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EnerNOC has completely changed the way it describes itself. Although the Boston-based company is best known as a demand response provider, that’s not the description it prefers.
Rather, CEO Tim Healy calls it an “energy intelligence software company” that is focused on providing analytics for building energy management all day, every day -- not just during peak times.
That’s not the only thing that has changed for EnerNOC. Its geographic footprint has also evolved in the same way.
Three years ago, 99 percent of EnerNOC’s revenues came from U.S. operations; last year, nearly 20 percent of revenues came from international markets. Most of that activity came from Australia, New Zealand and Canada, but the company is now offering various energy management services in 100 different countries.
“More so than ever before, EnerNOC is a global company,” said Healy, speaking at the Forum 20/20 conference in Boston. He said 35 percent of his staff is now located outside of America.
EnerNOC is now entering South Korea, following an expansion into Japan, Germany and Ireland in 2014.
Today Healy announced that EnerNOC has secured several large customers -- LG Chem, Kolon Industries, COEX and Korea Paper -- to provide demand response services that will be sold on the Korean Power Exchange. Earlier this spring, Korea established a demand response market for the first time, opening up an opportunity for companies like EnerNOC with experience in the more mature U.S. market.
Healy said the strategy would be to “go and get customers to adopt new [energy management] software by helping them get involved in demand response opportunities first.”
Demand response will enable EnerNOC to enter new markets. But it sees software as an equally large revenue opportunity. According to the company, energy intelligence software will add $70 million in sales -- nearing the $90 million expected from international demand response markets.
Unlike many other cleantech industries where the U.S. has historically lagged, new demand response markets like the one in South Korea have emerged because of American leadership. Healy said the company has seen a dramatic pull from countries attempting to emulate what the U.S. has done.
“People from around the world are coming to our headquarters to hear about the opportunity of demand response,” said Healey. "It's different than what we see in other clean energy markets."
But expanding into new countries -- particularly those with markets that are far less mature -- creates plenty of sticking points for the once U.S.-centric EnerNOC.
The biggest issue is understanding rate structures and potential legal issues within every utility territory that offers demand response.
"There are 200,000 different ways to buy electricity over a wire around the world," said Healy. "It's very localized, so the demand response opportunities are distributed."
Although demand response is an easier sell for EnerNOC because of its long experience in the market, the company does find it hard to compete with local software providers for building energy management.
"We have a brand name for demand response, but not necessarily for broader software. Local players can...[claim] you aren't the best fit. It's difficult to compete with that," said Healy.
Those local challenges make it imperative that the company hire lots of local people for support. EnerNOC has 200 people in software development and product marketing, but the vast majority sit in Boston. Healy said he's working on hiring more local product managers in new markets.
"We definitely need to put software resources and local product managers right in that market we're entering," he said.
With so many new markets opening up for demand response around the world, the employee and local resource demands are increasing for the company. The company now has twenty-two offices in twelve different countries. International revenue grew 116 percent last year, reaching 19 percent of total revenue -- up from 1 percent in 2010.
"The international demand response market is significantly larger than the United States market and significantly less penetrated," wrote Healy in the company's 2013 yearly financial report.