Why your power grid needs more software

One of the nicest comments people made about the power grid was, “There’s nothing.” Grids work best when they fade into the background.

That obscurity has changed in recent years, as fires in California and freezes in Texas have heightened awareness of the power grid. But it wasn’t until 2025 that concerns about the power grid and the strain on demand, supply, prices, and natural resources came into the spotlight. Then a new group of startups appeared, selling software as a solution.

Electricity prices here in the United States have increased by 13% this year. This is influenced by an AI boom that has reached unexpected places, such as repurposing supersonic jet engines for data center missions and efforts to transmit solar power from space.

And the pace of growth is not expected to slow down. The amount of electricity used in data centers is expected to nearly triple over the next decade. The forecast has fueled consumer dissatisfaction over pricing and angered environmental groups, which have called for a nationwide moratorium on new projects. Power companies have been working hard behind the scenes and are now scrambling to upgrade their power grids and build new power plants to handle the load, with the constant fear of the AI ​​bubble bursting in the background.

This combination of demand and fear could give software startups a boost next year.

For example, startups like Gridcare and Yottar argue that spare capacity already exists in the power grid and that their software can help find it.

Gridcare collects data on power lines, fiber optic connections, extreme weather events, and even community sentiment to optimize the search for new locations and convince power companies that the grid can handle it. The company says it has already discovered several such sites that had been overlooked. Yottar finds locations where known capacity exists and overlaps with the needs of midsize users, enabling them to quickly connect in the data center boom.

Several other startups are using software to stitch together large clusters of batteries scattered across the grid. These startups can turn these fleets into virtual power plants, providing power to the grid when it’s needed most.

Base Power, for example, is building batteries in Texas by leasing them to homeowners at relatively low prices. Homeowners can use batteries as backup power during power outages, and Base can use batteries to prevent power outages by selling aggregated capacity to the grid. Terralayr does something similar, but it doesn’t sell the batteries themselves. Instead, Terralayr uses software to bundle distributed storage assets already installed on the German grid.

Other startups such as Texture, Uplight, and Camus are developing software layers to integrate and coordinate distributed energy sources such as wind, solar, and batteries. Coordinating different assets is expected to reduce idleness and increase their contribution to the grid.

There is also hope that the software could help modernize older parts of the power grid.

For example, Nvidia partnered with EPRI, the power industry research and development organization, to develop industry-specific models in hopes of improving efficiency and resiliency. Meanwhile, Google is working with power grid operator PJM to use AI to sift through the backlog of connection requests from new power 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 technology due to reliability concerns. But new infrastructure is expensive and has a long lifespan, which slows investment. Ratepayers and regulators are known to balk when such projects begin to impact affordability.

But software is cheap, and if they can clear the reliability hurdle, there’s a good chance that the companies that provide it will gain traction.

And that could be more profitable than a startup selling software. Eventually, the power grid will need to be retrofitted and expanded. More electricity will be needed given the number of data centers planned and the electrification of wide sectors of the economy, including transportation, heating, etc. It would be foolish to ignore the power of software in cases like this. It’s cheap, flexible, and quick to deploy.