Investing in Climate 2/5 : Why Energy Efficiency Still Matters
Written by Liselotte Forgeot & Paul-Adrien Marie
This article is the second in our deep dive into climate investing, following our initial exploration of how leading impact funds like Breakthrough Energy and LowerCarbon Capital approach the energy sector. Our goal: understand how investors and founders can most effectively drive decarbonisation.
As we explained in our last article, the energy space can be broadly divided into four key verticals: Energy Management, Renewables, Storage, and Fusion. We start with the most mature and active field for VC-backed innovation: Energy Management.
Energy management means using less energy through better monitoring and controls, a relatively mature sector with proven solutions. But a new wave is emerging: energy flexibility. Instead of just reducing consumption, it’s about using energy in smarter, more adaptive ways, aligning demand with supply. And this segment is booming.
By making consumption smarter, more flexible, and better aligned with supply, we reduce emissions, enhance resilience, and unlock hidden capacity , without building a single new power plant. In today’s volatile energy markets, that’s never been more urgent.
Energy Management: Optimising Energy Consumption
What it means
Energy management is about using tech and data to control how, when, and where electricity is used , in real-time. Think of it as giving buildings and factories a brain: sensors monitor usage, software identifies waste, and automated controls reduce consumption without compromising comfort or performance.
The aim: spend less energy to do the same job.
Examples include:
- Smart meters that track usage minute-by-minute
- Software that identifies energy-saving opportunities
- Automated controls for lighting, heating, cooling, and machinery (e.g. smart thermostats, lighting controls)
- Multi-site optimisation for large real estate portfolios
It’s a straightforward equation: better insights = better decisions = lower emissions & lower bills
Why it matters
Energy management is mature and growing. The first generation of startups launched over a decade ago, with many now acquired by energy majors (e.g., EnerNOC by Enel to form Enel X). Home energy apps, building efficiency tools, and B2B optimisation software are widely deployed.
Yet there’s still room for innovation. As energy prices spike and carbon targets tighten, demand for smarter, more automated, and more scalable solutions continues to rise.
Who’s leading the way
The energy management market today is still dominated by large industrial players such as Engie, EDF, Schneider Electric, and Veolia in France, who offer integrated energy services across monitoring, optimization, and efficiency. These incumbents also provide extensive consulting and advisory missions to help enterprises and municipalities design and implement energy strategies, leveraging their scale and grid connections.
That said, the market remains fragmented and far from winner-takes-all, leaving substantial room for startups to disrupt with agility and software-driven innovation. A few notable examples include:
- Voltus (US, 2016) — A demand response and energy management startup serving commercial and industrial clients. Voltus enables customers to reduce or shift their power consumption during peak periods, monetizing this virtual capacity through energy markets. The company grew rapidly, at one point pursuing a SPAC IPO at a $1.3B valuation, and offers a software platform for demand response, energy procurement, and efficiency programs.
- Enel X (Italy, 2017) — Formed by Enel’s acquisition of EnerNOC, Enel X exemplifies how a major utility integrates startup DNA to scale globally. It delivers IoT-enabled monitoring, demand response aggregation, EV charging, and efficiency solutions for businesses, empowering C&I customers to optimize consumption and participate in capacity markets.
- Sympower (Netherlands, 2015) — Specializes in industrial load curtailment services across Europe.
- **Uplight** (US, 2019) — Focuses on utility-facing energy savings analytics and customer engagement platforms.
Emerging players like Enode (Norway) act as a backbone for both energy management and flexibility, serving as an energy data aggregator and infrastructure layer. By enabling smarter decisions across different approaches, Enode helps utilities, energy services, and software platforms integrate device-level data for optimization.
Enode competes in a landscape still without a clear leader, alongside:
- API platforms for energy device connectivity (e.g., Arcadia, Smartcar, Re.alto)
- Optimization software providers (e.g., GridPoint, EnergyHub)
- VPP and grid orchestration solutions (e.g., Sonnen, Next Kraftwerke)
Energy management is the first step in energy optimization, focusing on reducing consumption and improving efficiency. Once you’ve minimized usage, the next logical step is to make that usage smarter. This is where energy flexibility comes in, leveraging real-time insights and dynamic consumption to align energy use with grid needs, optimizing both cost and sustainability.
Energy Flexibility: Turning Consumption into a Grid Asset
What it means
Flexibility is about timing. Instead of just using less energy, flexibility means using energy differently, shifting usage to off-peak periods or pausing it during grid stress.
Imagine your building, EV charger, or factory equipment adjusting consumption dynamically to help the grid. Do it at scale (by aggregating several buildings/houses), and you’ve got a virtual power plant.
Why it’s crucial
With renewables rising, electricity supply is less predictable. We need the demand side (consumption) to become just as dynamic as the supply side (generation). Flexibility enables:
- Peak shaving during high demand
- Grid balancing when renewables fluctuate
- Smarter, cheaper & cleaner energy use
Where it stands today
Flexibility is early-stage, but gaining traction fast in the B2B (tertiary) and B2C when industrial demand response has existed for years:
Energy flexibility started as a largely industrial play, with early solutions developed or acquired by major utilities and industrials — like Agregio Solutions (created by EDF), Engie developing in-house, Flexcity (Veolia), Smart Grid Energy (Vinci), and Total Flex. These focused on large factories and energy-intensive sites.
