Smart Grid News interview (and video): Comverge on the move?


By: SGN Staff


By Jesse Berst

Demand response (DR) pioneer Comverge has been on an up-and-down road. Along with sector leader EnerNOC, it went public in 2007. Comverge embraced residential DR. EnerNOC focused almost exclusively on commercial and industrial (C+I) customers.


EnerNOC gradually pulled ahead and, for a couple of years, Wall Street analysts were leery of Comverge. But that has gradually been changing since the February 2010 appointment of a new CEO, Blake Young. Recently, several analysts have upgraded Comverge. After years of running at a loss, Comverge is now predicting a breakeven 2012 and a profitable 2013. The firm has also formed an international subsidiary to pursue DR profits outside the North American market.


Since Young's arrival, Comverge has stopped positioning itself as a demand response company and calls itself an "intelligent energy management" company instead. Just as more and more building automation companies are reaching towards DR, Comverge is expanding toward building management.


As I wrote recently in reference to EnerNOC, I believe we are about to see a bruising battle for leadership in demand response. So I made it a point to sit down at Distributech with the Comverge CEO to get his take.


Scientists say we learn at least as much from body language as we do from spoken words, so I've included a short highlight video from that interview in case you want to judge for yourself.


·         0:00  Utility challenges. Not much new here, other than confirmation that electric power utilities face a wide range of issues.

·         1:00  Biggest single obstacle. Young cites interoperability between metering, HAN, back-office, etc. An understandable perspective given that DR software sits at the nexus.

·         1:35  What's holding back the HAN market?  We need to be better at explaining what's in it for consumers. And we need more variable rate structures along with regulatory pressure.

·         2:20  Who will ultimately supply home energy management devices? Utilities will play the most influential role as they gradually learn to build deeper customer relationships.

·         3:00  The smart grid's killer application. Young says it is personalization. I think he has an interesting take on how we need to go forward as an industry.

·         3:30  Will DR fail to get and keep sufficient consumer engagement? Young says flatly he sees no evidence of that problem. He also cites some interesting statistics about the amount of direct mail it takes to enroll residential customers. I wonder if Comverge is growing expertise in consumer marketing that could eventually become a competitive advantage. (Today, EnerNOC has an advantage in the C+I market, where it has a better sales force.)

·         3:45  The two main factors that cause people to enroll in demand response programs. Check this out. It comes from years of experience.

·         4:30  This year's focus for Comverge. Young talks here about Comverge's sophisticated integration of hardware, software and services. I agree that his firm's technical framework is more robust. If the company can convince lots of partners to plug into that framework, he can transform that technical advantage into a market advantage by creating a de facto platform. Ultimately, that platform could turn into an "apps store" for demand response and energy efficiency.

·         5:15  The company's biggest challenge. Young continues here on his interoperability theme. I agree that this is the central technical challenge. I also believe the firm needs to improve its sales to the C+I segment, and to become a bigger player in the PJM capacity markets.

·         6:20  Our industry's theme for 2011. Young hammers the interoperability theme again. I agree with his comments that we've passed through the stimulus honeymoon and we're now in the middle of the struggle to get everything to work together.


What do you think of the demand response sector in general and Comverge in particular? Use the comment form to share your insights and your opinion of Blake Young's responses.


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