Why we invested in Splight?
We have recently announced our new investment in Splight, an AI startup at the forefront of grid operations technologies. This investment falls within our Energy Efficiency vertical as Splight’s technology increases grid efficiency while reducing waste and losses in the process.
As electrification increases across all industries, renewable energy supply and efficient grid operations are essential to meet growing demand. Distributed Energy Resources (DERs) such as rooftop solar and batteries are booming, but until now the industry lacked the technology to manage them at scale. We believe Splight's technology brings a level of efficiency to the energy sector that has long been unattainable.
In this brief article, we provide an overview of the main reasons behind our decision to invest in Splight.
1. THE PROBLEM: GRID CONGESTION AND IDLE CAPACITY - A WORLDWIDE ISSUE
Splight addresses a significant issue known as grid congestion, or grid bottlenecks, which arises from a shortage of transmission capacity due to outdated contingency management methods.
Today's grid relies on outdated mechanisms that prioritize security and stability over adaptability and flexibility, making it inadequate for the rapid increase in solar and wind generation. Renewable energy generators are often curtailed due to grid constraints, resulting in financial losses for investors and wasting over 40% of available clean energy. Furthermore, thousands of gigawatts of renewable energy projects are stuck in interconnection queues, waiting up to a decade to connect to the grid.
According to a study published by Grid Strategies in July 2023, congestion costs, in the USA only, amounted to $20.8 billion in 2022. Notably, annual congestion costs increased by 56% in 2022, following a near doubling from 2020 to 2021. This trend of rapid growth is causing significant concern across the entire sector.
Additionally, congestion is not the only inefficiency in grid operations. To prevent interruptions, transmission companies operate with 100% redundancy. This means that, even in the best-case scenario, grid transmission infrastructure runs with an idle capacity of 50%.
One solution to address congestion and system capacity issues is to build more transmission lines. However, expanding the grid's infrastructure presents significant challenges. It is prohibitively expensive and can take up to two decades to construct a single transmission line. Additionally, each new asset added to the grid exponentially increases its complexity.
This need for a faster and more cost-effective way to integrate more clean and affordable energy into the system inspired Splight's founder to create its innovative technology.
2. THE SOLUTION: USING AI TO MANAGE GRID ENERGY FLOWS
Splight has developed an innovative AI-based technology for advanced grid operations that leverages inverter-based resources (IBRs) and integrates data from satellites and weather stations for enhanced reliability. IBRs are power electronic devices that convert DC electricity into AC electricity, controlled by sophisticated software that dictates how these resources respond to grid events. This technology enables rapid and flexible energy ramping and deramping, driven by advanced power electronics and software controls.
By analyzing real-time data from transmission lines and generators (using IBRs), Splight optimizes contingency management from lines to generators. Algorithms leverage this data to estimate the grid's state before, during, and after contingencies, automatically adjusting responses based on measured element characteristics.
This enables generators to respond efficiently and reliably to contingencies, adjusting operations as needed to maintain grid stability. Unlike static approaches, Splight's dynamic algorithms can respond dynamically to a wide range of events, including line or transformer failures, thermal thresholds, and unexpected generation deviations.Ultimately, Splight aims to minimize curtailment and congestion by maximizing existing infrastructure utilization, ensuring a stable grid with optimal efficiency.
It is important to highlight that curtailment is a significant challenge for renewable energy generators because they have different generation and distribution dynamics compared to fossil fuel generators, for example. This characteristic places Brazil and Latin America as a whole within a large market to be explored by Splight.
According to the Energy Research Company, a Brazilian organization focused on the national energy sector, Brazil's energy matrix consisted of 85% renewable sources in 2021. By comparison, the global average for the share of renewable sources in the energy matrix was only 28% in the same year.
Concretely, in Barn's view, Splight's solutions are vital to major energy players. We are proud to be the only Brazilian investors in the company and to be anticipating a solution that will grow significantly in Brazil. Within Barn's Greentech thesis, we understand that, in addition to Brazil having a much greener energy matrix than the global average, new solutions like Splight's will allow for greater distribution efficiency and better integration throughout the country's energy chain. Despite addressing a global-scale challenge, in countries like Brazil, Splight's solution will have increasing adherence. Below is an example of the challenges faced by Splight's clients and the outcomes these clients achieve by using the company's various solutions.
It's worth noting that this is just one of the many solutions Splight offers its customers. The company has successfully adopted the strategy of acquiring new customers interested in Splight's first layer solution focused on connectivity, data gathering, processing, management, and formatting real-time data. After this first stage, new layers are applied to customers with a view to a complete and scalable solution for real-time AI-based coordinated operations.
3. THE CLIENTS: KEY CLIENTS VALIDATING THE SOLUTION
Splight has successfully deployed its AI technology with major and influential clients across both Latin America and the USA, demonstrating the effectiveness and reliability of its solutions. This widespread adoption by prominent industry leaders validates Splight's innovative approach to advanced grid operations, reinforcing its position as a key player in the energy sector.
4. THE TEAM: A UNION OF INDUSTRY EXPERTS AND DEEP TECH FOUNDERS
At Splight, the leadership team is a powerful blend of extensive expertise in the energy sector and cutting-edge computer science. This unique combination has been instrumental in developing our innovative solutions, addressing the challenges faced by energy players, and positioning Splight at the forefront of the global energy industry. The team's deep understanding of the sector, coupled with their ability to create high-performance software, ensures continuous technological improvement and sustained growth in revenue and customer acquisition. Below is a brief introduction to our founding team members:
Fernando Llaver
With twenty years of leadership experience in the energy industry, Fernando is focused on revolutionizing the electric sector through advanced technology and scalable clean energy solutions. His extensive background in project finance, executive management, and grid operations provides a unique perspective that enables him to refine Splight's technology. This ensures it meets the flexible interconnection requirements of power generators and enhances the efficiency of transmission and distribution networks.
Thomas Vadora
Thomas holds a master’s degree in computer science and has a deep passion for the dynamic energy sector. His journey began as an ICPC Competitive Programmer, where he developed an interest in scalable, high-performance software. As a former Principal Software Engineer, Thomas is dedicated to refining his skills and driving innovation. His advanced AI studies at the University of Toronto allowed him to merge his fascination for energy with AI expertise, leading to the creation of Splight to tackle grid challenges.
Carlos Caldart
Carlos has an impressive academic background with an MSc in Biomedical Engineering, an MSc in Nuclear Physics, and a Ph.D. in Science and Technology focusing on applied mathematics. His research experience in AI and Electronic Devices led him to transition into a Data Scientist role. Carlos is deeply committed to energy and sustainability, making him a perfect fit at Splight. He is a true "jack-of-all-trades," responsible for developing AI models and control algorithms, managing sales, enhancing customer experience, and navigating the complexities of network communication protocols.
Looking Forward
Investments that directly contribute to greater global energy efficiency have a tremendous impact. From an economic standpoint, more efficient and cheaper energy boosts an entire region's economy, while also reducing environmental pressure by making better use of the energy already being produced and distributed.
Splight's current clients are already an example of the robustness of the solution developed by the company's incomparable team. We expect that in the coming years, the company will gain even more prominence in the global energy landscape, contributing not only to players in the energy sector but to the entire economy of the regions that Splight is present. The first steps have been taken on a long journey ahead.
