Phillip Man was feeling exhausted. Having co-founded a watch trading company with his flatmate, the constant hustle was wearing him out. "We did that for ten years," Man reflected. "It becomes quite challenging to stay motivated when your sole mission is to sell luxury items to affluent clients." His previous career as a jet fuel trader at Glencore, which he viewed as "the evil side of energy," was also a far cry from fulfilling. Driven by a desire to return to a meaningful role in energy, Man set his sights on an enterprise that combined profit with planetary benefit.
The climate crisis proved to be the perfect arena. As his native Germany braced for the energy transition, shutting down nuclear plants and embracing wind and solar, the nation needed reliable solutions for energy storage on cloudier, windless days. In this context, grid-scale batteries emerged as a crucial technology to hold surplus renewable energy for later use, rapidly gaining ground with a threefold increase in global capacity in 2023 alone, as reported by BloombergNEF. Projections suggest another tripling by the decade's end.
Man saw an opportunity to innovate in an industry he perceived as developing inefficiently. "The industry, though still nascent, is being built backward," he explained. Current practices involved constructing batteries, which traders then market independently. Terralayr, Man's brainchild, represents a fresh iteration of the virtual power plant concept, which involves coordinating multiple battery storages for optimal usage. Terralayr aggregates these storage assets, bundles, and virtualizes them, akin to AWS's approach to computing resources.
Like AWS reshaping enterprise computing by offering scalable server capabilities without the need for physical infrastructure, Terralayr aims to reimagine grid storage by enabling battery owners to sell storage capacity in flexible time frames, from minutes to years, without acting as direct traders. Instead, Terralayr positions itself as more of an exchange platform, aiding battery owners in finding suitable buyers for their storage capacity.
"We don’t engage in trading ourselves. We strictly facilitate connections between sellers and buyers to match storage capacity with demand," Man emphasized.
Battery owners pay Terralayr a small percentage-based fee from their revenue. If Terralayr enhances the battery's financial performance compared to competitors, it also shares a portion of the increased earnings. To decide such outcomes, the company utilizes a proprietary model, partly informed by data from existing client bids.
This business model allows power companies to offset output fluctuations. In places like Germany, where Terralayr is gaining traction, energy providers must accurately forecast their electricity generation for the next day. Missed forecasts, such as those due to unexpected weather events, can lead to penalties. By leveraging battery arrays selling power simultaneously, providers can stabilize their output, mitigating financial risks.
At present, Terralayr has seven megawatt-hours of capacity actively on the German grid, with an additional 40 megawatt-hours soon to follow. The company has secured development agreements for more than 200 sites across Germany, potentially amassing over seven gigawatts, representing roughly 3% of the nation's overall generating capacity. "Not all of these projects will materialize," Man admits, acknowledging the long-term outlook. "We’re looking at a five- to ten-year timeframe for full implementation."
To support its ambitious expansion, Terralayr has successfully raised €62 million in equity and an additional €15 million in debt, attracting backing from investors such as Creandum, Earlybird, Norrsken VC, Picus Capital, and Rive Private Investment. While Man hesitates to label this fundraising a seed round due to the company's progress, technically that's what it represents.
Although Germany remains the primary focus, Man sees opportunities across the Atlantic, particularly in U.S. states like California and Texas. "This is what we deem a generational opportunity," Man stated. With a firm belief in the scalable potential of grid storage, Terralayr is poised to become a pivotal player in the global energy sector transformation.
