Submitted by EnergyTechStocks.com

It may be time to start thinking about electricity generation in a brand new way. In five years or less, demand response systems (DR) will account for roughly 10% of the U.S.’s generation mix compared with only about 1% today. That’s according to Tim Healy, CEO of Boston-based EnerNOC Inc., perhaps the foremost of a growing number of DR companies whose computer-based technologies enable utilities to reduce the strain on America’s increasingly overtaxed power grid by calling upon businesses that have signed up in advance to quickly reduce their power consumption.

U.S. demand for electricity isn’t just rapidly rising, it’s getting “peakier,” Healy told EnergyTechStocks.com in an interview, meaning that the demand for power is growing even more rapidly during expected periods of peak power consumption (i.e., hot summer afternoons). Thus, he said, the need for DR also is growing extremely rapidly, noting that EnerNOC’s DR business has been growing at a rate of 90% to 100% per year.

Experts say the rapid and still accelerating growth of DR is due in part to utilities seeking to avoid the sharply higher labor, materiel and fuel costs associated with building new power plants. Many utilities already face rising costs for installing pollution control equipment on their existing plants, as well as the prospect that they will have to pay for the carbon dioxide their coal-fired power plants generate under cap-and-trade legislation expected to pass the U.S. Congress some time over the next couple of years. Utilities further want to avoid spending more than is necessary on maintaining power grids, given the lower rates of return regulators generally permit on those expenditures.

Meanwhile, businesses are anxious to find ways to control their own rapidly-rising electricity costs, and DR serves as a starting point for a company such as EnerNOC to analyze and institute power-saving systems.

Healy told EnergyTechStocks.com that EnerNOC’s power monitoring and energy procurement business is also growing rapidly. “The dialogue has shifted,” he said, meaning more businesses want EnerNOC to drill down into how they consume electricity in order to eliminate costly inefficiencies.

While Healy said that first half revenue from monitoring and procurement services had surged to about $2.8 million compared with about $400,000 in the prior-year period, he indicated that he thinks this segment of EnerNOC’s business may experience even sharper growth in the coming months. He told EnergyTechStocks.com that in just the last six or so weeks, interest in EnerNOC’s monitoring services has “skyrocketed,” in part because, thanks to a bigger R&D budget, EnerNOC now has more sophisticated algorithms capable of going “deeper and deeper into customer facilities” to find where power is being wasted.

For more on EnerNOC see:

Demand Response & Energy Management Firm EnerNOC to be profitable within 2-3 Years – CEO Healy (Part 1 of 2)

EnerNOC CEO Healy: ‘Wouldn’t Surprise Me if We Are Sitting on a Fortune One Day’ (Part 2 of 2)