They've got the network. Why not use it.
That, in a nutshell, is the basis of an expansion plan for EnerNoc. The company now primarily aggregates excess electrical capacity at various industrial customers and sells it to utilities, typically during peak power times. The heart of the system is a network that lets EnerNoc curtail the power going to lights and machinery and thereby alleviate demand, which, to a utility, is the same as getting extra power from a third source.
"[Utilities] pay us the same way they would a power plant," said David Brewster, co-founder and president of the company in an interview with Greentech Media this week. Meanwhile, the industrial customers get paid pre-arranged contractual fees for giving up power.
Now the company wants to exploit that infrastructure to sell services to its industrial sources. Some services have already started. EnerNoc has already begun consulting on energy procurement and energy efficiency to certain clients.
Next up will be a set of carbon tracking and trading services. Carbon trading and tracking is currently largely voluntary in the U.S. but large companies are already lining up carbon strategies in the face of inevitable regulations.
EnerNoc has also begun to provide monitoring base commissioning services – i.e., monitoring and flagging inefficiencies in a corporation's ordinary operations. In a building, for example, a carbon dioxide monitor might go AWOL. In turn this sends a signal to the building management system to crank up the air conditioning. EnerNoc, ideally, could diagnose the problem remotely and send a fix earlier than a maintenance crew might.
Base load commissioning can cut power consumption by 10 percent to 15 percent, depending on the site, he said. So-called "smart grid" technologies – information and communications equipment and software that track and control electricity generation, transmission and usage – could help America reduce its future electricity needs by 200 billion kilowatt-hours, or 4.3 percent, by 2030, according to a report released Thursday by the Electric Power Research Institute.
Additionally, there are ways the network can be used for managing onsite renewable energy sources likesolarpanels and industrial fuel cells.
Several other companies, such as Siemens and IBM, provide various types of services like this and the market is expected to grow as energy becomes a larger part of operational budgets. Still, EnerNoc does gain some advantage in that it's already got a foot in the door. The company has nearly 1.8 gigawatts megawatts under management at 1,400 industrial customers and its basic energy arbitrage services are a fairly easy sell once a utility has agreed to buy capacity.
"The sales cycle [for industrial customers] is 60 days," he said. This week it signed up General Mills.
The customer base, however, is generally limited to big companies. "Typically, each [industrial] customer has 333 kilowatts of demand response capacity," he said.
The expansion plans began in 2007 with the purchase of MDEnergy. The company then bought South River Consulting in 2008.
Policy will also likely drive the market for services like this, Brewster noted. Connecticut, for instance, now recognizes demand response servicers as a class of renewable energy. This in turn allows participants to qualify for tax breaks and other benefits. Historically, energy efficiency hurt some utilities because the investments only lead to them selling less power.
Indirectly, utilities can also use demand response services to offer differential rates to customers. If a utility wanted to give a discount to a large consumer, in ordinary circumstances it would likely have to offer it to a broad class of customers and go through a morass of policy hearings. That same level of rule making doesn't apply to service companies: a single company can get paid more for giving up its power than a similarly situated one.