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Philip Mann was burned. He had started a watch trading company with his roommate, but the work was exhausting him.
“We’ve been doing this for ten years,” Mann said. “It’s very difficult to stay motivated when you know that the main reason you’re in business is to sell expensive things to rich people.”
He had previously been a jet fuel trader at Glencore – “the evil side of energy,” he said – and felt drawn back into that world. “I wanted to get back into energy, and do something that has a real impact, for profit, but helps the planet.”
Climate seemed like an obvious starting point. Germany, his home country, was awash with wind and solar power, and as the country retired nuclear power plants, it needed a way to keep the grid running on calm, cloudy days.
Grid-scale batteries help provide power generated from renewable sources for just such days, and have boomed in recent years, with global capacity tripling in 2023. According to To BloombergNEF. The company’s analysts also expect capacity to nearly triple before the end of the decade.
“Although this industry is still nascent, it has been built the wrong way,” Mann said. “Today, people make a battery, and then someone else replaces it.”
Alternative Man, which took shape as a startup called Terralayeris an evolution of the virtual power plant, which is what experts call when energy traders collect batteries and manage their use. Terralayr is similar to AWS, Amazon’s cloud service that pools computing resources and sells parts of them, he said. “We assemble grid-scale energy storage assets, aggregate them, virtualize them, and then sell the capacity in 15 minutes to 15 years,” Mann said.
AWS has transformed enterprise computing, allowing companies to run servers without owning hardware and scale them quickly as needed. In some ways, virtual power plants do the same thing. Grid-scale battery owners can sell their capacity to dealers, who then aggregate that capacity to the point where it makes sense to play in large electricity markets.
Terralayr also manages batteries, both its own and others, but Mann said the difference is that it does not operate as a trader, but more like an exchange. “Our pitch is like we are not traders. We do not trade at all. In fact, we will only find the best buyer for your ability.”
The startup charges battery owners a “small percentage” fee based on revenue. If Terralayr can operate the battery more profitably than the competitor, that will also take a slice of the upside. (How is this determined? Mann said the company uses a model, built in part using past quotes provided by its clients, that predicts what a typical trader will do.)
For buyers, energy trading allows them to fill gaps in their production. For a place like Germany, where Terralayr is starting out, energy providers need to forecast how much electricity they will generate in the next 24 hours. If they fail to match their predictions – such as if a freak thunderstorm covers their solar farm – they can be punished. By taking advantage of a battery pack that sells power at the same time, they can bridge the gap and avoid costly penalties.
Terralayr currently has seven megawatt-hours of capacity on the grid with another 40 megawatt-hours scheduled to become operational soon, Mann said. The startup has signed development agreements for more than 200 sites in Germany totaling more than seven gigawatts, or about 3% of Germany’s production. Total generating capacity. He added: “This is a horizon that extends from five to ten years.” Of those 7 gigawatts, not everything will be delivered.”
To fund the expansion, Terralayr has raised €62 million of equity and €15 million of debt from investors including Creandum, Earlybird, Norrsken VC, Picus Capital and Rive Private Investment. “I wouldn’t call it a seed round, but that’s what it is technically,” Mann said, adding that “seeds may falsely suggest the start of a business.”
While Terralayr is focused on Germany for now, Mann said the company is eyeing U.S. markets, especially California and Texas. “We believe this is a generational opportunity,” he said.
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