In August, residents of California were plagued by blackouts as the state’s power supply could not meet increased demand. Power outages were an inconvenience but also an indignity as Californians pay some of the highest tariffs in the country for electricity.
This situation has led to a company called SIP, whose backers include Google Parent Alphabet, to invest $ 100 million in what is called a “virtual power plant” that could soon make brownouts disappear.
Normally, utility companies meet growing demand by trying to add more electricity to the grid. The “virtual” SIP factory takes the opposite approach: it delete energy consumption during peak hours by paying consumers to reduce their electricity use.
To do this, SIP is teaming up with a company called OhmConnect to offer subsidized energy devices like smart plugs and connected thermostats. OhmConnect already operates in California and, during the recent energy crisis, paid 150,000 homes $ 1 million as a reward for reducing their electricity.
In practice, this means that participating households receive a notification on an OhmConnect app asking if they are ready to shut off power to various sources in their home. Those who agree receive a credit on their electric bill, which will vary in part depending on the energy they choose to cut – cutting power to a thermostat or electric vehicle charging station will obviously pay off. more money for the consumer than turning off their toaster. . The app looks like this:
SIP is devoting $ 80 million of its investment to increase the number of devices eligible for grants and to increase the scope of these grants, and also to develop the software that will help the project achieve greater energy of scale. The company calls this part of the project Resi-Station and says it will cover most areas of California (potential customers enter their zip code to confirm they are eligible). SIP is investing the remaining $ 20 million directly into OhmConnect in the form of a Series C funding round.
SIP stands for Sidewalk Infrastructure Partners, which is a spin-off of Alphabet’s now-closed subsidiary, Sidewalk, which sought to transform cities with a series of ambitious projects but which has sunk amid privacy controversies. SIP, which raised $ 400 million Alphabet and the Ontario Teachers’ Fund is trying a different approach. Instead of building its own projects, it supports existing businesses – including state-of-the-art recycling plants and a driverless system.road of the futureIn Michigan – with money and expertise.
According to CEO Jonathan Winer, SIP chose to invest in OhmConnect in part because the company has excelled at “gamification” in the mundane realm of managing household electricity bills. He says OhmConnect, whose leaders include the former CTO of video game maker Zynga, has made the energy conservation business easy and satisfying.
Winer recognizes that SIP’s “virtual powerhouse” alone cannot end California’s energy problems. But he predicts it will have a major impact and could eventually end the brownouts once and for all.
As California and its millions of environmentally conscious consumers lead the country in smart energy use, Winer says other states are quickly following suit. These include New York and Texas, which are exploring how to take advantage of devices like connected thermostats to better manage their power supply.
More generally, Winer sees broader changes in energy markets in the United States as more people install solar panels and technologies like Tesla’s battery factories connect yourself. These new forms of energy, combined with management schemes like the virtual power plant, will ultimately see the country rely on cleaner and more efficient forms of energy, he says.
“SIP believes that energy grids need to be modernized in order to orchestrate distributed energy resources,” Winer said in a statement.
More to read absolutely financial cover of Fortune:
- Why the power to change the founder’s double standard based on VC
- Wall Street Culture Shock: When Coinbase first met Cantor Fitzgerald
- How does the Slack / Salesforce deal compares to other Big Tech acquisitions in history
- Robinhood’s Next Adventure: Stealing market share from the rich
- Refuse unemployment benefits? Here are your options