Why I invested in Piclo

Following the official announcement from the company (here), I would like to share the news that I am part of the team of angels who invested, via the Green Angel Syndicate, in the latest £8.3 million Series B funding round of Piclo, the developer of software solutions that make our energy grid networks smarter, flexible and more sustainable.

From a timing perspective, this investment follows my recent investments in evvn and in Kelpi, and continues the series of recent investments in the Sustainability space. Sustainability and decarbonisation continue to be core themes of my recent investment activity, and this is largely due to the phenomenal work of the Green Angel Syndicate. Throughout my time as a climate conscious investor, I’ve been aware of the challenge we face of adapting our energy networks to meet new energy demands; the digitisation of energy networks from generators to households is further changing how everyone – generators, suppliers, distribution companies and consumers – engage with energy. Rapid decarbonisation of the Energy sector is needed particularly as heat and transport sectors are electrified, creating an increase in demand for electric power. Decarbonisation is being achieved by increasing the share of low-carbon energy sources, particularly renewables, and a corresponding reduction in the use of fossil fuels. As such, it is no surprise that plans to ensure that Britain’s homes and businesses are powered by affordable, clean and secure electricity by 2035 have been unveiled by the government. But how do you reduce emissions and meet increased demand, whilst ensuring the energy grid remains both reliable and affordable? Or put a different way, is it even possible to achieve our ambitious climate change targets, without reliable, smart and flexible energy systems?

For Ofgem, a smart, flexible energy system is one that reduces consumer energy bills by reducing the amount of generation and network assets that need to be built to meet peak demand. In other words, smart systems and flexibility are critical for decarbonisation. According to IT consultancy Accenture, flexibility, i.e., the actions taken by grid users to modulate power intake based on an external signal, is one lever that can empower distribution system operators (DSOs) to cope with the changes to the grid. As a result, across Europe, continues Accenture, market-based procurement of flexibility is developed with localized approaches driven by country specific needs and DSO maturity. For a while now, I have been reading and learning more about grid flexibility and the different options available to DSOs to access flexibility – mandatory provision, 'time of use' tariffs, variable connection agreements, etc. It is very much a still (fast) evolving market and one that Ofgem in the UK and the European Commission are taking steps to regulate – so this is very much here to stay and regulation will ensure that a framework is built/agreed to facilitate adoption.

Low carbon flexibility can be provided by different technologies: electricity storage (think batteries), flexible demand (think charging your EVs at night when demand is lower), flexible generation (think low carbon ‘peaking’ plants such as biomass boilers) and smart grids with country interconnectivity (shifting electricity across grids and between countries to where it is needed). All technologies are valid and all need to play their part in our quest for decarbonisation. And I am very proud that as I am writing these words and looking at my angel portfolio, I see investments in virtually all of those technologies – with Piclo being the most recent one.

So why Piclo then? Piclo is one of the world’s leading independent grid flexibility marketplace - with over 55,000 assets registered representing over 16GW of flexibility and has facilitated 1.1GW of flexibility capacity. Piclo Flex is a leading independent marketplace that brings together Flex Providers with System Operators to procure local flexibility services. The Piclo marketplace enables technologies such as renewables, batteries and electric vehicles to provide local flexibility to the distribution networks, smoothing out the complex transition to a decarbonised future and delivering low-cost and resilient grids. What I really like about Piclo is that it is already established as a market leader with a distinct SaaS-based product, a modularised and scalable platform and a stronger client base than its peers. As I was doing my diligence on the company, what really stood out for me with Piclo are 1) its marketplace business model and 2) the team. Led by Co-founder and CEO James Johnston, a renowned leader in smart grids and flexibility markets, and Co-founder and CTO Andy Kilner, with over two decades of experience developing software platforms, Piclo has a world class team, supported by an impressive group of advisors and Non-Execs. I always look for differentiated offerings and value propositions, and when I look at Piclo, I see a combination of an innovative SaaS-based business model, backed by an experienced team with decades of commercialisation experience. Having the backing of both cleantech financial investors and a global engineering firm is also an advantage – and now, with the backing of its existing and new investors, Piclo is in a great position to establish partnerships in new markets in Europe, the US and Asia-Pacific.

While Piclo’s progress has been impressive over the years, it still has to face challenges ahead. DSO flexibility markets have only recently emerged as a distinct category within the wider flexibility market and regulation is still evolving. New competitors will emerge as markets remain heavily localised and being able to win business across countries/ continents will likely determine the winners in the years to come. Expanding to Europe, the US and Asia-Pacific is not going to be easy of course and both time and resources will be required to enter new markets and fight off competition. In order to achieve its ambitious growth targets, Piclo will need to grow outside of its core UK market; the current Series B round of funding provides both the financial muscle and the right set of investors to facilitate the growth, however, execution is now key to success. And while commercialisation and market expansion are rightly the focus right now, Piclo will need to continue to invest in innovation to allow it to stay ahead of the competition and enable wide deployment and adoption of its technology.

I am absolutely delighted to be given the opportunity to be a small part of Piclo’s journey, and, as always, super grateful to the Green Angel Syndicate for giving angel investors access to deals like this and for making a real difference in fighting climate change.