EnerNOC [NASDAQ: ENOC]: Turning Energy Data into Competitive Advantage

EnerNOC [NASDAQ: ENOC]: Turning Energy Data into Competitive Advantage

Tim Healy, CEO, Chairman & Co-Founder, EnerNOCTim Healy, CEO, Chairman & Co-Founder From the famous intersection of Times Square in Midtown Manhattan, one can see a myriad of lights that overwhelm the senses. Huge digital displays shine with advertisements that are barely noticed by the smartly dressed swiftly walking pedestrians below, busy on their smartphones, some of them attending important business calls, and others planning a date for the weekend. Neon lights at the storefronts light up the night sky, attracting prospective consumers, but fail to dazzle tense faces staring at the news or the stock market updates, imbibing information that could potentially change their fortune. With arguably one of the largest concentration of electronic billboards, Times Square consumes a sizable chunk of the 160 megawatts of electricity consumed by Theater District annually. Consider the vibrancy and grandeur of Times Square powered by remote utility grids that seldom experience rapid changes or innovations; the irony is unnerving. For too many years, utilities have traditionally treated energy management as a mere transactional concept. Businesses too have viewed energy as any other commodity they consume and receive bills for, redirected to the accounts and then cleared.

We see a suppository positioning of energy, as a resource that is always available, and need not be managed intelligently and with precision. As a fresh MBA graduate, when Tim Healy proposed to his father that he wishes to begin a venture of his own that makes energy intelligent products for consumers and utilities to control energy usage and reduce operational cost, it was received with a skeptical look. Healy says that his father himself was a part of a very large utility services firm which was then known as International Fuel Cells, a company as Healy reminisces, was pretty ahead of its time. The company is now defunct.

"Think of the name—Energy Network Operations Center (EnerNOC)—and it will tell you we are running a hub"

In an industry where mild sparks of innovation are quickly consumed by labyrinths of authoritarian levels to be convinced, a stringent regulatory environment, and the very downplaying of a commodity which has perhaps, been taken for granted by the digital world, Healy knew what must be done. Today, he leads EnerNOC [NASDAQ: ENOC], as its CEO, Chairman, and Co- Founder, towards the vision of transforming energy management, in that it involves more than just bolstering existing facilities of utility setups. “There is a change coming,” says Healy, “We had started to see a new paradigm in the electricity and utilities marketplace where we are moving from a centralized system to a distributed functions system, much like the transition from mainframe computing to distributed and network computing. I wanted to be at the bleeding edge of this movement!” In a bid to be a part of this redefinition, EnerNOC helps in bringing utilities and consumers on a common mission and shared energy management goals. The idea is to lower demand response expectations on the utilities’ side, and to enhance cost effectiveness and higher availability on the consumers’ side. “Think of the name—Energy Network Operations Center (EnerNOC)—and it will tell you we are running a hub,” explains Healy, “We are marrying the needs of the supply and demand sides.”

We believe that technology-enabled demand response is an important and sustainable component of our energy future

EnerNOC’s Energy Intelligent Software helps consumers turn energy consumption savings into a strategic competitive advantage. Weaving a communication cord between sustainability, procurement, operations, and finance, EnerNOC’s solutions are deep dyed in ensuring that energy management decisions are well-informed and coordinated. By providing not only a macro view of the energy consumption patterns in commercial buildings, but also intricate details that affect this pattern, EnerNOC essentially puts their customers in power to make disciplined, data driven decisions. Such insights come as elixirs in a pandemonium of data silos—the exact situation that the Commonwealth of the Massachusetts’ government was languishing in. Spending in excess of $250 million on more than a billion kWh of electric power consumed across twenty five million square feet of property, the energy management team was ready to embark on its Enterprise Energy Management System (EEMS). The mission of this first-of-its-kind project was to monitor in real-time, as opposed to relying on 30 day-old utility bills, the energy consumption in property that entailed courthouses, prisons, hospitals, and college campuses, some of them newly built and some others standing for over a century!

