Smart devices in buildings

Let’s drill down into devices used to light, and heat and cool buildings, and the efficiencies that can be delivered when these devices are networked and can talk to each other. Only 1 percent of the world’s buildings use systems to control and network lighting, and just 7 percent of lighting in commercial buildings is controlled by smart control systems.

But the efficiencies from networking lighting and using smart software to control the lighting in an efficient way, are clear. Earlier this month, a startup called Enlighted Inc. launched a product that places wireless sensors on every light fixture in a commercial or office building, and the company says by using distributed sensing, its system can cut energy consumption from lighting in office and commercial buildings by 50 to 75 percent. Enlighted Inc.’s first customer is green carpet company Interface Services, which used the lighting system to cut down on energy consumption of a 35,000 square foot facility in Acworth, Ga.

Smart lighting controls are so under used, and could be such a large market, that a half-dozen venture-backed startups have launched products. Enlighted Inc. is backed by Kleiner Perkins Caufield & Byers, Intel Capital, and Draper Fisher Jurvetson. Competitor Adura Technologies is funded by NGEN, Claremont Creek Ventures, and VantagePoint Capital Partners. Redwood Systems, a lighting control company which sells a control and sensor system for LEDs that runs over an optimized version of Ethernet cables, raised money from Battery Ventures, U.S. Venture Partners, Index Ventures and Mitsui & Co.

Beyond lighting, networked heating and cooling devices can cut loads of energy consumption, too. Regen Energy is a Canadian startup that makes wireless nodes that can connect to HVAC systems and it uses “swarm logic” software to manage the HVAC systems like a swarm of bees or a flock of fish. Last month, Regen said it had raised $5.5 million from investors and opened its first U.S. office in San Diego.

To note, these are a lot of startups in the smart building industry, and the industry is dominated by companies like Honeywell and Johnson Controls, who have been working on a less digital and networked version of the smart building for decades.

Smart devices on the grid

By now, I’m assuming you’ve all heard about the huge efficiency and business opportunities of the smart grid. While Cisco has changed its smart grid strategies in recent months, Cisco CEO John Chambers still insists that the smart grid poses a bigger opportunity than the Internet. Cisco’s original smart grid product is selling ruggedized grid-specific routers and switches.

Most utilities in the U.S. have at least started to plan a strategy for how they will enter the digital age and are increasingly looking to add connected devices to their grids to reduce blackouts, add more clean power, and engage more with their customers. Smart devices are being installed on all levels of the grid from the substations to transmission to distribution to each home.

Many startups have tried to enter the smart grid at the individual home energy management level, and most haven’t really succeeded yet. That’s because consumers aren’t all that interested in monitoring their own home energy, yet, and utilities are price sensitive to expensive home devices. But one day the digital home, will also be the smart energy home, it’s just a matter of how, and when.

Cell phone companies, who are building the networks for much of the Internet of Things, are looking to have their networks run the smart grid, too. Some utilities are game, like Consumers Energy, and Duke Energy, though many utilities are opting to build their own smart grid specific networks.

Smart devices in cars

And finally, vehicles and transportation, are also becoming part of the Internet of Things, and are benefiting from efficiency gains. Car sharing companies use the Internet and mobile phones to manage the use of vehicles down to 15-minute intervals, and install connections in each car to manage the service. Car sharing directly leads to the reduction of personal vehicle ownership, turns the car into a service, and more efficiently utilizes the car. Peer-to-peer car sharing, where people rent out their own cars into the a network, can lead to even more efficient uses of personal vehicles.

Less obvious are the efficiency gains that GPS navigation services have added to vehicles. If you know the most efficient way to drive to a destination, you save on gas.

Electric cars will be even more reliant on networks and software to manage the charge (so the utility’s grid isn’t overwhelmed) and so drivers can find the nearest charging outlet while on the go. Electric vehicles are only slowly rolling out, due to slow-moving car companies, and a sluggish economy.

Boring factor

Lighting, heating and cooling, the power grid, and cars, might not be the coolest applications for the Internet of Things (well, cars are pretty cool). But they are ways that the Internet of Things can make a major positive impact on developing far more energy-efficient systems. In an environment that has struggled to deliver clean power, biofuels, electric cars and other cleantech products, the Internet of Things could be one of the most important ways to influence energy use.

Images courtesy of Redwood Systems, Duke Energy, Regen Energy.

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The algorithms have been under development since 2005, at MIT, and focus on a smarter way to link home and building devices and utility power generation. The algorithms use a framework called engineered “self-organization” where components on the network interact amongst themselves in real time and can adapt to information, in contrast to a more traditional method of a central server connecting with each component individually on the network. The concept kind of reminded me of the way that Regen Energy is using software based on swarm logic to manage appliances in buildings and electric cars like a swarm of bees or a flock of fish.

