Consert, the San Antonio, Texas-based startup that connects households into blocks of “aggregated load,” is turning from investors to buyers in its search for capital to expand. Chalk it up as another indication that, for startups in the smart grid place, acquisition is by far the most likely exit.
Jeff Ebihara, vice president of sales and marketing for Consert, said in a Monday interview that the company is in advanced talks with unnamed buyers and is likely to be acquired by year’s end. Ebihara wouldn’t provide any details on who the buyer might be, or what kind of prices are being discussed.
But he did say that the acquisition offer at hand came about in the midst of seeking another round of funding. “We were never intending to sell the company, but as we were getting ready for another round of fundraising, and got so many sales inquiries, we started having those discussions,” he said.
Consert, founded in 2008, has raised about $25 million from strategic investors including General Electric, Verizon, Qualcomm and Constellation Energy. That could provide a short list of potential acquirers, although Ebihara noted that the company has also been in talks beyond its strategic investors.
If bought, Consert will grow the long list of smart grid startups that have found their exits in acquisitions, rather than public offerings. Over the past several years, we’ve seen big corporate buyers spend tens of billions of dollars on acquisitions in the space, ranging from multi-billion-dollar deals for grid equipment giants (Eaton and Cooper Industries, ABB and Thomas & Betts, Toshiba and Landis+Gyr, etc.), to multi-million-dollar deals for startups (ABB and Tropos Networks, Silicon Labs and Ember, Itron and SmartSynch, Siemens and eMeter, etc.).
Meanwhile, the IPO sector is all but closed to the smart grid sector, except for one announced company at the gate. That’s Silver Spring Networks, which has managed to build up a U.S. smart meter networking market share to compete with longstanding meter giants Itron and Sensus, but has yet to hold the IPO it filed plans for last summer. Since then, it has found new investors such as EMC and Hitachi to fill its coffers, but is staying mum on when -- or if -- it might go public.
Consert, for its part, has installed its home load control technology for customers including San Antonio municipal utility CPS, New York utilities Consolidated Edison and Central Hudson Gas & Electric, and multi-state utility AEP in its Kentucky service territory, as well as other municipal utilities scattered around the country. Its biggest project, with CPS, has seen 7,000 homes connected so far, representing about 15 megawatts of load under Consert’s control, and plans to expand to 140,000 homes over the next several years.
Consert differs from most home energy management technologies out there today, in that it offers real-time, two-way communication between utility control centers and various devices in the home -- air conditioners, pool pumps and water heaters, in the case of CPS. Most other technologies, such as smart thermostats, radio-operated load control switches and the like, can’t verify how much power they’ve reduced when they’re triggered, at least not right away, he noted.
Consert’s in-home wireless controls and cellular backhaul solution, on the other hand, “can measure and verify down to the watt at the device level,” in real time, Ebihara said. That’s a lot faster than most other alternative ways of measuring home power use -- even today’s smart meters usually only update utilities every fifteen minutes to an hour or so, for example, and homes without smart meters have no connection to the utility at all.
Consert’s real-time, device-level system is more expensive than many other home energy management alternatives -- Ebihara said a typical installation costs about $400 to $500 per home. But it also offers a lot more value, he insisted, particularly in being able to verify the loads it’s controlling in a way that allows grid operators to use the resource for various grid balancing tasks.
For example, Consert is working with Texas grid operator ERCOT to qualify its collected homes as a non-spinning reserve -- a kind of grid backup power resource usually provided by “real power” assets like turbines, or maybe batteries, but rarely by demand reduction. While other companies are doing fast-response, grid-balancing demand response in commercial and industrial settings, most home DR programs rely on longer, hour-ahead or day-ahead warning or pricing regimes to work.