Smart Grid Finance Rundown
Smart Grid Finance Rundown
Venture Capitalists and Congress Rock the Grid
VC, M&A, and Legislation in the rapidly growing Smart Grid Sector
By Eric Wesoff, Greentech Media
In 2004, the term “Smart Grid” didn’t really exist - despite the Demand Reponse successes of now-public firms like Comverge and EnerNoc.
Fast forward five years and we’ve seen hundreds of millions of dollars of VC investment flow into a wide range of smart grid start-ups, essentially creating a new market and ecosystem from power generators to home networks. 2009 has gotten off to a slow investment start but that will change in the coming quarters.
Smart grid technology, investment, and infrastructure must emerge if the states are to meet their ambitious Renewable Portfolio Standards.
But beware—as Stephen Lee, the Senior Technology Executive for Power Delivery and Utilization at EPRI, the Electric Power Research Institute warns - smart grid players must avoid the hype, saying, “we are at the peak of the smart grid hype cycle - when Obama and Biden talk about the smart grid you know it’s being hyped.”
VC Funding in Smart Grid 2005-2009
Year | VC Funding in Smart Grid Firms |
2005 | $60M |
2006 | $281M |
2007 | $419M |
2008 | $461M |
2009 ytd | $196M+ |
2008 and 2009 Smart Grid M&A
In today’s difficult business environment, we expect to see lots more M&A activity and consolidation.
Recent M&A in the Smart Grid Sector
BPL Global | Acquired Serveron, a provider of technology and services to monitor electric utility assets | Financial terms were not disclosed. Since 1999, Serveron has raised ~$48M in VC from Perseus, Siemens Venture Capital, El Dorado, Nth Power, Cascadia Pacific Management, et al. |
Consumer Powerline | Acquired Xtend Energy, a provider of rapid response services to industrial, commercial, and retail customers, where customers have a brief window in which to supply excess capacity in response to sudden energy events. | Undisclosed |
GE Energy | Acquired Mapframe, to expand its smart grid portfolio of utility transmission and distribution offerings | Undisclosed |
Acquired V2 Green (PEV integration) | Undisclosed | |
SmartSynch, a provider of wireless smart metering technology | Acquired Applied Mesh Technologies, a provider of energy monitoring and usage control solutions to utilities and enterprise customers | Undisclosed |
VC Investment in the Smart Grid
Soaring energy costs, an aging electricity grid, national security concerns, and government regulation are creating a boom in smart utility meters and the semiconductors that go into them.
Most smart grid investments don’t require hundreds of millions of dollars to create a factory. VCs look at the smart grid market as a capital efficient alternative to the capital-intensive wave of green investments of late. Additionally the technology of the smart grid – wireless communications, mesh networks, semiconductor integration, and software is a familiar vernacular to the VC community.
Look for big players like Intel, IBM, Cisco, and Oracle to begin vying for a slice of the smart grid pie either through investment or acquisition. What follows is a detailed list of smart grid VC investments since Q1 2008…
Q1 2008 VC Investment in DR and Smart Grid | |||
$18M Round B | Ignition Partners led with PCG, Applied Ventures, Element Partners, Chrysalix | Renewable energy monitoring and reporting software and systems | |
$15M Round D Add-on | Quercus Trust | Managing energy sources and storage for utilities | |
$12M Round B | RRE Ventures led with Vista Ventures, Access Venture Partners, Appian Ventures | Zigbee-based energy management SW and HW for residences | |
$2.5M (Private Placement) | Vicis Capital | "Smart-grid" technologies that use power lines to transmit data | |
Undisclosed Round A ($1.2M?) | Peninsula Equity Partners | Advanced power strips enable collaboration between electronic devices and their power sources | |
Q2 2008 VC Investment in DR and Smart Grid | |||
$20M Round E | Credit Suisse led with Battelle Ventures, Beacon Group, Endeavor Capital, GulfSouth Capital, Kinetic Ventures, OPG, Siemens Venture Capital, et al. | Wireless smart metering technology | |
$17M Round C | Edison Electric Institute, Foundation Capital | A networking platform that allows utilities to connect energy-generation equipment, energy-storage devices and appliances, and energy-monitoring management and software | |
$13M | Siemens led with DBL Investors, Foundation Capital | Advanced metering and smart grid software | |
