UtilityAPI — Strategic software at a critical juncture

It’s not often that we come across simple and timely solutions to messy problems. The solar industry has long been running around in circles with paper and pen trying to understand customer electricity data. Now UtilityAPI can do it in a computational snap. Here’s why the early-stage (pre-series A) cleantech company is worth betting on.

Source: utilityapi.com

1. Solving an incredible pain point

Residential solar companies need home energy data to accurately quote projected financial savings and total cost of rooftop solar. They need a complete 24/7/365 set of smart meter data and electricity rate data to give potential solar customers the most accurate quote possible. What has this process looked like to date? Something like this:

Customer expresses interest in solar, residential solar company contacts utility, 3-way call is initiated between the parties, customer approves sharing the data (or disapproves), utility sends non-standardized files to both parties, sales people type in data from messy file, utility sends final authorization form, solar company sends customer final quote. Total time: 3 weeks

Three whole weeks just to get a quote. This includes all the administrative costs to jump on phone calls, clean data, input data, and correspond with the customer. By then many customers have already dropped out of the process. Step in UtilityAPI and their push-and-play solution that looks something like this:

Total time: 90 seconds

The difference is day and night. The value proposition is clear as white. Less hassle, less time, and more sales. Any residential solar company using utility data has found a much needed friend in UtilityAPI. The new solution is a step-change forward.

2. Favorable regulatory winds

UtilityAPI benefited from the government when they were awarded $0.76 million through the DOE SunShot program. However now they stand to benefit even more when state utility commissions mandate the appropriate and secure sharing of consumer data with third-parties. The diagram below depicts this exchange of data and services between the three stakeholders.

Right now it is optional for utilities to take part in the industry-led green button alliance which standardizes data for customers and third-parties. You can see in OpenEI that most utilites in California and the northeast have already signed up. However it may soon come under state jurisdiction to mandate this data sharing. It is already happening in Illinois and soon in New York and other states.

The inadequacies of green button have left a substantial opening for UtilityAPI to operate. Without granular meter data below 15-minute intervals and without real-time access to that data, UtilityAPI has proactively created the solution third-party players now long for. The company stands to benefit further when the new regulations mandate data sharing. Being already at the forefront of residential data acquisition and standardization, they have set the precedent for real-time, reliable, and ultra-fast data sharing.

3. A treasure of a market

With about 20 east and west coast utilities already onboard, UtilityAPI seems to have quickly become a utility of the newfound utility data market. It’s telling of the power of their solution. But what is the value of cleaning disparate utility data sets and automating the process of data acquisition? In words: massive. With the company’s business model on hand it is easy to bottom-up their U.S. residential associated TAM (total addressable market):

($10/meter historical + $1/meter/month ongoing) x 70 million meters = $1.54 billion PER customer — where 45% is upfront & 55% is annually recurring.

If you include the multiple customers types that need the data (residential storage, home energy monitoring, and energy efficiency companies), while also factoring in the increasing number of smart meters deployed, then it’s easy to see the figures multiply quickly. Of course not every company is going to want ongoing data. Some may just request historical data. But regardless the TAM is still massive. The alternative cost of obtaining and cleaning data manually makes this service a no-brainer for the third-player industry.

The question then becomes how much market share can the startup expect to capture? This is a more complicated question. Currently they’ve already beat the competition to the game by running ahead of new green button industry standards. They might not grow quickly given the slow pace of utility adoption and regulation change, but they will grow nonetheless. With a capital-light product and business model, it is possible the company can acheive double-digit multiples over the next 3–5 years. Plus they have the team to do it.

4. A well stacked energy team

Team is always the decisive factor for early-stage companies. Many CEO/CTO combinations have taken the plunge in the startup world but few have come out with profitable companies. I would posit that UtilityAPI Founders Elena Lucas and Daniel Roesler exhibit the type of CEO/CTO duo that is most likely emerge with a healthy technology business. Between them they check off many characteristics of successful founders including:

Female co-founder, young co-founders, prior startup experience, and experience working at large energy companies (non-tech but extremely relevant). Plus, their sheer passion for creating a product with broad sustainability impact and extensive involvement in the cleantech ecosystem. It comes as no surprise that this energy has already manifested in Elena’s 2016 30 under 30 award. There’s a lot of power behind these cleantech founders.

Since beginning in mid-2014 the team has brought on six more members, including four engineers, one operations specialist, and one policy specialist. This interdisciplinary mix is one that legendary MIT Entrepreneurship Director Bill Aulet espouses as crucial for early-stage energy companies. Like an energy generation mix, the UtilityAPI team is resembling a healthy mix of stacked complementary resources, capable of meeting any future demand.

No matter which way you look at it, what’s clear is that UtilityAPI is on a clear trajectory to impact. Their success is a harbinger of success for the growing clean energy industry. By creating superb utility data processing software at a time when third-party players are gasping for good data, the UtilityAPI team has placed themselves square in the middle of a utility data bottleneck. What they’ve done is smart, strategic, and transformational. I see UtilityAPI as an early-stage cleantech to bet on.