An Analysis of Demand Side Management              Aug 31, 2011                                        ⓒ 2011 insprout Cor...
Table of Contents1st Part: Introduction    Introduction    Our Focus in the Technological Domains of Smart Grid    Demand ...
IntroductionPurpose-In the previous research, we identify the business opportunities inDemand Side Management (DSM) that i...
2.Our Focus in the Technological Domains of Smart Grid       Generation                                     Transmission  ...
2.Detailed Descriptions of DSM Domains      Technological                                                                 ...
3.Structure of DSM  Block Diagram                                                              Demand Response Network    ...
3.Structure of DSM  AMI assumes communications among Smart Meter, Service Providersincluding utility companies and Energy ...
4.Big News!   California PUC adopted the world’s first comprehensive set of rulesto ensure that consumers can access the d...
4.Big News! ~OpenADE (Automated Data Exchange)              How the Open Automated Data Exchange communication standard wo...
Case Study 3 EnerNOC               ⓒ 2011 insprout Corporation.                          All rights reserved
Company Overview   Name        EnerNOC   Type        Public (NASDAQ: ENOC), IPO May 2007               75 Federal Street S...
Funding History             Year      Amount           Participants in the Round                                Draper Fis...
Focus Area  Block Diagram                                                              Demand Response Network            ...
Description of EnerNOC’s Services             DemandSMART                                                SupplySMART•Deman...
Description of DemandSMARTSupply                                                Demand          1.Notify when             ...
How Does Demand Response Actually Works                              When demand is high, power                           ...
EnerNOC’s Business Model                                           DemandSMART                                           1...
EnerNOC’s Business Model ~continued~                     •ENC receives recurring capacity payments, which they share with ...
Financial Highlights(Unit: Million $)                                                               (Unit: Million $)  300...
Risk Factors      Dependence on utilities for revenues             ENC currently generates all of its revenues from utilit...
CitationsEnglishhttp://en.wikipedia.org/wiki/EnerNOChttp://www.slate.com/id/2248558/http://www.greentechmedia.com/articles...
Case Study 4 Comverge               ⓒ 2011 insprout Corporation.                          All rights reserved
Company Overview   Name        Comverge   Type        Public (NASDAQ: COMV), IPO Apr. 2007               5390 Triangle Par...
Funding History             Year      Amount           Participants in the Round                                Nth Power,...
Focus Area  Block Diagram                                                              Demand Response Network            ...
Description of Comverge’s Demand Response Programs             Hardware•Installed at consumer’s location•Upon receiving th...
More on Demand Response Programs                Virtual Peaking         -Pay for performance basis betweenResidential     ...
Megawatts breakdown                                     Residential   C&I         TotalMegawatts owned under capacitycontr...
Notes on Megawatts breakdownMegawatts owned under long-term capacity contracts.    We directly develop, operate and manage...
Financial Highlights(Unit: Million $)    Comverge now mamages 3,732MW,               (Unit: Million $)                    ...
Risk Factors      Dependence on utilities for revenues, and on              COMV currently generates all of its revenues f...
CitationsEnglishhttp://seekingalpha.com/article/118451-comverge-demand-response-software-to-get-in-front-of-smart-gridhttp...
Comparisons between EnerNOC and ComvergeForemost, EnerNOC focuses exclusively on C&I customers,while Comverge makes about ...
TO BE CONTINUEDWe will analyze in detail various EMS technologies and             companies in those domains              ...
