The Smart Grid
The Smart Grid revolution is driving a crucial and inevitable transformation of the US power grid. It draws from a wide range of technologies to make our electrical infrastructure more efficient, connected, and resilient. This transformation will give energy companies better visibility and control over their assets and will result in lower electricity costs for consumers. The environmental impact will also be overwhelmingly positive as the Smart Grid allows for much better integration of renewable energy sources and more efficient transmission of power.
The Smart Grid market, valued at roughly $67 billion in 2017, is growing rapidly and is projected to reach $169 billion by 2025. The primary technologies driving innovation in the space are IoT, Machine learning/AI, Data Visualization, and Digital Twin technology. While much of the industry is dominated by Industrial tech giants, startups making creative use of the technologies mentioned above are beginning to draw attention from investors. In 2019, venture capitalists poured over $300 million into Smart Grid startups across 79 different deals.
Better integration of renewable energy sources (Now make up nearly 20% of US power Generation)
Better load management capabilities (supply and demand controls)
Better integration of consumer power generation (rooftop solar, etc.)
Better data collection and diagnostics capabilities
Cheaper electricity for the consumer
Better grid resilience during power disruptions
Recent investment in R&D and mass production bringing levelized cost of renewables on par with fossil fuels
Advances in data collection and management technology making Smart Grids more effective and viable
Renewable energy sources are rapidly coming online and Smart Grid tech is vital to the integration process
Smart Grid technology will be needed to manage increasingly unpredictable electricity supply and demand dynamics
Opportunities in the Venture Capital Space:
Much of the Smart Grid market is dominated by large industrial technology companies like ABB, GE, IBM and Siemens due to the capital intensive nature of many of the larger infrastructure projects, but startups are beginning to find a niche by discovering novel ways to incorporate technologies like AI and the Internet of Things to offer Smart Grid solutions.
The two largest areas of opportunity for startups will likely be in Smart Grid SaaS and the electricity market place platforms.
Smart Grid SaaS:
Utilities have been surprisingly proactive in adopting IoT technology, which has given rise to a significant opportunity for Smart Grid SaaS providers. The US power grid is becoming smarter and more connected thanks to hardware solutions like smart meters, and utilities are being overwhelmed by the amount of new data they can now collect. The market for software employing technologies including machine learnings/AI, digital twins, and data visualization on behalf of utilities is growing rapidly. These companies should be able to take a significant portion of the overall Smart Grid market .
Smart Grid SaaS Companies:
Description: The company works with utilities and government agencies on AI and blockchain initiatives including predictive maintenance and contingency planning.
Funding: The company has raised $9 million in seed funding
Investors: The Westly Group, NXT Ventures, Elemental Excelerator
Description: Innowatts is a leading provider of AMI-enabled predictive analytics and AI-based solutions for utilities, energy retailers and smart energy communities.
Funding: Raised a $18 million series B on 5/14/2019 ($24 million total)
Investors: Shell Ventures, Iberdola, Energy Ventures
Description: The company’s IoT connectivity sotware allows data to flow between devices and back-end reliably. Their technology helps enable smart metering systems.
Funding: Raised a $14.4 million series B on 5/142019 ($20 million total)
Investors: Inventure, Tesi, ETF Partners, KPN, Ventures, Vito Ventures
Description: The company’s cloud based energy management systems helps utilities integrate distributed renewable resources (consumer solar, power storage, etc)
Funding: $11 million series D in 8/2019 (!$65 million total)
Investors: Ecosystem Integrity Fund, Evergy Ventures, Equinor Energy Ventures
The Electricity Marketplace:
The electricity market is in the midst a significant transition as a growing proportion of our power is being generated by variable renewable energy sources. In order to integrate these decentralized sources into the traditionally centralized whole-sale energy market, the marketplace will have to adapt. The need for more integration and digitalization within this market provides real opportunities for startups in the space.
Electricity Market Place Companies:
Description: The company is developing a marketplace to connect, control and actively manage a large network of existing energy generating / energy using / energy storing assets connected to the electricity grid.
Funding: Raised a £18,600,000 Series be on 4/5/2018 (£36 million total)
Investors: Cambridge Innovation Capital, Aggreko
Description: the company’s blockchain technology platform allows renewable energy asset owners to decide who they want to sell their surplus energy to and at what price.
Funding: Raised $34 million via an ICO on 9/4/2017
Investors: ICO funded
Description: The company’s blockchain based technology offers a simple way to pool local distributed energy resources and enable customers to buy and sell local energy and optimize the grid at a community level.
Funding: Raised a $5.8 million venture round on 7/11/2019 (5.8 million total)
Investors: Shell Ventures, Centrica, Braemar Energy Ventures