$12M | NCD Investors led with KPCB, Catamount Ventures, Phoenix Partners | PC software that reduces energy consumption across computer networks | |
$4M | Scottish & Southern Energy, Sigma Capital Group | Energy management and carbon monitoring | |
DeepStream Technologies | Undisclosed | 3i and Doughty Hanson | Intelligent sensors addressing energy management, protection, and control |
Undisclosed | Intel Capital | Smart-grid software developer | |
Q3 VC Investment in DR and Smart Grid | |||
$23M Round D | Cross Atlantic Capital Partners, IFA Group, Novitas Capital, El Dorado, and Morgan Stanley | Software and services for electric utilities to build the smart grid | |
$19M | Flybridge Capital Partners, RockPort Capital, The Westly Group, Metropolitan Investments | Wireless nodes, gateways, software and tools for smart utility networks | |
$6.6M | Wellington Partners, 3i Group, Emerald Technology Ventures, Siemens Venture Capital, BayTech Venture Capital, et al. | Energy harvesting technology, wireless sensors, and RF communication for building automation, lighting, AMR, and environmental applications | |
$1.5M Seed | Enterprise Equity, Enterprise Ireland, et al. | Zigbee-based wireless sensors and controllers for lighting, energy monitoring, building management, etc. | |
Undisclosed | Balderton Capital | Energy efficient data center management | |
$1.46M | Thames Valley Investment Network, Bank of Scotland, et al. | Smart meters and home energy hubs | |
$120M Round E | Goldman Sachs Group, Susquehanna Private Equity Investments, The Quercus Trust, Altira Group, Standard Renewable Energy Group | Smart-grid infrastructure | |
$40M | MissionPoint Capital Partners, Zouk Ventures | Network solutions and software for advanced metering, DR, and smart grid management | |
Q4 2008 VC Investment in DR and Smart Grid
Smart metering in the US currently has a low penetration, with ~6% of households having installed the technology in 2006. This is set to increase rapidly over the next few years with some forecasts for smart meter penetration to reach close to 90% of households by 2012.
Q4 2008 VC Investment in DR and Smart Grid | |||
$75M | KPCB, Foundation Capital, JVB Properties, Northgate Capital | Communications hardware, software, and services for the smart-power grid | |
$33M Round B | Energy Capital Partners, Second Avenue Partners | Managing air-conditioning electricity usage Freezing water in an insulated tank at night and using the ice to cool air during the day | |
$14M | NEA | Demand-response and energy efficiency data technology | |
Ambient (OTC) | $8M | Vicis Capital Master Fund | Software and services for electrical utilities to deliver IP-based services on existing power lines |
$7M | Altira Group | Energy recovery and emission control technology | |
RLtec (UK) | $960K | Low Carbon Accelerator, et al. | Grid management technology for DR and energy balancing |
Q1 2009 VC Investment in DR and Smart Grid | |||
$7.5M Round B | ONSET Ventures, Claremont Creek Ventures | Demand-side energy management software for data centers and commercial and industrial facilities | |
$15M Round D add-on | Previous Round D investors include KPCB, Foundation Capital, JVB Properties, Northgate Capital | Up-round? for the wireless smart-grid equipment and software maker | |
SynapSense | $7M | Robert Bosch Venture Capital, Emerald Technology Ventures, Sequoia Capital, ARV, Nth Power, DFJ Frontier | Wireless energy efficiency solutions for data centers |
GridPoint | Undisclosed | Craton Equity Partners | Open software platform for distributed energy |
Q2 09 VC Investment in DR, and Smart Grid | |||
Tendril Neteorks | $30M Round C | VantagePoint Venture Partners, Good Energies, RRE Ventures, Vista Ventures | Residential smart grid software and wireless sensors |
Zenergy (AIM) | $13.8M | Arranged by Panmure Gordon & Co and Mirabaud Securities | Superconductors as fault current limiters, preventing current surges on the grid. Recently announced contracts with NY’s Con Ed. SC Power is the US subsidiary. |
AlertMe (UK) | $12.8M Round B | Good Energies, Index Ventures, SET Venture Partners, VantagePoint Venture Partners | Zigbee-based web-enabled home energy management devices add-on to security systems |
Ember | $8M | Chevron Technology Ventures, Stata Venture Partners, Polaris Venture Partners, GrandBanks Capital, RRE Ventures, Vulcan Capital, DFJ ePlanet Ventures, New Atlantic Ventures, et al. | The leading maker of ZigBee wireless mesh networking chipsets for communications between devices such as utility meters and thermostats |
