Tesla’s battery business isn’t just about putting Powerwall units into solar-roofed homes. Commercial and industrial (C&I) customers pay a lot more attention to their energy costs, and they bear a bigger burden from demand charges that batteries are good at containing. They also have access to, or existing relationships with, demand response or energy services partners with the skills to put behind-the-meter batteries to proper use.

As one of Tesla’s first big C&I energy storage partners, demand response and energy management software provider EnerNOC will be testing out this proposition. In EnerNOC’s quarterly earnings conference call last week, CEO Tim Healy revealed some details on how it’s working with Tesla so far, and how energy storage could fit into its longer-range plans.

EnerNOC’s initial Tesla battery deployments are at “select customer sites in California,” the state with the most lucrative incentives for customer-sited energy storage systems, Healy said. He didn’t provide details on how many sites or which customers are participating, although Stater Bros., a Southern California grocery store chain and long-time EnerNOC customer, did say it was trying out Tesla’s energy storage system in an announcement.

EnerNOC isn’t expecting its Tesla projects to be “needle-moving” for its financial outlook in the short term, Healy said: “Internal projections don’t suggest that there is going to be sizable revenue with Tesla this year.” But if the energy storage market does grow to a multi-billion-dollar business over the next five to ten years, “this could be a sizable channel to market,” according to the CEO.

That, of course, depends on whether energy storage systems can hit the low price points that Tesla and other battery vendors are promising. According to a report from The Boston Globe, EnerNOC is using Tesla's 100-kilowatt-hour Powerpack units, capable of discharge over two to four hours at a time, which Tesla has said will come in at a cost of $25,000 apiece, or $250 per kilowatt-hour. That's a low price for utility-scale lithium-ion batteries, although it's unclear how much more cost will be involved with the addition of bidirectional inverters, other supporting electronics, and installation costs.

But costs are only one part of the equation. Equally as important is whether batteries can be managed in alignment with the incentives, regulations and rate structures that allow them to earn revenues over their working lives. That’s where software plays a critical role, both for keeping batteries running at top efficiency and for matching them to buildings’ ever-changing load profiles and energy cost structures.

We’ve written about how Tesla partner SolarCity uses its Demand Logic software to manage its batteries in a way that meets customers’ energy-saving and peak-shaving needs, and how C&I energy control software providers like Powerit are incorporating batteries into their customers’ broader demand management goals.

Likewise, EnerNOC’s energy intelligence software (EIS) will be the “information layer” between Tesla’s batteries and customer sites, Healy said. “Using our EIS, customers will be able to monitor the batteries and engage in demand-charge management and demand response.”

EnerNOC already shaves peak load at customer sites by turning down energy use in lights, cold storage units, HVAC systems and the like, both on command for demand response, or in anticipation of expensive peaks in energy use. Adding a battery can expand the scope of those power-shaving capabilities, though not without a hefty upfront cost.

Behind-the-meter battery startups like Stem, Green Charge Networks and Coda Energy have lined up financing partners and no-money-down offers to overcome the upfront-cost barrier for customers. But Healy emphasized that EnerNOC will not be taking on that role with Tesla.

“It’s not our intent to be deploying capital,” he said. “There are other companies out there that are in a great position to be part of the financing solution for these companies.”

EnerNOC does offer Tesla a big base of customers who are already engaged in their energy use. Some 6,500 companies are using EnerNOC for demand response, and about 4,300 or so are using one or more parts of its software-as-a-service suite, Healy said, although he added that there’s a lot of overlap between these two groups.

EnerNOC wants its software-based utility and enterprise business lines, built up through acquisitions and internal development, to outgrow its traditional demand response business in the next three years. That’s always been a stated part of the Boston-based company’s strategy, given the significantly larger market opportunities in energy efficiency and energy management. At the same time, demand response, as EnerNOC has helped to define it in the past 15 years or so, is undergoing regulatory and legal challenges that are making it an increasingly uncertain business to be in.

Tesla’s battery business fits into another big change that EnerNOC sees coming to its traditional business, Healy noted. “Batteries are an important piece of the puzzle in moving from central generation to distributed energy resources and microgrids,” he said. “And in order for this transition to work, the industry requires software as an important part of the information layer.”

Healy pointed to EnerNOC’s new partnership with SunPower as an example of how it’s branching out into this world. Under that deal, SunPower’s existing commercial customers will get access to EnerNOC’s software suite, and EnerNOC will offer SunPower’s services and equipment to its customers.

“Together we will bring increased visibility to solar generation, resulting in, among other things, a better understanding of the true savings created by solar deployment,” he said. The SunPower partnership has already started to bring some annual recurring revenues for EnerNOC, he noted.  

Energy storage is a natural complement to solar, enabling customers to add demand management capabilities to the more general reduction in energy spend that comes from generating power on site. And the kind of customers who are interested in that value are probably the same kind of customers that have hired EnerNOC for demand response representation or bought subscriptions to its software suite, he said.

“I think what we’re seeing is the convergence of solar software storage, and we’re as well-positioned as anyone for that,” he said.