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TEM Energy: Innovative new model for business energy explained
TEM Energy is making waves in the business energy market with claims of savings of up to 30% by bypassing the wholesale market entirely.
Business owners are understandably curious and sceptical about how a new entrant can deliver prices that incumbents can’t match.
This guide breaks down how TEM’s transaction engine and RED tariff work to deliver savings. Here’s what we cover:
- Who are TEM Energy?
- How TEM Energy’s model works
- What is RED by TEM Energy?
- How TEM Energy offers cheaper prices
- Does TEM Energy require half-hourly meter data?
Who are TEM Energy?
TEM Energy is a London-based energy technology company founded by the team behind Limejump.
The company has raised $94 million to date, including a $75 million Series B in early 2026 led by Lightspeed Venture Partners, with backing from Atomico, Hitachi Ventures, Schroders Capital, Allianz and AlbionVC.
TEM operates two connected products. The first is an AI-powered transaction engine that enables direct transactions between small-scale generators and business consumers, bypassing the wholesale electricity market. The second is a business energy tariff product called RED, which uses the transaction engine to offer a supply to business customers.
Is TEM Energy a supplier, broker or energy platform?
TEM doesn’t strictly meet the regulatory definition of an energy supplier or broker. Here’s why:
- Energy supplier: TEM’s RED tariff is a supply product for customers. However, the regulatory backing for this product is managed by the licensed supplier Versa Energy.
- Broker: TEM is not a broker, as it works with only a single supplier to offer its tariff product. TEM works with trusted business energy brokers to promote its RED tariff to business customers.
TEM’s main focus is building a transaction engine that provides an alternative to the wholesale electricity market, enabling transactions between small-scale generators and end business users.
How TEM Energy’s model works
TEM Energy is building the transaction architecture that acts as an alternative to the wholesale market, allowing business consumers to purchase power directly from small-scale renewables delivered via the national grid.
Currently, in the retail energy market, licensed suppliers rely on purchasing power from their customers on the wholesale electricity market. Reliance on the wholesale electricity market introduces cost inefficiencies, which include:
- The profits of traders who act as middlemen between generators and suppliers.
- The cost of employing trading desks that must transact with the market to ensure half-hourly balancing of purchasing against customer demand.
TEM Energy’s transaction engine aims to eliminate these inefficiencies by arranging direct transactions between small-scale generators and business consumers, with the power being delivered through the grid.
Here are the steps used by TEM Energy’s infrastructure to match the supply of generators with the demand of consumers.
Demand forecasting of business consumers
Businesses with half-hourly electricity meters have a live measurement of power consumption in kWh delivered through their business electricity connection every 30 minutes.
This dataset is used to produce a continuously evolving forecast of electricity demand for each customer for each future contracted half-hourly supply period.
Supply forecasting of generators
A similar process applies to the electricity fed into the grid by the portfolio of small-scale renewables.
The generation of each wind, solar and hydro asset is continuously forecast using historical performance and expected weather conditions.
Portfolio matching
TEM’s platform matches the power produced by specific generators with the demand of specific customers, optimising allocation across the entire portfolio.
Maximising portfolio-level matching means that the trading required for imbalancing is minimised.
Trading the residual position
In each half-hourly period, on a portfolio basis, the TEM transaction engine will be left with either:
- Excess generation: From the generators for which there is no business consumption to match against.
- Excess demand: From the business customers whose demand could not be fulfilled by the generators.
The residual position must be purchased or sold on the wider wholesale market, either through active trading or automatically settled through the NESO’s Balancing Mechanism.
What is RED by TEM Energy?
RED stands for “Renewable Energy Direct”. It is TEM’s electricity supply product, offered exclusively to non-domestic electricity customers with half-hourly electricity meters.
Structure of the RED tariff
The RED tariff offered by TEM is structured in a similar way to the tariffs offered by traditional business energy suppliers.
The RED tariff is offered as a fixed contract, with unit rates per kWh and business electricity standing charges charged at a fixed value for an agreed contract length.
At the end of the contract, if the customer hasn’t agreed a new tariff or arranged to switch business energy suppliers, the contract will roll onto variable out-of-contract rates.
How RED delivers renewable energy
TEM’s RED tariff delivers renewable energy in a way that differs from most green business energy tariffs.
Most green tariffs are backed by suppliers purchasing Renewable Energy Guarantees of Origin (REGOs) from renewable generators and retiring them to match their customers’ electricity consumption.
TEM’s approach is different. It explicitly does not purchase REGOs (which saves money), and instead uses its transaction engine to contract directly with renewable energy generators.
This is the same model used by large organisations seeking to enhance their green reputation through corporate PPAs.
Taking advantage of P442 and Licence Exempt Supply
The RED tariff uses the TEM transaction engine to deliver a Licence Exempt Supply where possible, taking advantage of a recent change in energy industry rules called the P442 modification.
P442 changed the way transactions work on the electricity market, enabling businesses to purchase power from small-scale generators that are delivered via the grid.
Under the P442 rules, where the half-hourly consumption of a business can be matched against the generation of electricity by a small-scale generator, the supply of electricity can be designated a Licence Exempt Supply.
The advantage of the Licence Exempt Supply is that suppliers avoid contributing to the Contracts for Difference and Renewable Obligation levies that add to the unit cost of electricity. This allows TEM to offer cheaper rates in the RED tariffs offered to customers.
Find out more in our guide to P442 and license exempt supply.
How TEM Energy offers cheaper prices
The innovative approach taken by TEM Energy has the potential to deliver lower prices for businesses choosing the RED tariff in two ways:
Saving from a Licence Exempt Supply
When the RED transaction layer provides a successful match between a small-scale generator and a business customer, Licence Exempt Supply rules allow TEM to avoid paying environmental levies associated with the supply of electricity.
Matched electricity can cost 5 pence/kWh less than supply electricity purchased from a large-scale generator, or via the general supply in the wholesale market.
Savings from avoiding wholesale market frictions
The traditional model for business energy suppliers involves continuously trading on the wholesale electricity market to meet the demand of a customer base in every half-hourly period.
This incurs costs associated with employing market traders, as well as effectively paying for the profits earned by trading intermediaries in the market.
In contrast, the AI transaction engine developed by TEM avoids the requirement to trade where it is possible to match the demand of a business against the supply of a generator.
Does TEM Energy require half-hourly meter data?
Yes, TEM Energy’s RED tariff is exclusively available to businesses with half-hourly meters (MPANs starting 05 to 08, or 00).
The reason is that, currently, only these types of business electricity meters are set up to provide the half-hourly consumption data required by TEM’s matching engine.
It is worth noting that the upcoming market-wide half-hourly settlement reform will convert all smart business energy meters to reporting consumption on a half-hourly basis. This regulatory change may enable TEM’s tariff offering to be available to all commercial properties.
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