Powerit Solutions | $6M | Siemens Venture Capital, ArcelorMittal's Clean Technology Fund, @Ventures, Expansion Capital | Intelligent energy management and efficiency systems |
Hexaformer (Sweden) | $4.6M Round B | Sustainable Technologies Fund, Innovations Kapital | Electric transformer cores |
OutSmart Power Systems | $2M Seed | Bainco International Investors, Clean Energy Venture Group, Manifold Products | Hardware and software systems to monitor and manage energy usage, building occupancy and other activities in commercial buildings |
EnergyHub | Undisclosed Round A | .406 Ventures, Physic Ventures | Home energy management solutions |
VC Investment in EE, DR, and Smart Grid | |||
eMeter | $32M | Sequoia Capital, Foundation Capital | Smart grid management software |
iControl | $23M Round C | ADT Security Services, Cisco, Comcast Interactive Capital, GE Security, Charles River Ventures, Intel Capital, Kleiner Perkins iFund | Home energy management integrated with security systems |
Control4 | $17.3M | Best Buy Capital, Mercato Partners, University Venture Fund, Frazier Technology Ventures, Thomas Weisel Venture Partners, vSpring Capital | Home Energy Management - a wirelessly controllable thermostat linked to a gateway meant to communicate with smart meters |
Grid Net | $13.8M Round C (peHub) | Braemar Energy Ventures, Catamount Ventures, GE Energy Financial Services, Intel Capital | Network management software and communications products for the utility industry's smart grid |
Advanced Telemetry | Undisclosed Round B | Quercus Trust, 21 Ventures | Wireless energy and resource management system for home and small business |
CPower | Undisclosed add-on to April’s $10.6M B Round | Intel Capital | Demand response aggregator with a portfolio of ~2,200MW under management |
GenDrive (UK) | Undisclosed | Angel investors | Grid connected inverters for connection to a range of renewable energy devices |
Silver Spring’s $15 million investment comes on top of a $75 million Round D raised in October. In a good economy, Silver Spring would be a natural IPO candidate. Even in this economy – Silver Spring could be the IPO that quenches the IPO drought later this year.
With large-scale contracts with utilities including Pacific Gas & Electric Co. (5 million customers), Florida Power & Light (4.5 million customers) and Pepco Holdings (1.9 million customers), Silver Spring is set to install its devices in millions of meters over the coming years.
Silver Spring’s competitors include smart meter vendors that provide networking and communications themselves — Itron, GE, Landis+Gyr, Sensus and Elster— as well as rival networking providers such as Aclara, Trilliant, Eka Systems and SmartSynch.
And shifting gears away from Venture Capital in smart grid – here’s a bit of info on legislation in smart grid.
As testament to the policy shift in energy, today we have federal politicians with the will to advance a bill with “smart grid” in the title.
H.R. 1774, the Smart Grid Advancement Act looks to reduce peak demand and increase the deployment of smart grid technologies.
The bill incorporates smart grid features into labeling so consumers have the information to purchase smart grid capable products. And the bill takes steps to reduce peak electricity demand. The Smart Grid Advancement Act directs states and load-serving entities to identify peak demand reduction goals based on an aggressive effort to adopt smart grid technologies. Studies show that when implemented on a large scale, demand response could reduce electric costs by as much as $15 billion annually.
Final Word
The only way we can reach aggressive Renewable Portfolio Standards and exploit energy storage, distributed generation, PHEVs, demand response, and smart meters is through an integrated and intelligent grid.
But the entity we call a “Smart Grid” is more of a theoretical construct than a true engineering problem. In a perfect world, we could build from scratch, a self-aware, self-healing, sensor-laden, robust and secure mesh network that allowed dynamic forward pricing to inform customer and utility energy usage and choices.
But in the real world - we are attempting to overlay intelligence on an antiquated legacy network that has many masters and many flaws. Utilities tend not to move quickly and are slow to innovate. Legislation is slow and imperfect and standards often compete.
Nevertheless, there is momentum in this field and VC funded start-ups like Silver Spring and Fortune 500 firms like IBM and Intel are starting to drag the utilities and the grid into the 21st century.
