Turning Big Data into Smart Data
The face of energy efficiency is changing. Yes, gains can still be made by installing energy saving appliances or purchasing energy efficient light bulbs. But taking a look at the third quarter deals in our Energy Efficiency sector, a new trend is slowly but steadily gaining traction. The power of information technology is profoundly reshaping the way producers and users consume energy. Instead of installing energy efficient light bulbs, companies are creating intelligent lighting systems that optimize energy usage. And as venture investors are becoming more hesitant to invest in companies that require a lot of start-up capital, the rise of demand response software is increasingly positioning energy efficiency as a low risk, capital lite investment. Among those capital efficient investments, we’re seeing a rise in intelligent analytic platforms that engage energy users and producers alike to capture energy savings. Taking a cue from “pure” tech companies specializing in data management and cloud computing software, cleantech is taking a go at making data more efficient. Especially with the hype surrounding smart grids, there will be no shortage of data to sift through. The focus now will be on companies that are turning real time data analytics into smart, actionable improvements that achieve energy reductions for their customers.
At the residential level, energy users have a breadth of consumer engagement platforms to choose from to help curb their energy usage. Building off the success companies like Opower have had with leveraging data and behavioral science, we’re seeing a host of new start-ups harnessing information technology to promote energy efficiency. Bidgely, which received $5 million from Khosla Ventures this summer, is one of them. The Sunnyvale, CA start-up uses a cloud based algorithm to collect real time feedback of energy usage at the appliance level to help consumers lower their energy bills. Bidgley provides highly personalized recommendations based off their appliance itemization as well as a social and demographic profile of the user.
Another cloud-based energy service provider, EcoFactor, made headlines yesterday for closing a $10 million round led by power company, NRG Energy. EcoFactor allows individuals to save energy and money through optimizing one of the largest energy sinks in the household: HVAC systems. Their predictive analytics algorithm is constantly making slight adjustments to your thermostat based on your preferences,anticipating changes in weather conditions and creating custom programs based on household energy usage.
Trove, a Florida based start-up, also falls into the category of companies embracing “intelligent efficiency”. The company received $1.1 million from CUBRC in August for their cloud based platform-as-a-service that provides energy data aggregation tools for utilities and software developers. Trove combines innovative data analytics with predictive data science to collect information on consumer energy usage and predict future consumer behavior. Big data in the utility sector is not a new concept; but now new technologies are giving us direct visibility into utility operations in real time and enhancing our decision making abilities when it comes to using energy more efficiently.
For the time being, demand response energy management systems are delivering the biggest bang for investors’ buck. Investors are increasingly wary of huge investments in hardware when Silicon Valley can make a surer bet on apps and dashboards. Optimization is critical in achieving energy efficiency, but time will tell if the companies listed above, as well as big names such as Opower and Nest, will truly bring in the big energy savings they claim to, or if they will eventually hit some theoretical energy savings threshold.