In 2005 we started Groom Energy with a pretty basic idea: eventually, companies would (1) more actively manage and reduce their energy consumption and (2) consolidate their vendors, rewarding the ones who offered comprehensive services and performed the best.
Fortunately, today it seems our initial thesis was probably correct.
We’ve been able to grow an Inc. 5000 company by recruiting a great team and staying focused on energy efficiency upgrades in distribution, grocery, hotels and industrials. We searched for customers who valued our technical sophistication, our multi-measure approach (compressed air, HVAC, LED, refrigeration, etc.) and our ability to retrofit their buildings anywhere in the US.
While the market’s overall growth has been some wind at our back, we didn’t anticipate how interrelated the energy services would eventually become. We’ve called this Energy Managed Services and freely admit it’s bigger than us alone. Our friends at Greentech Media agree, recently publishing their research on the bundled, more comprehensive C & I market.
Customers now need their vendors to integrate pretty much everything in the C & I energy bucket. Energy monitoring, production and building systems, commodity purchasing, solar & storage and real-time utility connections all relate to each other in the new world. It’s physical, with engineers and delivery teams in buildings, and virtual, with cloud-based algorithms and connections to everything. Oh, and throw in financing and staying committed during historically long corporate project development cycles.
The largest vendors may choose to do it all themselves or acquire the pieces they think they’re missing. Smaller players may bet on partnerships, while others stick to their knitting, hoping they can grow into the market over time without being marginalized.
We’ve already seen several visible players making their first moves.
EnerNOC is betting their integrated offering will come from investments in software with services, leveraging their historical demand response business. Alternatively, Johnson Controls has shed their demand response and their facilities management businesses, believing they already have what they need. Honeywell, Siemens, and Schneider may feel the same way, with these ESCO’s needing only to invest more in commercial sales, as their teams today focus only on federal, state, local and MUSH customers.
Utilities have also seen the opportunity. Edison Energy, the deregulated side of Edison International, has acquired three companies and is early in a stitch-it-together process. Similarly, Engie has acquired Ecova, Opterra, and Green Charge Networks.
Other utilities are taking a more application specific approach. Duke Energy has acquired Phoenix Energy Technologies in HVAC management and Southern Company acquired PowerSecure for their microgrid monitoring and management capabilities. Exelon’s Constellation bought ConEdison’s retail electric and gas business, while ConEd Solutions says they’ll focus more on services for its C&I customers.
At the beginning of this year, we met up with the team at DK Energy, the US arm of EDF’s Dalkia division. Dalkia had made the decision to come to the US market, bringing their resume in building energy services in European markets, but also wanting to partner with existing US players. EDF, DK’s parent, is the world’s largest producer of electricity, with $83 billion in revenues and 156k employees.
Our first engagement considered how we could become an implementation partner for Dalkia’s DESC platform, their remote energy building monitoring system. Using intelligent networked software, analysts at DESC centers in France now measure and monitor over 85,000 buildings. The system operates in real-time, connected to electric, gas and water meters with visibility to HVAC set points and building occupancy levels. When an energy fault occurs, the system can dispatch Dalkia trucks to arrive on site and deal with repair or correction. If you believe in Energy Managed Services, this operating center connected to field engineers concept is pretty powerful.
Later we met DK’s EDF sister companies in the US: EDF Energy Services, based in Houston, who provides sophisticated commodity trading and procurement services to C&I customers. And EDF Renewables, based in San Diego, a large player building and operating wind and solar systems, and who recently acquired C & I specialist GroSolar.
We all saw an even more significant opportunity. One larger company, with multiple affiliated companies working together underneath, each with a business and business model strong enough to stand on its own.
So on Friday we announced Groom Energy is formally joining the DK US team. We’re off on a journey to build this larger affiliated US platform, excited to be DK’s first US acquisition and to immediately offer more to our customers. Our team will have the chance to grow, lead and learn, while having a more comprehensive solution.
In growth markets, it’s never a winner takes all outcome. It’s chess – and we need to be thoughtful and strategic with each move. You can tell we’re very happy with our latest.
Now let’s get on with the game.