In October, I wrote about the announcement that Comverge and Constellation would combine their commercial and industrial demand response (DR) businesses into a standalone entity. The questions were: What would the new company be called? Would they take one of the existing names? Combine the two names? Come up with something new? Instead, they brought back a familiar brand: CPower, the name of the DR provider that Constellation bought 4 years ago.
But this is not your mother’s CPower, according to Chris Cantone, the company’s senior vice president of sales and marketing. The C in CPower carries multiple meanings aside from the lingering brand recognition: the combination of Comverge and Constellation, customer engagement, and curtailment services. “The market has been excited about the announcement, and our channel partners have been waiting for an independent DR provider,” Cantone told me in a phone interview. The company is still in a little bit of stealth mode as the behind-the-scenes business combination unfurls, but expect a media splash in the near future.
Divide and Succeed
What value does this new structure bring to the parties involved? Cantone says that the future of DR will entail greater technical requirements, which were hard to fulfill under a larger organization like Constellation. CPower can be more strategic and proactive on its own, while maintaining a preferred provider relationship with Constellation for its customers. From Comverge’s perspective, there was a lack of synergy between its utility-focused residential business and its market-focused commercial and industrial business, so it made sense to split them up and allow them to build to their own strengths.
So was Constellation’s purchase of the original CPower 4 years ago a mistake? No, asserts Cantone. It was an invaluable experience for the old CPower DR experts to get immersed in the energy markets and learn how DR fits into the bigger picture on the wholesale side with generation and the retail side with customers’ energy procurement strategies. Additionally, the 2011 deal was the move that set in motion the trend of larger energy entities investing in the DR realm, as Johnson Controls bought Energy Connect, Siemens bought Site Controls, Schneider bought Energy Pool (in Europe), and NRG bought Energy Curtailment Specialists. Will those combinations survive? Cantone thinks they will have to deal with the same issues that Constellation did, and we will have to see who can find internal solutions and who sets DR free.
The Real Threat
Regarding business strategy, the initial intent is to focus on the existing markets in the United States, like PJM, ERCOT, NYISO, ISO-NE, and California. An expansion into utility programs could be the next growth step, followed by selective entry into the burgeoning international arena.
I contacted executives at EnerNOC to get their take on what looks to be their strongest competition, but they declined to comment . In the meantime, EnerNOC and CPower may find common ground to combat the potential disruption from the court drama over FERC 745 to remove DR from the wholesale markets, which could affect them more than any amount of friendly competition could.
Tags: Demand Side Management, Digital Utility Strategies, Mergers & Acquisitions, Smart Utilities Program
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