Five became one this week, as Tendril and Simple Energy announced that they are merging, hauling along the three smaller firms that Tendril has snapped up in the past few months – fueled by a recent investment round. There’s been no talk of money changing hands, but the merger creates a very capable utility software provider that shows no signs of slowing down.
The two firms are both based in Colorado, and now Uplight is looking to become the main provider for utilities’ customer-centric software and analytics. Uplight now has some 75 customers in North America, which collectively account for 100mn end-customers – with Tendril and Simple Energy often sharing utility customers. With 350 staff, Uplight is not planning layoffs, and hopes to be a strong competitor that sits somewhere between the crop of inexperienced startups and the slightly distracted enterprise software providers.
Rubicon Technology Partners bought a majority stake in Tendril from its original investors, and then injected enough cash for Tendril to acquire EEme (in-home energy load disaggregation pattern recognition via meter data), EnergySavvy (energy efficiency recommendations platform, called Next Best Action), and FirstFuel Software (data analytics and management software).
Rubicon remains the majority investor in Uplight, while AES Corp is still a significant shareholder, thanks to its investment in Simple Energy – worth around $53mn. Uplight hasn’t talked about a valuation, but it seems sensible to estimate that it’s probably in the $400mn range right now. New CEO Adrian Tuck said that the company would be profitable immediately, which is a very encouraging sign.
Of course, Uplight is now positioned squarely against Oracle’s Opower suite, which too wants to be a single source for utility software, as well as startup Bidgely, which just announced that it had managed to achieve 41GWh of savings for Rocky Mountain Power, based on its AI-driven Home Energy Reports (HER) program.
Uplight has a new three-step focus, combining the Tendril and Simple Energy capabilities – Engage, Activate, Orchestrate. Broadly, Tendril was good at the first and third, while Simple Energy excelled at step two. Unsurprisingly, Engage is all to do with consumer engagement, and includes the very effective HER stage – where simply seeing your energy usage habits and a list of recommendations to improve them, or perhaps how you rank compared to neighbors, can be enough to dramatically change a consumer’s habits.
Activate boils down to making actual changes in the customer’s home or energy plan. Simple Energy began life as a white-label application for utilities to offer competitions and program signups and registrations, which largely enabled utilities to turn these customers into grid assets – enrolling them in demand response programs, for instance.
Getting these customers to opt-in to new programs, which are to the utilities’ benefit, has proven difficult, and so there is a market for firms like Simple Energy, and now Uplight. These programs and marketplaces are often the easiest ways to get a home to adopt a smart thermostat, which can then be used as the basis for grid services – but utilities have historically struggled here.
The third step, Orchestrate, is perhaps most technically complex. This regards harnessing all the collected data and connected devices, and then putting them to use at scale – using them to effectively store surplus energy generated by Distributed Energy Resources (DERs) like rooftop solar and wind, or asking them to reduce their demand so that the utility doesn’t have to fire up expensive reserve generation capacity or buy that energy from a wholesaler.
If a company can gather enough DR homes under its control, it can begin pitching to grid operators and utilities as if it were a more conventional grid asset, like a storage battery or a solar array. Using DR, this company can increase or lower the demand for energy to help the grid out, for which it will be paid a fee. This payment is going to be required to help pay out to the homes, as most DR programs are essentially a voucher or rebate scheme that pays up when the home’s demand is adjusted – usually by lowering demand via control of appliances, or delaying a scheduled task for a more optimal time.
Once you factor in the increasing penetration of smart home technologies, these early-stage DR players can leverage greater ecosystems of connected devices and functions, which give each home a greater DR potential. EV charging, white goods scheduling, and HVAC control would let the DR firm act as a larger grid asset, enabling it to charge more for its services.
Of course, the utilities would like to have this capability in-house, but the process of building up their own smart home platforms will be resource-intensive and likely cost-prohibitive. Centrica’s Hive is the best-placed option in the energy industry, but in the smart home sector, Amazon and Google are going to be the kingmakers. This is why we are so interested in their activity in this sector.