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How Energy Transformation Investors Are Supporting New Utility Customer Solutions

William Tokash
May 10, 2018

I recently highlighted how innovative utility customer solutions can have both customer benefits and utility value. Such customer-focused solutions in both the residential and commercial and industrial (C&I) sector are the focus of my new Utility Customer Solutions Research Service.

The Southern Company pilot effort I blogged about last month exhibits the kind of customer-focused thinking needed by vertically regulated utilities, retail energy choice brokers, energy service providers, and technology disruptors. But not all types of new behind-the-customer solutions can come from rate-based, approved pilot projects in the vertically regulated US. For these solutions to begin to scale, forward-thinking investment funds will play a key role in supporting solutions-based technology platform companies with the capital they need to take advantage of the distributed energy solutions being created by the Energy Cloud transformation.

Investment Activity Key to Transformation

By way of example, several of Southern Company’s recent technology investments and investment exits directly support the new residential utility customer solutions framework in my recent report as well as my C&I-focused Energy as a Service report. The following investment funds are playing key roles in this evolution:

  • Energy Impact Partners (EIP) is a utility investor partnership supported by Xcel Energy, National Grid, Southern Company, AGL Energy, and Alliant Energy, among others.
  • Constellation Technology Ventures (CTV), a subsidiary of Exelon, seeks to invest in energy technology companies at various stages of development to deploy the company’s products via Exelon’s commercial platform.
  • Shell Ventures seeks technology to help residential customers better manage their personal energy use and commercial opportunities to bring power to remote communities. The company invests in renewable power generation, distributed energy solutions, and energy storage solutions.

Key investment/divestiture examples from these three investors include:

  • EIP’s joint investment with Amazon’s Alexa Fund in ecobee, an integrated home energy/smart home company with smart thermostat, smart lighting, and smart sensor technology. This investment supports Navigant Research’s take that technology like ecobee’s, coupled with smart home technology like Alexa, will revolutionize the way people interact with their homes. It also will extend the role a smart home platform can play to support efficient home energy use.
  • CTV’s investment in Sparkfund, a company focused on a subscription-based energy efficiency technology deployment business model to deploy lighting, HVAC, building controls, and energy storage at C&I facilities. Sparkfund’s approach highlights the C&I customer’s need for energy as a service solutions without CAPEX.
  • Shell Ventures’ investment in Sense, a smart home-focused home energy disaggregation platform that enables customer smartphone visibility at the plug and device level. These types of platforms are poised to add depth to utility partners looking to engage with their customers with new, cutting-edge technologies for the home.

Tipping the Scales

Transformative change takes time and the scales never seem like they will tip until they do. Navigant Research believes that the scales will tip when utilities, energy services, technology providers, and investors focus first on the customer and what customer problems these new technologies can solve. EIP, CTV, and Shell Ventures are providing the support necessary to bring these solutions to the marketplace.