Mexico-based startup Niko Energy has raised $8 million in equity to develop the country's first virtual power plant (VPP), a move that could help alleviate the nation's power grid reliability issues. The funding round, led by QED Investors with participation from 468 Capital and Picus Capital, will support Niko's ambitious plan to aggregate and control decentralized energy resources, including home batteries, thermostats, and EV chargers.

Niko Energy was founded in 2023 by Edoardo Dellepiane and Raffaele Sertorio, who identified a significant opportunity in Mexico's underdeveloped solar market. Despite the country's abundant sunlight, it has relatively few solar installations. Niko initially focused on helping solar installers sell, plan, and finance panels for residential and small commercial building owners. However, the company soon recognized another opportunity: building Mexico's first VPP.

The demand for power is surging in Mexico, driven in part by multinational corporations seeking to establish factories in the country. However, Mexico's grid is struggling to keep up, and blackouts were widespread last year during a drought that impacted hydropower generation. A VPP could help mitigate these issues by controlling how much power is contributed to or drawn from the grid.

"We have seen the new government put a lot of attention to this problem," Dellepiane told TechCrunch. "We want to be the company that manages the biggest portfolio of decentralized energy resources in Mexico." Niko's plan involves continuing to finance new solar installations, with the number of projects serviced growing 20% month over month. The company is also starting to sell battery storage to current solar owners and is looking to acquire portfolios from companies interested in selling assets.

Niko aims to amass tens of megawatts of capacity at the outset, according to Andrés Marquina, the company's head of strategy. This marks a shift from the company's previous strategy, which involved expanding its solar installation offering across Latin America. Instead, Niko is focusing on Mexico, recognizing the country's huge untapped opportunity.

In addition to its VPP initiative, Niko is expanding its customer base to include larger companies. The startup will finance and facilitate the installation of solar panels for these businesses, offering a fee-for-service contract that can be canceled at any time. Niko expects companies to save on their energy bills, making the contract an attractive option.

The $8 million equity raise is accompanied by $15 million in debt, providing Niko with the necessary capital to drive its VPP vision forward. As the company continues to grow and develop its platform, it is likely to play a significant role in addressing Mexico's power grid reliability issues and promoting the adoption of decentralized energy resources.

The success of Niko Energy's VPP initiative could have far-reaching implications for Mexico's energy landscape, and the company's focus on decentralized energy resources could serve as a model for other countries facing similar power grid challenges.