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  1. 1. An Analysis of Demand Side Management Aug 31, 2011 ⓒ 2011 insprout Corporation. All rights reserved
  2. 2. Table of Contents1st Part: Introduction Introduction Our Focus in the Technological Domains of Smart Grid Demand Side Management Big News!2nd Part: 4rd Case Study Comverge 2 ⓒ 2011 insprout Corporation. All rights reserved
  3. 3. IntroductionPurpose-In the previous research, we identify the business opportunities inDemand Side Management (DSM) that include the EnergyManagement Services (EMS) and Advanced Metering Infrastructures(AMI) & Field Area Network (FAN).-In this research, we will deeply take a look at the structure of thesetechnological domains, and pick up & analyze some companiesactive 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 doingbusinesses within these fields to get case studies for Japanese startups. 3 ⓒ 2011 insprout Corporation. All rights reserved
  4. 4. 2.Our Focus in the Technological Domains of Smart Grid Generation Transmission Distribution Consumption 1 2 3 Energy Consumption Energy Production Monitoring&Control of System Power Supply 1) Renewable Energies 4) Wide Area Monitoring System 5)Distribution Automation 6) EMS 2) Alternative Energies 7) EV 4 Effective Operation of System Power Supply 3)Fossil Fuel Efficiency 8) Recycle 10)Superconducting Transmission 9) Energy Saving 11) Power Electronics Applied Equipment 5 Advanced Interface Technologies 12) AMI / FAM 13) Power Conditioner Technologies 6 Energy Storage 14) Energy Storage Technologies 4 ⓒ 2011 insprout Corporation.※Classifications are based on Japan’s New Energy and Industrial Technology Development Organization (NEDO) “Renewable Energy Technology White Paper 2010.” All rights reserved
  5. 5. 2.Detailed Descriptions of DSM Domains Technological Description Domain Process of managing the consumption of energy, generally to ③Energy Consumption 6) EMS Technologies 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 ⑤Advanced Interface control devices for energy management. FAN is a network that Technologies 12) AMI / FAN bundles multiple smart meters and connects to public communication lines. 5 ⓒ 2011 insprout Corporation.※Classifications are based on Japan’s New Energy and Industrial Technology Development Organization (NEDO) “Renewable Energy Technology White Paper 2010.” All rights reserved
  6. 6. 3.Structure of DSM Block Diagram Demand Response Network Household Power Company Energy Business Generator AMI HEMS Household System Controller Devices Distribution Energy MDMS Concentrator Communication Storage Automation System Building/Commercial/Industrial Energy Generator Measure Gas Company Control BEMS/FEMS Household Controller Devices Service Energy Provider StorageSystem Structure Wired/Wirelsss Communication Unit MDMS Smart Meter EMS Controller Concentrator 6 ⓒ 2011 insprout Corporation.※Source: “Technologies and Standardization of Smart Grid” published in 2010 by Japan Standard Association All rights reserved
  7. 7. 3.Structure of DSM AMI assumes communications among Smart Meter, Service Providersincluding utility companies and Energy Management System placed in thedemand side. Between service providers and consumers AMI provides information tovarious systems through Meter Data Management System (MDMS). Forexample, billing automation system, distribution automation system are donethrough AMI. The introduction of AMI makes it possible to measure power consumption real time. 7 ⓒ 2011 insprout Corporation. All rights reserved
  8. 8. 4.Big News! California PUC adopted the world’s first comprehensive set of rulesto ensure that consumers can access the detailed energy usage datagathered 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. 8 ⓒ 2011 insprout Corporation. All rights reserved
  9. 9. 4.Big News! ~OpenADE (Automated Data Exchange) How the Open Automated Data Exchange communication standard works Utility Data Center Authorized Third Party Meter Utility Utility Open Open Internet ADE Data Billing Web ADE Energy Info Mgmt & CIS Site Application Smart Network Application Platform Communication Network Head End Internet Smart Meter Next Day Data Communications AMI Network Radio 9 ⓒ 2011 insprout Corporation.※Source:http://www.emeter.com/smart-grid-watch/2011/california-puc-adopts-consumer-data-access-and-privacy-rules-for-smart-meters/ All rights reserved
  10. 10. Case Study 3 EnerNOC ⓒ 2011 insprout Corporation. All rights reserved
  11. 11. Company Overview Name EnerNOC Type Public (NASDAQ: ENOC), IPO May 2007 75 Federal Street Suite 300Headquarters Boston, MA, 02110Year Founded 2001 Revenue $280 Million (FY2010) Employees 484 employees (as of Dec.31 2010) Business Demand response, energy management systems Sectors 11 ⓒ 2011 insprout Corporation. All rights reserved
