Can utilities rely on home air conditioners and water heaters the same way they rely on power plants? Consert, a startup founded in 2008 and funded by about $25 million from strategic investors including General Electric, Verizon, Qualcomm and Constellation Energy, says it has the magic formula for making it happen.

Now the startup has a chance to test its proposition in its new hometown of San Antonio, Texas. This summer, the company announced it was moving its headquarters there from Raleigh, N.C. to work on its biggest project yet: a partnership with municipal utility CPS Energy, aimed at enabling 250 megawatts of load shedding across 140,000 customers over the next four years.

Consert’s plan is to create virtual peak plants (VPPs), made up of hundreds and thousands of homes and small businesses that turn over their thermostats, water heaters and pool pumps to utility control. Utilities also pay for the systems in Consert’s business model, which means that customers get to save on their power bills at no direct cost (though they’ll presumably pay for it indirectly in increased rates).

Utilities, on the other hand, get to subtly, but firmly, control their major loads to help meet their grid management and power purchasing needs. While Consert is including home energy dashboards and smartphone apps to connect to homeowners, its technology is rooted in serving the utility’s interests, CEO and Chairman Jack Roberts said in a Tuesday interview at the DistribuTECH smart grid conference in San Antonio.

“We’re about electricity, not home automation,” he said, drawing a distinction between his company and startups like Tendril, EnergyHub, Energate, AlertMe, iControl and the dozens of others in the crowded home area network (HAN) space.

Consert’s real-time energy command-and-control system costs about $400 to $500 per customer, quite a bit more than today’s smart meter-based home demand response systems or direct load control systems from the likes of Comverge. But Roberts said the system also offers far more lucrative and reliable load-shedding capacity for utilities desperate to avoid building new power plants, meet efficiency goals and adapt to grid disruptions like solar and wind power and plug-in EV charging.

“To capture the most valuable economics in the energy business, you need precision, verification and speed,” Roberts said. In that sense, he compared Consert’s installation prices not against other home energy management technology, but against the cost of building a new natural gas-fired peaker plant to manage extra load. On those terms, he estimates that Consert’s VPP technology should be about a quarter the capital expense and about 60 percent the ongoing operational costs.

To be sure, Consert isn’t the only company aiming its sights on controlling energy use across lots of homes to serve utility needs. But Roberts said that today’s residential energy management and load control systems just aren’t dispatchable in the way utilities need them to be. 

The first generation of load control programs used one-way radio and pager networks to shut off air conditioners and other household loads, with no way of verifying that the load drop actually took place, let alone measuring exactly how much power was saved. Two-way communications solved the verification problem, but didn’t solve the measuring problem -- it takes smart meters to capture household load on an auditable basis.

But even communications and smart meters don’t capture just how much energy is dropped by Consert’s wirelessly linked household loads, Roberts said. That’s because the difference between the home energy consumption before the event and after the event can’t be tied to pool pumps, water heaters and thermostats alone. Someone may have turned the dryer on or off in that time, or cranked up the home stereo, or turned all the lights off and left the house -- all events that would skew the equation.

That’s why Consert actively meters each load on an individual basis, with wireless links fast enough to talk to the meter once every two seconds or so if needed, Roberts said. Most smart meters only communicate back to the utility once every 15 minutes to an hour -- not fast enough to respond to the most lucrative potential markets for energy reduction.

Consert’s four strategic investors play an important part in its business strategy, Roberts said. Its cellular-to-ZigBee radios now come embedded in GE smart meters and connect to utility control systems over Verizon’s network, he said (the company is now using ZigBee to connect to in-home devices). Qualcomm has partnered with Verizon on M2M networks and “helps us with technology and intellectual property,” he said.

As for Constellation, the energy company could use Consert’s VPPs to shed load for the demand response, ancillary services and power markets where dispatchable (market-ready) “negawatts” can earn lots of money beyond simply lowering power bills. While Consert hasn’t started actually bidding its demand reduction capacity into power markets in an operational way, it plans to be able to be doing so by this summer, Roberts said. 

In Texas’ deregulated energy market, spot prices for power can shoot from about $50 a megawatt-hour to up to $3,000 per megawatt-hour during brief windows covering roughly 100 hours out of a year, Roberts noted. That could give energy users and the municipal and cooperative utilities that buy power in the market a big incentive to spend on technology that gives them a fast-responding demand response reserve to avoid having to pay for unexpected power needs at those prices.

That’s one high-value market Consert is targeting, he said, but utilities can pick and choose their applications. Some may want to target specific neighborhoods to ease congestion on feeder lines.

Consert is talking to smaller utilities in South Dakota, Tennessee, Kentucky, New Jersey and New York, as well as three larger investor-owned utilities, Roberts said. After moving its headquarters from North Carolina to San Antonio earlier this year, the company employs 50 there and about 20 more elsewhere, he said.

The big question for Consert would appear to be its higher price per home, compared to the competition. “We’re not the cheapest out-of-pocket cost, but we’re the highest value,” Roberts insisted. The startup won’t just have to prove that it can deliver that precision, verification and speed at its price point -- it will also have to prove that the market cares enough about those qualities to pay more for them.

Tags: comverge, consert, constellation energy, demand response, efficiency, energy efficiency, general electric, ibm, qualcomm, smart grid, utilities, verizon