Smart Grid Needs Innovative Startups

As startups in the smart grid sector continue to push innovation boundaries, big players in the industry are beginning to realize their importance.
Published: Wed 06 Mar 2013

Innovation in the smart grid industry will be kept alive as long as the big players show their support of startups. With the industry being rather conservative and sluggish, innovation is essential to its development. Companies that have managed to survive in the industry realize that they can benefit from supporting these startups. Many of these innovative startups have a wealth of knowledge and ideas to share. By working closely with these startups is a good way for the larger and more established companies to stay ahead of the pack. The more traditional power grid firms are also beginning to realize the significance of developing working relationships with the startups. The startups also benefit from these relationships as many would perish without the support of their bigger and more established counterparts. Due to the tough nature of the smart grid industry, many smart grid startups struggle financially and end up being sold for smaller amounts than they or their investors had originally hoped. These ailing companies are often forced to dramatically downsize, or eventually close their doors. There’s a gaping chasm between when a startup launches and raises venture funding, and when a company reaches velocity with utility sales. Often, this process can take years of long utility sales cycles to cross, and many startups don’t survive. 

Silver Spring Networks is one of those big players that take an active role in supporting and working with startups. The firm recently announced that it is reselling startup AutoGrid System’s software which helps utilities quickly deploy energy efficiency programs for its customers. To utilities that may not be familiar or comfortable with the two-year-old venture-backed startup, Silver Spring’s partnership gives AutoGrid some extra weight. 

Other companies such as Siemens, ABB, and GE all have various startup-focused initiatives. More of these large key players are needed to take a more active role in supporting and developing the most promising startups. This is essential for innovation to flourish in the smart grid over the next few years. 

Unfortunately, there were fewer venture capital deals for smart grid companies in 2012 in comparison to previous years. According to a report from Mercom, there were 40 smart grid startup investment deals in 2012, compared to 50 deals in 2011. In addition, only 66 investors put money into smart grid startups in 2012. This is down from 92 investors in 2011. However, there is a reason to be optimistic about the future growth of the sector. Major factors such as the shift to cleaner, renewable energy sources, increased energy efficiency and market deregulation, will continue to boost growth.

Engerati Analysis

The coalition between startups and established big players in the smart grid sector spells a win-win situation for all of those involved as new ideas are shared.

Sources                                            

Gigaom-How to keep innovation alive in the smart grid

GreenBiz-Small startup brings big data tools to the smart grid