After tapping Morgan Stanley and Goldman Sachs last November to help it go public, the energy efficiency firm Opower has confidentially filed for an initial public offering with the Securities and Exchange Commission.

The Wall Street Journal reported on the news this morning. According to Greentech Media sources close to the company, the filing possibly could have occurred around a month ago -- the private market for shares has been very active as former employees trade in anticipation of an IPO.

However, because Opower was allowed to confidentially file with the SEC under new rules for businesses with less than $1 billion in revenue, the exact timing is unknown.

Speculation about an Opower IPO has been brewing for months. With a strong revenue stream, a growing portfolio of utility partners and a good story to tell investors, the company has been on analyst watch lists for some time.

In just the last few years, Opower has evolved from a little startup sending simple paper notifications about energy conservation to utility customers into a software-as-a-service player expanding internationally and developing behavioral demand response programs. Opower now has 400 employees, has partnered with 90 utilities and touches 22 million homes internationally.

It's not a surprise that Opower was a strong candidate for an IPO in 2014. But there are still a lot of unanswered questions about how much the company is worth and what its future expansion plans will be. Here are three things to watch out for as Opower prepares to go public.

1. Actual valuation


Because Opower doesn't disclose revenue figures and was allowed to file for its IPO secretly, we still don't have information on the company's valuation. But we do have some helpful metrics.

The company has raised $65 million from Accel Partners, Kleiner Perkins Caufield & Byers and New Enterprise Associates since it was founded. According to a survey from Deloitte, Opower has expanded revenue by more than 10,000 percent since 2009. In 2010, CEO Daniel Yates reported that the company had signed contracts with utilities worth more than $30 million over a multi-year period.

Those contracts have likely expanded substantially since then, as the company pushes into international markets and continues signing up new power companies.

2. How will the company expand and continue to be competitive?


Opower has done remarkably well in convincing conservative utilities to use its service, which delivers 2 percent to 4 percent savings by sending messages to customers about how their neighbors are using energy. The behavioral science approach has worked, but does it make Opower competitive in the long run?

Delivering incremental savings opens up a multi-billion-dollar market in the utility sector around the world -- and there's still lots of efficiency the company can tap. But Opower is starting to diversify by partnering with Honeywell to deploy smart thermostats, and also to use its platform to run residential demand response programs. The smart thermostat venture hasn't resulted in much, but the demand response offering looks promising.

According to a GTM source, internal management is constantly worried about competition and is sensitive to any new market entrants that gain traction. Presumably, Google's acquisition of Nest is a concern for the company, as Google now has a powerful new tool to manage energy and data in the home. Nest has emerged as a competitor to Opower as it expands its own utility partnerships and leverages smart thermostats for demand response.

The range of other home networking providers gaining traction -- telecom companies, alarm companies and startups -- may also present strong competition to Opower as they get deeper into the home.

Along with paying off investors, the IPO will help Opower continue its expansion in order to compete with this broad new range of companies, rather than temper growth for immediate profitability's sake. There's also speculation that Opower will expand into other markets, like water, or move into entirely new vertical segments outside the utility sector.

3. A sign of things to come for cleantech in 2014?


Investors are naturally going to point to Opower as a big success. With the venture capital sector still reeling after a slew of failed investments, any strong public exit is a good story to tell. 

Today, VCs are more interested in the capital-lite "cleanweb" companies that use IT to solve energy problems. It's debatable whether Opower can be classified as a cleanweb company, but Rob Day, a partner at Black Coral Capital, expects investors will claim it as such. However one defines Opower, there's a general feeling that this IPO -- along with Nest's recent acquisition -- will give the market a much-needed boost.

"Amidst a lot of negativity around the sector, we're still seeing companies growing and succeeding," said Day. "We're going to see more of these -- it's a taste of what's to come."

Tags: cleantech investment, ipo, nest, opower