One day, the old-skool electricity grid will have the smart network capabilities of the Internet — distributed, self-healing, maybe even peer-to-peer. It’s a huge future business opportunity that’s prompting investors to put money into startups like GridPoint, which this morning said it closed a $48.5 million Series D round that was led by Goldman Sachs Group (GS) and Susquehanna Private Equity Investments (we wrote about the first part of this round in mid-September).
GridPoint CEO Peter L. Corsell says what his company’s software and hardware do for power-grid technology is similar to what Cisco (CSCO) did for networking — enabling intelligent distribution and optimization — and Oracle (ORCL) did for data management. And if the electricity grid is going to be as smart as the Internet on the edge of the network (connected to devices like smart meters), it’s going to have to overcome a few hurdles. Corsell hopes the industry will figure out standardization and regulation. Here’s excerpts from a chat with GridPoint’s CEO:
Q) Is the building out of the electricity grid driven by the same factors as the broadband buildout, cheap silicon and wireless computing?
A) Absolutely. Everything that happened to digitize and modernize the telephony space is happening to the power grid. The basic premise is: Up until now the power industry has been focused on building new-generation and transmission capacity, which is necessary to meet the demands for power. But if you look at the environmental and NIMBY issues, it’s becoming harder and harder to [build] power plants and transmission lines. These aren’t things people are excited about.
The premise of our company is it will be more and more difficult for utilities to address the needs of society by just simply building new generation. They need to invest in network-optimization equipment, virtual power plants, demand-side architecture, and the edge of the grid. We’re selling an alternative to a power plant.
Q) What are the differences between building out the Internet and the electricity grid?
A) It’s a different landscape. Conceptually it’s very similar. But differences are the physical realities of electrons. It is also difficult to store power on the network.
Q) What are the hurdles for bringing IT to the power grid?
A) The emergence of standards. It is important that electric utilities get together for IEEE-type standards so different vendors can make technology that is interoperable and scalable. Standards are a big thing. Regulatory change is another.
Q) Do you think some of the sexier technologies of the Internet, like peer-to-peer or self-healing, will come to the power grid?
A) Yes, we do see them coming, but in reverse order to what you said. Peer-to-peer is probably a bit futuristic, but self-optimizing and self-healing, definitely.
Q) There have been a number of IPOs in the demand response space, is that something GridPoint is shooting for?
A) We just raised a substantial cushion; we don’t have any plans on the horizon to raise additional capital. Obviously we would never rule it out down the road.