Washington's smart grid stimulus campaign is paying off for many U.S. software companies.
Having flourished on the back of federal support, firms are finding growing demand for their services worldwide, as grid operators grapple with upgrading meters and adding variable renewable power to their systems.
Perhaps none has seen a bigger payoff than Boulder, Colo.-based Tendril.
The energy management software start-up has quadrupled both its workforce and revenues since tapping into the market several years ago, allowing it to expand overseas.
Tendril provides applications that help customers understand how much electricity they consume and at what times of day, and to set personal goals to conserve energy. Users can monitor and control consumption via smartphones, tablets, computers and flat-screen televisions, or opt for a separate in-home display.
In May, the firm announced a major partnership with Origin Energy, Australia's largest energy retailer. Origin will deploy a pilot service of Tendril's Energize application suite in thousands of Australian homes later this year, with the potential for mass distribution to nearly 5 million households.
Tendril could help the 100,000 or so Origin customers who have residential solar energy systems to match peaks in solar power supply with household energy demand, a service Tendril expects to provide for other renewable energy resources like wind in North America as well.
Ivo Steklac, Tendril's chief operating officer, credits the Obama administration's smart grid rollout with helping the firm enter the global market.
Since 2009, the U.S. Department of Energy (DOE) has distributed nearly $4 billion in stimulus grants for the development of smart grid technology, storage and monitoring. Most utility and energy companies received the awards in late 2010 and early 2011, but are only now starting to spend the cash.
"Tendril has participated with a number of domestic utilities who were awardees of those grants. And through that participation we were able to accelerate the development of the technologies that we have today — as well as grow our company to the size that we could develop internationally," Steklac told SolveClimate News.
Pike Research, a cleantech market consultancy, estimates that government programs in part will help prod major utilities in North America and Europe to replace more than 45 percent of meters with advanced technologies by 2015, with a projected $19.5 billion of smart meters to be deployed worldwide by that year.
The research firm also estimates that more than 250 million smart meters will be installed by 2015, up from 46 million in 2008, and representing 18 percent of all the world's electrical meters.
While smart meter sales will eventually taper off at the end of this decade after most of the infrastructure is installed, home energy management tools and data and analytics services could continue to evolve with upgrades and higher-tech capabilities, Bob Gohn, a research director for Pike Research, told SolveClimate News.
"[The future] will be a much more consumer-oriented market, as opposed to an infrastructure one," he said.
Chet Geschickter, a senior smart grid analyst with GTM Research, said: "A core driver here is that the different utilities that are moving forward with smart meters are building customer engagement and increasing it.
"It is typically one of the top three strategic objectives that [utilities] are talking about ... and the vendors trying to serve those utilities are definitely finding a receptive audience," he said. "The common realization is that these smart meters are going to provide vast volumes of data and that there is some business opportunity to help people leverage that data."
Success 'An Open Question'
Still, Gohn said that for home-management vendors "the market is still very nascent."
He explained: "The growth prospects are there and the opportunity is there. Whether it will actually emerge as [vendors] hope or be as robust as they would like is still an open question."
Tendril got its start in 2004 as a software developer with just over a dozen employees for devices such as thermostats and smart appliances. The firm soon spotted an emerging market for bringing products that consume energy together with ways to control energy use, and the team developed a software-as-a-service (SaaS) platform to bridge the connection.
Around 2008, Tendril honed its focus on the energy management market. At that time, a handful of utilities in California, Texas and some Northeastern states had begun updating their energy grids and deploying a wide variety of smart meter technologies in customers' homes.
"Pre-stimulus is what I would call spotty movement. It was still real and meaningful, but it wasn't universal," said Tendril CEO Adrian Tuck. "What the stimulus grants did was that they distributed funds to states that otherwise would have probably waited for that first wave to be completed to understand what worked and didn't work.
"There was a danger that there was going to be some fragmentation over the technologies, and that would have created difficulty for the full value of the smart grid to be realized," he said. "But what happened with the advent of the stimulus was this coalescing around certain standards."
Tendril today supplies its software platforms to around 40 domestic utilities, of which more than one-third have funded some portion of their smart grid projects with DOE dollars, Tuck said.
Tendril itself has not directly received DOE grants, he noted.
Last October, the company acquired Massachusetts-based software firm GroundedPower, whose behavioral analytics technology can provide energy consumers with interactive advice and personalized guidance on how and when to scale back use. Tendril also secured an additional $23 million in investment with the purchase.
Earlier this year, the company announced its partnership with Whirlpool Corporation to enable the rollout of smart home appliances and opening of a Tendril Australia office in Melbourne.
Over the past 18 months, Tendril has quadrupled its head count to 120 full-time employees and has hired around 10 new people each month on average since the start of 2011, according to the company.
The start-up's bookings — or projected revenues in the pipeline — have increased four-fold from 2009 to 2010. Being a privately held company, Tendril would not disclose the financial details.
Tendril timed its announcement of the Origin deal with a May 20 cleantech conference headed by Vice President Joe Biden at the National Renewable Energy Laboratory (NREL) in Golden, Colo.
Biden praised Tendril for helping consumers shrink their energy use, while Tuck gave a nod to the administration's role in indirectly boosting his company's recent growth.
Tendril's Steklac also attributed the firm's success to a rising interest in energy efficiency among households and businesses.
'Becoming Front-of-Mind' Issue
"What we're seeing ... is an awakening in this marketplace that says energy is no longer something that people want behind the scenes in the back of their mind," he said. "It is something that is slowly becoming front of mind."
He pointed to a recent Australia-wide survey commissioned by Origin that found that while respondents were confused about the impact their choices had on their energy bills and greenhouse gas emissions, 93 percent of those polled said they wanted to implement sustainable solutions at home.
But before home energy management tools can really take off, certain regulatory incentives must be in place to encourage energy efficiency, Pike Research's Gohn said.
"Some of these things are predicated on there being dynamic electricity rates, so that I can get some economic benefit by [managing] my use of electricity, by shifting my use to off-peak hours or sun-peak hours, and getting the benefit of those savings," he said.
"But if those dynamic rates aren't available from the utility in my area ... then this technology doesn't necessarily provide a real [economic] benefit other than lowering my consumption by a little bit. That is a big swinger in how this might be used."