Smart Wires has raised $54.6 million in funding, as the Bay Area startup works with utilities on three continents to prove out its latest generation of technology meant to bring greater control to the transmission grid.
The new funding round is part of an $88.1 million total offering, according to a filing with the U.S. Securities and Exchange Commission. Of the $54.6 million, $44.6 million consists of shares issued upon conversion of convertible notes, a form of short-term debt provided by investors from previous rounds which can be converted into equity in future rounds of funding.
Smart Wires had previously raised about $63 million, most recently in 2015 with a $30.8 million round that included $11.6 million in convertible notes and $19.2 million in equity investment.
The sole investor in that round was 3x5 Special Opportunity Fund, an investment vehicle formed by RiverVest Venture Partners and Arnerich Massena & Associates. RiverVest Venture Partners was also the sole named investor in Smart Wires’ $10 million Series A round in 2012 and an $18 million Series B round in 2014.
While Smart Wires’ latest SEC filing doesn’t name the investor in this new round, the high proportion of shares issued as convertible notes would appear to indicate that previous investors are involved. Smart Wires representatives didn’t respond Wednesday to requests for comment on the new investment, or about how it planned to spend the newly raised funds.
The startup, formerly named Smart Wire Grid, was spun out of Georgia Tech in 2008 to bring the latest in lightweight, low-power digital power electronics to the world of high-voltage transmission — the same kind of technology behind distribution grid devices from companies like Varentec and the now-defunct Gridco Systems.
Its core concept was a set of devices, deployed on power lines or poles and networked to a master control system, that can induce impedance and capacitance into specific transmission lines in a network — throttling or juicing its capacity to transmit power in relation to its adjacent networked lines.
Its first device, the PowerLine Guardian, is an impedance-only unit — it can reduce a line’s throughput, but not increase it. Smart Wires first tested the Guardian with the Tennessee Valley Authority, which installed 100 of its Guardian devices across about 20 miles of 161-kilovolt transmission lines. That project was partly funded by a nearly $4 million grant from ARPA-E, the Department of Energy energy research program.
Southern Company subsidiary Georgia Power was the next utility to test Smart Wires' Guardian devices in 2013; it decided to expand the deployment the next year and integrate the devices into its energy management system platform in 2015. That year also saw Guardians deployed by California utility Pacific Gas & Electric and Irish transmission operator EirGrid, and last year pilots were begun by utility Minnesota Power, French transmission company RTE, and Australian transmission operators Western Power and TransGrid.
Smart Wires’ next-generation technology is called SmartValve, and it adds the ability to increase as well as decrease transmission line reactance, giving it the key ability to increase power flow along the line it’s affecting.
SmartValve received its first test with EirGrid in 2016, with three units deployed on towers at two substations on a 110-kilovolt line in west Ireland. In a December report (PDF), EirGrid reported a successful test of “the full functional performance of the SmartValve units,” including switching from full capacitive reactance injection mode to full inductive reactance injection mode, with no problems beyond losing communications to a single unit for some time due to a software error.
Today’s transmission grids do have existing technologies, like phase-shifting transformers or flexible alternating current transmission systems, which can perform some similar functions. But they are large and expensive devices that are cost-effective only for the highest-voltage power lines, whereas Smart Wires targets networks at and below 230 kilovolts.
Transmission grid operators are struggling to manage increasing amounts of intermittent wind and solar power. The Edison Electric Institute has highlighted $60.6 billion in transmission investments that will be necessary to modernize the transmission system through 2024, and three-quarters of that is in support of new renewable resources. And the American Society of Civil Engineers, which has given the nation’s energy infrastructure a “D+” grade, has identified $177 billion in grid spending needed by 2025 to keep up with the country’s changing mix of distributed and renewable energy.