  12. 12. Funding History Year Amount Participants in the Round Draper Fisher Jurvetson,Series A Apr. 2003 2.6M Braemar Energy Ventures New Atlantic Ventures, Foundation CapitalSeries B Jan. 2005 7.75M Braemar Energy Ventures, Draper Fisher Jurvetson Total - 10.35M - 12 ⓒ 2011 insprout Corporation. All rights reserved
  13. 13. Focus Area Block Diagram Demand Response Network Household Power Company Energy Business Generator AMI HEMS Household System Controller Devices Distribution Energy MDMS Concentrator Communication Storage Automation System Building/Commercial/Industrial Energy Generator Measure Gas Company Control BEMS/FEMS Household Controller Devices Service Energy Provider StorageSystem Structure Wired/Wirelsss Communication Unit MDMS Smart Meter EMS Controller Concentrator 13 ⓒ 2011 insprout Corporation.※Source: “Technologies and Standardization of Smart Grid” published in 2010 by Japan Standard Association All rights reserved
  14. 14. Description of EnerNOC’s Services DemandSMART SupplySMART•Demand response application •Offers consulting services to help•EnerNOC acts as an aggregator companies buy energy efficiently.between utilities and end-users.*For a video presentation, see the following link: *For a video presentation, see the following link:http://www.youtube.com/watch?v=wDJb8YhbE6k http://www.youtube.com/watch?v=v6bJTFagwq0&feature =related EfficiencySMART CarbonSMART•Analyzes users real-time power •Tracks and manages greenhouseconsumption to reveal opportunity gas emissions for companiesto save energy. trying to reduce their emissions.•Offers traditional commissioning. *For a video presentation, see the following link: http://www.youtube.com/watch?v=FD0mvzHWlcw&featu re=related 14 ⓒ 2011 insprout Corporation. All rights reserved
  15. 15. Description of DemandSMARTSupply Demand 1.Notify when 1.Request Power increase in Demand demand Response CommercialCompany Users Power 2.Aggregate EnerNOC 2.CurtailCompany reduction of Power energy use Demand Consumption Institutional Response Users PowerCompany 3.Pay reward 3.Pay reward based on the based on the amount saved amount saved Industrial Power UsersCompany *Note: EnerNOC does not target residential customers 15 ⓒ 2011 insprout Corporation. All rights reserved
  16. 16. 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. 16 ⓒ 2011 insprout Corporation. All rights reserved
  17. 17. EnerNOC’s Business Model DemandSMART 1. Reliability-Based Power Demand Response Company EnerNOC Commercial & Industrial 2. Price-Based UsersMulti-million dollar contracts with Demand Responseterms that generally range betweenthree and ten years. Such contractsalso predetermine capacitycommitment and payment levels. 3. Ancillary Services 17 ⓒ 2011 insprout Corporation. All rights reserved
  18. 18. EnerNOC’s Business Model ~continued~ •ENC receives recurring capacity payments, which they share with customers, from utilities for being on call, whether they receive a signal to reduce consumption.Reliability-Based •When called to implement a demand reduction, ENC typically receivesDemand Response 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. •Enable C&I customers to monitor and respond to wholesale electricity market price signals when it is cost-effective Price-Based •ENC receives an energy payment in the amount of the wholesale marketDemand Response 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.Ancillary Services •Utilities rely on a reserve pool of these quick-start resources to provide short-term support as needed during these contingency events. 18 ⓒ 2011 insprout Corporation. All rights reserved
  19. 19. Financial Highlights(Unit: Million $) (Unit: Million $) 300 280.2 20 EnerNOC now mamages 5,300MW, 250 serving 3, 600customers at 8,600 sites 9.6 10 190.7 200 0 -5.8 -6.8 150 -10 106.1 -23.6 100 -20 60.8 50 26.1 -30 -36.7 0 -40 2006 2007 2008 2009 2010 Revenues Net Income 19 ⓒ 2011 insprout Corporation. All rights reserved
  20. 20. 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. 20 ⓒ 2011 insprout Corporation.*Source: EnerNOC 2010 Annual Report All rights reserved
  21. 21. CitationsEnglishhttp://en.wikipedia.org/wiki/EnerNOChttp://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/Japanesehttp://ventureclef.com/blog2/?p=1135 21 ⓒ 2011 insprout Corporation. All rights reserved
  22. 22. Case Study 4 Comverge ⓒ 2011 insprout Corporation. All rights reserved
  23. 23. Company Overview Name Comverge Type Public (NASDAQ: COMV), IPO Apr. 2007 5390 Triangle Parkway, Suite 300Headquarters Norcross, GA, 30092Year Founded 1980 Revenue $119 Million (FY2010) Employees 562 employees (as of Dec.31 2010) Business Demand response, energy management systems Sectors 23 ⓒ 2011 insprout Corporation. All rights reserved
