"Virtual peaking power": Getting a lot of attention lately

Cnet's News.com had a nice little article on Friday on the emergence of energy efficiency service providers focused on freeing up electricity by taking occasional control of your thermostat.

By tweaking thermostats a bit on the highest-demand days, and aggregating the electricity saved within a particular utility's service area, these vendors provide "virtual peaking power" that allows the utility to avoid building a new power generation plant that wouldn't get much use, or to avoid purchasing spot power at exorbitant prices. It's a new spin on the old "negawatts" idea.

As the article points out, two of the bigger names in this emerging industry are Comverge and EnerNOC. Not coincidentally, both recently took in large infusions of venture funding:

• Comverge raised $13.6M in October in a Series B led by Rockport Capital
• EnerNOC raised $7.75M in January in a Series B led by Foundation Capital (here's a link to the pdf of the announcment)

Both Comverge and EnerNOC are basically outsourcers, managing these "virtual peaking power" supplies for their utility customers. Other utilities are tackling these activities by themselves, and the practice is growing quickly.

Such similar services can also be applied to lighting. One early company attempting to provide virtual peaking power by adjusting lighting (in office buildings, etc.) is Electric City.

The market potential for virtual peak power savings could be quite large -- between lighting, heating and air conditioning that covers a large portion of overall electricity consumption. Especially as natural gas prices remain high, avoiding the costs of purchasing spot power or building new gas-fired "peaker" plants is definitely a win for utilities, which explains the current interest.

Another technology winner in this market is the communications infrastructure that is needed to enable all the automated remote monitoring and control processes that drive these services. There are a lot of compelling investment opportunities generated by the emergence of virtual peaking power services.