The Lens: Arcadia + Urjanet

Hey gamechangers!

Welcome to The Lens, a monthly-ish recurring series where I unpack the strategy and context behind the news in as few words as possible.  For past editions, check out Vol. 1, Vol. 2, Vol. 3, Vol. 4, Vol. 5, Vol. 6, Vol. 7, and Vol. 8.

For Volume 9, let's talk about Arcadia's acquisition of Urjanet.

Enjoy!

What happened?

Arcadia, a community solar developer and residential utility data provider, acquired commercial utility data provider Urjanet.

If you don't know Arcadia, they started as a community solar company for homeowners or renters. They sync with your utility to track your electricity usage,  then they source, verify, purchase and retire renewable energy credits (RECs) for you. As a result, you're purchasing renewable electricity from a low- or zero-emissions resource, which reduces the emissions associated with your electricity use.

The REC piece is fun and all, but the 'sync with your utility' piece is what we're going to focus on today. In late 2021, Arcadia spun off that portion of their stack as a utility data platform called Arc—"aimed at entrepreneurs and developers who are building tools that can help consumers use energy smartly".

Urjanet is also a utility data platform. They built a screen scraping application that logs into your utility's website and grabs the data off of your monthly utility bill or your utility-owned interval meter, if available. Then they give that to anyone via an API.

Both Arc and Urjanet fill the gap created by utilities being horrible at allowing customers to use our own data. Before the acquisition, Arc covered 125 electric utilities. Urjanet covered 9,500 electric, gas, and water utilities.

Why?

Obviously the bigger picture here is that decarbonization is becoming a core business issue in commercial real estate. We've covered that a lot in the past, so let's talk about 'Why?' from a product perspective...

I love this quote from Canary Media to start us off:

Do you remember the flood of data from the 100 million smart meters that were rolled out in the aughts? And the smart grid transformation of the 2010s? And how, starting in 2012, Green Button allowed us easy access to utility information?

Those programs ushered in a new golden age of customer awareness and control of energy usage. We can now easily use third-party apps to time our consumption to when power is cheaper or cleaner, and engage in demand-response schemes that lower our costs and support the grid at the same time.

That's why. Easy access to utility information can enable decarbonization. In other words, this is all about that vital first step of the Carbon Management Journey framework: Getting Data.

"The secret of this company, and the market, is that accessible meter and grid data is key to rapid decarbonization.”

—Arcadia CEO Kiran Bhatraju

Verdantix called Arcadia the Amazon Web Services (AWS) of energy data because AWS is the plumbing of the internet. I disagree...

This is about plumbing, yes. But it's really about data access, not compute infrastructure. It's about pre-built integrations and the number of customers already using those pre-built integrations. Arcadia is the Plaid of energy data and the Stripe of buying clean energy all in one.

All of these companies—AWS, Plaid, Stripe, Arcadia, Urjanet—are API-first companies. Their job is to provide an API that abstracts-away complexity and then continuously grow the value of that API.

Arcadia's acquisition of Genability in 2021 is a similar API-first strategy. Genability abstracts-away utility rate tariff complexity. Now, with that engine included behind the Arc API, it's even more valuable.

The Urjanet acquisition is about growing the value of what's behind the API in three ways:

1. More utilities: from 125 to 9,500
2. More types of utilities: from electric only to electric, gas, water, waste, and even telecom
3. More types of utility accounts: from residential to commercial

The last one is huge, allowing Arcadia to branch out into commercial real estate decarbonization. And crucially, allowing Urjanet's commercial customers (30+% of the fortune 500's buildings) to get the added value of the Arc platform. While Urjanet just tracks real utility-grade meter data, Arc claims to be able to map it to the carbon-intensity of the grid where those companies operate and then find clean electricity to match those needs.

Context

Unlocking energy usage data is a unique problem due to the geographically segmented nature of utilities. There aren't many companies working on this in commercial buildings besides Urjanet. The only other one I know is Utility API, and they only unlock a few dozen utilities.

That means Arcadia is in an amazing position to be THE utility data aggregator for commercial buildings. It's also great for the industry as a whole—we don't need a ton of different companies doing this.

This is also about digitizing and automating as much of the decarbonization process as possible. According to the World Economic Forum, only 9% of companies use software to accurately manage their ESG reporting. Others rely instead on manual processes, Excel, and estimates. That makes it perfectly timed for the new SEC regulations which will turn up the intensity, scale, and stakes on all of that inefficient work.

Speaking of all that work, this is huge for the commercial building decarbonization supply chain too—Urjanet is used by the vast majority of energy and carbon software firms (E.g. Enel X, Goby, and Measurabl) AND by most energy management consultants.

Since Arcadia can now do all that stuff behind one API, this isn't great for point solutions that do only one of the things Arcadia can now do (e.g. carbon intensity of the grid). And I think Arcadia is positioned (and capitalized) to defeat or swallow up any company with data or analytics that make their API better.

This also has interesting implications for the smart building stack, and specifically, the Independent Data Layer. The IDL of tomorrow needs to be able to access many different types of cloud aggregators—like Arcadia—who abstract-away different types of complexity.

Finally, the billing aggregation piece (like Stripe for Utility Billing) is something almost no one is talking about that could end up being a huge deal. What happens when you can purchase power through a digital platform instead of with a monolithic utility? We will soon see.  

That’s all for The Lens this month!

If you want more on this topic, Joe Aamidor and I will discuss his thoughts on this and more in the next edition of M&A Roundup - our ongoing series on mergers and acquisitions in our industry. If you missed the first one, where we talked about IBM's acquisition of Envizi, check it out here.

Thanks for reading,

—James

P.S. These are obviously just my opinions that I always welcome feedback on. Three questions for ya:

• Did you like this? If not, let me know by hitting reply or leaving a comment on Nexus Connect.
• Where am I wrong?
• What news should I turn The Lens on next month?