The Lens: Energy Program Management

Hey gamechangers!

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

Volume 5 is a special edition focused on energy efficiency program management. It’s a follow up from last month’s Live Broadcast on trends in the energy management software space. I talked way too fast, so this is a chance to slow down on one of the key points.

Enjoy!

What happened?

• Redaptive raised $50M this summer and $150M last fall to help large corporations with lots of buildings implement energy conservation measures portfolio-wide.
• Allumia uses software to run Duke Energy’s Direct Efficiency program and streamline the “engineering, design, funding, installation, management, and maintenance of energy conservation measures”.
• Besides traditional ESCOs and utility conglomerates, Guidehouse listed startups Redaptive, Sparkfund, and Carbon Lighthouse as leaders in the energy-as-a-service (EaaS) space.
• We also discussed Blocpower’s fundraising and unique EaaS model in Volume 3.
• Aquicore and Bractlet, EMIS software startups, each recently released energy program management tools. Aquicore calls it their Projects suite and Bractlet released it under their Simulation offering: the ability to forecast, evaluate projects, decide between investments, implement projects, and verify results.

Why?

• The energy program management process is complicated, has many moving parts, doesn’t scale well, and most corporations don’t have the staffing to navigate the full journey.
• With companies facing growing stakeholder pressure and investor requirements to demonstrate alignment with Paris Agreement goals and setting ambitious carbon targets, EaaS offerings allow them to find partners to handle the complexity, scalability, and often the up front capital required.
• I think entrepreneurs and investors are seeing this as an opportunity to add technology to the traditional energy performance contracting process to help automate and scale up. The ESCO market has historically focused on large public buildings and hasn’t leveraged software very well. This trend focuses on democratization and digitization, which opens it up to private corporations and smaller buildings.
• I also see this as an expansion of the traditional EMIS software capability set. The energy management software market has historically focused on analyzing meter data and BAS data. Insights gained would then need to be taken elsewhere (out of the software) to actually do something. This trend digitizes the whole energy management process.

The context

• As I said in the Live Broadcast, it’s not new to leverage technology to automate and optimize parts of the energy management process.
• Energy Management Information System (EMIS) software is traditionally and increasingly used to handle all the meter data at the heart of assessing performance. It can now be the middleware between everything that provides or consumes utility or meter data, from those automated utility data feeds like Urjanet to city benchmarking, to tenant billing to certification reporting like LEED or GRESB. The tech is there to have your utility bill data automatically acquired, stored in a database, checked for errors, analyzed for common faults (such as spikes and leaks), and (if you’re in the US) sent to Energy Star Portfolio Manager within 24 hours of the utility creating the bill. And it can cost less than it does to pay someone to put it into a spreadsheet, with far better results.
• And that someone is now freed up for more meaningful and fulfilling work: acting on the analytical results. But here’s the thing: the trend I’m seeing in 2021 is to digitize the other parts of the energy management process too. We have to start automating and optimizing the full lifecycle of efficiency improvements, from energy conservation measure development to energy modeling, managing the project, all the way to M&V. I call that program management.

• The key to highlight here is that the energy management process requires engaging diverse stakeholders across all those steps of the process. It’s (nearly) perfect for a multi-sided software platform. Can the software platform be the place where the work gets done? All the work? If it were, project execution would surely become smoother, faster, and the hope is that we could enable the scale we need if it doesn’t depend on all the energy engineers and their spreadsheets.
• There are several software platforms that are digitizing more and more of the steps and engaging more and more stakeholders. They’re also solving real problems for each stakeholder in the process and letting them interact around the energy project as the unit of value. For the building owner, they’re simplifying the process and reducing risk and removing upfront costs. For the lenders, they’re aggregating smaller deals and de-risking it, for the supply chain, they’re reducing CAC, for the utility, they’re providing a new capability and value stream for customers. Examples of this are Sparkfund, Redaptive, Allumia, Blocpower, and there are many more.
• Here’s what that looks like in my crude drawing:

That’s all for The Lens this month! Thanks for reading.