Philipp Man was burnt out. He had started a company that traded watches with his flatmate, but the grind was wearing him down.

"We did that for ten years," Man said. "It's very difficult to keep yourself motivated when you know the whole reason for your operation is to sell expensive stuff to wealthy people."

He had swapped jet fuel for Glencore — "the evil side of energy," he describes it — and felt himself being pulled back into that world. "I wanted to get back into energy, do something that has real impact, for profit but that helps the planet.".

But climate was an obvious place to start. Germany, where he's from, was getting drenched in wind and solar power, and as the country flipped off its nuclear power plants it had a desperate need for a way to keep the grid running smoothly on calm, cloudy days.

Grid-scale batteries help store renewably generated power for just such days, and they have boomed in recent years, with global capacity tripling in 2023, according to BloombergNEF. Analysts at the firm also expect capacity to nearly triple again before the end of the decade.

"The industry, while still very nascent, has been built the wrong way around," Man said. "Today, people build a battery, and then somebody else trades it."

Man's alternative, which is taking shape as a startup called Terralayr, is more of a twist on the virtual power plant, which experts describe it to be when energy traders aggregate batteries and manage their use. "Terralayr is like AWS," he said. "It aggregates computing resources and sells fractions of them.". We aggregate grid-scale energy storage assets, we bundle them, we virtualize them, and then we sell off the capacity between 15 minutes and 15 years," Man said. AWS transformed enterprise computing, allowing companies to run servers without owning hardware and scale them on demand. Virtual power plants do something similar. Capacity from grid-scale batteries owners can be sold to traders and aggregated to a level at which it makes sense to play in large markets of electricity.

Terralayr also manages batteries, theirs, as well as others', but Man said the difference is that it doesn't work as a trader, but rather something more like an exchange. "Our pitch is like, we are not traders. We don't trade at all. In fact, we'll just find the best buyer for your capacity."

The company charges battery owners a "small percentage" fee based on revenues. If Terralayr can operate the battery more profitably than a competitor, it will take a piece of the upside, as well. (How is that determined? Man said the company uses a model, built in part using previous bids from its own customers, that predicts what a typical trader would do.).

For the buyer, power trading allows them to fill gaps in output.

For somewhere like Germany, where Terralayr is starting out, power providers need to predict how much electricity they'll generate in the next 24 hours. If they fail to match their forecast — like if a freak thunderstorm clouds their solar farm — they can be penalized. They will bridge the gap by tapping into an array of batteries selling into the same market at the same time, and thus they may avoid costly penalties. Terralayr currently sits on 7 megawatt-hours of capacity on the grid, and Man said another 40 megawatt-hours are supposed to flip the switch soon. The startup signed development agreements with more than 200 sites in Germany, with more than 7 gigawatts total, or about 3% of the country's total generating capacity. "That's a five- to ten-year horizon," he added. "Of those 7 gigawatts, not everything will come through."

In equity and debt, Terralayr has mobilized €62 million from investors such as Creandum, Earlybird, Norrsken VC, Picus Capital, and Rive Private Investment to finance the expansion. "I wouldn't call it seed round, but that's technically what it is," Man said, commenting that "seed would wrongly suggest the earliness of the business.".

While Terralayr is focused on Germany for now, Man said the company is eyeing U.S. markets, particularly California and Texas. "We believe this is a generational opportunity," he said.