Green Tech

Smart-grid company Tendril has raised an additional $30 million in venture funding to expand the reach of its home energy monitoring gear.

VantagePoint Venture Partners on Tuesday announced the series C round for the Boulder, Colo.-based company. The money will be used to grow Tendril's network of manufacturing and distribution partners.

Tendril's in-home display can show how much a homeowner is spending on electricity.

(Credit: Tendril Networks)

Tendril makes small displays for consumers to see how much electricity a home is consuming. The company also makes software for utilities to run energy-efficiency programs that allow consumers to take advantage of lower rates at off-peak times.

The Tendril displays use Zigbee wireless to connect to a home's smart meter and communicate with the utility.

The company is one of dozens building smart-grid technologies aimed at modernizing the electricity grid so consumers and utilities can have better information to improve efficiency.

Tendril's area of home energy monitoring faces competition from a number of other suppliers and Google, which released its PowerMeter monitoring software in limited beta last month. Tendril's strategy is to sell its goods primarily through utilities, which tend to be conservative adopters of technology.

VantagePoint Venture Partners' investment in Tendril reflects how clean-tech venture capital investing has shifted over the past year from very expensive solar and biofuels deals to more "capital-efficient" companies like Tendril.

Smart-grid companies, in particular, are attractive to venture capital because they are essentially IT companies targeting the utility industry, sectors that many investors are comfortable with.

I talked this week with Adrian Tuck, CEO of Tendril, about interesting ways the U.S. power delivery grid could be modernized. Tendril, it needs to be said, could gain a lot from the nationwide adoption of smart grid technologies, since it makes software and designs hardware that collects electricity use data from appliances and then processes that data for utility companies and consumers.

The big idea that Tuck and I discussed is a concept that's only now boring its way through the thick bureaucracies of the utility companies: what if, instead of power companies charging for electricity at the power meter, which is the point of where it leaves their power lines, they instead were able to charge individual appliances and other devices for the power they used, regardless of where they used it?

Adrian Tuck, CEO, Tendril

(Credit: Tendril)

What's the difference? It's this: suppose I have a Tesla Roadster, and I drive 240 miles (the Tesla's range) from my house to yours, to see you. I need to recharge my car to get back home. If I plug it in at your place, that will cost you about $4, Tesla says. A small price to pay for the pleasure of my company, but nonetheless isn't it unfair for you to pay for my car's fuel? And if you're talking about parking lots full of cars at businesses, this cost could add up. If cars and power companies could communicate directly, that charge could go to the cars' owners, not the owner of the building where they plug in.

Other devices that use a lot of energy--refrigerators, washing machines, air conditioners--could give their owners some control over whose energy they use and when they use it. Tuck says that the idea of energy that's billed to devices instead of homes is "the equivalent of number portability" for electricity. It would allow manufacturers to build devices that let their owners choose which electricity producer they want to use to power their devices. Want cheap but polluting coal power right now? Go ahead and dial that in. Want green wind power instead (and the carbon credits with it)? Set your washer to run only when there's "wind on the grid," and let the provider who generates that power send you a bill for the electricity you use.

Tuck even talked about the idea of appliances with pre-paid kilowatt-hours. You could go to Home Depot, buy a window-mount air conditioner with a summer's worth of cooling already built in to it. Such a device would certainly make consumers more aware of the power they're using. (It's also a great gift idea, if you ask me.)

Tilting at windmills

This vision is, for the most part, a fantasy right now. Except in Texas, power generation, delivery, and sales are not deregulated enough to allow such services, much less encourage utility companies to push for this kind of a re-think of their businesses.

But there's real consumer value in putting a little electricity meter in every appliance or electric car. Tuck says that consumers who get better information on their energy consumption than the current monthly bills use less power--up to 15 percent less, depending on the quality and timeliness of the data.

Appliances with energy-reporting chips will start coming out in 2011, he says. They'll just offer reporting capabilities to the utility and the consumer; the idea of allowing users to select different energy supplies for individual appliances is still a long way off.

