Kachan & Co., a cleantech research and consulting firm, has published its set of industry predictions for 2011, and one of the highlights will be a keener focus on information technology companies providing applications and infrastructure for improving energy efficiency. That is, those that can help the world save energy rather than those that will help us generate clean energy from renewable sources.
According to Kachan's predictions blog, written by Dallas Kachan, "look for efficiency to become the clear dominant investment theme as investors continue to seek less capital intensive efficiency plays and eschew solar, where company valuations have been swinging wildly in 2010 from continued supply/demand and international subsidy havoc."
Of course, that means there will probably be some consolidation of the energy efficiency sector, which Kachan ties closely to the smart grid. In particular, that means we should closely watch many of the big players in the smart grid and smart metering space. Not convinced? Just this week, one of the players that Kachan is watching, OPOWER, snagged $50 million in a Series C Financing round by Accel Partners, Kleiner Perkins Caufield & Byers, and New Enterprise Associates (which is OPOWER's biggest investor). OPOWER provides what it describes as a customer engagement platforms that offers consumer a way to track their energy consumption. The software reaches 2 million homes right now through the company's relationships with 45 utilities. Here's the investment rationale from Peter Wagner, partner at Accel Partners, from the press release highlighting the massive investment:
"We believe OPOWER has a profound opportunity to leverage the power of the Internet and social media to deepen consumer engagement in the energy world, and to use this engagement to drive critical gains in efficiency."
There are a LOT of players in this game, and only the best funded will survive 2011, Kachan predicts.