Smart grid tech draws $75M for global expansion

Redwood City, Calif.-based Silver Spring Networks has raised $75 million in equity for its smart grid technology, which is based on an open-platform IP network.

The round was led by Kleiner Perkins Caufield & Byers and included previous investors Foundation Capital, JVB Properties and Northgate Capital. Silver Spring had previously raised about $56 million.

Smart grid technology has been attracting record investment in recent months, in part because utilities are preparing for plug-in electric vehicles while adjusting their power loads because of distributed generation from individual solar and wind installations.

Smart grid technology raised an all-time high of $202 million in the third quarter of 2008, led by a $120 million round by GridPoint (see Masdar makes another move in cleantech). The sector averaged less than $30 million a quarter in the previous 10 quarters (see Cleantech investment breaks all-time record).

Silver Spring does about 95 percent of its business in North America, having recently signed agreements with Pacific Gas & Electric, Florida Power & Light, and others. But Silver Spring now plans to focus its growth globally, especially in Australia, South America and Asia, Vice President Eric Dresselhuys told the Cleantech Group.

“This side of Antarctica, where I’m not sure there’s going to be a smart-grid play, this really affects the whole world,” he said. “Utilities see this as a regulatory imperative and an operating imperative.”

The U.S. electric grid loses roughly 7 percent of energy production through faulty transmission lines, theft and mechanical problems. But utilities don’t have a way to track where energy is lost, when energy is consumed or where outages occur. Lost electricity accounts for about $20 billion in unrealized revenue a year, drives up the cost to produce energy and causes additional power plants to be needed.

Although much attention in cleantech has been focused on new energy generation or ways to lower consumption, smart grid technology looks to improve the system of distribution. Silver Spring’s technology incorporates information about generation, the distribution system and devices to manage electricity using the well-tested and scaleable IP network, Dresselhuys said.

The open-standards system lowers barriers for potential competitors but is a necessity for selling into utilities, which are more likely to want the newest technology than remaining loyal to one vendor, Dresselhuys said. He also said the market is growing at a much faster rate than competition.

Silver Spring was able to raise the equity in just a couple months despite the current financial uncertainty in the U.S., which Dresselhuys said was evidence of the sector garnering traction within cleantech. With the new round, Al Gore and venture capitalist John Doerr joined the company’s advisory board.

Silver Spring has about 150 employees.

Cleantech developments making news in the past 24 hours

• AES raises $1.58B with China Investment
• Patently unobvious

View the last week of cleantech developments here | Subscribe to full feed