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PowerMand Pioneers New Approach to Demand Response By Jesse Berst Sep 10, 2008 - 11:44:39 AM
PowerMand is a Portland, OR-based startup that builds hardware and software for demand-side management (DSM), including demand response (DR), energy efficiency, and distributed generation (DG). It is pioneering a different approach that may signal important changes to the metering and DR sectors.
This Company Watch profile starts with a brief overview of PowerMand and its business model. It finishes by explaining what these developments may mean to utilities and to other vendors.
Overview
PowerMand is a Portland, OR-based startup that offers products and services to allow residential and small commercial sites to participate in demand response programs. The founding CEO is Dan Russell, formerly a high-ranking sales executive at Intel. Target customers include energy aggregators, energy service companies (ESCOs) and electric utilities.
PowerMand offers hardware and software that OEMs can use to quickly build their own branded services. The company will also offer a turnkey service to utilities that want to quickly deploy demand response or energy efficiency.
The system is based around a gateway device that can monitor and control wireless devices at the customer premise. The gateway, which is based on the Zigbee home area networking standard, uses the customer’s existing Internet connection to send data to PowerMand’s network operating center (NOC).
On the hardware side, PowerMand will initially provide a gateway, a smart thermostat and an optional load control module. It will soon add a dedicated, standalone display unit where customers can view their energy dashboards. On the software side, PowerMand provides an energy dashboard for consumers to monitor and control their devices. It also has an administrator’s interface for utilities and aggregators. The NOC allows them to monitor energy use and cut it back during times of peak demand (by adjusting the thermostats or turning off appliances).
Gateways Defined
For the purposes of this article, I will define a “gateway” as a device that talks to multiple resources upstream and multiple devices downstream. Upstream, a gateway may talk to utility applications such as meter data management and demand response. It may also talk to applications from other sectors, such as home security or home automation.
Downstream, the gateway may talk to the home’s power, water and gas meters. Someday it may also talk to home appliances, light switches, security cameras, home media servers and other intelligent devices.
In all cases, the gateway accepts data from the devices and sends that information upstream to the applications that need it. It also accepts commands from the upstream applications and passes them through to the right device. For instance, it may take a command from a demand response program and order the home’s thermostat to raise the set point by two degrees. Or tell the home’s water heater not to switch on for the next 30 minutes.
PowerMand didn’t invent the gateway approach, which dates from the mid-90s (if not earlier). Other organizations – including vendors, utilities, and research consortia -- are working on similar projects. To our knowledge, however, PowerMand is the first company to try to bring gateways in large quantities to the residential and small commercial market.
Business Model
Given the founder’s background at Intel, it’s no surprise that PowerMand’s business model borrows many lessons from the high-tech world. The firm ultimately wants to provide one-stop shopping for anyone who wants to aggregate small to medium sites for a demand response program. In other words, it wants to sell picks and shovels to the miners heading off to the DR gold rush. PowerMand will operate the network operating center for an upfront service fee plus a percentage of each transaction.
PowerMand hopes to make low cost and ease of use the foundations of its competitive advantage. CEO Dan Russell’s Intel connections should, in theory, make it possible to find low-cost manufacturers for the hardware. Piggybacking on customers’ existing Internet hookups should save on communications costs. On the software side, PowerMand claims its dashboard will be user friendly, easy to set up, and able to work through issues such as temporary loss of the Internet connection.
Market Implications
There are at least four implications buried inside the PowerMand business model.
1. Demand response as a valid starting point for the Smart Grid. Today, most utilities assume that smart meters are the essential first step to a Smart Grid. PowerMand has a different take. They want utilities to install PowerMand gateways first so they can get started with DR and energy efficiency programs. When utilities are ready to add advanced metering, they can run the meter data through PowerMand’s gateway and network operating center.
2. Gateways as a valid alternative to smart meters. Some utilities may gravitate to smarter and smarter gateways (as opposed to smarter and smarter meters). If utilities begin to favor gateways instead of meters, it will open the market to competition from companies outside the “traditional” metering field. The Itrons of the world may find themselves competing with the likes of Microsoft, Cisco, Sony, and Honeywell, not to mention startups such as PowerMand.
3. Residential and small commercial as valid categories for demand response. Until now, most DR participants have been industrial and large commercial customers, who have enough load to justify the expense of installing equipment on premise. Most of today’s DR vendors have the residential market in their sights for the long term, but they are taking a top-down approach. They are installing expensive, industrial-strength gear at large sites with the expectation of gradually moving it downstream. PowerMand hopes to leap-frog the existing competition with a bottoms-up approach – inexpensive devices purpose-built for the small-to-medium market.
4. Broadband as a valid option for Smart Grid communications. The Smart Grid requires two-way communications. PowerMand believes the existing Internet can provide that platform. Many Smart Grid applications suddenly become cost-effective if utilities don’t have to pay the capital costs for a separate communications channel. (On the other hand, utilities may have to offer a subsidy or alternative program for households without Internet.)
Now It’s Time to Execute
PowerMand was founded nearly two years ago. The company has assembled its core team, created its first offerings and is now searching for “distributors” (OEMs that want to use PowerMand’s equipment for their own offerings). Now we’ll see if PowerMand can switch from conceive and create mode to execution mode. And we’ll see if utilities are ready to search for energy efficiency inside residential urban load pockets.
PowerMand has a compelling strategy. If it has the timing right – if it can roll out quickly and if utilities are ready to tackle residential DR – it will become a mind-share leader. If not – if it is jumping out too soon – it may suffer the same fate as the pacesetters in the Tour de France. It may go out to an early lead only to see larger, better-known firms pass it by when the finish line draws near.
Is the market ready for residential demand response? Use “Leave a Comment” below to set down your thoughts on PowerMand’s approach.
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