Sunverge Energy, a company designing management systems for distributed battery storage, closed a Series C round worth $36.5 million this week.

The California startup announced the funding round at the DistribuTech conference this week -- proving that distributed battery storage is starting to get recognition in the utility sector. 

Sunverge calls itself a "utility-centric" storage integrator that wants to aggregate behind-the-meter batteries for demand response, frequency regulation, and smoothing intermittent renewables. It has big plans to become a virtual power plant provider with distributed batteries as the backbone.

The company says it currently has 1,000 systems shipped and between 700 to 800 systems in operation around the world. The battery systems (not including the controls software) cost between $8,000 and $15,000 and range from 6 kilowatt-hours to 23 kilowatt-hours in size. 

The new money will be used to build out Sunverge's engineering team and improve its monitoring software. But it will also be used to expand distribution in one of the most promising storage markets in the world: Australia.

AGL Energy Limited, a large investor-owned utility in Australia, led the round with a $20 million investment. Faced with high electricity costs, consumers are increasingly demanding storage and solar in order to cut their bills. And AGL says it wants to give consumers what they want.

"This future is increasingly based on decentralized products and services, including digital metering [and] solar PV systems, as well as new technologies such as batteries, electric vehicles and other ‘beyond-the-meter’ energy solutions," said AGL CEO Andy Vesey in a statement.

Sunverge and AGL have been working together since 2015, when they aggregated small numbers of residential storage systems for peak shaving. The next phase will involve hundreds of systems and more experimentation with various grid services. 

"The goal is to make energy more predictable. We believe there are so many more revenue streams to be had over time, and we're exploring all of them," said Matt Lugar, the VP of business development at Sunverge.

Three AGL executives, including Vesey, now have seats on the Sunverge board. 

AGL Energy joined the round with current investors, including the Australian Renewable Energy Agency (ARENA), the Chinese venture capital firm SBCVC, Siemens Venture Capital and Total Energy Ventures International. In recent months, ARENA has specifically targeted energy storage investments as part of a broader government strategy to promote clean energy.

The following chart shows how Sunverge's $36.5 million round stacks up with global venture investment flows into storage through the third quarter of last year.

Source: GTM Research's Energy Storage Monitor

Sunverge chose an ideal market in which to ramp. According to the most recent numbers from GTM Research, the Australian residential storage market is set to grow from 1.9 megawatts in 2015 to 44 megawatts in 2016. By the end of the decade, the residential storage market could hit 132 megawatts annually.

"Australia's behind-the-meter energy storage market is poised for substantial growth over the next few years, and Sunverge is positioned to make significant inroads in this market," said Brett Simon, an energy storage analyst with GTM Research. 

No one has yet found the dominant business model for deploying and aggregating large volumes of distributed storage. But with more venture capital and project finance flowing into the space, the resources are increasingly available to find the ideal model -- or models.