Filling in the data gaps: how will we keep the lights on in the future? 💡
Another Friday, another investment memo...
Did you know the United States recently announced $94 billion of global public funding to accelerate clean energy worldwide? 🤯
Introduction
This is an astounding statistic considering venture capital investment in clean technology stood at just $300 million across 59 deals in the early 2000s.
Today’s trend:
breakthroughs in scalable, nascent technologies (i.e. AI, ML, digital twins) are empowering utility operators to get more information from their power grid data, consequently facilitating a faster transition to a sustainable energy future.
Startup Ecosystem
So what are some interesting startups capitalizing on this trend right now?
Camus Energy - a clean technology startup leveraging the technology that built the cloud to re-envision how America’s power grid is managed using a data-first, massively-scalable software and systems approach to manage, monitor and monetize the distributed grid of the future ⚡
Camus has recently started putting AI (artificial intelligence) and ML (machine learning) capabilities to work for recovering missing or messy unmetered solar data and increasing grid visibility.
In other words, with the increase in distributed energy resources (DERs) and customer-owned devices (like batteries, heat pumps, electric vehicles), the grid is becoming more and more distributed. Therefore, utility operators are experiencing a new generation of challenges in managing their power grids that the current infrastructure just doesn’t support.
Operators must be able to see how renewables and DERs are behaving and accurately forecast their impact on the grid. This is entirely reliant on data.
However, real-world data is often super messy or even missing. Camus’ cloud-computing platform collects data from all different utility software systems and then uses this existing data to fill in gaps (both past and future) that can help these operators forecast grid conditions (i.e. predict the future 😉)
Opus One - a software engineering and solutions company helping electric distribution utilities plan, manage, optimize and trade renewables and distributed energy resources (i.e. electric vehicles, batteries, solar PVs, etc.) across the energy network 🚗
Camus isn’t the only software startup leveraging nascent, massively scalable technologies to give utility operators greater insights.
Opus One recently launched their platform, GridOS®, that creates a digital replica of the client’s power grid (aka a digital twin) to help them visualize real power flow across networks and make better decisions.
A digital twin uses data from connected IoT sensors to tell the story of a real, physical asset all the way through its life-cycle. The physical asset in this case is the client’s real power grid.
This is an extremely important concept as the grid of the future shifts from centralized, one-way power flows to bidirectional flows (as a result of more distributed energy devices being integrated to the grid and feeding electricity back into it).
Unicorn? 🦄
So the real question is: are these startups $1B exit opportunities or nah?
Camus Energy = yes….but it will take a very long time because the pain point is not fully realized by all utility customers (yet) and they are pioneering a new approach to power grid management which could take some time for utility operators to get around to. However, with effective key value proposition messaging and marketing, a billion dollar exit could very well be a possibility in the future.
💡strong founding team: ✅
world-class co-founders and engineering team with experience from building Google’s high-reliability computing platform in the early 2000s to publishing award-winning research at the National Renewable Energy Laboratory.
expertise in both large scale distributed systems architecture and power grid operation.
💡traction and investor signaling: ✅
$19M in funding over 2 rounds led by Congruent Ventures, a prominent VC firm focused on technology companies that will positively impact energy and resource consumption.
featured in major energy news outlets (e.g. Utility Dive, Canary Media, Climatebase) and featured press on the Economist, Crunchbase, PR News Wire, Energy Capital Media, and much more!
💡timing: ✅ and ❌
technology is very cutting-edge for the slower moving, archaically built utility industry.
however, the timing could not be better for a clean tech startup leveraging proven cloud technology to come on to the scene! Clean tech startups raised $54B in 2021 alone with energy-focused companies comprising about a third of that number. The capital and traction are there.
💡market size: ✅
the global decarbonization market is projected to grow at a compound annual growth rate of 12.7% from 2021 to 2026. This is a substantial growth area for startups to build in.
another important note is that Camus Energy does provide “grid management as-a-service”. SaaS companies are very valuable because of their scalability (i.e. being able to serve many customers extremely quickly because of the cloud model) which enables them to grow extremely quickly while generating recurring revenue.
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Opus One = [acquired by GE Digital for $68M] but could it have been a $1B opportunity if not bought out so soon? Perhaps but maybe not for a long time, similarly to Camus.
💡strong founding team: ✅
diversity in race and gender on the executive leadership team.
prior to founding Opus One, Joshua Wong served in business development, policy, strategy, and engineering leadership positions across several energy storage and smart grid firms.
💡traction and investor signaling: ✅
actually acquired by GE Digital, a subsidiary of General Electric, in Dec. 2021 for US $68M in an attempt to help utilities make better decisions about how to integrate renewables and DERs at scale across the electric grid. This seems to be a recurring theme…
Prior to this acquisition, Opus One raised a total of $7M in funding led by Energy Impact Partners and Elemental Excelerator.
💡timing: ✅
similar to Camus, the timing could not be better. Climate technology, specifically decarbonization, is the present and the future.
there aren’t too many startup competitors for Opus One’s GridOS® technology right now. Mostly behemoths like bp, Chevron, and Shell who are capitalizing on the digital twins in energy space.
💡market size: ✅
leveraging cutting-edge emergent technology, like digital twins, positions Opus One in a spot for tremendous growth over the next 10-15 years.
the global digital twin industry is projected to reach almost $130B by 2030 with a CAGR of almost 40% between 2022 to 2030. This is huge as the need for proactively searching for and harvesting data continues to grow.