SFV’s Investment in Piclo
We are excited to announce that we have participated in Piclo’s Series B financing round. With Piclo, electricity grid operators can leverage the demand-side flexibility of buildings, vehicles, and industry to manage local grid constraints caused by intermittent renewables and newly electrified sectors.
By Matthew Chagan and Reid Carroll
Earlier this year we published our thoughts on why the transformation of the grid will be a key to the decarbonisation of the built environment, as well as our take on the various technologies vying to transform the grid.
We’re now excited to introduce our first investment in the space: Piclo.
We believe that the majority of grid operators globally will need to leverage demand flexibility. This is both a function of regulation and economics, as “shifting” demand is faster and cheaper than upgrading physical grid infrastructure. In the UK, Ofgem has mandated that DSOs utilise flexibility for this very reason.
The problem? Demand flexibility is complex to orchestrate:
- The number of DERs (Distributed Energy Resources) is growing exponentially, and dispatching millions of devices is completely different than the legacy workflow of dispatching a few “peaker” plants.
- More wind and solar based energy means more uncertainty around when exactly flexibility will be needed. Flexibility procurement will need to be dynamic (i.e. close to real time) for it to be a long term and scalable solution.
- Demand flexibility needs to be locational, as constraints are increasingly moving to the distribution (local) level of grids.
The vast majority of grid operators will be unable to manage this complexity internally, which presents a great opportunity for external software solutions — “Flexibility Marketplaces”, as we’ve called them in our market map.
Many of these companies have been around for 8 or more years, as becoming a trusted solution for grid operators requires years of pilots, product refinement, and trust building. The upside of this is that it also provides a high barrier to entry for new players.
This inherent defensibility, combined with regulatory tailwinds and a few recent landmark commercial deployments made this one of our favourite sub-sectors.
We think that Piclo is in a particularly strong position, and are thrilled to be backing the company for a number of reasons:
Piclo is a market leader in a risk averse sector
Piclo has won landmark commercial contracts to deploy dynamic flexibility marketplaces with some of the largest grid operators in the UK and Europe. In an industry with minimal tolerance for risk, being a first mover — first to build credibility, first to work through the intricacies of an at-scale deployment — puts Piclo in a position of great strength going forward.
Regulations and grid constraints are leading to action, and Piclo is playing a major role
Demand flexibility as a market has been notoriously slow to develop — industry experts were predicting inflection points as far back as ten years ago.
Today, thanks both to regulations and a steep increase in the penetration of intermittent renewables, grid operators are finally being forced into action. We are aware of flex market procurement processes underway with grid operators in at least a dozen countries, and Piclo is primed to accelerate this market growth by demonstrating the effectiveness of their platform with some of the largest grid operators in the world.
The company is led by a team of thought leaders
Piclo has been procuring flexibility on behalf of grid operators for a number of years, and nobody in the world knows the ins and outs of the market better than CEO James Johnston and his co-founders Alice Tyler and Andy Kilner.
We are joined in this round by Future Energy Ventures, Clean Growth Fund, Toshiba, Green Angel Syndicate, and Japan Energy Fund. We’re excited to support James, Alice, Andy, and the rest of the team as they tackle their ambitious goals for 2023 and beyond.
