The Evolution of Smart Grid Venturing
In venture capital investment, the smart grid category of yesterday was mostly driven by the advent of smart meters, meter data management apps, and the genesis of demand response and storage. Investments were made in companies like Silver Spring Networks, Trilliant and eMeter (acquired by Siemens) in metering and meter data management, EnerNOC (C&I service unit recently acquired by CLEAResult) in demand response, and numerable battery chemistry innovators on the storage side.
Smart grid innovation today, however, is all about the internet-of-things (IoT), most prominently to better integrate (or accommodate) renewables, storage, microgrids, and the flexible demand enabled by many of those demand response strategies that have now grown up. Companies like AutoGrid Systems, Opus One Solutions, Geli, and Gridco Systems – all funded in 2016 – are emblematic of this trend. Meanwhile, in addition to Geli, new energy storage business models demonstrated by Stem, AMS, Green Charge Networks, Greensmith, Sunverge and Sonnen are all about the internet of dispatch-able aggregated storage (to grid operators, that is) – no longer about the commodity batteries therein.
The “things” in IoT is deliberately vague, however, implying the broad applicability of the theme to all kinds of physical objects. For the purposes of this post, that means that the lines between the smart grid and adjacent categories in new technology and business creation are now often blurred. So, to appropriately monitor innovation toward a smarter grid, industry stakeholders need to look further afield.
The electric grid is only one target market application for most industrial IoT companies today. Other companies funded in 2016 like Sigfox, Mocana, Ayla Networks, and C3 IoT have brought platform-as-a-service offerings with applications for planners of lots of different types of infrastructure networks – including water, transportation, oil & gas, connected home, and yes, the electric grid.
This also means that the power sector is somewhat in competition for developmental direction of these solutions. Where utilities were once the only logical strategic partner for innovators offering solutions for the smart grid, they now find themselves competing for attention with oil & gas companies and telecommunications firms, among others.
Truly an Evolution? Or Simply Brand-Hype?
It’s worth acknowledging that, while the evolution suggested above sounds linear, there were glimmers of the IoT future even way back when in the smart grid category. Companies like RuggedCom (funded in 2003 by Emerald Technology Ventures, OPG Ventures, and Capital Power) and Ember (RRE Ventures, Chevron Technology Ventures, DFJ, others) – acquired in 2012 by Siemens and Silicon Labs, respectively – were early innovators in connecting devices on the grid for wireless communication. Silver Spring Networks and Trilliant, meanwhile, both mentioned above as examples of the smart grid start-ups of yesteryear, are also both embracing the IoT branding.
Perhaps the evolution at hand is less a technological breakthrough and more a slow embrace of technology that’s been there all along. Now, however, that evolution is getting a shot in the arm from an IoT wave that makes the grid market more accessible to application-agnostic IoT companies, and the nebulous benefits of a connected everything more accessible to the lay person.
We’ll leave you to ponder that but welcome your thoughts. Meanwhile, stay tuned for an appropriate evolution of our own categorization of the smart grid and IoT themes on our data platform, i3.