Blue Pillar, a startup that’s built up an interesting niche in enabling hospitals to manage power for efficiency and demand response needs, has raised a $7 million Series B round aimed at expanding its presence into the data center, military, education and manufacturing sectors.

Investors in the Series B round included Claremont Creek Ventures, Arsenal Venture Partners, Allos Ventures and OnPoint Technologies, the U.S. Army's venture capital fund. Previous unnamed investors also participated in the round, the company announced.

Blue Pillar has previously raised about $2.5 million in friends and family investment, CEO Kevin Kushman told me in an interview last year. Founded in 2006, the Indianapolis-based startup got its start in providing the hospital market with distributed power asset management, specifically, testing generators and other emergency power systems that keep critical medical services up and running during blackouts.

Because keeping the power up and running can be a matter of life and death, hospitals are required to have plenty of power backup and to make sure it operates properly in an emergency. But most of the time, that backup power goes unused, Kushman said. That makes hospitals a natural target for demand response capacity, or covering grid peak power needs in exchange for a fee.

Of course, hospitals are loath to turn over control of such critical assets to an automated system, he said. They’re also insistent that any energy controls make clear distinctions between systems that can be turned off and those that can’t in a power emergency.

Blue Pillar started working with Duke University Health System in 2007 (PDF), and took a detailed approach, breaking out different hospital systems and rooms at the circuit level using Blue Pillar’s Advise software, Kushman said.

Because the North Carolina university health system encompasses some 90 buildings, Blue Pillar includes management of “fleets” of buildings as a single resource via a single dashboard, he said. That’s part of the company’s Aurora software platform.

Together, the two systems make up what Blue Pillar calls its “Actionable Microgrid” system. It sounds a lot like the smart building systems being built by giants like IBM in partnership with the likes of Schneider Electric, Honeywell, Siemens and Johnson Controls, or like the virtual power plant architectures that startups like Viridity Energy or Powerit Solutions are devising for their clients.

Blue Pillar’s next customer, Tenet Healthcare, expanded the fleet management concept to multiple states, with 20 sites in Texas and Florida, Kushman told me. In March, Tenet brought Blue Pillar in to work on hospitals in California as well.

Working with an energy efficiency rebate program from Texas utility TXU Energy, Blue Pillar was able to realize paybacks on investment of two years to as short as six months, Kushman told me last year. As a retail power provider, TXU has an interest in helping its clients shave power use when spot power prices are high, which saves both the utility and its customers money.

By delving more deeply into individual systems and areas of a building, the startup can also enhance the amount of power available to demand response providers like EnerNOC or Constellation Energy, Kushman added. Because Blue Pillar works with building owners and operators, it sees itself as a natural partner for demand response aggregators like these, he said.  

Other potential customers with critical power backup needs include data centers and military installations, he added. That latter category could be an interesting and lucrative target, given the U.S. military’s focus on enabling its facilities to keep running during blackouts.

Kushman told me last year that Blue Pillar was in discussion with the U.S. Air Force on multiple projects, though the company hasn’t announced anything on that front yet. It will be interesting to see whether the Army’s venture stake in Blue Pillar leads to any new projects between the two.

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