20110831 comverge english_combined

ⓒ 2011 insprout Corporation.

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An Analysis of Demand Side Management

Aug 31, 2011


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2

Table of Contents

1st Part: Introduction

� Introduction

�Our Focus in the Technological Domains of Smart Grid

�Demand Side Management

�Big News!

2nd Part: 4rd Case Study

�Comverge


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3

Introduction

Purpose

-In the previous research, we identify the business opportunities in

Demand Side Management (DSM) that include the Energy

Management Services (EMS) and Advanced Metering Infrastructures

(AMI) & Field Area Network (FAN).

-In this research, we will deeply take a look at the structure of these

technological domains, and pick up & analyze some companies

active in these domain as case study.

Methodology

-We will present an diagram of Demand Side Management,

identifying each technological component within the system.

-We will then pick up some companies that are actively doing

businesses within these fields to get case studies for Japanese startups.


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2．Our Focus in the Technological Domains of Smart Grid

TransmissionTransmission DistributionDistributionGenerationGeneration ConsumptionConsumption

Renewable EnergiesRenewable Energies

Alternative EnergiesAlternative Energies

Energy Production

Wide Area Monitoring SystemWide Area Monitoring System

Monitoring&Control of System Power Supply

Distribution AutomationDistribution Automation

Superconducting TransmissionSuperconducting Transmission

Effective Operation of System Power Supply

Power Electronics Applied EquipmentPower Electronics Applied Equipment

AMI / FAMAMI / FAM

Advanced Interface Technologies

Power Conditioner TechnologiesPower Conditioner Technologies

EMSEMS

EVEV

Energy Consumption

Energy Storage TechnologiesEnergy Storage Technologies

Energy Storage6

1 2 3

4

5

RecycleRecycleFossil Fuel EfficiencyFossil Fuel Efficiency

Energy SavingEnergy Saving

※Classifications are based on Japan’s New Energy and Industrial Technology Development Organization (NEDO) “Renewable Energy Technology White Paper 2010.”

1）

2）

3）

4） 5） 6）

7）

8）

9）10）

11）

12）

13）

14）


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※Classifications are based on Japan’s New Energy and Industrial Technology Development Organization (NEDO) “Renewable Energy Technology White Paper 2010.”

DescriptionDescriptionTechnological

Domain

Technological

Domain

③Energy Consumption

6) EMS Technologies

Process of managing the consumption of energy, generally to

optimize available and planned generation resources.

It includes HEMS, BEMS, FEMS, and Demand Response.

AMI refers to a system that integrates smart meter and various

control devices for energy management. FAN is a network that

bundles multiple smart meters and connects to public

communication lines.

⑤Advanced Interface

Technologies

12) AMI / FAN

2．Detailed Descriptions of DSM Domains


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※Source: “Technologies and Standardization of Smart Grid” published in 2010 by Japan Standard Association

3．Structure of DSM

Power Company

Business

System

Distribution

Automation

System

Gas Company

Service

Provider

MDMS Concentrator Communication

AMI

Measu

re

Contro

l

Building/Commercial/Industrial

HEMS

Controller

Household

Devices

Energy

Storage

Energy

Generator

Household

BEMS/FEMS

Controller

Household

Devices

Energy

Storage

Energy

Generator

Demand Response Network

EMS Controller

Smart Meter

Concentrator

MDMS

Communication

Unit

Wired/Wirelsss

Block Diagram

System Structure


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3．Structure of DSM

�AMI assumes communications among Smart Meter, Service Providers

including utility companies and Energy Management System placed in the

demand side.

�Between service providers and consumers AMI provides information to

various systems through Meter Data Management System (MDMS). For

example, billing automation system, distribution automation system are done

through AMI.

The introduction of AMI makes it possible to

measure power consumption real time.


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4．Big News!

�California PUC adopted the world’s first comprehensive set of rules

to ensure that consumers can access the detailed energy usage data

gathered by their smart meter. This decision calls for:1. Web Presentment

-Utilities must provide via their websites such information as detailed energy usage.

2. Tier Alerts-When customers move from one price tier to the next, the utilities are to provide notification.

3. Rate Option Calculator-Help consumers understand whether they would save money by switching to a time-of-use rate.

4. Real-time Data

-Decision requires them to file plans that “include an initial phase with a rollout that enables a

minimum of 5,000 HAN-enabled devices to be directly connected with smart meters.

