Daniel Flohr, CEO of stealthy startup Sequentric Energy Systems, has some pretty strong opinions about why his company's approach to linking home appliances and systems to monitor and control their energy usage is cheaper and more secure than those of its competitors.

But the North Carolina-based company has remained quiet about the utilities it's working with to prove its concepts.

Now Greentech Media has learned that utility Duke Energy (NYSE: DUK) is using Sequentric's technology. The venue is Duke's microgrid pilot project in its headquarters city of Charlotte, N.C., where Sequentric is providing home energy management hardware, software and networking, sources close to the project say.

Duke spokesman Dave Scanzoni declined to comment on the matter, saying that the utility doesn't discuss speculation on potential or existing vendor relationships.

Flohr also declined to comment on whether or not Sequentric is working with Duke, though he said the company is working with a number of utilities.

But if Flohr was unwilling to talk about specific utility relationships, he wasn't shy about expressing his view that, when it comes to doing home energy management, some rival startups are missing the boat.

He claimed that Sequentric can outfit a home with a handful of sensors attached to appliances and a home's main circuit breakers, as well as a gateway that communicates with them wirelessly, for about $100, he said. That's generally less than the cost of a single "smart thermostat" today, let alone an entire home system (see The Smart Home, Part I).

To link its devices and gateway, Sequentric uses a proprietary wireless network in the 433 megahertz spectrum. That's a departure from the majority of U.S.-based home energy monitoring startups that plan to use ZigBee or other standards-based wireless technologies such as WiFi (see RF Mesh, ZigBee Top North American Utilities' Smart Meter Wish Lists).

Flohr said it's worth it, given the low costs – about $1 per radio – as well as longer range and better ability to penetrate walls and other obstacles than ZigBee and other wireless protocols based around the 2.4 gigahertz spectrum.

That, he believes, will give utilities confidence that Sequentric's technology can be used for such things as demand response – powering down household systems during peak demand times to avoid overloading the grid. Sequentric has been able to cut power bills for customers of one utility by up to 40 percent through such demand response control, he said.

Whether or not these features might conflict with being able to sell products to consumers directly won't matter much, he said.

Unlike some other home energy management companies that are seeking a consumer-driven path into the home, Flohr believes that it will be utilities that will drive the deployment of these systems, and he's built Sequentric's strategy around that premise (see AlertMe Raises £8M for Home Energy Management and Will Utilities or Customers Lead in Smart Grid?).

"It's not about ZigBee [versus competing standards]," Flohr said. "It's about what utilities need" – and that includes low cost, reliability and the ability to add future features like demand response to home area networks, he said.

It also includes security, he said. In his opinion, utilities will be leery of allowing outside companies to manage the flow of data between home energy devices and utility control rooms, particularly if that flow includes controls for turning air conditioners, pool pumps and other home devices on or off.

"With one big customer we have, we are now moving all of this stuff inside their network – and it is a pain," he said. "They are deathly frightened of this idea of customer portals that could be hijacked, and somebody gets control of the system and makes everybody's air conditioner go on to take down the power grid."

Securing smart grid systems against such potential attacks has been a growing concern among utilities and regulators. Security firm IOActive in March claimed it had proven that an unnamed smart meter network could be hacked to boost or cut power to millions of homes at once, which could cause a widespread blackout (see Hacking the Grid: Is Smarter Less Secure?).

Utilities across the country also are working to meet new security guidelines from the North American Electric Reliability Corp., an organization that has been given federal authority to enforce reliability standards.

With this utility focus comes another difference between Sequentric and many other home energy startups. Unlike home energy companies like Tendril and Greenbox that have stressed giving homeowners the lion's share of responsibility for controlling their home energy devices, Flohr thinks control will primarily come from utilities.

As for getting information from Sequentric's gateways to utilities, that will happen mainly via existing broadband connections, though cellular networks, WiMax or other Internet protocol-based "backhaul" networks, Flohr said.

Unlike most of the other startups in its field, Sequentric is entirely funded by its founders and insiders, Flohr said. He wouldn't say how much money has been put into the company so far.

"I expect we'll do our first financing round fairly soon," he said. Flohr himself has worked in the consumer electronics field for decades, and Sequentric's team includes former utility executives, he said.

The company is working with utilities on integrating with other smart grid systems, including batteries for solar power inverters and for so-called automatic meter reading (AMR) meters from Itron that send data but do not allow two-way communication (see Tendril Moves to Link Up Old-School Meters).

As far as integrating with ZigBee-enabled smart meters to link home devices, Sequentric has built bridges that can accomplish that, he said.

The company has also worked with Google to bring data to its PowerMeter platform, Flohr said. Google has named eight utilities and Itron as partners in the project to bring free energy monitoring software to homes, but has declined to say what other startups it is working with (see Lu's Google PowerMeter Update: Open APIs, More Partners Soon and Google Names Itron, Utilities as PowerMeter Partners).

Sequentric also has shown in a utility pilot project that its gear can detect fluctuations in frequency of power being delivered to appliances, he said. That's another valuable piece of information for utilities considering whether to cut power to appliances, since those frequency variations can both harm the appliances and cause grid instability.