But the idea of charging devices' registered owners for the services they use is powerful and interesting. This is how cellular phones work. You can get phones where you pay for exactly what you use, no more and no less, because the phones and their service providers know what services you're using. Drive that kind of granular service data into the appliances that consume the majority or our electricity and there's no telling what kind of innovation we'd get--and with it, presumably, smarter use of the limited energy resources we have.

See also: Gridpoint, Comverge, Greenbox, Wattvision, and more stories about Tendril.

Like a lot of green-technology companies, Tendril is waiting for the federal stimulus money to start flowing.

"I think it will act like a massive accelerator," said CEO Adrian Tuck, whose company makes sensors that consumers can use to monitor and control their consumption of energy.

Adrian Tuck, CEO, Tendril

(Credit: Tendril)

But echoing a common concern, Tuck also hopes that Tendril and other green-tech start-ups will not need to wait too long before the spigots open.

You know the cliche about time being of the essence? It's a refrain I heard again and again during the course of interviewing CEOs as part of a CNET News special report examining the progress and prospects of green tech.

The paradox is that the most interesting companies in the field often happen to be the very ones who don't have access to capital because of the economic crisis.

How much will an immediate cash infusion help? Plenty, according to Tuck, who says the public will see a quick payback from the coming investment in this nascent industry. For example, he predicts that for every $100 the U.S. Department of Energy invests, Tendril can save $100 for the consumer within 18 months.

"What we and others like us bring to the table is speed," he says.

But despite the confident tone that Tuck and other CEOs working in the green-tech industry voice, one big uncertainty remains: Will the money get into the hands of smaller, entrepreneurial outfits in the beginning, or will Uncle Sam prefer to deal with the bigger, established companies? How that question gets answered may very well decide the fates of many of the companies whose ambition is to change the world.

Smart-grid start-up Tendril is using a classic computer industry game plan in a bid to create the equivalent of the Windows operating system for a 21st century electricity grid.

At an industry conference, the Boulder, Colo.-based company will announce that third-party companies have developed software applications that work with Tendril's in-home smart-grid software and devices.

Tendril's in-home display can show how much a home is spending on electricity at a given moment.

(Credit: Tendril Networks)

The basis of Tendril's partner program is a set of technical specifications, or application programming interfaces (APIs), for both its software, which talks to utilities' back-office systems, and for its Zigbee-based energy-management hardware.

It's not clear that unlocking Tendril's products will result in a thriving "ecosystem" of partners like Microsoft's Windows enjoys, or that it's technology will become a de facto industry standard. But the move is significant in that it signals a broader shift toward interoperability and away from proprietary technology in the utility industry.

"This is the right thing to do. More vendors should be doing this," said Jesse Berst, the founder of Smart Grid News. "With standards in the area they're proposing, you can put people (like electricians) to work and create a platform for future prosperity based on the smart grid."

In the computer industry, all the large software companies have sought to build a technical platform for third-party developers in the hopes of creating a critical mass of add-on products.

Technical standards around software development and data exchange, meanwhile, helped lay the foundation for countless products and innovations, from the Linux operating system to Wikipedia.

Utilities have historically invested in proprietary technology. Slowly, though, standards are playing a larger role, in part because of regulatory pressure, said Berst, who predicted that it will take another 18 to 24 months for necessary standards to be worked out.

Demand response
The point of modernizing the electricity grid is to show consumers how to use less electricity and to help utilities operate the power grid more reliably and efficiently.

Although "smart grid" covers a wide range of products, the technology is generally geared toward collecting and communicating information on the flow of electricity.

Like others, Tendril makes a line of devices, including a wireless thermostat and an Internet gateway, that provides a method for automatically collecting information on home energy usage.

Once centralized in Tendril's data center, consumers can see their real-time consumption via a Web browser on a PC as well as an iPhone or BlackBerry. By seeing how usage varies over time and how one household compares to others, the idea is that people will seek to lower their energy consumption.

Tendril Networks provides consumers with Web access to see their electricity usage and to compare it to similar households.

(Credit: Tendril Networks)

For utilities, real-time data collection provides insight into energy demand, allowing them to run the grid more efficiently. Through energy-efficiency programs, utilities can control customers' appliances and equipment remotely. A store could allow the utility to turn down lights during the middle of the day, or a consumer could allow the dryer to turn off the gas for a few minutes.