5. Third-Party Data Service

- Consumers can authorize third parties to receive their backhauled smart meter data directly from the

utility to support services such as energy efficiency. Will use OpenADE as standard.


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4．Big News! ~OpenADE (Automated Data Exchange)

Meter

Data

Mgmt

Utility

Billing

& CIS

Utility

Web

Site

Open

ADE

Smart Network

Application Platform

Communication Network

Head End

Open

ADEEnergy Info

Application

Utility Data Center Authorized Third Party

Next Day DataAMI

Radio

Smart Meter

Communications

Network

Internet

Internet

How the Open Automated Data Exchange communication standard works

※Source：http://www.emeter.com/smart-grid-watch/2011/california-puc-adopts-consumer-data-access-and-privacy-rules-for-smart-meters/


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Case Study 3

EnerNOC


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Company Overview

Headquarters

Year Founded

Employees

Business

Sectors

Revenue $280 Million (FY2010)

75 Federal Street Suite 300

Boston, MA, 02110

2001

484 employees (as of Dec.31 2010)

Demand response, energy management systems

Type Public (NASDAQ: ENOC), IPO May 2007

Name EnerNOC


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Funding History

Series A

Series B

Total

Apr. 2003

Jan. 2005

-

2.6M

7.75M

10.35M

Year Amount

Draper Fisher Jurvetson,

Braemar Energy Ventures

New Atlantic Ventures, Foundation Capital

Braemar Energy Ventures,

Draper Fisher Jurvetson

-

Participants in the Round


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Focus Area

Power Company

Business

System

Distribution

Automation

System

Gas Company

Service

Provider


AMI

Measu

re

Contro

l


HEMS

Controller

Household

Devices

Energy

Storage

Energy

Generator

Household

BEMS/FEMS

Controller

Household

Devices

Energy

Storage

Energy

Generator


EMS Controller

Smart Meter

Concentrator

MDMS

Communication

Unit

Wired/Wirelsss

Block Diagram

System Structure


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Description of EnerNOC’s Services

•Demand response application

•EnerNOC acts as an aggregator

between utilities and end-users.

*For a video presentation, see the following link:

http://www.youtube.com/watch?v=wDJb8YhbE6k

DemandSMART

•Offers consulting services to help

companies buy energy efficiently.

*For a video presentation, see the following link: http://www.youtube.com/watch?v=v6bJTFagwq0&feature

=related

SupplySMART

•Analyzes users' real-time power

consumption to reveal opportunity

to save energy.

•Offers traditional commissioning.

EfficiencySMART

•Tracks and manages greenhouse

gas emissions for companies

trying to reduce their emissions.

*For a video presentation, see the following link: http://www.youtube.com/watch?v=FD0mvzHWlcw&featu

re=related

CarbonSMART


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Description of DemandSMART

Demand

Response

EnerNOC

Power

Company

Power

Company

Power

Company

Power

Company

Supply

Commercial

Users

Institutional

Users

Industrial

Users

Demand

1.Notify when

increase in

demand

1.Request

Demand

Response

2.Curtail

Power

Consumption

2.Aggregate

reduction of

energy use

3.Pay reward

based on the

amount saved

3.Pay reward

based on the

amount saved

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*Note: EnerNOC

does not target

residential customers


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How Does Demand Response Actually Works

�When demand is high, power

company raises electricity price.

�EnerNOC requests its business

partners that participated the DR

program to curtail their energy use.

�Companies that wish to avoid

high electricity price accept to cut

back consumption.

�EnerNOC aggregates such

reductions of power consumption,

successfully shifting heavy load.

�EnerNOC and those who helped

the DR get paid based on the

amount of energy they saved.


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EnerNOC’s Business Model

EnerNOCPower

Company

Commercial

&

Industrial

Users

17

Multi-million dollar contracts with

terms that generally range between

three and ten years. Such contracts

also predetermine capacity

commitment and payment levels.

1. Reliability-Based

Demand Response

2. Price-Based

Demand Response

3. Ancillary Services

DemandSMART


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EnerNOC’s Business Model ~continued~

18

Reliability-Based

Demand Response

•ENC receives recurring capacity payments, which they share with

customers, from utilities for being on call, whether they receive a signal

to reduce consumption.

•When called to implement a demand reduction, ENC typically receives

an additional payment, which they also share with customers, for the

energy they reduce.

•By aggregating a large number of C&I customers to participatein these

reliability-based programs, ENC helps to prevent blackouts.

