If you are a European startup building something in the GridTech space, whether you are at the ideation stage or have already validated your product in the market, we are eager to connect with you: johanna.junkermann@b2venture.vc

A huge THANK YOU to our Visiting Analyst, Paul Schmidt, for his significant contributions to this deep dive!

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