Navigant Research Blog

EnerNOC Restructures: Is It Back to Basics for the Demand Response Company?

— October 13, 2016

AnalyticsA couple of weeks ago, EnerNOC announced a restructuring, a move which included laying off 200 employees, about 15% of the demand response leader’s workforce. Many of these positions were at its corporate headquarters in Boston. I didn’t want write on the topic until I had a chance to talk directly with the company and get its side of the story, which took a week or so of phone tag to complete. Here’s what I heard and my reaction.

I spoke with Sarah McAuley, senior director of marketing at EnerNOC. She explained that the layoffs were focused on the enterprise software side of the business, and they were cross-functional across sales, operations, and other functions. I have since learned that employees in other parts of the organization that dealt with the software business tangentially were also affected by the restructuring. There were no changes to the senior management team, but changes did extend up to the vice president level. McAuley said that there is nothing else at this scale planned in the near future, but that EnerNOC is taking a close look at how it is operating the business and will continue to optimize resources and shift personnel around the edges.

McAuley also stated that EnerNOC is not retreating from the software business, and the company’s core strategy hasn’t changed. However, its go-to-market path and operational delivery models will be different, focusing on becoming more targeted and lean rather than wide and broad.

Pivot to Software

I remember first hearing about the company’s pivot to software at EnerNOC’s Analyst Day in 2013. At the time, it seemed to me like a risky proposition; EnerNOC is not a software company at heart, and it was an uphill battle against the incumbents to carve out its space in that field.

A similar experience appears to have occurred in the energy efficiency space. EnerNOC made a series of acquisitions over a span of 5 years or so, trying to parlay its demand response position into that adjacent space. All of those deals have since been unwound, presumably at a loss.

It’s important to remember that public companies need to take risks to show constant growth for shareholders. Not all of these are expected to completely succeed, but it appears that few have worked outside of EnerNOC’s core competencies.

Potential Paths Forward

So what’s next? Being the only publicly traded demand response/energy efficiency company left, there are a couple examples of previous outcomes. Comverge, EnerNOC’s closest peer, also went public in the heyday of the economy during the last decade. It only lasted a few years before being bought out and brought private, and it has continued to operate steadily since that time. Opower is the most recent case, having tried the public life for a few years before being acquired by Oracle earlier this year—time will tell how that situation will play out. One of those two scenarios seems plausible for EnerNOC at this point, either going private or being swallowed by a larger corporation (though I am not a financial professional, so don’t take this as investing advice).

In any case, I hope EnerNOC’s passion for and leadership in the demand response field will not be lost. Its tide has truly lifted all boats in the sector, and there is a lot of work left to be done to ensure that it keeps its place in the world’s future low-carbon resource mix.


Keeping Cool Without Climate Change

— August 3, 2016

HVAC VentAs a heat dome lingers over much of America, many are grateful for air conditioning. Though some credit air conditioning with shaping our history, evidence is emerging that it may also be putting humanity at risk. Globally, stationary air conditioning systems account for nearly 700 million metric tons of CO2-equivalent emissions, roughly the same emissions as all of Germany. The future may herald even more emissions as the growing wealth and growing populations of developing countries prompts the greater adoption of air conditioning.

Changing the current environmental influence of air conditioning is imperative to avert the catastrophic effects of climate change. In a new report published by the U.S. Department of Energy, Navigant outlines the changes in air conditioning technology needed to reduce greenhouse gas emissions and highlights the R&D pathways to get there.

From Air Conditioning to Energy System

One of the next-generation air conditioning technology research areas highlighted in the report is the integration of air conditioning and other building systems. Fundamentally, air conditioning is the transfer of heat from inside a building to outside a building, which requires the use of energy. Meanwhile, additional energy is spent creating heat for other needs: domestic hot water, cooking, and manufacturing processes. At times, buildings may require both heating and cooling just for thermal comfort. This happens during temperate days where the sunny side of a building may need cooling while the shady side needs heating, or in the scenario of the notorious space heater under the desk.

In a perfect building, waste heat could be reused productively. This is a fundamental shift from individual building processes to a building energy system. Indeed, this is already beginning to happen. Ground-source integrated heat pumps that provide space heating, space cooling, and water heating are already commercially available. Energy recovery ventilators similarly transfer thermal energy between air that is exhausted from a building and fresh air brought into a building.

Deeper building integration is not only necessary, but forthcoming. Axiom Energy, Ice Energy, and CALMAC all have solutions that turn air conditioning and refrigeration systems into energy storage, folding these systems into the Energy Cloud. Moreover, air conditioning controls are beginning the transition into the Internet of Things as more data from different sources can be used to optimize performance. This pivot to an energy system and deeper integration can transform air conditioning from a threat to humanity into a resource that meets the changing energy needs of the world.


Energy Efficiency Is an Imperative for Climate Change Adaptation

— August 1, 2016


There are two common ways climate change enters the public discourse in the United States: heated political rhetoric or targeted campaigns for increased investment in renewable energy. The problem is that while shifting away from fossil fuels is critical, energy efficiency—a significant opportunity to combat greenhouse gas (GHG) emissions—is often overlooked. Redefining the relationship between commercial buildings and energy is fundamental for tackling climate change because these facilities are not only contributing about 40% of the GHG emissions in the United States, but also are strikingly inefficient. Here are two reasons energy efficiency can move the needle on the fight against climate change and circumvent the political boondoggle.

