Voltus, a startup with some large-scale demand response contracts that belie its size, has raised a venture capital round to take its technology and business model to a larger audience.
On Monday, the San Francisco- and Boston-based startup announced the close of a $10.1 million investment from Prelude Ventures and a family office represented by Energy Innovation. It’s the first formal investment for Voltus, which has previously worked with about $1 million raised by CEO and former EnerNOC executive Gregg Dixon and other parties, he said.
With that seed funding, Voltus leapt into prominence last year with about 400 megawatts of contracts, including both legacy business being ported over from competitors including EnerNOC, and new business created in what have previously been underserved markets, like those of midwest grid operator MISO.
Since then, Voltus has expanded its portfolio to about 600 megawatts, including a big expansion in MISO reported last month.
It has also run a successful season of events with its customers, and is targeting a goal of 1,000 more megawatts of demand response capacity under contract by year’s end, Dixon said.
While all its business is in the United States at present, the company is also seeking to expand to international markets next year, he said. But in the U.S. at least, “our claim is, we offer more demand response programs in more markets than anyone else,” he said.
Voltus is not competing in terms of sheer scale against chief U.S. rivals such as EnerNOC, Comverge and CPower. Instead, it has designed its demand response offering to come in at a lower price than its mainline industry competitors through streamlining both the technology and the human labor that goes into each megawatt of contracted power, Dixon explained.
The technology side of things includes its Voltlet -- a $100 hardened, Linux-based PC, built from standard parts -- and its Amazon Web Services-hosted VoltApp and VoltMarket software platforms.
This technology combination supports sub-second response times and data granularity to tap a broader range of grid revenue opportunities that aren’t part of most traditional demand response portfolios, he noted. In MISO, for example, Voltus is aggregating retail customers for capacity, operating reserves and frequency regulation markets.
This flexibility also allows Voltus to make the best use of batteries, on-site generators and other sources of energy supply as well as flexible demand, he said.
This level of technical control over behind-the-meter energy assets isn’t unique to Voltus. Startups like Enbala Power Networks, Advanced Microgrid Solutions, Blue Pillar, AutoGrid, Tangent Energy and others are taking advantage of falling costs for on-site networked controls and cloud computing to push them into a growing number of settings.
At the same time, the biggest players in the U.S. market have undergone a significant change in focus over the past few years. First, there was the court challenge that threatened to undermine the federal regulations behind the country’s biggest markets for the service.
That threat was shelved by the U.S. Supreme Court, but another challenge arose in the form of year-round regulations for mid-Atlantic grid operator PJM’s capacity markets, which have led to a reduction in megawatts for the traditional summer-focused demand response in the country’s biggest market.
These changes led to the top two U.S. demand response companies being acquired by companies with a much broader focus than simply demand response. In May, Comverge was bought by Itron for $100 million, and in June, EnerNOC was bought by Enel Green Power North America for $250 million.
