Software startups emerge to optimize the strained electrical grid

In 2025, the electrical grid moved into the spotlight, following years of public awareness driven by events like fires in California and freezes in Texas. Electricity rates in the U.S. have increased by 13% this year. This rise is occurring alongside a massive expansion in computing infrastructure; the amount of electricity used by data centers is projected to nearly triple in the next decade. This growing strain is creating a market opportunity for software startups to optimize existing capacity and integrate new power sources.

Several software startups argue that spare capacity already exists on the grid and can be identified using data. Gridcare gathers data on transmission lines, fiber-optic connections, extreme weather, and community sentiment to optimize grid capacity and find overlooked sites. Similarly, Yottar identifies existing grid capacity for medium-size users to help them connect to the grid quickly.

Other startups are focusing on managing distributed energy sources—small-scale power generation or storage technologies like wind, solar, and batteries. Some are bundling these assets into virtual power plants, which are aggregated fleets of batteries or energy sources acting as a single power plant to deliver electricity when demand peaks. For example, Base Power is building virtual power plants in Texas by leasing batteries to homeowners for backup power and selling the aggregated capacity back to the grid. Terralayr uses software to bundle distributed storage assets already installed on the German grid. Meanwhile, startups like Texture, Uplight, and Camus are developing software to integrate and coordinate these distributed energy sources to ensure they contribute more efficiently to the grid.

Established technology companies are also partnering with energy organizations to modernize grid infrastructure. Nvidia is partnering with EPRI, a power industry R&D organization, to develop industry-specific models to improve grid efficiency. Google is working with PJM, a grid operator, to use artificial intelligence to help sift through its backlog of connection requests from new sources of electricity. While utilities are traditionally slow to adopt new technologies due to reliability and cost concerns, 2026 could be the year when these software-driven changes begin to take hold.

Why it matters

The electrical grid is facing increased strain from the AI boom and data center growth, creating a market opportunity for software startups to optimize capacity and integrate distributed energy sources.