Kayton calls Zome’s technology the first type of “demand supplyide optimization,” and the company plans to launch its first software product in the fourth quarter of 2011. That first tool will offer utilities analytics to take a deep dive into not-yet-deployed demand supply projects smart meter networks. Next year, the company will start selling its “demand supply management” server to utilities that links with home and building devices that use Zome’s smart device software.

The idea is that utilities can use the Zome server and home devices to manage home and building energy usage in real time, and shave off up to 20 percent of energy demand from customers without them necessarily being aware of the curtailment. Demand can also be more finely tuned with supply, particularly from clean power sources, which fluctuate the amount of power they produce at any one time (the sun shines and the wind blows only at certain times of day). Zome says its system can aggregate those tiny shaved off loads from home devices, which is similar to what EcoFactor is looking to do with connected thermostats.

Zome is looking to use the emerging standard U-SNAP (Utility Smart Network Access Port) for its home and building devices, and U-SNAP wants to be a USB-like standard for switching different communications modules – such as ZigBee, Wi-Fi, Z-Wave and FM radio – in and out of mass-market gear like smart appliances and home energy dashboards. Zome Co-Founder Jon Rappaport also co-founded the U-SNAP Alliance, whose members include Google, General Electric, Comverge, Trilliant, 4Home and smart meter maker Sensus.

One of the big barriers to the idea is the slow movement of connected home energy devices. This market has been particularly slow-moving, with utility trials taking many months if not years, and consumers not being all that interested in energy-saving products. U-SNAP is also somewhat new. Zome says it has a dozen utility trials (but declined to disclose the utilities) several of which are in Ontario, a couple in the U.S. and a couple in India. (Update: Zome clarified that these are letters of intent for trials). Zome has raised $500,000 in investment and plans to raise a $1.2 million round in the fourth quarter of 2011.

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Regen Energy makes a wireless node that when coupled with its software can reduce the energy consumption of commercial building systems like air conditioners and lighting. Its swarm logic software is based on the idea that each individual node makes a decision based on the actions of the group. HVAC systems and lights in buildings each get a node installed, which can control the appliances in response to demand response signals from utilities or control systems from business managers in an efficient and uniform way.

The startup is also interested in using the swarm logic software to help utilities intelligently manage electric cars. If there is an influx of electric cars plugging into the grid in certain regions, utilities could be looking for ways to control their rate of charge as a group.

Regen Energy has been eying a move to connect with California utilities for a while, and Regen says today that it is also focused on the Northeast U.S. Over two years ago CEO and founder Mark Kerbel told me that the startup was in testing-related talks with several California utilities. Back in 2005 Kerbel developed the algorithm to manage the wireless nodes based on swarm logic.

Heating and cooling in buildings and lighting are easier markets for the company than EVs, given the nascent stage of the electric vehicle market, and Regen Energy already has demand-response utility clients in Toronto like Toronto Hydro. The company also launched an open-source version of its demand-response software based on OpenADR (the open-source standard for demand-response signals) this summer.

Regen Energy raised the funds from NGEN Partners and BDC Venture Capital. Greentech investors increasingly seem to be interested in investing in green startups that are developing capital-efficient ways to use IT and software for energy efficiency.

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Here are 10 trend and news bits out of Distributech this morning:

1. Managing Electric Cars Like a Swarm of Bees. Regen Energy is a Toronto-based company that makes wireless networking devices and “swarm logic””software based on the idea that each individual node makes a decision based on the actions of the group. It’s one of the more interesting ideas out there for the smart grid, and basically, the company is asking if software that acts like a swarm of bees, or a school of fish or a flock of birds, will be the answer to collectively managing energy systems from electric cars to HVAC systems. At DistribuTECH this week, Regen Energy announced that the Los Angeles Department of Water & Power is looking at their so-called EnviroGrid product for its DOE-funded Smart Grid EV integration project. I wrote about their move into EVs a year ago, but now they have a utility willing to publicly try it out.

2. Home Energy Market to Ramp Up. Analysts are still bullish on home energy networking and making some big predictions for it. GTM Research predicts the market for home area networks and home energy management will grow almost 90 percent between 2011 and 2015, resulting in a $750 million market by 2015. That growth will be due to many utilities installing this type of gear as part of their smart grid strategies and using backing from the DOE’s smart grid stimulus program. Pike Research has predicted that by 2015, 28 million homeowners around the world will be using some kind of high-tech tool to manage their energy use. Startup EnergyHub released the next-generation version of its smart energy home device at the show.