Price-Based

Demand Response

•Enable C&I customers to monitor and respond to wholesale

electricity market price signals when it is cost-effective

•ENC receives an energy payment in the amount of the wholesale market

price for the electricity that the customer does not consume and share

this payment with the customer.

•This service is called upon byelectric power grid operators and utilities

during short-term contingency events such as the loss of a large power plant.

•Utilities rely on a reserve pool of these quick-start resources to provide

short-term support as needed during these contingency events.

Ancillary Services


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Financial Highlights

26.1

106.1

190.7

280.2

60.8

-5.8

-36.7

-6.8

9.6

-23.6

0

50

100

150

200

250

300

2006 2007 2008 2009 2010

-40

-30

-20

-10

0

10

20

Revenues Net Income

(Unit: Million $) (Unit: Million $)

EnerNOC now mamages 5,300MW,

serving 3, 600customers at 8,600 sites


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Risk Factors

�Dependence on utilities for revenues

�ENC currently generates all of its revenues from utilities.

�Upfront costs

�As ENC expands the MW under management, the infrastructure (such as STB installed at

customers’ sites) necessary to enable those rises.

�Time lag in revenue recognition

�PJM forward capacity market operates on a June to May program-year basis. For example, a

MW that ENC enables after June of each year won’t be recognized as revenue until June of

the following year.

�Penalty payments when capacity commitment is not met

�Under the contracts, utilities make periodic payments based on the amount of demand

response capacity committed by ENC, not the amount of consumption actually saved.

If this commitment is not met, penalty payment is imposed on ENC.

�Net penalty payments were $288,527, $168,719, and $82639 in 2010, 2009, and 2008

respectively, about 1/100 of annual revenue.

*Source: EnerNOC 2010 Annual Report


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Citations

English

http://en.wikipedia.org/wiki/EnerNOC

http://www.slate.com/id/2248558/

http://www.greentechmedia.com/articles/read/demand-response-solid-team-player-but-

not-a-star-yet/

http://www.sramanamitra.com/2009/01/08/deal-radar-2009-enernoc/

http://gigaom.com/cleantech/enernoc-sees-business-beyond-demand-response/

http://buildaroo.com/news/article/enernoc-efficiencysmart-energy-management-

software/

http://www.greentechmedia.com/cleantech-investing/post/whats-enernoc-up-to/

Japanese

http://ventureclef.com/blog2/?p=1135


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Case Study 4

Comverge


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Company Overview

Headquarters

Year Founded

Employees

Business

Sectors

Revenue $119 Million (FY2010)

5390 Triangle Parkway, Suite 300

Norcross, GA, 30092

1980

562 employees (as of Dec.31 2010)

Demand response, energy management systems

Type Public (NASDAQ: COMV), IPO Apr. 2007

Name Comverge


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Funding History

Series A

Series B

Total

Oct. 2003

Oct. 2004

-

18.6M

13.6M

37.7M

Year Amount

Nth Power, EnerTech Capital Partners,

Ridgewood Capital, E.ON Venture Partners,

Shell Internet Ventures, and others

Rockport Capital Partners, Nth Power,

EnerTech Capital Partners, NorskHydro

Ventures, Ridgewood Capital.

-

Participants in the Round

Series C Mar. 2006 5.5M

Nth Power, EnerTech Capital Partners,

Rockport Capital Partners, Norsk Hydro

Ventures, Ridgewood Capital, and others


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Focus Area

Power Company

Business

System

Distribution

Automation

System

Gas Company

Service

Provider


AMI

Measu

re

Contro

l


HEMS

Controller

Household

Devices

Energy

Storage

Energy

Generator

Household

BEMS/FEMS

Controller

Household

Devices

Energy

Storage

Energy

Generator


EMS Controller

Smart Meter

Concentrator

MDMS

Communication

Unit

Wired/Wirelsss

Block Diagram

System Structure


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Description of Comverge’s Demand Response Programs

•Installed at consumer’s location

•Upon receiving the command by

software, hardware in turn reduces the

operating hours of equipment, making

electric capacity available to utility

Hardware

•Establish communication between

energy providers and consumers, and

receive a consistent infrastructure for

command and control of energy

management programs

Software (IntelliSOURCE)

•Includes such things as installation,

marketing and management program

Services

Residential

Commercial &

Industrial (C&I)

: offers services to small

commercial end-use participants

: offers services to utilities that

manage programs for large C&I

customers


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More on Demand Response Programs

27

Residential

C&I

Virtual Peaking

Capacity (VPC)

Turnkey

VPC

Open Markets

Energy Efficiency

-Pay for performance basis between

-COMV owns & operate the network

-COMV provides the same network as VPC, but

COMV sold the assets to customers after having

installed them at negotiated rates of payment

-Pay for performance basis between

-COMV owns & operate the network

-Utilities seek bids from C&I customers to provide

demand response based on prices offered in bidding.

