Why the electrical grid needs more software

The electrical grid, traditionally unnoticed when functioning smoothly, has recently come under intense scrutiny due to crises like California wildfires and Texas freezes, as well as rising electricity demand driven by the AI boom and data center expansion. In 2025, concerns about grid capacity, pricing, and resource strain intensified, prompting utilities to urgently upgrade infrastructure and build new power plants. This environment has created opportunities for software startups offering innovative solutions to optimize grid management, site selection for new infrastructure, and integration of distributed energy resources. Startups such as Gridcare and Yottar use data analytics to identify optimal locations for grid expansion and facilitate connections for medium-sized users amid the data center surge. Others, like Base Power and Terralayr, aggregate distributed battery storage into virtual power plants to provide backup and grid support, while companies like Texture, Uplight, and Camus focus on coordinating renewable energy sources to improve efficiency. Major tech players like Nvidia and Google are also applying AI to enhance grid resilience and streamline connection processes