The opportunities for demand response in Europe are growing -- and REstore is raising money to grow with them.

On Thursday, the Antwerp, Belgium-based startup announced a €7 million ($7.5 million) Series C capital round, to expand operations from its home country and the U.K. to France and Germany, and to beef up its data analysis and control platform for the industrial and commercial customers it’s tapping for flexible electricity load. 

In the past four years, REstore has grown from a few megawatts of industrial load to more than 1 gigawatt of peak load under management, serving more than 80 industrial customers including ArcelorMittal, Praxair, Sappi and Barclays. Its revenues grew 700 percent from 2013 to 2014, and since the end of last year, it’s increased its share of “95 percent reliable” load from 250 megawatts to 350 megawatts -- a measure of how much can offer equal or better certainty than natural-gas-fired power plants of being there for grid needs.

REstore’s new round, led by existing investors LRM, Axe Investments, Ark Angel Fund and other individuals, brings its total capital raised to €11 million ($12.5 million), according to Thursday’s announcement. REstore wants to grow its always-available portfolio to more than 2 gigawatts by 2018, and “that’s steep growth, and that requires some capital,” co-CEO Jan-Willem Rombouts said in a Thursday interview.

It’s also seeking to expand to “a European-wide scale,” he said, to match an expanding set of opportunities for turning flexible loads like steel smelters, freezers, pumps, fans and manufacturing lines into grid resources.

Europe’s demand response needs aren’t driven by summertime peak loads as they are in the United States. Europe does have some wintertime electric heating loads -- but the bigger drivers are the system-wide effects of the continent’s growing share of intermittent wind and solar power, REstore co-founder Pieter-Jan Mermans said.

“Our power plants are increasingly being mothballed. That’s a trend that’s crystal clear, and will not be reversed any time soon,” he said. “Second, the penetration of intermittent renewables continues to grow, which means real-time volatility on the grid.”

Capacity markets bring U.S.-style demand response to Belgium, U.K. and France

Capacity markets are one way to solve the issue of power plants being shut down, he said. That’s the form of demand response pioneered in the United States by companies like EnerNOC and Comverge, in which these aggregators bid alongside power plant operators to commit to meeting future peaks in grid energy demand, and then deliver on them years later.  

While the majority of U.S. demand response is through capacity markets, Europe has just started to create the structures that allow demand-side resources to participate. Belgian transmission system operator Elia got the ball rolling last year by opening up market bids for 2 gigawatts' worth of capacity to meet winter power shortfalls.

The U.K. held its first capacity auction in December, and while the lion’s share of the 45 gigawatts or so of winning bids went to power plants instead of demand response, REstore also won some of them, Mermans said. REstore also competes against a host of demand response companies in the U.K., including EnerNOC, Kiwi Power, Flexitricity, and Honeywell and partner Stor Generation.

The next big capacity market to open up is France, Mermans said. Starting in 2016, French grid operator RTE and other transmission system operators (TSOs) will start asking the country’s power suppliers (i.e., power plant owners) to offer capacity certificates to qualified parties on an over-the-counter market.

Out of France’s entire 90- to 100-gigawatt wintertime peak load, about 6 gigawatts of capacity is expected to be needed to fill in gaps that can’t be met by the country’s nuclear and fossil-fuel-fired generator fleet, “and that’s obviously where demand response can compete,” he said. Competitors in this market are Actility, Voltalis, and Energy Pool, the demand response aggregator majority-owned by French grid giant Schneider Electric, which has a big presence in France’s existing capacity programs.

Wind and solar power create demand for fast-reacting building controls

The second opportunity lies in primary reserves markets, he said. These correspond to frequency regulation or ancillary services markets in the U.S., which operate on a minute-by-minute -- or second-by-second -- basis for generation or load reduction that can help smooth grid imbalances.

In the United States, companies like Enbala Networks, Powerit Solutions, Demansys and Viridity Energy are providing this kind of fast-acting load control. It’s a pretty cost-effective way to give the grid the flexibility and reliability it needs to run amidst more complex and variable conditions, compared to building energy storage systems or tapping power plants.

Back in 2013, REstore was the first European company to network and control building loads for primary reserves markets run by Belgian TSO Elia. Since then, it’s started to apply the same technology to similar programs, like the Firm Frequency Response program started by U.K. grid operator National Grid early this year, which opens up roughly 1,000 megawatts for qualified participants, Mermans said.

France is the latest market to allow demand-side resources to participate in primary reserves markets, which opens up the opportunity to compete for a share of about 600 megawatts of fast-acting grid resources, he said. That market is “worth several hundred million euros per year,” according to RTE’s website.  

Still, that’s only a slice of what Mermans estimated is a Western European-wide primary reserve market of some 3,000 megawatts. A lot of that remainder lies in Germany, the country at the epicenter of the continent’s energy market disruptions.

German utilities like RWE and E.ON are marking multi-billion-dollar annual losses from power plants that can’t generate power at prices competitive with government-supported solar and wind power. E.ON announced in December that it’s planning to split its business into one unit managing its traditional power assets, and another focused exclusively on renewable power, efficiency and distributed, customer-sited energy activities.

Data to prove out demand response’s capabilities for regulators

Advanced demand response capabilities could be a natural fit for this new grid-edge utility business model, as could virtual power plants, microgrids and other ways to organize distributed, demand-side grid resources as grid assets and energy market participants. But so far, Germany’s regulatory structures haven’t moved as quickly to create markets to allow third-party demand response providers like REstore to play a role in that transition, Mermans said.

“The big question is how the regulatory landscape will evolve,” he said. “Germany has been the country that has not been very welcoming for demand response. It’s very simple -- it’s all about the fact that you have four big integrated utilities that prefer to run their power plants in a profitable fashion, and prefer to shut the market off from substitutes that are much cheaper.”

At the same time, European demand response companies are working on opening those markets, he said. One important player in Germany is Entelios, a startup that brought the first demand-based capacity to Germany’s secondary reserves market, and which was bought by EnerNOC last year. Here's a map from the Smart Energy Demand Coalition industry group that ranks different countries' openness to European Commission directives to include demand-side resources in broader energy efficiency and carbon reduction goals.

One of the big questions for European grid operators is how reliable, flexible and scalable demand-side resources can be in meeting grid needs. After all, electricity isn’t just a commodity to be traded for grid needs for factories, warehouses, data centers, office buildings and other end customers -- it’s the lifeblood of keeping their businesses running smoothly and profitably.

That’s why REstore plugs its 100-percent track record on delivering services to date -- and why it's going to spend some of its new funding on expanding the capabilities of its Flexpond software platform, Rombouts said. In particular, it will be boosting its data analytics capabilities to put the immense amounts of data it’s pulling from its customer sites to new uses.

That could open up new possibilities for REstore’s customers to put fast, automated power controls to use in managing exposure to risk on spot energy markets, or predicting and mitigating peaks in energy consumption that trigger high demand charges, he said.

“As an aggregator, we believe we are uniquely positioned, as we log massive amounts of this behind-the-meter data,” he said. “We are really looking for patterns in the way that power is consumed. We want to learn what power is truly flexible.”