Energy Efficiency Makes Economic Sense

The bottom line is that customers adopt technology and behavior changes that reduce costs or generate new revenue. Energy efficiency is straightforward. Take a simple scenario for a commercial building owner—the improvement in equipment performance (say a more efficient air conditioning unit) results in lower utility bills. The benefits are magnified when you start to consider the effects on the climate associated with energy efficient technologies.

In July 2016, a Navigant report was published for the U.S. Department of Energy. It provides a deep dive into the specifics of how the economic benefits of energy efficiency could be a revenue stream for deeper climate mitigation strategies. The report states that, “Given that energy costs account for the majority of lifecycle air conditioning costs, energy efficiency improvements can more than offset increases in upfront purchase costs to consumers that could result from switching to hydrofluorocarbon alternatives (refrigerants with lower global warming potential).” 

Energy Efficiency Provides a Robust Sustainability Strategy

Corporations are facing significant demand from shareholders and customers to address climate change. In fact, in late July, major corporate shareholders sent a collective letter to the U.S. Securities and Exchange Committee (SEC) demanding clarity on the material risks of climate change: “Based on our experience with these issues, we (45 investors representing $1.1 trillion in assets under management) believe it is critical for the SEC to improve reporting of material sustainability risks in issuers’ SEC filings, both because such disclosure is mandated by current law and because we need it to make informed investment and proxy voting decisions.”

There are two sides to the relationship between energy and climate change. The transformation of supply with renewables is important and will help shift the economy away from the fossil-fuel based generation people have relied on for hundreds of years. Let’s not forget the demand side of the equation. Changes in the way people operate equipment, utilize innovative technologies (such as automation and software), and direct behavioral modification can reduce carbon emissions while benefiting the economy. Navigant Research captures this dynamic relationship between energy supply and demand with ongoing thought leadership on the concept of the Energy Cloud—this is the transition from one-way power flow to a dynamic network of networks supporting two-way energy flows at the periphery of the grid. Buildings have a huge role to play in this new reality, as commercial buildings represent new business opportunities, tackle climate risk, and see broad business results. Energy efficiency can be the foundation of this new reality.


Nature’s Role in Renewable Energy Innovation

— July 6, 2016

BiofuelHuman innovation has led to some astounding advances throughout history. We now live in a world that past generations couldn’t possibly imagine. One of the primary drivers of this increase in global development comes from the use of fossil fuels. While fossil fuels are responsible in part for the rapid rise in standard of living that many of us experience, the continued reliance on these resources has led to issues of environmental pollution and scarcity among others. While renewable energy technologies have emerged to help alleviate some of this dependence, issues with regards to efficiency continue to hinder the industry and its technologies from reaching their true commercial potential.

One of the more intriguing fields of study attempting to improve some of these efficiency levels is biomimicry. Biomimicry refers to the imitation of natural systems and elements for the purpose of solving complex human problems. This field has an incredible number of potential applications, and has already led to advancements in the areas of energy, architecture, transportation, agriculture, medicine, and others. With the use of biomimicry, we can draw inspiration from nature’s complex elements and systems to help improve the efficiency of today’s renewable energy technologies. Whether it be something as small as a butterfly or as large as a whale, nature is starting to provide us with ideas to help save us from ourselves.

A Gap in Potential

While the solar energy industry has continued to witness increases in efficiency limits alongside falling costs, there is still a gap to be filled in order for the industry to reach its full potential. Researchers from the University of Exeter’s Environment and Sustainability Institute are looking to biomimicry—more specifically, butterfly wings—as a means of maximizing the efficiency of solar concentrators. Before taking flight, the Cabbage White butterfly has been observed warming up its muscles by using its wings to reflect sunlight onto its body, a process known as reflectance basking. Insights gained from these observations have already led to promising results. Researchers were able to produce a solar cell using butterfly wings that resulted in 42% greater solar output than their traditional solar cell using reflective film tape. Continuing to advance these ideas into a new generation of solar cell prototypes can help fill in some of the gap associated with solar technologies.

Biomimicry has also led to advances in the field of wind power. Looking to the oceans of the world, humpback whales need dexterity and maneuverability in order to adequately feed themselves and navigate the open ocean with efficiency. This is accomplished primarily through tubercles—large, irregular bumps on the animals’ fins that increase lift and angle of attack. These tubercles are now being replicated on wind turbines and have been shown to help improve lift, reduce drag, and increase the angle of attack before stalling. Even these relatively small advancements in efficiency can have a significant impact when applied to the large installed wind turbine bases we see in the United States, China, Germany, India, Spain, and beyond.

Looking Ahead

The evolution of renewable energy technologies has accelerated in recent history. In order to maintain significant change, an array of innovative, economical, and feasible solutions will need to be implemented. One of the drivers in this recent push to address environmental problems is an attempt to save the systems and elements invoked in biomimicry. Studying the natural world in order to derive solutions to human problems is a powerful thought and will hopefully provide a means of addressing the gap that remains between the status quo and the upper limits of these technologies.


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