Cleantech Platform Startup Paces Raises $11M to Scale Energy Project Development

Paces, a GIS and data platform accelerating renewable energy project development, last week announced the close of an $11M Series A funding round. This round, led by Navitas Capital, with participation from Suffolk Technologies and MCJ Collective, and existing investors Resolute Ventures, Soma Capital, and Y Combinator, will contribute to the scale-up of Paces’ innovative preconstruction platform enabling the deployment of grid-connected energy infrastructure projects.

Based in Brooklyn, NY, Paces currently provides nationwide coverage, and with the additional capital raised in the Series A round, targets expansion into Canada and other countries in 2025. Beyond geographic expansion, this fundraise will enhance the data intelligence features of the platform.

Capital Utilization

Paces provides clean energy infrastructure project developers with essential preconstruction tools that leverage data to optimize every stage of the development process. The platform excels in aggregating data from diverse sources and layering analytics on top of that data, ensuring developers have a holistic view of potential project sites.

The company reports that a standout feature of the solution is the “use of large language models (LLMs) for text-to-geography mapping and analysis.” The company uses LLMs to “summarize and classify textual data and connect it to the right geographic entity e.g. a zone, substation or parcel of land.”

Preconstruction Pain Points

Renewable energy and grid expansion projects are currently top-of-mind for the built world. U.S. energy demand has remained stagnant for the last 15 years, until now with the daunting load that data centers and EV charging networks are placing on the grid. The preconstruction projects for these projects can vary drastically from commercial construction projects.

From the perspective of the company, the two biggest preconstruction differences involve power availability and grid capacity. “Large power generation and load projects can often trigger very expensive upgrades to local electrical infrastructure,” explains the company. The cost burden here typically falls on the developer, making projects uneconomical. “There is a nation wide land grab occurring to find the sites which have the most grid capacity,” according to Paces.

In contrast, power constraints are not as pressing for commercial construction projects as other costs such as labor, procurement, regulatory compliance, etc. Power demands on commercial jobsites can be more predictable and lower than that of a renewable energy development. The company also predicts that eventually power constraints will affect all businesses across the U.S.

How Does Paces Fit In?

Paces software helps developers with site selection, due diligence, project financing and construction. Paces primarily addresses two pain points for developers: power availability and permitting. Paces streamlines permitting by automating the collection and analysis of project requirements. It also analyzes the grid to identify locations with sufficient power infrastructure, minimizing the need for costly upgrades.

Paces reports that the value-add of its platform is that developers can find sites faster (by a metric of months) than traditional methods and have a higher chance of their projects being built.

The Investors’ Perspective: Opportunity in the Energy Infrastructure Space

We have seen a prodigious increase in investor appetite (in both generalist and built world-focused investors) for the clean energy sector spurred by waves of U.S. legislative actions (CHIPS Act, Inflation Reduction Act and Bipartisan Infrastructure Law). What exactly excites investors about this space?

Jenny Song from Navitas, the lead on this investment round, says “it represents a paradigm shift in the built environment, driven by the increasing importance of energy availability and connectivity.”

Adding that “in the AI era, energy is the new critical constraint.” Major industrial shifts, such as nearshoring initiatives bringing back domestic manufacturing, electrification of our physical spaces and grid transition to decentralized clean energy, underscore the need for innovative solutions to mitigate energy risk.

Importantly, the increase in energy demand is taking place in the context of multiple other megatrends, including a boom in domestic manufacturing, electrification of transport and buildings, and the transition from centralized coal and natural gas power generation to decentralized power with a focus on renewables. This shift underscores the need for innovative solutions to manage site selection, due diligence, and permitting with a focus on energy risk.

Navitas, Song says, believes that Paces' platform, with its emphasis on de-risking development projects through proprietary data and projections, is essential for developers, investors, and utilities to navigate the challenges of the grid transition, making it a valuable and critical tool for the future.

Suffolk Technologies also appreciates the essential work of Paces to "enable developers to build more renewable and energy-intensive infrastructure," says Diana Swenton, Vice President of Venture Capital at Suffolk Technologies. Adding:

“In order for the U.S. to live up to its energy transition goals, renewable infrastructure must at least double over the next five years. Unfortunately, the current processes of the industry, including interconnection requirements and permitting, can be cumbersome and delay projects. In this environment, tools such as Paces become indispensable in uncovering new sites and unlocking bottlenecks that slow down development of renewable energy infrastructure. At the same time, more and more assets are being built today that have large energy requirements."

Future Outlook: Where do we go from here?

Paces predicts the grid will undergo four major changes in the coming decade:

1. The first is that interconnection queue processes will be overhauled due to federal pressure. This is being pushed by changes like the recent FERC 1920 order. This will bring greater transparency to the grid, however, the utilities and grid operators are pushing back against these changes and will likely not take effect for another five years, or more.
2. The second is that distributed energy resources (DERS) like rooftop solar and behind the meter batteries will shift some power generation and consumption from the transmission grid to the distributed grid.
3. After several decades of grid under-investment, we are seeing an increase of spending dedicated towards grid upgrades in the last two years which will open up new capacity.
4. However, these changes will not be sufficient, in the view of the company, and so the rise of colocation and “private wires” may be the fourth major shift in our energy infrastructure.

Equipping developers with the essential planning, design and preconstruction tools will lead to a more resilient and expansive energy grid for the future. The built environment VC ecosystem is playing a pivotal role in the bulletproofing of US energy infrastructure.