British Gas picks AlertMe for trial of online heating control

A unit of UK conglomerate Centrica (LSE:CNA) said today it selected Cambridge, England-based startup AlertMe for a trial that would allow consumers to control heating using the Internet.

The deal with British Gas could help utility customers reduce the use of natural gas thanks to heating, which accounts for around 47 percent of total UK energy consumption.

It was the first publicly announced utility customer for AlertMe, which revealed in June that it raised £8 million ($13 million) in a Series B from Good Energies, Index Ventures, SET Venture Partners and VantagePoint Venture Partners (see AlertMe closes £8 million to expand in Europe). CEO Pilgrim Beart said AlertMe has other trials underway with European telcos, but he declined to name them.

The companies did not release financial terms of the agreement, nor specify how many customers are expected to take part. However, Beart told the Cleantech Group that AlertMe is getting paid for the trial, which is starting as a pilot and could lead to a full commercial rollout with British Gas.

Beart noted that the deal could help the company as it looks to expand in the United Kingdom, Europe and across the globe. British Gas has 4.5 million heating customers in the UK, while Centrica owns utilities in Europe and North America.

“It’s just one part of much larger plans,” Beart said. “The big picture here is the ongoing relationship between British Gas and AlertMe.”

Beart told the Cleantech Group in June that the company has no direct competition in the UK. However, the startup could face much more competition if it enters the North Amercian market.

In June, Redmond, Wash.-based Microsoft launched the beta version of its new Hohm online energy management application (see Microsoft enters energy management with Hohm app). Also that month, Boulder, Colo.-based Tendril Networks brought in a $30 million Series C round for its technology (see VantagePoint leads $30M round in AMI solution leader). And earlier this year, Google entered the smart grid and energy monitoring market with its PowerMeter program (see Google admits VC rumors).

The voluntary trial announced today calls for British Gas customers to opt-in for the extra fee associated with AlertMe’s system, which incorporates hardware and software wired into the customer’s broadband connection. The customer could then remotely control heating from a mobile phone, the Internet, e-mail, or text messages.

Beart said the program is expected to begin before the end of 2009, and it’s expected to be available across the UK. He declined to say whether other companies were providing equipment or services.

AlertMe’s business model calls for the company to make money on the upfront sale of hardware, as well as an ongoing service revenue. The company’s Smart Home platform can also control electricity use by integrating devices such as lamps and windows using Zigbee communication, but the focus of the deal with British Gas is just heating for now, Beart said.

Last week, the UK government published its renewable energy strategy, calling for 30 percent of its electricity from renewables by 2030. The measures for home insulation, power generation, electric vehicles and transportation are intended to cut emissions 34 percent by 2020, against a 1990 baseline (see Inside cleantech Europe: That was the week that was!).

British Gas has encouraged energy efficiency to its customers as a way to protect against fluctuating energy costs. The utility plans to spend more than £1 billion by 2011 to help customers improve insulation and install energy efficient boilers.

The company is also focusing on new methods of energy generation. In April, Centrica's British Gas New Energy division acquired a stake of biomass heating business Econergy for £1 million (see Big brother backing cleantech). The company has also reportedly been pursuing the devlopment of offshore wind (see Kleiner Perkins going greener).

Shares of Centrica were up 0.22 percent in early morning trading today. The company recently made a £1.3 billion hostile takeover bid for North Sea oil and gas company Venture Production.

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