Dialing down energy use is most important during peak energy times, like the middle of a hot summer day. By dialing back demand with "demand-response" software, utilities can avoid starting up expensive, polluting power-generating plants to meet peak demand.

Smart grid building steam
As part of its open software strategy, Tendril said last week that its server software now adheres to a demand-response standard called OpenADR. Adhering to the standard means that Tendril customers can automate energy-saving changes in their home appliances, according to Tendril CEO Adrian Tuck.

For example, a consumer could program the TV and entertainment equipment to turn off completely in the middle of the night, rather than consume energy on standby mode. Or a consumer could schedule the dishwasher to run when electricity rates are lowest.

Tendril hopes that opening up access to its technology will lead to a flourishing of third-party applications, like Google gadgets that display your home's information in real time on a PC.

"One of the tenets of our business is that we believe that nobody really understands where energy efficiency will go once usage information has been liberated from the grid," he said. "And almost everybody we compete against is architected to be closed."

In theory, standards benefit utility customers because they can choose among different suppliers. Pacific Gas & Electric, which is considered one of the most forward-looking utilities in the U.S., will use standards-based, rather than proprietary, products in its upcoming smart-grid trial, CEO Peter Darbee said last month at the Clean-tech Investor Summit.

Smart grid is considered one of the most promising technology areas this year because the planned federal stimulus package includes a number of incentives for utilities to launch smart-grid trial programs.

It's also becoming better understood in the general public--General Electric aired a smart-grid advertisement during Sunday's Super Bowl--and tens of thousands of consumers now participate in trial programs.

But even with the growing awareness of the technology's potential, smart-grid vendors say that one of the biggest problems is getting notoriously conservative utilities to actually deploy the technology, particularly products from relatively small providers.

"It's not clear that utilities know how to move rapidly. These are guys that famously make the government look quick," said Tuck.

Start-up Tendril Networks on Tuesday announced the details of its networked in-home energy displays, a sign that smart grid technology is crawling into the marketplace.

Basic in-home displays show consumers how much electricity they are consuming at a given moment. More sophisticated systems, as Tendril Networks has developed, are designed to give consumers more options to save energy by collecting information over time and to communicate with the utility through networked meters.

Tendril's in-home display can show how much a home is spending on electricity at a given moment.

(Credit: Tendril Networks)

The company's product, called Tendril Residential Energy Ecosystem (TREE), is a combination of software that works with utilities' back-office systems and a line of devices that use the home area networking standard Zigbee.

The display, Tendril Insight, shows usage information in real time by reading information from so-called advanced meters installed by utilities. The company also sells a gateway device and a network-enabled thermostat.

The set-up will allow consumers to not only see usage in real time, but also make adjustments to save money, according to Tendril Networks CEO Adrian Tuck. For example, you could choose to run the dishwasher at an off-peak time to get a cheaper rate or to completely shut down (without stand-by current) a large TV at certain hours of the day.

The company intends to get its devices into the market primarily through utilities; Tuck said he expects the company's gear will be in tens of thousands of homes this year and just under one million next year.

Tendril Networks provides consumers with Web access to see their electricity usage and to compare it to similar households.

(Credit: Tendril Networks)

By the middle of next year, it will sell hardware products directly to consumers with advanced meters at a cost of between $30 and $50, Tuck said.

Ultimately, the vision is to have Zigbee-enabled appliances communicate directly with a thermostat or in-home display. But that's likely a few years away because of the expense associated with smart grid technology and because Zigbee, although a standard, has yet to be universally adopted by the industry.

Boulder, Colorado-based Tendril Networks, which raised $12 million in venture funding in March of this year, is one of several smart grid companies targeting the energy efficiency market.

Tuck said the company is looking to differentiate itself by using the Zigbee standard which will allow people to get software updates on their devices. Also, it intends to take a more consumer-friendly approach than existing smart grid pilot tests, which tend to focus on the benefits to utilities.

"Most in-home displays take information from the outside meter, but because ours are networked devices and because we're talking to the utilities' back office, we know what the price plan is and we can present it in dollars and cents," he said.