  24. 24. Funding History Year Amount Participants in the Round Nth Power, EnerTech Capital Partners,Series A Oct. 2003 18.6M Ridgewood Capital, E.ON Venture Partners, Shell Internet Ventures, and others Rockport Capital Partners, Nth Power,Series B Oct. 2004 13.6M EnerTech Capital Partners, NorskHydro Ventures, Ridgewood Capital. Nth Power, EnerTech Capital Partners,Series C Mar. 2006 5.5M Rockport Capital Partners, Norsk Hydro Ventures, Ridgewood Capital, and others Total - 37.7M - 24 ⓒ 2011 insprout Corporation. All rights reserved
  25. 25. Focus Area Block Diagram Demand Response Network Household Power Company Energy Business Generator AMI HEMS Household System Controller Devices Distribution Energy MDMS Concentrator Communication Storage Automation System Building/Commercial/Industrial Energy Generator Measure Gas Company Control BEMS/FEMS Household Controller Devices Service Energy Provider StorageSystem Structure Wired/Wirelsss Communication Unit MDMS Smart Meter EMS Controller Concentrator 25 ⓒ 2011 insprout Corporation.※Source: “Technologies and Standardization of Smart Grid” published in 2010 by Japan Standard Association All rights reserved
  26. 26. Description of Comverge’s Demand Response Programs Hardware•Installed at consumer’s location•Upon receiving the command bysoftware, hardware in turn reduces theoperating hours of equipment, makingelectric capacity available to utility Residential Software (IntelliSOURCE)•Establish communication between : offers services to smallenergy providers and consumers, and commercial end-use participantsreceive a consistent infrastructure forcommand and control of energymanagement programs Services Commercial &•Includes such things as installation, Industrial (C&I)marketing and management program : offers services to utilities that manage programs for large C&I customers 26 ⓒ 2011 insprout Corporation. All rights reserved
  27. 27. More on Demand Response Programs Virtual Peaking -Pay for performance basis betweenResidential -COMV owns & operate the network Capacity (VPC) -COMV provides the same network as VPC, but Turnkey COMV sold the assets to customers after having installed them at negotiated rates of payment -Pay for performance basis between C&I VPC -COMV owns & operate the network -Utilities seek bids from C&I customers to provide Open Markets 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 Energy Efficiency equipment upgrades and building automation 27 ⓒ 2011 insprout Corporation. All rights reserved
  28. 28. Megawatts breakdown Residential C&I TotalMegawatts owned under capacitycontracts 597 294 891Megawatts owned for sales in openmarket programs 16 1,698 1,714Megawatts provided under turnkeycontracts 658 32 690Megawatts managed for a fee on apay-for-performance basis - 437 437Megawatts owned or managed 1,271 2,461 3,732Megawatts provided through productsales 6,707 - 6,707Total megawatts owned, managed or 7,978 2,461 10,439provided 28 ⓒ 2011 insprout Corporation. All rights reserved
  29. 29. Notes on Megawatts breakdownMegawatts 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. 29 ⓒ 2011 insprout Corporation. All rights reserved
  30. 30. Financial Highlights(Unit: Million $) Comverge now mamages 3,732MW, (Unit: Million $) serving over 5M end users 140 -6.2 -6.6 0 119.4 -10 120 98.8 -20 100 -30 77.2 -31.7 -31.4 -40 80 -50 55.2 60 -60 40 33.9 -70 -80 20 -90 -94.1 0 -100 2006 2007 2008 2009 2010 Revenues Net Income (Loss) 30 ⓒ 2011 insprout Corporation. All rights reserved
  31. 31. 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. 31 ⓒ 2011 insprout Corporation.*Source: Comverge 2010 Annual Report All rights reserved
  32. 32. CitationsEnglishhttp://seekingalpha.com/article/118451-comverge-demand-response-software-to-get-in-front-of-smart-gridhttp://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-2011-07-26-141930http://www.forbes.com/sites/tomkonrad/2011/07/18/comverge-diverge-or-merge/http://news.cnet.com/8301-11128_3-20030043-54.htmlJapanesehttp://www.itrco.jp/wordpress/?p=1881http://japan.cnet.com/news/tech/20083305/ 32 ⓒ 2011 insprout Corporation. All rights reserved
  33. 33. Comparisons between EnerNOC and ComvergeForemost, EnerNOC focuses exclusively on C&I customers,while Comverge makes about 60% of revenues from residentialcustomers. Comverge takes up about 60% of residential demandresponse market. It’s a niche market, but more profitable thanC&I market.They both rely utilities for revenues, so they need to diversifyrevenue sources. EnerNOC introduces such services asSupplySMART and CarbonSMART, both of which deriverevenues directly from customers. 33 ⓒ 2011 insprout Corporation. All rights reserved
  34. 34. TO BE CONTINUEDWe will analyze in detail various EMS technologies and companies in those domains 34 ⓒ 2011 insprout Corporation. All rights reserved

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