Renewable electricity is cheap and clean, but also less predictable than firing up a gas turbine. Turns out that’s both a problem and an opportunity.
Most solutions to the problem of intermittency involve pairing solar panels and wind turbines with batteries, which store the power for use when the sun sets or the wind dies down. The batteries act as a sort of hedge against those natural disruptions.
But pricey physical assets aren’t the only way to hedge risk. Markets are another. One startup, ElectronX, is in the process of building an exchange in which buyers and sellers can speculate on the price of electricity on an intraday basis. The goal, the company said, is to help both sides manage risk and hedge volatility, taking some of the financial uncertainty out of renewable energy.
To reach that goal, ElectronX has raised $10 million in a follow-on round led by Systemiq Capital with participation from Equinor Ventures, Shell Ventures, and Innovation Endeavors, the company told TechCrunch. The new investment follows a $15 million seed the startup raised in June 2024.
For the most part, the electricity market in the U.S. is highly regulated, built on assumptions that were formed when electricity was largely generated by coal-fired power plants. They ran day in, day out, forming a stable base on which more expensive power plants reacted to fluctuations in demand.
But as solar and wind have entered the market, they’ve turned some of those assumptions on their heads. Unlike large fossil fuel power plants, renewable power can be turned on and off quickly. Batteries add to the cost but offer even more speed and flexibility in responding to shifts in demand.
Those qualities have opened the door to new ways of trading power, ElectronX argues.
The company’s proposed exchange would allow electricity suppliers and consumers access to futures and options contracts that capture intraday volatility in pricing. ElectronX is still waiting on approval from the Commodity Futures Trading Commission, but should that happen, the company’s smaller contract sizes and more direct access should lower the financial barriers present in today’s electricity markets, the company said.
The goal is to allow smaller companies to play a larger role in electricity markets, similar to how retail traders can participate in other markets. “By leveraging more precise financial products, renewable assets should see better return profiles and faster payback periods,” Innovation Endeavors said in a statement.
Update: Clarifies how capacity is bought and sold and updates attribution in last paragraph.
