Energy Startups Take Page From Tech Playbook, Build Data Platforms
A standard playbook in the tech industry is to try to build a “platform” on top of which a company can attract developers and partners—and build revenue. In the energy industry, though, the notion of technology platforms and partner ecosystems is more or less non-existent.
That could change, though, as more technology entrepreneurs cross over into energy, said speakers at the MIT Platform Strategy Summit on Friday. “Examples of successful platforms in other areas have gotten people to wake up to the potential,” said Peter Evans, vice president of strategic analysis and trends at the Center for the Global Enterprise, in an interview. “Access to data has always been difficult in energy, but some innovators are end-running around those challenges.”
A good example is Somerville, MA-based Crowd Comfort, which last week raised $344,000 in angel funding, its second round since the company was conceived at the Cleanweb Hackathon in Boston last year. The startup has developed an app that lets people with smartphones effectively act as human sensors by reporting their comfort level to facilities managers. The company has expanded the system so occupants can report things like spills or burned-out light bulbs to building owners by taking a photo, says CEO Eric Graham.
Many building energy management companies have built energy-efficiency applications by mining data generated by building management systems or utility bills. Lexington, MA-based FirstFuel and Boston-based Retroficiency have built applications that collect and analyze utility data to identify which buildings are inefficient and could be improved. In the Bay Area, there are a number of energy software companies, including electric meter analytics company Gridium, energy management software company BuildingIQ, and Pulse Energy, which generates efficiency recommendations based on utility bills and building automation systems.
And increasingly, new sources of data are coming online as industrial companies install sensors that collect data from their equipment. A gas pipeline, for instance, could have multiple pieces of equipment, such as pipes and compressors. These “industrial Internet” applications could help companies with lots of heavy equipment identify maintenance needs and troubleshoot problems.
Since 2003, there have been more than 20 “energy intelligence” startups formed in different cities in the U.S., with most based in the Bay Area, Evans estimates. A prominent example is Arlington, VA-based Opower, which generates reports on behalf of utilities that compare one household’s energy consumptions to that of neighbors. The company built a Hadoop-based data store to collect information from utility bills, meters, and smart thermostats, on which it’s built a number of analytics-based applications.
But thus far, no one startup has been able to create a thriving ecosystem around which third-party developers can build add-on apps—the true definition of a platform. Retroficiency has collected a lot of data on the efficiency of many buildings, which could be of interest to companies it doesn’t currently work with, such as building equipment providers, says Mike Kaplan, the firm’s vice president of marketing. “Fundamentally, we’ve focused on utilities so far because they have the data,” he says.
Some larger companies are already trying to build partner networks by making data available via application programming interfaces (APIs). Boston’s EnerNOC, for example, released anonymized data on building energy usage in the standard “GreenButton” format to encourage developers to build custom apps.
Milwaukee’s Johnson Controls, which makes building management equipment, provides APIs to allow third-party developers to write apps using building control system data. So far, it’s innovative startups that have been the first to build apps on that platform, notes Evans.
In the residential energy world, smart thermostat maker Nest has shown that it intends to use its hardware as a platform for multiple applications and use cases. In addition to giving consumers data on their own energy use, it has started to work with utilities to run demand-response programs—adjusting thermostat settings during peak hours in exchange for rebates.
If history is any guide, building-software companies would do well to design their products so that a network, or ecosystem, of partners can connect to them. Look at Salesforce.com. The company’s first product was just a sales force automation application, but early on it had a vision of providing programmatic access to its applications to developers, and it now has a thriving app store of add-on products.
Much of the action so far in energy has been in analyzing buildings to improve efficiency. But there’s a bigger opportunity when you consider that a lot of industrial equipment is being instrumented with sensors and connected to corporate IT systems.
It’s conceivable, for instance, that a developer could write an algorithm using sensor data from a GE locomotive to spot mechanical failures before they occur, or tell the driver how to optimize fuel usage. Evans, a former GE Energy executive, expects that big industrial companies, such as GE and Siemens, will try to encourage third-party companies to write apps that work with their equipment, too. “Everyone talks about Nest and energy in the home but if you really want to tackle the energy problem, it’s not necessarily where the action is,” he says.