The future of grid energy storage: Software-as-a-Service

One of the reasons energy storage for the power grid isn’t widely used is that many of the technologies, like batteries, are still far too expensive to be used at grid scale. But what if you could use something that costs a fraction of a battery to deploy for grid storage … like Software-as-a-Service? On Thursday, a startup called Clean Urban Energy (CUE) launched its SaaS product, which uses commercial buildings essentially as thermal batteries, and announced a $7 million investment from VCs Battery Ventures and Rho Ventures.

Here’s how it works: CUE makes a deal with a building owner, then plugs the company’s software into the building’s management system. Over a two-week period, the software crunches the energy consumption and HVAC system data, pulls in outside data like weather and temperature, and eventually creates a model and baseline for how the building consumes energy and how best to optimize that energy use.

The software then is able to shift parts of the building’s energy use via the HVAC system to times of day when a utility’s rates are lower and when there is less demand on the grid. So, say, a building could be subtly pre-cooled on a hot day, before the utility’s peak times occur and the rates are a lot higher. The software can do this without changing the comfort of the people in the building, says Battery Ventures Partner Jason Matlof.

CUE says it can save building owners 15 to 30 percent in energy savings from their HVAC systems. For utilities, the buildings are turned into sort-of thermal batteries that can store energy during peak times, and can enable building owners to participate in utilities’ variable pricing programs.

In contrast to many building management systems that use sensors and extra hardware installed throughout a building — and take weeks or months to integrate — CUE uses no extra gear, and just relies on the building management system and its model to start to work. The system can cost less than $10,000 to get up and running says Matlof, and the low capital required is one of the reasons Battery Ventures funded the company.

The smart algorithms came from the work of one of CUE’s founders, Gregor Henze, a professor at the University of Colorado at Boulder, who previously wrote his dissertation on optimal control of thermal energy storage systems. The model is able to accurately predict how the building is going to respond to the current environment in real time and adjust the HVAC system accordingly, says Matlof.

Battery Ventures has backed other low-capital-intensive energy efficiency software plays like networked lighting company Redwood Systems. “We’ve avoided the kinds of companies that get stuck in the Valley of Death, like thin-film solar, utility-scale solar thermal and electric cars,” says Matlof.

CUE’s software reminded me a bit of some of the projects that smart thermostat service company EcoFactor has done, optimizing demand response events for utilities. Though EcoFactor is concentrating on residential buildings, and not, say, a 70-story commercial building that’s in CUE’s cross hairs, the two companies are similar in that they both use big data and predictive algorithms to focus on HVAC as the pain point in a building.

CUE has already done 12 pilots with its software (two in the Chicago area) and has just started selling its software commercially.

Image courtesy of CUE.