Niko: Mexico's First Virtual Power Plant | Solar Startup

Niko Energy's Entry into Mexico's Solar Market

In 2023, Edoardo Dellepiane and Raffaele Sertorio established Niko Energy, recognizing significant potential within Mexico’s relatively undeveloped solar energy sector.

Despite abundant sunshine across much of the nation, the number of solar installations remains surprisingly low.

Identifying a New Opportunity: Virtual Power Plants

Following over a year dedicated to assisting solar installers with sales, planning, and financing for residential and small commercial clients, the founders identified a further opportunity.

This involved the creation of Mexico’s inaugural virtual power plant (VPP).

Addressing Mexico's Growing Power Demands

Mexico is experiencing a surge in power demand, with multinational corporations eager to establish manufacturing facilities.

However, reliable power access is a prerequisite, and the nation’s electrical grid is currently under considerable strain.

Widespread blackouts occurred last year due to a drought impacting hydropower generation.

A VPP functions by aggregating and managing resources such as home batteries, thermostats, and electric vehicle (EV) chargers.

Controlling the power contribution and consumption of these devices can help alleviate grid stress.

Government Focus and Niko Energy's Vision

“The current administration has demonstrated significant attention to this issue,” Dellepiane stated to TechCrunch.

“Our objective is to become the leading company in Mexico for managing the largest portfolio of decentralized energy resources.”

Expanding Services and Building Capacity

Andrés Marquina, Niko’s head of strategy, explained that the company intends to continue financing new solar installations.

Niko has reported a 20% month-over-month growth in the number of projects it supports.

To construct its VPP, the company is now offering battery storage solutions to existing solar panel owners.

It is also exploring the acquisition of portfolios from companies looking to divest assets.

The initial goal is to accumulate tens of megawatts of capacity, according to Marquina.

Strategic Shift: Focusing on Mexico

The renewed emphasis on Mexico and the VPP initiative signify a change in the company’s prior strategy.

Previously, Niko had planned to replicate its solar installation model throughout Latin America.

“We realized that Mexico presents a substantial, untapped opportunity, prompting us to concentrate on excelling in one country before expanding elsewhere,” Sertorio explained.

Targeting Diverse Customer Segments

Initially, Niko primarily served homeowners and small businesses, a demographic the founders felt was underserved.

The startup will continue to cater to these customers, but is now also actively pursuing larger corporate clients.

Innovative Financing and Service Model

Similar to its offerings for smaller customers, Niko will finance and oversee the installation of solar panels for larger businesses.

The arrangement operates as a fee-for-service, with electricity being the service provided.

Dellepiane noted that the contract is cancellable at any time, with Niko responsible for removing the solar panels upon termination.

However, given the anticipated energy cost savings, the startup does not foresee frequent cancellations.

“This provides them with assurance,” Dellepiane added.

Securing Funding for Growth

To facilitate further installations and develop the VPP platform, Niko has secured $8 million in equity funding.

TechCrunch was exclusively informed of this raise.

QED Investors led the round, with participation from 468 Capital and Picus Capital.

Additionally, the company obtained $15 million in debt financing.