The cost of renewable electricity is low and environmentally friendly, but its unpredictability poses a challenge. However, this unpredictability also presents an opportunity.

To address the issue of intermittent energy supply, most solutions involves combining solar panels and wind turbines with battery storage. This allows for the storage of power for use during periods when the sun is not shining or the wind is not blowing, effectively mitigating the impact of natural disruptions.

However, physical assets like batteries are not the only means of managing risk. Another approach is to utilize markets. A startup called ElectronX is currently developing an exchange platform that enables buyers and sellers to trade electricity. The primary objective is to assist both parties in managing risk and hedging against volatility, thereby reducing the financial uncertainty associated with renewable energy.

In order to achieve this goal, ElectronX has secured $10 million in follow-on funding led by Systemiq Capital, with additional participation from Equinor Ventures, Shell Ventures, and Innovation Endeavors, as announced to TechCrunch. This new investment follows a $15 million seed funding round that the startup raised in June 2024.

The electricity market in the United States is heavily regulated and based on assumptions that were formed during a time when electricity was primarily generated by coal-fired power plants. These power plants provided a stable base load, with more expensive power plants adjusting to fluctuations in demand.

However, the increasing presence of solar and wind power in the market has challenged these assumptions. Unlike large fossil fuel-based power plants, renewable energy sources can be rapidly turned on and off. While batteries add to the cost, they provide even greater speed and flexibility in responding to changes in demand.

According to ElectronX, these characteristics have created opportunities for new methods of trading power.

The proposed exchange by ElectronX would enable electricity suppliers and consumers to purchase and sell capacity in 1 megawatt blocks on an intra-hour or hourly basis for the current day and the following day. Although ElectronX is still awaiting approval from the Commodity Futures Trading Commission, the company’s more granular blocks could reduce the implied multimillion-dollar trading requirement present in today’s electricity markets, should approval be granted.

The ultimate goal is to enable smaller companies to play a more significant role in electricity markets, similar to how individual traders participate in the stock market. By leveraging more precise financial products, renewable assets are expected to experience improved return profiles and faster payback periods, according to the company.