EnerNOC’s SaaS-based Energy Intelligence Software was selected to power this venture, tasked with the collation, refinement, and quantification of real-time data from over 1300 meters installed in 460 state buildings. The solution was tasked with capacitating visibility in the energy consumption of these buildings across various points of expenditure— electricity, natural gas, oil, propane, steam, condensate, chilled, and hot water. Such well-rounded visibility helped pin point the discrepancy between the HVAC system and the building controls system at the Mazzaferro Center, one of the two dozen buildings monitored in the Fitchburg State College—the reason for consumption of a major chunk of energy resources. Diligence in farming a variety of data points—electrical, heating, water usage, weather conditions, real-time energy pricing, and building occupancy schedules—is to be attributed for the big impact in savings effected by minute operational adjustments.

Success breeds success—this adage thrived in the midst of scrutinizing eyes when the time came to fathom whether or not energy management efforts had reached full fruition. EnerNOC Energy Intelligent Software’s “compare to past” function showed—in the meticulously arranged lights of weather and energy production data—the outcomes of the Massachusetts EEMS project, with granular detailing. It resulted in an identified $2.6 million annual savings for the Commonwealth—an amount that stands significantly before the pre-implementation expenditure. Rick Pollara, Director of Facilities at the Massachusetts Hospitals School notes, “Watching your energy use in different buildings, you can really pinpoint where you’re losing some energy and where you can go after some savings that in turn will help your budget.” The University of Massachusetts Lowell, for instance, installed new boilers and economizers, assiduously tracking their natural gas consumption, and the results were eye-opening; they consumed lesser in a year that saw hotter summers and colder winters when compared to the previous year.

The impact of EnerNOC’s partnership with the Commonwealth percolates much deeper than the overall cost and energy savings—connecting with each contributor at a human level. “The EnerNOC software allows me to check readings quickly and accurately from my office”, says Debra Dunn, an electrician for Massachusetts Hospital School, “I don’t need to spend additional time out of a busy day going to each building taking meter readings, recording them, and analyzing things in a spreadsheet.” The software translates facility behavior in quantifiable financial terms and priorities, essentially automating the decision making process for the users. The results are a win-win situation for both the facility owners as well as occupants—owners are less ridden with complaints of shortages and maintenance calls, while occupants continue enjoying optimum performance during nightmarish peak periods, such as the Christmas season, due to Demand Response (DR) capabilities of EnerNOC’s technology.

Southern California Edison (SCE), the largest electrical utility in California, knows all too well about the value of DR. It serves roughly a 50,000 square mile area, responding to the fluctuating demands of over 14 million people housed in that area. Being one of the most prominent proponents of demand-side reduction, SCE signed on EnerNOC as a key third-party demand response provider, commissioning 110 megawatts of its DR capacity to the “new kid on the block” back then. EnerNOC enabled SCE to reach out to strategic business customers and help on-board them into their DR portfolio, leveraging their solution to automate load reductions. “California’s energy demand cannot be met by supply-side solutions alone,” remarks Healy, “and we believe that technology-enabled demand response is an important and sustainable component of our energy future.” EnerNOC closely worked with SCE’s customers, helping them reduce their demand by 100 kilowatts or more, if need be. The incentives these customers earn by active participation in the joint DR program would go a long way in boosting them financially, in California’s highly competitive business environment.

The Aquarium of the Pacific, the fourth largest in the U.S., is one such active participant in EnerNOC DR, earning over $5000 annually in payments. Put in a situation where environment variables are monitored closely, EnerNOC’s expertise in demand response strategies and their ability to study the consumption environment circumstantially played to the advantage of the program. “EnerNOC studied our facility carefully and we found that some simple adjustments could let us shed hundreds of kilowatts”, says John Rouse, Vice President of Operations at the Aquarium of the Pacific. SCE believes that having EnerNOC as a third party demand response provider has been crucial in satisfying the participants and the success of the program in entirety.

EnerNOC’s approach to bridging the demand-supply levels transcends the futile efforts that were aimed at triggering innovation solely on the supply side. Healy, as a youth soccer coach in his leisure time, stands at the helm of a company that blows the proverbial whistle to bring together the players of a disparate team, and work towards a shared vision of energy management goals. “What we are doing is pretty straightforward,” explains Healy, “We are reducing electricity usage at peak times so that the utility grid can avoid a blackout, and consumers can help keep peak prices in check in a challenging economy.” EnerNOC believes that corporate responsibility extends beyond just maintaining a bottom-line profit and this very thought is ingrained in what they do. “The responsibility of a corporation is to do something that benefits the society and also drives profitability for its stakeholders,” summarizes Healy, “EnerNOC has done that!”