While the idea of an investment bubble growing for the smart grid isn’t new, the rhetoric around the question of whether or not we’re in the midst of a smart grid bubble has only risen in recent weeks. At the AlwaysOn Going Green conference in Sausalito, Calif. this week, a panel of tech execs indicated that they had seen a lot of unwise over investment in the smart grid space and Adrian Tuck, CEO of home energy management firm Tendril said, “We’re falling into a classic trap: a bubble.”
Tuck’s industry — home energy management — is certainly one of the areas that has seen over-investment from venture capitalists. In just the past few months, home energy management startups Tendril, AlertMe, Control4 and EcoDog raised multimillion dollar rounds. There’s a low barrier to entry for companies in this space (basically a couple of developers) and for venture capitalists that have a history of investing in web firms, home energy management is something they can easily understand.
But there’s a bigger shift in investing in the smart grid industry taking place according to some investors, and which I argued in a GigaOM Pro article (subscription required): the first wave of infrastructure companies are already well-established, says Foundation Capital partner Adam Grosser, whose firm backed smart grid network provider Silver Spring Networks. Companies that bet on smart grid infrastructure several years ago are already big enough to be ruling the market where large companies win utility deals.
The opportunity now is in next generation applications that will run on top of that infrastructure, like more mature software for demand response and billing. To find out the hot next-gen smart grid ideas, check out GigaOM Pro.