Smart grid VC funding inches up (and reveals home energy trend)

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Quick take: We've told you about the slow, gradual uptick in the home energy management market in recent stories about OG&E's successful smart grid program, why Reliant Energy is piloting in-home displays and why Tendril may be positioned for growth. Now a report from Mercom Capital reveals one trend -- an increase in VC investments into smart grid -- that also shows another. Peel back the covers to see just what VCs are spending their money on reveals several home security and home automation firms. That's because -- after years of dipping their toes -- home security and home automation firms are now adding home energy management to the things they offer to homeowners. (A similar phenomenon is taking place on the commercial side, by the way, where the vendors of building management systems now routinely offer energy management and demand response too.)

And that's the key, in our view -- making home energy part of a mix of offerings. It's hard to cost-justify a new in-house device just for energy management. But if that device does many other things too -- security and home automation, for instance -- then the math starts to work. – Jesse Berst

Third quarter venture capital funding in the smart grid space showed some signs of life after three relatively weak quarters. That's the word from Mercom Capital Group, the global clean energy communications and consulting firm.

 

Mercom says there were $238 million in 12 deals in Q3 2012 – mostly due to $136 million raised by Alarm.com, a security and home automation company. Yet that deal points to a growing trend, according to Raj Prabhu, Managing Partner at Mercom Capital.

 

“The Alarm.com funding deal and the acquisition of Vivint for $2.2 billion by Blackstone Group is part of a growing trend where home security companies have expanded into home automation,” he said. “We expect to see more transactions in this niche where security, cable and telecom companies expand their offerings to cover the whole ‘connected or digital’ home services which would include everything from communication and automation services to solar installations.”

 

Aside from Alarm.com, Mercom says the other deals in the top five in Q3 were:

·         GridPoint, an energy management company, raised $23.3 million

·         Viridity Energy, a demand side management solutions company, raised $15 million

·         Space-Time Insight, a geospatial information systems company, raised $14 million

·         SIGFOX, a wireless connectivity solutions provider for smart metering, building intelligence and M2M among other markets using ultra narrow band technology, raised $12.6 million

 

Mercom reports that Merger & Acquisition activity in Q3 2012 totaled $2.2 billion in five transactions. The top two deals were the $2 billion acquisition of Vivint by Blackstone, and the $183 million acquisition of smart grid and automation solutions provider ZIV Group by electrical T&D equipment company Crompton Greaves.

 

You can get a complete list of Q3 transactions in the smart grid sector here.

 

And for more on the home energy management trend discussed above, Gigaom has posted an interview with the CEO of Bidgely, a new VC-backed startup that says it has created algorithms "that can dig into real-time smart meter energy-consumption data, can reduce consumers’ home energy use by between 4 percent to 12 percent, and can also deliver other beneficial home services to consumers."

 

Jesse Berst is the founder and chief analyst of Smart Grid News.com, the industry's oldest and largest smart grid site. A frequent keynoter at industry events in the U.S. and abroad, he also serves on advisory committees for Pacific Northwest National Laboratory and the Institute for Electric Efficiency. He often provides strategic consulting to large corporations and venture-backed startups. He is a member of the advisory boards of GridGlo and Calico Energy Services.

 

From the SGN Research Marketplace…

Technology Selection: North America Home Energy Management Spending Forecast, 2011–2016 -- This IDC Energy Insights report helps electric utilities understand the investment patterns in home energy management (HEM) enabling hardware, software, and services. Get details >>