Demand response has come of age.
EnerNoc, one of the largest demand response companies in the U.S., on Wednesday announced that the city of Boston has joined its network of power providers. Under the deal, the city will allow EnerNoc to regulate power consumption at public buildings like police headquarters and the public library (see EnerNoc Expanding Into Carbon Management Energy Services).
The city will be paid a fee and enjoy a lower power bill while EnerNoc makes money providing peak power to utilities.
The company's growth in the region, however, now arguably makes it something of a regional utility. It also has deals with the states of Vermont, Connecticut and Rhode Island. In all, it ended 2008 with more than 750 megawatts in the New England area under its management. That's about the same as seven medium-sized peaker plants. (In 2006, Rhode Island in total had 1.8 gigawatts of capacity) The Boston deal, of course, will add to that total.
EnerNoc recently estimated that it managed around 2 to 2.2 gigawatts nationwide, or about the size of two good-sized nuclear power plants, at the end of 2008. It started 2008 with 1.1 gigawatts under its control. Thus, it doubled the power it manages in 2008 or, put another way, added the equivalent of a nuclear power plant to its portfolio.
It will likely provide more details on its overall portfolio on Feb. 18, 2009 when it announces earnings.
More deals in the region could be likely. Connecticut, for instance, now recognizes demand response servicers as a class of renewable energy, which means that demand response companies and/or their partners can qualify for tax breaks and other benefits.
Demand response and energy efficiency will be one of the dominant topics in greentech for the next two years. Worried about the high capital expenses and declining prices in solar and biofuels, investors are increasingly turning their attention to companies that can curb energy consumption. Some experts estimate that a little over half of the energy produced in America is never used for a productive purpose: it turns into waste heat (see Tapping America' Secret Power Source).
Utilities are also actively promoting these kinds of technologies. And let's not forget: two of the more prominent champions of energy efficiency – Barack Obama and Steve Chu –have new jobs in Washington.
Although primarily engaged in demand response services, EnerNoc is now trying to exploit its network to move into other markets. It has already begun consulting on energy procurement and energy efficiency to certain clients. Next up will be a set of carbon tracking and trading services.