EnerNoc (NSDQ: ENOC) said Thursday that it has proven that turning down people's power can be a profitable business.

The Boston-based demand response provider reported its first profitable quarter since it went public in 2007, with quarterly net income of $26.6 million, up from a loss of $3.1 million in the same period last year.

That income came on revenues of $103.1 million for the third quarter, compared to $44.2 million for the same period last year.

EnerNoc also reported it expects to remain cash flow positive through the second half of 2009 and achieve a profitable year in 2010, though executives said in a conference call that the weakened economy could impinge on that goal.

Over the past year, EnerNoc has nearly doubled its number of megawatts under management – a measure of how much power it can turn down at factories, office buildings and other sites at the call of utilities that need to shave power when facing peak demand times.

It's taken some time to reach profitability in the business. EnerNoc lost $36.7 million in 2008 and $23.6 million in 2007, its first year as a public company.  It also lost $6.2 million in 2006.

Any emphasis on EnerNoc's Thursday announcement should take into consideration that the company realizes more than half of its revenue in the third quarter due to the nature of its contracts with grid operator entity and big customer PJM, noted Ben Schuman, analyst with Pacific Crest Securities.

Comverge (NSDQ: COMV), the other publicly traded rival to EnerNoc in the demand response field, has reported quarterly profits but like EnerNoc has not pulled off an annual profit (see Comverge Boosts Revenues, Narrows Loss in 2Q).

Comverge lost $94.1 million in 2008, a number inflated because of acquisition costs. It lost $6.6 million in 2007 and $6.2 million in 2006.

Both companies have seen strong and somewhat steady growth in revenue, however, which has persisted through the economic downturn that began last year.

That could be because demand response providers can pay their commercial and industrial clients, first to agree to be ready to turn down their power during peak loads, and again to actually do so. The money comes from utilities eager to reduce customer demand, and avoid paying extra-high costs for power, to meet the handful of hours out of the year that they're facing peak loads on their grids.

The Federal Energy Regulatory Commission has pointed to demand response as a major means to reduce the nation's energy use and greenhouse-gas emissions. While about 41 gigawatts of power was under demand response management as of December 2008, or about 5.8 percent of nationwide peak power demand, FERC has estimated that up to 188 gigawatts of power could be brought under demand response control

That's got venture capital investors interested in other demand response providers, such as privately held CPower, which has raised at least $10.7 million from investors including Intel Capital (see Green Light post).

While most demand response providers focus on industrial and commercial customers, Comverge has branched out into residential demand response, setting up homes with both an older line of pager-controlled devices and a new system meant to deliver power-down commands through smart meters and broadband connections (see Demand Response: The Home vs. C&I Debate).

Some industry watchers have questioned whether the traditional model of demand response may be supplanted by the more direct connections between utilities and their customers that smart meters may bring. Demand response providers respond that they're applying their hard-earned expertise in the business using the same new technologies (see Is Demand Response Doomed?).

How the growth in demand response applies to prospects for other smart grid companies remains to be seen. Silver Spring Networks, which makes networking technology for smart meters and other smart grid systems, has said it expects to become profitable this year, and has hinted at an IPO in the next year or two (see Green Light post).

Lithium-ion battery maker A123 Systems, on the other hand, went public in September – the first greentech IPO since the economic collapse last year – without yet turning a profit (see Greentech IPOs: First A123, Who's Next?)

Of course, in thesolarpower field, both Sunpower and First Solar have experienced profits since going public. So has Energy Recovery in its business of desalination equipment (see Green Light post).