-COMV sells the capacity in the markets on behalf

of customers

-Provide permanent base load reduction through

equipment upgrades and building automation


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Megawatts breakdown

28

Megawatts owned under capacity

contracts

Megawatts owned for sales in open

market programs

Megawatts provided under turnkey

contracts

Megawatts managed for a fee on a

pay-for-performance basis

Megawatts owned or managed

Megawatts provided through product

sales

Total megawatts owned, managed or

provided

Residential C & I Total

597 294 891

16 1,698 1,714

658 32 690

- 437 437

1,271 2,461 3,732

6,707 - 6,707

7,978 2,461 10,439


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Notes on Megawatts breakdown

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�Megawatts owned under long-term capacity contracts.

�We directly develop, operate and manage the entire demand management system. We typically own and

operate the underlying assets used in these programs. We refer to the megawatts provided under our VPC

programs as megawatts owned under long-term capacity contracts.

�Megawatts owned for sale in open market programs.

�We own and manage megawatts in open market programs with grid operators. In these programs, we

aggregate megawatts from consumer loads, provide them to the market.

�Megawatts provided under turnkey contracts.

�We offer load control programs in which the utility maintains ownership of the underlying asset but we

provide product, software and services.

�Megawatts managed for a fee on a pay-for-performance basis.

�We also manage megawatts in open market programs for certain large industrial customers. We are paid

based on the performance of those megawatts and do not own the underlying megawatts.

�Megawatts provided through product sales.

�We sell intelligent energy hardware, combined with software, which electric utilities use to build their own

IEM networks.


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Financial Highlights

(Unit: Million $) (Unit: Million $)

33.9

55.2

77.2

98.8

119.4

-94.1

-31.4-31.7

-6.2 -6.6

0

20

40

60

80

100

120

140

2006 2007 2008 2009 2010

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

Revenues Net Income (Loss)

Comverge now mamages 3,732MW,

serving over 5M end users


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Risk Factors

�Dependence on utilities for revenues, and on

�COMV currently generates all of its revenues from utilities.

�Upfront costs

�As COMV expands the MW under management, the infrastructure (such as STB installed at

customers’ sites) necessary to enable those rises.

�Time lag in revenue recognition

�Contracts run on a June to May program-year basis. For example, a MW that COMV

delivers after June of each year won’t be recognized as revenue until June of the following

year.

�Penalty payments when capacity commitment is not met

�Under the base load contracts, utilities make periodic payments based on verified load

reduction after inspecting and confirming the capacity reduced. The contracts also require

building out a specified amount of megawatts at pre-determined dates.

�If failed to fulfill the required contracted capacity by the dates specified in the contracts,

COMV is obligated to pay up to $0.3 million per megawatt.

*Source: Comverge 2010 Annual Report


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Citations

English

http://seekingalpha.com/article/118451-comverge-demand-response-software-to-get-in-

front-of-smart-grid

http://gigaom.com/cleantech/why-comverge-is-rebranding-demand-response/

http://www.marketwatch.com/story/comverges-swift-response-prevents-record-

breaking-east-coast-heat-wave-from-affecting-grid-stability-2011-07-26-141930

http://www.forbes.com/sites/tomkonrad/2011/07/18/comverge-diverge-or-merge/

http://news.cnet.com/8301-11128_3-20030043-54.html

Japanese

http://www.itrco.jp/wordpress/?p=1881

http://japan.cnet.com/news/tech/20083305/


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Comparisons between EnerNOC and Comverge

� Foremost, EnerNOC focuses exclusively on C&I customers,

while Comverge makes about 60% of revenues from residential

customers. Comverge takes up about 60% of residential demand

response market. It’s a niche market, but more profitable than

C&I market.

� They both rely utilities for revenues, so they need to diversify

revenue sources. EnerNOC introduces such services as

SupplySMART and CarbonSMART, both of which derive

revenues directly from customers.

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