Viridity Energy has spent the past eight years building up a portfolio of projects and partners using its software to turn batteries and controllable energy loads into virtual power plants. Now the Philadelphia-based startup has raised $8.5 million from one of its original investors, in order to expand its work in an increasingly competitive field.
The new round from AltEnergy, which first invested in Viridity in 2009, comes on top of a $15 million investment in 2012, a $14 million round in January 2011, and about $10 million previously raised in state grants and investments. Previous investors include Mitsui, Intel Capital and Braemar Ventures.
Since its 2009 founding, Viridity’s software has been put to use managing assets ranging from commercial buildings and university campuses to large-scale battery projects at train systems and solar installations. The startup’s focus isn’t so much on linking and controlling these devices, as much as it is on providing the intelligence to match that flexibility to financial opportunities in customers’ utility bills or grid energy markets.
Viridity CEO Mack Treece said in a Friday statement that the company has about 2,000 commercial and industrial sites using its software, as well as one of the largest portfolios of behind-the-meter battery systems on the East Coast. In a January interview, Treece told us that Viridity’s customers represent about 650 megawatts of controllable load, and that its energy storage portfolio is about 23 megawatts.
Viridity doesn’t actually own these assets. Instead, it’s working with a variety of channel partners such as Constellation, ConEdison Solutions and Engie, some of which have come in to take over the financing and ownership role on projects that got started as grant-funded undertakings.
One example of this is Viridity’s long-running project with the Southeastern Pennsylvania Transit Authority (SEPTA) train system. Started in 2012 with a $900,000 state grant, the project uses batteries from Saft and power electronics from ABB to capture electricity from a train's regenerative braking and provide it to the frequency regulation market of mid-Atlantic grid operator PJM.
Now partner Constellation has taken on the role of financing the expansion of that project to 8.75 megawatts, far beyond its initial pilot scale. Viridity earns money alongside Constellation from the revenues earned by the operation of those batteries in PJM, along with annual license fee per megawatt managed, Treece said.
Project developer Half Moon Ventures is playing a similar role in one of the country’s largest solar-storage projects, a 7.5-megawatt battery array linked to a 4.2-megawatt solar system installed and integrated by S&C Electric for the municipal utility of in Minster, Ohio.
While battery projects like these are larger in individual scale, Viridity is also working with retail energy providers such as Constellation and Engie “to help them reduce the risk” of exposure to demand charges and energy price volatility for many smaller-scale commercial and industrial energy customers, he said.
For example, Viridity has worked with utility Consolidated Edison through a Department of Energy grant-funded smart grid demonstration project, to enable 24 commercial buildings in New York to respond to grid needs, he said. “All of those buildings came over to become a client of ours through ConEdison Solutions,” through its 2012 partnership with the energy services arm of Con Ed.
Another energy services partner is Engie, the company formerly known as GDF Suez Energy Services, he said. Viridity’s software allows the company to “leverage the revenue” from providing utility bill management and grid services to lower the commodity price on their equipment, he said.
Having real-time control over building equipment can offer partners like these more options than the traditional day- or hour-ahead demand response options, he noted. One example is using variable speed drives, also known as variable frequency drives (VFDs), the digitally controllable motors that run modern fans, pumps and other building equipment, to alter operations on a second-by-second basis to serve fast-responding frequency regulation markets.
“We actually are the first company that’s taken a VFD into the Reg-D market,” he said, referencing the PJM frequency regulation market for fast-responding assets. That work is being done with Schneider Electric, starting with a 2014 pilot project testing VFDs in a Wal-Mart store in eastern Pennsylvania.
Viridity is far from the only provider of software allowing this kind of flexible response to energy market and pricing imperatives on the part of large commercial and industrial customers. Notable startups competing with Viridity include Enbala, which is working with GE Energy Ventures and Edison International, and Blue Pillar, which is working with NRG Energy.
Tangent Energy, a Pennsylvania-based company with about 525 megawatts of flexible behind-the-meter energy under management with industrial customers, municipal utilities and retail energy providers, provides similar capabilities. And Power Secure, which manages a portfolio of about 1,500 megawatts of backup generators and other on-site energy flexibility for commercial and industrial customers, was bought by utility Southern Company for $431 million in February.
Viridity’s path to its current position in the marketplace hasn’t come without hiccups. Back in the 2011-2012 timeframe, industry insiders reported that Viridity customers had expressed some dissatisfaction with the readiness of the startup’s software to scale beyond pilot-project level.
In response, Viridity “did away with the old software stack, and brought in a completely new software stack” in 2013, Treece said. Key features of the new software include “best-in-class proprietary peak-shaving algorithms” that “maximize cash revenue per unit of load through proactive, automated real-time sales of load flexibility across a comprehensive interface with the wholesale electric power markets,” according to Viridity.
Viridity was founded by Audrey Zibelman, who was formerly the COO of mid-Atlantic grid operator PJM, and now serves as the chairwoman of the New York Public Service Commission, and Ed Krapels, the head of transmission and microgrid project developer Anbaric. Zibelman’s connection to Viridity and Anbaric led to a public inquiry into the potential for conflicts of interest in her role as PSC chairwoman last year, and Zibelman gave up her remaining shares of the company in June.