retoflow Secures Million-Dollar Investment

retoflow, a Fraunhofer spin-off based in Kassel, is receiving fresh capital to further expand its network planning software platform. BM H Beteiligungs-Managementgesellschaft Hessen is investing a seven-figure sum in the DeepTech company through HessenFonds Beteiligungen GmbH. retoflow develops digital twins of energy infrastructures that allow municipal utilities and grid operators to simulate various future scenarios and plan the expansion of their grids.

The exact amount of the investment was not disclosed. The capital is to be used for both technological development and sales expansion. retoflow already has an established software business: According to the company, it is operating profitably, generating rising recurring revenue, and has begun to attract its first international customers.

Digital Twins for Electricity, Gas, and Heating Networks

The problem that retoflow addresses is growing alongside the transformation of the energy system. Electricity grids must be expanded to accommodate electrification, renewable energy, and new consumers. At the same time, new heating networks are emerging, while parts of the existing gas infrastructure could eventually be dismantled or decommissioned. However, these developments cannot be planned independently of one another. Changes in one area can have repercussions on other parts of the energy infrastructure.

A major hurdle here is the available data. Information about networks is often stored by utilities in different systems and formats. retoflow brings this data together in a single environment and uses it to create a computable digital twin of the existing infrastructure.

Identifying Bottlenecks Before They Occur

Based on this, grid operators can simulate various scenarios. For example, the software is designed to show where bottlenecks might arise in the future within a grid and what reinforcement or expansion measures would be necessary. This aims to transform grid planning—which has often been a static process—into a more continuous one that can account for different assumptions.

Given the pace of the energy transition, grid planning can no longer be a static process.

Dr. Leon Thurner, Managing Director & Co-Founder of retoflow

Grid operators need a robust data foundation to quickly evaluate different scenarios. This is particularly relevant for small and medium-sized municipal utilities. Many of them operate multiple infrastructure systems simultaneously but lack the resources of large energy corporations. Software-supported modeling can help them prepare investment decisions more quickly and incorporate changes into their planning at an early stage.

From Fraunhofer Research to a Software Business

The technological foundations of retoflow were developed at the Fraunhofer Institute for Energy Economics and Energy System Technology (IEE) and at the University of Kassel. The founders—Dr. Leon Thurner, Jannis Kupka, and Simon Drauz-Mauel—spent several years there working on the modeling of utility networks. They also played a key role in the development of the open-source projects pandapower and pandapipes, which are used for modeling and analyzing energy infrastructures.

With retoflow, the founders ultimately transformed this scientific foundation into a commercial software platform for energy utilities. As such, the company serves as an example of technology transfer in which not only individual research findings are commercialized, but a standalone software business emerges from a scientific infrastructure built up over many years.

retoflow is already profitable

BM H’s investment is not in a company that still needs to prove its business model in the market. According to retoflow, initial pilot projects have since led to long-term customer relationships and rising recurring revenue. The company also states that it has been operating profitably for several fiscal years. At the same time, it is gaining its first international customers.

This distinguishes the financing from many traditional venture-capital rounds in the DeepTech sector. The fresh capital is intended less to fund foundational technological development and more to further scale an already functioning business model.

BM H Focuses on Energy Transition Infrastructure

For BMH, the growing importance of distribution grids is central to this. “Distribution grids are the operational backbone of the energy transition,” says Investment Manager Christoph Wolf. As the energy supply system is restructured, there is a corresponding increase in the need for tools that enable grid operators to make complex expansion decisions more quickly and with greater confidence. retoflow has developed a technology for this purpose that has already established itself in the market.

The investment is being made through HessenFonds Beteiligungen GmbH. The exact amount of the investment has not been disclosed; only a seven-figure sum has been announced.

From the Power Grid to the Entire Utility Infrastructure

retoflow sees additional growth potential in applying its technology to other infrastructure sectors. So far, the focus has been on power grids. However, according to the company, the underlying modeling and simulation logic is increasingly being used in gas, water, and heating networks as well.

The integration of these sectors could become a key differentiator in the long term. As sector coupling increases, it is becoming less and less sufficient to consider electricity, heat, and gas separately. This opens up a market for retoflow that extends far beyond the digitization of individual network plans. The platform could become a tool that enables utilities to jointly model different infrastructures and plan investments spanning several decades.