OutSmart: Tapping Power Lines to Manage Building Energy

Many companies looking to manage the energy consumption of rooms and buildings often first turn to the power of wireless, because wireless standards like Zigbee can make energy management systems relatively cheap and easy to deploy. Not OutSmart, a 1.5-year-old startup based in Natick, Mass., which sells an energy management product for buildings based on a proprietary powerline protocol. Investors seem to think the plan to use existing electrical wiring — and its secret communications sauce — is a decent one: On Wednesday morning, the company plans to announce that it has raised $2 million in seed financing from East Coast investors Bainco and The Clean Energy Venture Group (CEVG), as well as incubator Manifold Products.

OutSmart says its nodes can be installed into the electrical wiring — breakers, switches, outlets and universal modules — of a commercial building, and the building’s energy consumption can then be managed by a web-based dashboard. OutSmart says its system can be used to connect to wireless networks and wireless devices, but it doesn’t see the need to install what it calls a “redundant mesh network.” The company is targeting owner-occupied commercial buildings, multi-unit residential buildings and university campuses (it can scale up across buildings) and plans to install its first pilot project in the third quarter of this year at its own headquarters.

OutSmart also has an unusual business model. The company plans to install the monitoring hardware inexpensively and charge a low monthly fee for management of the data that comes from the equipment.

Powerline networking is commonly used in home-network applications, and standards like HomePlug Smart Energy are being developed to work with smart meters and the smart grid. The HomePlug standard has large companies backing it like Cisco (s CSCO), Motorola (s MOT), Intel (s INTC) and GE (s GE) Energy.

Given the lessons learned with standards-based networking — lower cost, more innovation from third-party developers, economies of scale — we’re not sure why a company would rest its technology on a proprietary powerline standard. In addition, when it comes to managing the energy of large commercial buildings, we’re not sure wired offers a lower-cost solution compared with wireless. Wireless mesh solutions are very low cost, easy to install, easy to upgrade, and easy to move to another building if the occupant is leasing the building but owns the energy management system. We’ll also be very interested to see if building owners will want to pay a recurring low monthly fee. If OutSmart has a powerhouse of a product, perhaps the building owner will be happy with the tool over the life of the building, but we’ll wait to hear from its future customers on that one.