3. Moving From Security to Energy. The telcos are interested in offering a combined home energy and security product, as are startups like Control4. And here’s another one: A company called APX Alarms is revamping as Vivint and launching products that combine door locks, video security and lighting and appliance control. If APX is just getting into this, they’re slightly behind. 4Home, which has a similar product, was bought by Motorola last year, while Xanboo, which also has a similar product, was also acquired by AT&T last year. Control4 announced utility customer NV Energy earlier this week. Vivint is working around the wireless protocol Z-Wave, which is proprietary and is being used by Verizon for its trial.

4. A Behavior Change. Startups like OPower and Efficiency 2.0 have long built their services around behavioral science; the idea is to research how people behave and target energy-efficiency recommendations that actually work to customers. Picture the kind of work that Netflix or Amazon do to convince their users to click. This morning, energy management player Tendril announced a set of web services called Energize that will also use behavioral science to offer energy-efficiency recommendations. The product is the result of the acquisition of Grounded Power, which Tendril made in October. Tendril also announced a partnership with Whirlpool yesterday.

5. Partners Make the Smart Grid World Go Round. The smart grid is a network and one company can’t hope to control the entire end-to-end pipe. That’s why a lot of announcements from the show are on partnerships, coalitions and distribution deals. Networking company Silver Spring Networks sent out an announcement this morning about its 40-partner network for its Smart Energy Platform product. The partner platform also now includes services deeper into the grid, like voltage optimization and reduction. Unless you actually work at a utility, you probably don’t care about voltage servicing, but given utilities are Silver Spring’s customers, they try to give ‘em what they want.

6. Clean Power and the Smart Grid. One of the trends I’ve been getting more interested in is how to leverage the smart grid to help add in more renewable power. This morning, demand response giant EnerNOC announced a deal with Bonneville Power Administration to use EnerNOC’s demand response to help make the addition of wind power to the grid a lot more stable. If the smart grid manages — and electric vehicles are charged — with coal-fired power, it partly defeats the purpose of the investments. The companies called the project “a first of its kind.”

7. Don’t Forget About Grid Health. While many companies are focusing on where the grid meets the consumer, utilities will likely spend a lot more money on deeper (critical, as they call it) grid services. Chicago-based S&C Electric announced the next generation of its distribution automation and grid self-healing devices.

8. Smart Grid Cities for All. I’m always a little wary of city-specific collaborations given Boulder’s Smart Grid City was such a disaster. But this week, San Diego (yes, the city that hosts Distributech) is launching the Smart Grid San Diego project, which will combine initiatives from the city, utility San Diego Gas & Electric, GE, UC San Diego and CleanTECH San Diego. The projects seek to deploy smart EV charging, connect clean energy and EVs, create green jobs in San Diego, and study the behavior of San Diegans around energy and EVs.

9. Demand Response Players Expand. Demand response companies have been increasingly looking to offer additional services and expand their brands beyond demand response. The latest is Comverge, which announced a series of news at the show, branching out to offer connections with vehicle service OnStar, and connected thermostats. EnerNOC has also been really aggressive about breaking the demand response mold, including racking up a series of acquisitions and new products.

10. ZigBee or Z-Wave for the Home. While covering standards battles can get tiring, I’ve been watching the one brewing between ZigBee and Z-Wave in the smart energy home. The ZigBee Alliance says this morning that there are 100 certified ZigBee home energy products from 49 companies. But at the same time, Vivint announced this morning that it is going with Z-Wave and so has the first telco home energy trial in the U.S. via Verizon. ZigBee is an open standard, while Z-Wave is proprietary, yet Z-Wave has been available a lot longer (or that’s the reason Verizon gave me for using it). What to pick?

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Image courtesy of Vladeb.

Regen Energy’s flagship product is a wireless device that when coupled with software can reduce the energy consumption of HVAC systems and lighting in commercial buildings. The company has utility clients like Toronto Hydro, and over the past year has set its sights on working with utilities in California, which are interested in using Regen Energy’s technology as a way to help implement demand response programs, which enable utilities to work with power users to cut back their consumption during peak demand periods.

In large buildings, Regen Energy’s wireless nodes can be attached to appliances like air conditioners, and on hot afternoons, for example, a utility could send a command to the appliances to cut back on energy consumption. Kerbel says that a cellular modem connection can be placed on one of the nodes, and once a command is sent to the hardware via cellular connection, the swarm algorithm will prompt the other nodes to replicate the behavior. So even buildings that don’t have a centralized automated management system could be outfitted with Regen’s technology.

But the “smart charging” of electric vehicles would be a new market for the firm. The notion is that individual electric vehicles could be aware of what other vehicles are being charged at the same time and the charging could be managed dynamically in succession.

