Demand response -- turning down building energy loads en masse to help balance the power grid -- has traditionally been a top-down, utility-controlled affair. Where markets for it exist, they’re centered on grid-specific needs, from reducing emergency peak loads to joining generators in day-to-day, minute-by-minute energy-balancing markets.

But offices, factories, stores and other buildings have their own energy imperatives (mainly to keep running and making money, no matter what). From their perspective, efficiency and demand response are just one of a number of tools at hand to manage energy costs -- and for big corporate or government energy users, a big part of managing energy cost is managing energy risk.

In Europe, where green energy, carbon reduction mandates and nuclear-power phase-outs are pushing more and more volatility onto the grid, those risks are growing. It would be beneficial if all the smart building energy controls being installed to help the grid could also help their owners reap rewards in future energy markets by fine-tuning energy use across multiple sites from day to day to address this new volatility.

Reactive Technologies says it has created the software platform to accomplish this. Last month, the Oxford-based startup launched its Tradenergy platform, a cloud-based software suite that integrates with building control systems down to individual fans, pumps, chillers and other building loads, and delivers that real-time visibility and control to the trading desks of big U.K. energy retailers.

Reactive Technologies has been working with “major energy suppliers” in the country, co-founder Mark Borrett told me in an interview last week, in “national trials with some of the largest U.K. energy consumers, typically in the retail sector." While he didn’t name partners, he did describe the projects as being “on an industrial scale," with sites including supermarkets, office buildings, warehouses and other building types.

Founded in 2010 by Borrett and former top Nokia technology developer Heikki Huomo, the startup has built a communications platform “capable of managing millions of devices in real time,” he said. “We’re bringing that to individual assets, 3-kilowatt refrigerators and compressors. Our platform can manage down to the individual device.”

This is the same kind of “internet of things” challenge that’s being tackled by some of the world’s biggest IT companies, as well as multiple startups, all promising better and more elegant ways to tie together innumerable low-power, slightly smart devices in a useful manner. In Reactive’s case, the goal is attaining a real-time view of, and control over, every single device in buildings across an entire corporate or government property portfolio, or “estate,” as Borrett put it. 

Reactive Power’s software integrates with existing building controls and networks, which sometimes requires extra investment to reach individual devices, he noted. But the company's software-centric approach is meant to avoid the vendor lock-in typical of traditional building energy management projects of this type, he said.

Once installed, the platform is capable of managing up to 1.5 billion instructions per second to determine which devices can be turned up or down, and for how long over the coming minutes and hours, in order to best shape the load curve of the entire portfolio and meet the sub-hourly shifts in energy markets, he said. “That’s the difference between an integrated power company model, when you just want to get over a peak, and the deregulated model, where if we can shift from one peak to another, we can start to open up revenue opportunities to the customer to sell that energy shift on the wholesale market,” he said.

“For an energy trader, they get a window from us into our platform, and they can see the kind of shapes and capacity that can give them," he said. "We’re fitting it into trading blocks, so there’s a specific shape that fits with a specific sell event. The way it currently works is that a customer agrees to a fixed shape with their energy supplier. We’re saying now that we can dynamically adjust that shape to create value, at a given time of day or day of the week.”

This is not a unique proposition. We’ve seen increased convergence between the world of energy management technology and the world of energy trading, with grid giants like Schneider Electric buying up energy services companies, and big retail utilities like NRG or E.ON getting into customer-sited solar and energy management. Plenty of companies are going beyond the simple on-off concepts of demand response and modulating lots of individual loads in ways that maintain each building’s operations while shifting energy consumption in subtle ways.

In the U.K.’s highly deregulated energy market, a number of real-time, automated demand response projects are now controlling building loads in a way that could be applied to this energy trading equation, featuring startups like Kiwi Power, REstore and Flexitricity, as well as deep-pocketed players like Honeywell and partner Stor Generation.

These projects are centered on existing grid programs like the Short Term Operating Reserve, or pilots funded by the country’s Low Carbon Network Fund. Countries like the U.K., France and Belgium are creating new capacity markets that could bolster the return on demand response investments. But underlying all these grid-facing opportunities remains the core proposition of managing energy spend and risk, Borrett said.

“With more intermittent generation, there’s going to be far more volatility, even down to intra-day pricing. Without question, there is going to be scope” for prices that skyrocket, or negative pricing that’s forcing wind farm operators to curtail power today, he said. “The more volatility that comes through into the market, the more value we can provide.”

It’s hard to determine the extent to which similar real-time, building-by-building energy data and control systems are being used in today’s energy trading world, since the companies involved tend to avoid giving away their competitive secrets. But it’s likely that many of the aforementioned players are looking at the potential, and not just in the U.K. As Borrett noted, ”We’ve sort of used the U.K. as our proving ground as a market. But going forward, our intent is to broaden out into other markets.”

Reactive Technologies was launched with investments from Borrett and others in the company’s founding team, and in March it raised a Series B round of an undisclosed amount (PDF). Borrett described the company’s funding to date as being in the “up to $10 million” range.

RES (Renewable Energy Systems), a big wind power and renewables developer, was the lead investor in the Series B round. Borrett didn’t provide specifics of how RES might be working with the startup, though he did point out that a better-balanced, more reactive energy consumer base could be a good thing for companies trying to develop intermittent green energy projects.

“I think they are conscious that for renewable generation to be properly integrated into the energy system, some other things need to happen,” he said. “Obviously energy storage is one, but demand-side management is another.” The idea is to find cheap, yet reliable, ways to make energy consumption as flexible as the green power they’re using -- and the more that flexibility can be turned into a money-making resource, the more likely it is to become a big enough asset to meet our future grid needs. Let the markets decide."