EnerLume’s Game Plan Illustrates the Threat to DR Firms Such as EnerNOC and Comverge (Part 2 of 2)
Submitted by EnergyTechStocks.com
Editor’s Note: In keeping with its mission to be solely a news source, this EnergyTechStocks.com article is presented for information purposes only.
Posted: October 31, 2008
The business model for “demand response” firms such as EnerNOC Inc. and Comverge Inc. is fairly simple. Pay big commercial and industrial power users for the right to turn off their electricity when the system-wide demand for power is so great a blackout could occur. Simultaneously, contract with the customers’ electric utility to make those power cuts available on demand, thereby sparing that utility the high cost of having to buy additional power on the spot market.
EnerNOC, Comverge and a growing number of similar firms act as middlemen, a role that would appear to be threatened under the business model of a company such as EnerLume Energy Management. According to EnerLume CEO David Murphy, the company anticipates testing a new product as early as the fourth quarter of 2009 that would eliminate the need for middlemen by making it easy for an electric utility to interact directly with its customers on demand response solutions.
This is no small matter. The need for demand response solutions is expected to grow enormously over the next few years as utilities struggle to generate and transmit sufficient electricity while navigating a mine field of environmental and other regulations. In addition to maintaining service reliability, what’s potentially at stake here is billions of dollars in carbon trading “credits” that will go to companies able to reduce their carbon footprints via efficiency and other fossil-fuel-saving technologies. Who’ll get them – the utilities or the middlemen?
EnerLume’s Murphy said that because his product is fully automated, there’s no need for a middleman. In discussing all this with EnergyTechStocks.com, it appeared as if Murphy wasn’t aware of the full financial potential of his new product should it prove a success. Indeed, while EnerLume appears to be concentrating primarily on a energy management system for CFL lighting, it may be that its automated DR product could be a far bigger deal in the long run. Indeed, it could make this tiny over-the-counter firm an attractive takeover candidate, though there’s no reason to believe it has attracted any interest at this point.
Whether EnerLume succeeds, it seems clear that EnerNOC, Comverge and similar firms have reason to be concerned.
For Part 1 of this two-parter, please see:
EnerLume Bets Big on Compact Fluorescents Staying Dominant in Commercial Sector (Pt 1 of 2)
