Why does the electrical grid need more software?

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

This low-profile status has changed in recent years as fires in California and freezes in Texas have raised awareness of the electric grid. But that was in 2025, when the electric grid – and concerns about demand, supply, pricing and pressure on natural resources – moved into the spotlight. A new crop of startups has emerged offering software as a solution.

Electricity prices rose 13% in the United States this year, driven by an artificial intelligence boom that has seeped into unexpected places, including Reuse of supersonic jet engines For data center duty and work on it Solar radiation from space.

This pace of growth is not expected to slow down; The amount of electricity data centers use It is expected to nearly triple In the next decade. This has fueled expectations Consumer frustration About pricing and It sparked the ire of environmental groups Which called for a national moratorium on new projects. Utilities, which toiled in the background, are now scrambling to modernize the grid and build new power plants that can handle the load — the fear of the AI ​​bubble bursting always lingers in the background.

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

For example, startups like Network sponsorship and Leotard They argue that excess capacity already exists on the network and that software can help find it.

Gridcare has collected data on transmission and distribution lines, fiber-optic connections, severe weather, and even community sentiment to improve the search for new sites and convince utilities that the grid can handle them. Indeed, the company says it has found several such overlooked sites. Yottar finds places where there is known capacity and overlaps with the needs of medium-sized users, helping them connect quickly amid a data center boom.

Many other startups are using software to assemble huge fleets of batteries spread across the grid. These startups can turn these fleets into virtual power plants to deliver power to the grid when it’s needed most.

For example, Base Power is building one in Texas Battery rental to homeowners At relatively low prices. Homeowners can use the batteries for backup power in the event of a power outage, while Base can leverage them to prevent outages by selling the collected capacity to the grid. Terralayr does something similar, although it doesn’t sell the batteries itself. Instead, Terralayer uses software to aggregate distributed storage assets already installed on the German network.

Other startups including Texture, Uplight, and Camus are too Software development layers To integrate and coordinate distributed energy sources such as wind, solar and batteries. The hope is that by coordinating different assets, they will reduce idleness and contribute more to the network.

There is also some hope that the software will help modernize some older parts of the network.

For example, Nvidia has partnered with EPRI, an energy industry research and development organization, To develop industry-specific models Hopefully they will improve efficiency and flexibility. Meanwhile, Google is Working with network operator PJM To use artificial intelligence to help sift through a 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 concerns about reliability. But they are also slow to invest in new infrastructure because it is expensive and long-term. Taxpayers and regulators are known to cringe when such projects begin to impact affordability.

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

This can benefit more than startup sales programs. Ultimately, the network will need some renovation and expansion. Given the number of data centers planned and the electrification of broad sectors of the economy, including transportation, heating, etc., we will need more energy. It would be foolish to ignore the power of software in these cases. It is cheap, flexible and quick to deploy.