EcoFactor, a contender in the cloud-based home energy services and analytics sector, just raised $10 million in venture funding -- including a significant investment from NRG Energy.

The company's software and analytics are designed to lower residential energy use and are increasingly being used for residential demand response programs.

In the volatile and growing home energy management services (HEMS) market, partnerships are crucial as entrepreneurs stake out market channels and sectors. Having NRG Energy as an investor gives the startup some insight into an energy giant with 47,000 megawatts of generation capacity. NRG is also one of the larger solar developers (through NRG Solar) and retail providers of green energy (through Green Mountain). 

NRG Energy joins VC investors Claremont Creek Ventures, RockPort Capital Partners, and Aster Capital. Investors in EcoFactor speak of allowing "utilities, service providers and energy retailers to deploy multiple home energy programs on a single platform while increasing consumer convenience." This round brings EcoFactor's funding total to $23.5 million in the high-stakes battle for control of the home.

GTM Research values this year's HEMS market at $1.5 billion. The recent report notes that while the market is still in its infancy, "The top two leading home automation companies combined already have over 2 million customers paying monthly subscription fees of between $20 and $60, demonstrating the HEMS market’s remarkable potential. New companies have entered the arena, hungry for the next set of opportunities revolving around software and bundled service solutions, and the market has shifted in its scope and product offerings."

GTM Research sees the market at $4 billion by 2017.

In addition to NRG Energy, EcoFactor has also formed partnerships with utilities NV Energy, Reliant Energy and SMUD for demand response products. It has also designed the energy management tool on Comcast's Xfinity home platform. 

Does the path to home connectivity and HEMS run through the utility, the telecom or cable provider, or perhaps the home security provider such as Alarm.com or Vivint? All of those channels are potential partners and customers for EcoFactor.

Katie Tweed has suggested in her reporting that "utilities are, to some extent, sitting on the sidelines and watching. But they like what they see. Utilities are eager to leverage thermostats in their territories for demand response while someone else manages the customer relationship."

That's the battle being waged at the channel level where telecom firms and cable companies are looking to attract new customers with new services, and competitive utilities are looking to reduce churn. Regulated utilities are looking to increase enrollment in demand response.

Within its overcrowded niche, EcoFactor competes with other contenders such as C3 Energy, Nest, Tendril, Bidgely, and Energy Hub -- all looking to partner up and reach the consumer at the grid edge.

Below is a market taxonomy from the GTM Research report, Home Energy Management Systems Vendors, Technologies and Opportunities, 2013-2017.

Tags: aster, claremont, comcast, connected home, ecofactor, energy efficiency, home energy management, icontrol, nrg, rockport, smart home