According to analyst John Gartner of Pike Research the market for “intelligent management” of electric vehicle charging could be as large as $297 million in the U.S. as of 2015. Globally, the revenue from EV management could climb to $1.5 billion in 2015, up from $383 million in 2010.

Gartner predicts that in particular, vehicle-to-grid, or V2G, programs, in which hundreds to thousands of aggregated electric vehicle batteries provide energy storage and stabilizing services for grid operators, (with electricity and data flowing two ways between cars and the power grid) will kick off in earnest in 2015. But as Josie points out in this article (GigaOM Pro, subscription required), different types of plug-in vehicles will demand distinct business models — or at least a variation on models for V2G systems.

If Regen Energy could grab a piece of this market, it could get in while it’s still early, and effectively compete with larger, more well-funded companies like GridPoint, which bought smart charging startup V2Green back in 2008.

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Image courtesy of wolfpix’s photostream.

For example, as I describe in an article at GigaOM Pro today (sub. req’d), five-year-old Efficiency 2.0 has developed algorithms around an energy reduction recommendation service that it sells to utilities. Its service uses publicly available data, like real estate info and income data, to make highly personalized and targeted energy efficiency recommendations to utility customers. Efficiency 2.0′s CEO Thomas Scaramellino thinks of his service as the Mint.com of energy.

EcoFactor, a smart thermostat software maker, also uses publicly available info, like weather data and real estate data, to shave off energy use via connected thermostats. Zensi, a startup recently bought by Belkin, uses algorithms similar to facial recognition software, to listen to the voltage noise of appliances in a home.

Regen Energy, a Toronto-based startup, has developed a wireless node that uses algorithms based on “swarm logic” — in which each individual makes a decision based on the actions of the group — to reduce energy consumption of HVAC systems in commercial buildings. The idea is if energy-consuming devices in buildings were made to act like a swarm of bees, a school of fish or a flock of birds, it could significantly cut energy consumption.

The potential business opportunity is massive, and when utilities invest billions of dollars into smart grid infrastructure over the next 5 years they will be overwhelmed with the amount of energy information that is unleashed. These energy info innovators will be crucial to helping utilities make sense of the data, and help them reach their energy efficiency targets. To read my entire analysis go check out my article on GigaOM Pro, and come to Green:Net today to learn more about the intersection of algorithms and energy.

Read the full article here.

Image courtesy of woodleywonderworks photostream.

Kerbel and his crew have made a lot of headway with the technology in their home province of Ontario, including bringing on Toronto Hydro as a client. (Toronto Star reporter Tyler Hamilton has an excellent article on the company’s work up north.) But recently Regen has been setting its sights on the U.S.; it’s currently in testing-related talks with several California utilities (Kerbel declined to name the utilities, as they’re still in the discussion stage). California utilities are interested in using the technology as a way to help implement demand response programs, which enable utilities to work with power users to cut back their consumption during peak demand periods.

In large buildings, Regen Energy’s wireless nodes could be attached to appliances like air conditioners, and on hot afternoons, for example, a utility could send a command to the appliances to cut back on energy consumption. Kerbel says that a cellular modem connection can be placed on one of the nodes, and once a command is sent to the hardware via cellular connection, the swarm algorithm will prompt the other nodes to replicate the behavior. So, even buildings that don’t have a centralized automated management system could be outfitted with Regen’s technology.

Why is California testing out innovative technology like Regen Energy’s? Partly because of progressive regulations. Back in the late 1970s, California utilities adopted a policy whereby their sales are disconnected — or decoupled — from their profits. With revenues no longer tied to the amount of electricity sold, the disincentive for utilities to implement energy conservation measures was removed. According to the California Public Utilities Commission, which oversees utilities’ energy efficiency programs, California’s per-capita energy use has remained pretty much flat over the last three decades, while elsewhere in the U.S. it’s risen by 50 percent.

California utility PG&E already administers a dozen different demand response programs, including its PeakChoice program, which enables companies to dictate how much energy is reduced and when, in return for financial compensation. By the end of 2008, PG&E’s demand response programs had worked with partners to reduce demand by 695 megawatts.

Taken together, California’s decoupling laws and successful demand response programs around the country have shown enough success that there are now calls for a nationwide program. Bill Clinton advocated a nationwide proposal at the National Clean Energy Summit in Las Vegas last year. Even the stimulus package has a nod toward decoupling (though the language is rather ambiguous) that sets financial incentives aligned with energy efficiency as one condition for the release of billions in energy-efficiency grants. Regen’s technology could soon find its way into far more states than just California.

This article also appeared on BusinessWeek.com

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