Massive funding to lift Smart Grid companies. Look for it next month

October 23, 2009 | Matt Marshall

The federal government has earmarked $4 billion dollars for companies promising to build out a Smart Grid and improve power efficiency, but Silicon Valley’s startup community hasn’t seen much of that money yet.
That may change later this month and in November, when the Department of Energy will begin dishing out as much as billions of dollars to the nation’s utilities to support investments in smarter, more efficient technology. Those utilities will then finally have money to turn around and buy products from innovative, venture-backed Silicon Valley-style companies.
So far, federal money for the Smart Grid has only been passed out to a limited number of projects, for example, in the form of guaranteed loans to more mature companies, such as electric car companies Tesla and Fisker, or solar and wind farms (see list here, and commentary here). However, more early stage Smart Grid-focused companies — those building new kinds of smart meters, for example — haven’t seen much money because they’re more dependent on utilities, which themselves haven’t seen any money yet.
Michael Kaufman, principal at the Westly Group, a venture capital firm that invests in green-oriented companies, says he’s hearing the money will finally start to flow later this month or next month and will ease what can be a tough job for startups in breaking into the tightly regulated power market. “Most entrepreneurs are the most optimistic and energetic people in the world,” he said, “but Smart Grid people tend to look beaten down when they arrive at our office. We make the espresso stronger when they arrive.”
The Department of Energy has held its cards relatively close to its chest on what sectors it will support next. But Under Secretary of Energy, Kristina M. Johnson, said last month that the DOE was considering where to target the next wave of investments, and that it is in part waiting to see what has worked so far.
The delays have some venture capitalists irked, because it means that some utilities have held off on their spending, preferring to wait until the government funds arrive. Warren Weiss, of Foundation Capital, an investor in the hot smart-metering company Silver Spring and several other Smart Grid-related companies including eMeter, EnerNOC and Control4, said he was aware of several examples of utilities waiting for funding. The government aid could cover up to half of the costs of some projects these utilities invest in. He calls the government’s Smart Grid funding project more of an “anti-stimulus package.” He too expects the spending to pick up this quarter and to extend into the first quarter of the year. Weiss said his companies haven’t applied for funding directly. In the case of Silver Spring, however, it has applied for funding on behalf of its utility customers.
This is a great time for entrepreneurs to conceive of and build new ideas to help the U.S. move from a crusty old carbon-based energy system, to one that hums with efficiency and that is built on alternative, renewable energy sources.
If you’re an entrepreneur who leans green, you should strongly consider showcasing your company at GreenBeat, the seminal conference for the Smart Grid. We’re inviting the top movers in the industry — from Vice President Al Gore, to top venture capitalist John Doerr, and executives from top companies such as GE, IBM, Cisco and PG&E. Another highlight will the be the Innovation Competition, where we’ll be showcasing the boldest ideas for a smarter grid.