Why the power grid needs more software

One of the nicest comments people made about the power grid was…nothing. The grid works best when it disappears into the background.

That low-key status has changed in recent years, as wildfires in California and deep freezes in Texas have raised public awareness of the power grid. But it was in 2025 that the power grid – and concerns about demand, supply, prices and pressure on natural resources – came into the spotlight. And a new batch of startups has emerged with a “software as a solution” pitch.

Electricity rates have risen 13% in the United States this year, driven by an AI boom that has crept into unlikely places, including reuse of supersonic jet engines for data center service and work on transmit solar energy from space.

And this rate of growth is not expected to slow; the amount of electricity used by data centers is should almost triple in the coming decade. This forecast fueled consumer frustration around prices and angered environmental groups who called for a national moratorium on new projects. Utilities, which have been working in the background, are now scrambling to upgrade the grid and build new power plants that can cope with the load – with fears of an AI bubble bursting still lingering in the background.

This confluence of demand and fear could give software startups a boost in the coming year.

For example, startups like Network maintenance And Yottar argue that unused capacity already exists on the network and that software can help find it.

Gridcare collected data on transmission and distribution lines, fiber optic connections, extreme weather conditions and even community sentiment to optimize the search for new locations and convince utilities that the grid can handle it. The company already says it has found several such sites that have been neglected. Yottar finds where known capacity exists and overlaps with the needs of mid-sized users, helping them connect quickly amid the data center boom.

Several other startups are using software to assemble massive fleets of batteries scattered across the grid. These startups can turn these fleets into virtual power plants to provide electricity to the grid when it’s needed most.

Base Power, for example, is building one in Texas in rental of batteries to owners at relatively low prices. Owners can use the batteries as backup power in the event of an outage, while Base can leverage them to avoid outages by selling the accumulated capacity to the grid. Terralayr does something similar, although it doesn’t sell batteries itself. Instead, Terralayr uses software to consolidate distributed storage assets already installed on the German network.

Other startups, including Texture, Uplight and Camus, are develop software layers to integrate and coordinate distributed energy sources such as wind, solar and batteries. The hope is that by orchestrating various assets, they will remain less idle and contribute more to the network.

It is also hoped that the software can help modernize some of the more outdated parts of the network.

Nvidia, for example, has partnered with EPRI, an energy sector R&D organization, develop industry-specific models in the hope that they will improve efficiency and resilience. Meanwhile, Google is work with the PJM network manager using AI to help sift through its backlog of connection requests from new electricity sources.

These changes won’t happen overnight, but 2026 could be the year they start to take hold.

Utilities tend to be slow to adopt new technologies due to reliability concerns. But they are also slow to invest in new infrastructure because it is expensive and long-lasting. Taxpayers and regulators are known to balk when such projects begin to affect affordability.

Software, however, is cheaper, and if it can overcome the reliability hurdle, companies offering it will have a good chance of gaining traction.

And it could benefit more than just startups that sell software. Ultimately, the network will need to be renovated and expanded. Given the number of data centers planned and the electrification of large parts of the economy, including transport, heating, etc., we will need more energy. It would be foolish to ignore the power of software in these cases. It’s cheap, flexible and quick to deploy.