Utilities are getting nimble with analytics start-up investments and partnerships

By October 30, 2018 No Comments

Demanding times call for innovation and utilities have responded by getting involved. Traditionally risk averse, utilities now recognize that they can learn from companies that are born of a culture of fail fast, learn and move on.

Active organizations are participating on Advanced Research Projects Energy (ARPA-E) advisory boards, initiating corporate venture funds, partnering with universities and expanding their pool of suppliers to include young start-up companies.

Analytics start-ups are an important part of the mix because they can offer quick support in rapidly evolving areas, including the integration of distributed energy resources (DER).

According to Bloomberg New Energy Finance, utility venture deals have more than doubled over the last nine years, with a total of 40 projects receiving investments in 2017. One example is Energy Impact Partners (EIP), backed by a consortium of 14 US and global utilities and energy companies that collaboratively invest in innovative energy technologies that create value for customers. Others include WEC Energy Group’s involvement in Energize Ventures (formerly the Invenergy Venture Fund), the Ameren Accelerator, Accel-VT (a Vermont utility collaboration), the Westly Group (backed by Duke Energy), Innogy at AEP and Exelon’s Constellation Energy Ventures.

Early involvement by utilities in start-ups is a win-win. Utilities shape the development of the concept of solutions into viable products that fit their needs. Start-ups get a realistic path to scale that can handle utility requirements. For example, SMUD is working with Clean Power Research on developing analytical tools to support distribution resource planning in a high-DER environment. Ameren’s transmission line loss analytics were a joint effort with PowerRunner.

Doing what they do better: energy management

Utilities want to make bonds with their customers stronger, and are looking to do so by acting as a “trusted energy advisor.” FirstFuel’s analytics (bill disaggregation, pattern recognition to identify building profiles, prescriptive modelling of savings measures) are deployed at 40 utilities to engage business customers. Packetized Energy, a University of Vermont project with funding by ARPA-E and Accel-VT, provides hardware mounted on energy-consuming equipment so that it consumes only “packets” of energy based on peak demand.

Adapting to changes in the grid

As the grid changes with the addition of DERs, it is not surprising that analytics start-ups are active in the greenfield space, with their businesses evolving alongside technology and market needs in this area.

AutoGrid was born out of a Stanford grant to work on power flow and later received funding from APRA-E for renewable integration—the company has since pivoted to develop a demand response platform that forecasts supply and demand fluctuations.

AMS began as a battery project developer and through that experience, developed the software and controls to manage battery charge and discharge. The company, also funded by EIP, has recently pivoted to emphasize software over project development. AMS’s platform will run analytics (forecasting building use, market conditions, prices and demand, resource optimization) to facilitate utility bids into the wholesale market.

Other start-ups to watch in the transition to a new grid are Opus One Solutions and Greenlots. Opus One is testing analytics for hosting capacity with Hawaii Electric and distribution resource planning-related analytics with Toronto Hydro. Greenlots – think Deploying Analytics as EV Penetration Increases – offers utilities analytics they can use to plan for future EV penetration and manage EV charging, and is working with Avista.

Don’t fear the pivot

Utilities’ needs and business strategies are in flux, and a requirement for many technology start-ups is to be agile with respect to their products and services. Fortunately, many start-ups are equipped with that mindset from the get-go.

On the other hand, utilities investing in these companies might not feel the same way. Traditionally risk averse, the idea of investing in something without being able to predict what that thing will look like in 5-10 years is likely to cause some hesitation.

But the pivot should not strike fear in the hearts of utilities. It is a good thing. What starts as a kernel of an idea gets baked into a product that will be ready and able to integrate into utility systems now and in the future, as well as meet the changing needs of the market. Today, it is the only way to assert technology leadership.