This year should see an explosion in smart-grid investing, particularly from venture capitalists interested in developing applications companies for this emerging market place.
Only a dozen or so successful start-ups address the smart-grid business, despite the more than $4 billion the Obama Administration has poured into smart-grid projects and the excitement the rumored Silver Springs IPO is likely to bring later this year.
The explosion could come as VCs begin to see the smart grid as a plaform ripe for application development, says IBM's Drew Clark
This could change. “You’re going to see venture capitalists attack this space,” says Drew Clark, director of strategy at BM’s venture capital group. “This year, you’ll see an explosion” of interest.
Clark says VCs are beginning to see the smart grid as a platform where applications can sprout, much as they sprout on Apple’s iPhone. This view is somewhat self-serving, since IBM hopes to be that platform supplier. (Cisco Systems also is making a platform play.)
Yet, Clark has reason to know. He talks to a lot of VCs as he tries to interest them and their start-ups to work with IBM and its products, such as the Maximo asset management software.
He says the trend will be driven by the realization that the energy-use data being generated by smart meters and stored in utility company computers has great value. In much the same way Google found a way to use search data to develop an advertising business, smart-grid companies will find ways to deliver products and services to consumer to help them save money and more effectively use power.
“People are thinking this is the ‘energy Web,’” he says. “I think it’s going to pick up speed.”
Clarks says one particularly promising opportunity is carbon accounting, or energy management, software. These are products analyzing energy-use data and pricing information to allow consumers and businesses to make better decisions about when to use energy.
Another compelling area involves smart micro grids. A university might develop such a micro grid to network its buildings, and monitor and manage their energy use. The micro grid also might be self-sufficient with solar and wind power and the ability to share energy among the buildings. Software to run the grid could represent a big opportunity.
It is clear the smart grid is at an early stage. The development of applications might signal stage two is on the way.
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