EnerNOC, the U.S. demand-response market leader, says its software-as-a-service platform can tap markets much larger than its traditional field of demand response. The trick will be getting customers to take full use of it.
This week, Walgreens announced it’s standardizing on EnerNOC’s Energy Intelligence Software (EIS) platform for its 8,300-plus U.S. locations. That’s a pretty big deal for the Boston-based company’s new enterprise business, which targets corporate and government customers for energy efficiency, power procurement, risk management, utility customer engagement, and full-scale facility energy monitoring and controls.
At least, that’s what EnerNOC offers at its most complete -- and most expensive -- EIS packages. But only a minority of EIS customers are making use of this complete suite, or applying them to all of their buildings, as EnerNOC has laid out in its recent quarterly earnings reports.
The same goes for Walgreens. The drugstore chain has initially tapped EnerNOC to manage its utility bills, replacing an incumbent software platform it had been using for that task. Utility bill management is one of the most basic features of EnerNOC’s EIS, Fielder Hiss, EnerNOC’s vice president of marketing and product management, said in a Wednesday interview. This system can often find 1 percent to 2 percent energy savings just in catching errors and quirks in billing systems across a company’s portfolio, he said.
But the bigger savings come with more advanced levels of EIS, he said. Comprehensive data-tracking and analysis can yield 6 percent to 10 percent savings, and bringing in professional services and upgrading buildings with new technology can yield 15 percent to 20 percent improvements, he said. EnerNOC’s goal with customers like Walgreens is to collect the data to show how much deeper its software can go, and start turning those opportunities into deeper and more persistent SaaS revenues, he said.
“This is an on-ramp,” he said. “We’re in the process of this first stage. There’s no commitment for Walgreens, but we hope to expand this to real-time metering and monitoring for them, optimizing energy spend. The base capability is really just trying to deal with all the data.”
EnerNOC is far from alone in trying to get its software in place as the standard energy-management platform for big corporate and government clients. On the building automation system (BAS) side, vendors like Honeywell, Siemens and Schneider Electric are adding cloud-based software platforms and support services to their core offerings. On the IT side, enterprise resource management software from the likes of SAP, CA and IBM is starting to add more energy-related intelligence.
EnerNOC also competes with energy software specialists with big corporate portfolios like Ecova, building energy analytics from the likes of SCIenergy, and startups such as Lucid that integrate various legacy systems. And that’s not to mention the various demand-response competitors also looking for deeper inroads into customers’ broader energy management goals.
EnerNOC’s EIS platform is itself built from technology the company has both developed in-house and acquired over the years, like utility bill management software provider EnTech, for example. About 20 percent of EnerNOC’s EIS customers are using the software to “manage real-time energy and real-time expense,” he said, with features like real-time energy prices, day-ahead market pricing reports, and monitoring building energy use to catch spikes in prices or demand.
Many of these full-service customers are part of its core industrial demand response clientele, who’ve already invested in the technology to make full use of their energy flexibility, he said. Others are commercial property owners and managers with some real-time BAS capabilities to build on, or grocery store chains that have super-thin margins that make energy costs a tempting target.
“We’ve mapped all the energy tariffs, as well as their supply contracts -- we can apply that to energy data, so they can understand the impact of energy costs throughout the day and the week [and] see the difference between on-peak and off-peak rates,” he said.
“We can also understand the impact of their demand charges -- that’s a big one, because demand charges continue to increase relative to total bills,” he said. “That’s getting more volatile, because of distributed energy resources.” EnerNOC’s work with SunPower on commercial solar integration and with Tesla on behind-the-meter batteries is a part of its broader push to integrate customer-owned energy resources with its efficiency and demand-response capabilities, he said.
But for customers starting with a simpler and cheaper set of applications, “I think the software-as-a-service approach really lowers the barriers to entry” to these more sophisticated use cases, he noted. EnerNOC typically rolls up implementation costs in its monthly software fees, making it cheaper to try new things with the platform, he said.
And these first-step tasks can find savings “that can be used for more control systems, more intelligent capabilities, to drive even further savings,” he said. That’s a virtuous cycle, as far as well-planned energy efficiency is concerned. It’s also one of the keys to EnerNOC building a stable, recurring and growing revenue stream for its software business.