What’s Sexy In the Downturn: Smart Grid Software

For years, energy-management technologies have played second fiddle to energy-generation technologies such as solar power, wind power and biofuels. But in an economic downturn, the so-called “smart grid” sector, which often has been labeled “not sexy” by investors and analysts, is becoming ever more attractive.

On Monday, eMeter announced that Texas utility CenterPoint will use its meter-data-management system for a rollout of 2 million smart meters starting in March and finishing up in 2013. The system, called EnergyIP, will help CenterPoint’s Houston-area customers monitor and manage their electricity use and cost, as well as provide outage, restoration and connection and disconnection services for the company. While he didn’t say how much eMeter will earn from the contract, Chris King, chief strategy officer for the San Mateo, Calif.-based company, said that the IT system will make up less than 5 percent, or $32 million, of the cost of the $640 million program.

eMeter’s software essentially helps the utility’s older systems, like billing, work together with the new smart-grid systems, King says. The network includes automated controls for different appliances, and it will keep track of the appliances and report power outages. The software — and the smart meters it works with — enable peak-pricing and time-of-use programs, in which utilities charge more for electricity used during times of high demand, as well as demand-response programs, in which utilities ask a group of customers to reduce their usage during critical periods to avoid outages, in exchange for lower electricity bills.

In pilot programs, customers have been able to reduce as much as 40 percent of their household electricity use during critical peaks, King says. eMeter, which raised $12.5 million in April, claims its software works with all different smart meters, making it ideal for utilities that are still trying to decide which meters to use. The company licenses its software to utilities and helps them install it into their data center and integrate it with their existing software.

eMeter says it has signed a dozen contracts with utilities in the last few months, representing a total of 23 million smart meters, and has dozens more contracts in the works. About 5 million meters already are connected, with the remaining 18 million set to be installed within three years, King says.

That’s a significant number considering that the Federal Energy Regulatory Commission in December reported that 4.7 percent — about 6.8 million — of the 144.4 million meters installed in the United States are “advanced meters,” up from less than 1 percent in 2006. But with President Barack Obama calling for the installation of 40 million smart meters, King expects the growth to accelerate.

The stimulus bill the U.S. House of Representatives passed last week, as well as the version that the Senate plans to consider this week, both call for $4.5 billion for transmission funding that could boost smart meters and other smart-grid technologies. It already seems to be helping the late-blooming sector grow. “We’ve already spoken to a half-dozen utilities about using the stimulus funds to get going quickly, and they’re all very excited about it,” says King.

Other energy-management companies also have noted the increased momentum. “Believe it or not, most of what we’re hearing from potential partners is that energy efficiency is one of the areas investors are still excited about,” Matthew Smith, vice president of marketing for Greenbox Technology, which is raising its first round of funding for its software to manage home energy use, told us recently. “Finding ways for people to save money in a down economy is a good thing.”