Edinburgh University spinout Exergy3 has raised £10 million in seed funding to scale its proprietary technology targeting industrial decarbonisation, grid balancing and energy security.

The round, led by French VC firm Axeleo Capital, whose Article 9 Green Tech Industry I fund backs deeptech environmental-focused startups, will help push Exergy3’s transition from early demonstration to scale after proving its thermal energy tech in real‑world conditions.

Additional backing came from Bavaria-based VC investor Bayern Kapital and Singapore-based climate tech fund Kibo Invest, who joined existing investors Scottish Enterprise, Zero Carbon Capital and Old College Capital, the University of Edinburgh’s in-house venture investment fund. 

Exergy3 said the fresh capital will allow the firm to scale manufacturing capacity, double its headcount by the end of the year, and deploy its system across industrial sites. 

The energy-tech also plans to open a Munich office later this quarter as part of its expansion strategy, establishing a European foothold to capture demand across key industrial markets.  

The spinout’s modular thermal energy storage units, which convert renewable electricity into high-temperature heat up to 1,200°C, are designed for rapid integration across industrial environments and can be adapted to a wide range of industrial processes, from direct heat applications to steam generation, making them applicable across energy-intensive industries.

“The decarbonisation of industrial process heat is a key lever for the transformation of energy-intensive industries and at the same time a highly relevant growth market for climate tech in Europe,” said Monika Steger, MD of Bayern Kapital.

“As a VC investor, we see significant commercial potential here. Exergy3 is developing a technologically promising solution at the intersection of energy, industry, and decarbonisation.” 

Industrial heat represents a significant share of global energy demand and emissions, with industrial processes often running 24/7, accounting for 20% of global energy demand.

Exergy3 said that industrial heat remains structurally difficult to decarbonise because of the need for these high, continuous temperatures to power a range of processes, a problem compounded by renewable output wasted as systems struggle to absorb generation in real time.

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By turning excess renewable generation into a reliable energy input for industry, Exergy3 aims to decarbonise heat at scale, with its tech converting surplus renewable electricity, such as curtailed wind power, into high-temperature heat, and turning excess generation into a usable energy source rather than a wasted supply.

“Industry needs reliable, high-temperature heat, while large amounts of renewable electricity are going to waste,” said Markus Rondé, CEO of Exergy3.

“Exergy3 brings them together – turning surplus renewable power into reliable, low-cost heat for industry. That means lower emissions, lower energy costs, and a more resilient energy system.”