More recently, we’ve seen an acceleration towards B2C and tertiary B2B models, with new players bringing innovation to homes, offices, and commercial buildings, such as:
- Elax Energie, which helps consumers adjust usage in real-time,
- Hello Watt and Mylight Energy providing residential flexibility services,
- Tiko Services (acquired by Engie) enabling smart home flexibility,
- Voltalis pioneering residential heater control,
- and newer entrants like Orus Energy, Tilt Energie, Survoltage, Symphonics, and Energy Pool targeting distributed, smaller-scale loads with software-driven solutions.
Despite the need, energy flexibility is still a relatively nascent segment with respect to startups. Many solutions are in pilot or early commercialization phases, and business models are evolving (energy markets can be complex to navigate for new entrants, and regulatory support varies by country). Investors are now diving deep here because decarbonization makes flexibility crucial — intermittent renewables require a smarter, responsive grid.
The upside is significant: empowering millions of distributed assets to respond to grid signals could unlock vast new capacity for grid balancing, and startups that crack the code stand to become the next generation of energy giants.
What’s new is:
- Aggregating smaller, distributed loads (homes, offices, EVs)
- Enabling real-time response with software + IoT
- Monetising flexibility through energy markets
Real-World Examples in France
France has implemented several innovative market mechanisms to unlock demand-side flexibility and involve businesses in grid stability and decarbonization efforts. These mechanisms create revenue streams for flexibility providers while supporting the grid during peak demand or imbalance events:
- Capacity Mechanisms — French grid operator RTE runs a capacity market where businesses and aggregators are paid to commit flexible capacity that can be curtailed during critical peak periods (notably winter) (up to 60k€/MW, aggregating around 500 houses in France enable to have 1MW flexible capacity). Participants receive a premium for being “on call,” helping ensure security of supply.
- NEBEF (Notification d’Échanges de Blocs d’Équilibrage de Flexibilité) — This unique mechanism allows demand response aggregators to sell verified demand reductions directly on the wholesale electricity market as if they were additional generation. It integrates flexibility into price signals and market clearing.
- Tertiary Reserves (Réserves tertiaires) — These are real-time ancillary services provided by highly responsive loads that help RTE correct frequency deviations on the grid within seconds or minutes. Fast-acting industrial loads or batteries are remunerated for contributing to system stability.
Together, these programs incentivize flexible consumption and integrate distributed resources, making France’s electricity system more resilient, cost-efficient, and low-carbon.
On an individual level, a household utilizing energy flexibility could reduce its electricity bill by up to 10% (150–300€), and even more if it includes a battery (300–400€ in additional savings annually). When combined with solar PV and an effective energy management system (EMS), a household could cut its electricity costs by as much as 60% (1,500€/year). This is the offering Ensol will provide to its clients starting in September, a level of savings already available from leaders in Germany and Sweden.
New faces in flexibility
Across Europe a crop of startups has appeared in the last 2–3 years aiming to enable and monetise energy flexibility. These companies often build software platforms that connect to energy assets (building management systems, EV chargers, heat pumps, etc.) and aggregate their ability to ramp usage up or down. Many are early-stage but growing quickly with VC support, as the race is on to capture this “demand-side virtual power plant” opportunity. Below are some notable examples and how they differ:
Tilt Energy (FR) — Founded in 2023, Tilt helps commercial buildings to respond to grid signals with predictive AI. They raised €5M with Daphni in 2025.
- B2B2C
- Partnering with utilities and real estate
- Turns sites into grid assets
Ensol (FR) — Founded in 2023, they help households combine solar panels, batteries, and EV chargers to manage their own energy.
- Full-stack home energy system (hardware installation combined with software energy optimization & flexibility)
- Enables users to shift usage based on price/grid signals
- Acts as a decentralised virtual power plant
Survoltage (FR) — App-based B2C demand response. Sends alerts to households to reduce consumption during peaks.
- Gamifies flexibility
- Partners with smart device makers (Netatmo, Wiser)
Orus Energy (FR) — Turns commercial buildings into “thermal batteries” by shifting HVAC schedules.
- Cloud software manages heating/cooling
- 1M+ sqm under management, big contrats signed with IKEA in France
What Breega takes from this
At Breega, we’re excited by the acceleration of energy flexibility — especially where it intersects with software, IoT, and new business models. It’s no longer just about heavy industry; a new wave of startups is empowering buildings, vehicles, and households to participate in grid services.
We see a strong opportunity in backing companies that:
- Orchestrate distributed energy assets at scale (e.g., Ensol),
- Build interfaces between consumers and complex grid needs (e.g., Survoltage),
- Enable commercial infrastructure to become flexible by design (e.g., Orus).
As with energy management, we continue to believe the most scalable climate solutions live at the intersection of software orchestration and physical assets.
We are building a portfolio that reflects this duality, one that balances capital-light platforms with deep integration into real-world energy flows. If you’re a founder tackling this space, we’re always super happy to connect.
Let’s build the future together.
