OhmConnect raises $55M to enlist more homes to prevent blackouts

Extreme weather is threatening to push power grids to their limits across the country this summer. That spells trouble for utilities and grid operators trying to keep the lights on — and opportunity for companies like OhmConnect that reward homeowners for reducing their power use to relieve grid stress.

OhmConnect closed a $55 million Series D fundraising round on Thursday, bringing total investment in the San Francisco–based startup to roughly $100 million. Lead investors ClearSky, Sidewalk Infrastructure Partners and Telus Ventures were joined by previous investors including City Light Capital and Elemental Excelerator and new investors Japan Energy Fund, solar and battery vendor SunPower, and Carrier, the maker of air-conditioning systems and smart thermostats.

Several of these investors are also significant strategic partners in OhmConnect’s business of incentivizing households to help the grid. That business now encompasses more than 250,000 connected home devices and appliances.

Sidewalk Infrastructure Partners, which is backed by Google parent company Alphabet, provided OhmConnect with $80 million in late 2020 to fund the rollout of smart thermostats and ​“smart plug” devices in California, its primary market.

And in March, Carrier and SunPower announced plans to integrate their technologies with OhmConnect’s platform for paying customers to cut energy consumption. Over the past two years, that platform has expanded to Texas, New York and Australia.

Now, as utilities and grid operators across the U.S. West prepare for what’s expected to be a summer of scorching temperatures and record-setting electricity demand, OhmConnect CEO Cisco DeVries said the company is looking for new ways to engage its customers and integrate with household equipment to help forestall the threat of power shortfalls.

“We need homes to be able to flex demand in ways that work for customers, that they appreciate and are rewarded for, and that can be translated into dispatchable megawatts that can be used in lieu of power plants,” DeVries said in an interview.

Demand response in a time of grid emergencies 

OhmConnect is one of a growing number of companies that enlist customers to reduce and shift their electricity use to ease grid stress, a business traditionally called demand response. Coordination of groups of power-saving customers has also begun to go by different names, such as virtual power plants, reflecting how companies can use real-time communications to virtually control backup batteries, EV chargers, and networked thermostats and appliances.

OhmConnect’s competitors in this space include Enel X, Leap, CPower, Voltus and AutoGrid, the startup recently acquired by power equipment giant Schneider Electric. Also in the mix are solar-battery vendors such as Tesla and Sunrun and smart-thermostat vendors such as Google Nest and Generac-owned ecobee. But many of these companies have partnered with OhmConnect too — like Nest, for example.

The companies have also cooperated to lobby state utility regulators to reduce barriers that hamper their activities and to increase compensation for the megawatts of load reduction they provide, also known as negawatts. Much of that effort has focused on California, where the increasing threat of summer electricity supply shortfalls has prompted several stages of emergency responses from regulators and Governor Gavin Newsom (D), including a recent budget proposal that would direct $6.7 billion to grid-reliability measures.

DeVries said that OhmConnect now ​“can show up in an emergency with several hundred megawatts” of load reduction. That’s more than it was able to deliver during an August 2020 heat wave that forced the state to impose its first rolling blackouts in more than two decades, he said.

OhmConnect reported that it lost hundreds of thousands of dollars per day during that August 2020 emergency because of complex regulatory structures that it says don’t fairly compensate companies that provide demand-response services. It and other companies in this space say these rigid rules are holding the market back.

A set of grid-reliability measures approved by the California Public Utilities Commission in December has expanded compensation for customers who reduce power use during emergencies, including extending incentives for deployment of smart thermostats. But demand-response companies say they don’t go nearly far enough to fix the problems with the system.

Still, OhmConnect is expanding its demand-response capacity in California. Last year, it announced plans to provide up to 1 million Nest thermostats at low or no cost to California customers. It wasn’t able to hit that target, DeVries said, although the company did get a number of customers ​“well into the six figures” to install both thermostats and wirelessly controllable smart plugs that can turn off refrigerators and other heavy household loads during emergencies or to save on energy bills.

OhmConnect has also started offering customers upfront payments of $5 to $7 a month based on the number of thermostats and smart plugs they connect, both to boost uptake and to offer relief from increasing utility rates, he said.

“People’s concern about their energy bills is through the roof,” DeVries said. ​“It’s approaching the level, if not at the level, of their concerns about the cost of housing.” 

This combination of rising utility bills and rising concern over potential blackouts is driving increasing interest in distributed energy resources (DERs) as a potential solution, he noted. OhmConnect now integrates with appliances and other DERs from 30 companies, including Tesla EV chargers and Powerwall batteries and Amazon and Google’s home voice assistant platforms — ​“and now Carrier is a part of that and SunPower is a part of that,” he said.

From smart thermostats to solar-charged batteries 

Shawn Fitzgerald, SunPower’s executive vice president of corporate development, described in a March interview how his company plans to work with OhmConnect, starting with targeting each other’s customers.

“OhmConnect has over 200,000 customers who really have the ingredients for what we see as being a good customer for us for solar and storage because they’re interested in saving money on their electricity bill,” he said.

OhmConnect also has many customers outside SunPower’s traditional customer base of single-family homeowners, he noted. SunPower’s equity goals include reaching more people in historically marginalized communities, including people living in rental and multifamily housing. Those customers are hard to serve under existing solar net-metering policies, but could become more viable solar customers under community-solar structures being proposed in California, Fitzgerald said.

Then there’s the opportunity to pair SunPower’s batteries with OhmConnect’s ability to aggregate households’ energy savings in energy markets, he said. SunPower is following solar and battery vendors like Tesla, Sunrun, Sunnova, Enphase, SolarEdge, sonnen and others in exploring the different ways that solar, batteries, EV chargers and home energy controls can be managed to create value for customers and utilities.

“Because they have such a broad footprint of resources, being able to smartly combine our storage resources into their pool of resources is really interesting,” Fitzgerald said of OhmConnect. Early tests indicate that homeowners can save hundreds of dollars a year by restricting or shifting their energy use with the combination of OhmConnect’s daily customer interactions and solar-charged batteries, he said.

OhmConnect doesn’t just help customers make money during grid emergencies, DeVries emphasized. On any given day, it sends energy-saving tips and triggers automated load reductions in response to less significant spikes in wholesale electricity prices, or to mitigate demand-supply imbalances in localized parts of the grid.

“We are absolutely seeing this change from the emergency-response version of demand response to the day-in-and-day-out peaker-power-plant replacement,” he said. OhmConnect launched in 2013 with the aim of not just preventing blackouts but also helping customers shift energy use to prevent fossil-gas ​“peaker” plants from needing to be fired up to meet spikes in local electricity demand.

OhmConnect launched an interesting experiment on this front last month, teaming up with elected officials in Redondo Beach, California on a campaign to enroll enough local electricity customers to reduce power use enough to curtail the dispatch of a 68-year-old gas power plant that’s considered a local blight and pollution hazard.

DeVries noted that California’s current grid-reliability crisis has postponed efforts to shut down that power plant and other coastal plants previously slated for closure. But ​“one of the things we do is reduce demand when it’s extremely dirty to supply it,” he said.