There’s an interesting post from Venrock Capital’s Matthew Nordan regarding the correlation of natural gas pricing with demand response compensation for frequency regulation. The overall point Nordan is making is that demand response players like EnerNOC and PowerSecure have been undervalued precisely because natural gas prices have been so low. For a utility, the major value of demand response is in avoiding having to turn on a natural gas peaker to provide the marginal megawatts of electricity during high demand. If natural gas prices are low, the cost of doing that remains relatively low and the value of demand response, which would have the grid turn down demand rather than have the utility turn up supply, is in turn low. But natural gas prices are creeping up, and I’ve written that with LNG exporting on the horizon, cheap natural gas won’t last forever. Which is why Nordan think the value of demand response companies will rise soon as the prospect of natural gas peakers gets less and less attractive for utilities. Nordan makes the additional point that if GDP can continue to bounce back, electricity use will itself rise, creating further need for demand response. With all the carnage in the solar industry and the IPO troubles in cleantech, investors sure could use an energy technology sector to get excited about.