Schneider buys AutoGrid to tap huge potential of distributed energy resources

Over the past 10 years, AutoGrid has become a major provider of technology that connects and orchestrates distributed energy resources (DERs) to serve grid needs, from household smart thermostats and EV chargers and rooftop solar and battery systems to industrial-scale equipment such as chillers, pumps and on-site generators.

Now AutoGrid’s technology and support services are set to become part of the Schneider Electric corporate empire, as is the growing portfolio of more than 6 gigawatts of DERs that AutoGrid manages across the world.

On Wednesday, the French energy equipment and services giant announced plans to buy the Sunnyvale, California–based startup for an undisclosed sum. AutoGrid will continue to operate as an independent company working with multiple technologies and customers after the expected close of the acquisition in the third quarter of this year, pending regulatory review.

AutoGrid has raised about $159 million since its 2012 founding, most recently with an $85 million Series D round last year. Schneider Electric, which took a 10 percent stake in the company in 2019 and led last year’s investment round, has been a longtime AutoGrid partner on work ranging from home energy controls to integrating distributed-energy management into its distribution-grid control system.

Schneider, which competes with grid giants such as Siemens, General Electric and Hitachi in the utility grid technology space, has bought dozens of companies over the years to expand its role in controlling energy use in buildings and integrating DERs into grid operations. It’s also launched businesses that work on microgrid development and distributed energy as a service, backed by hundreds of millions of dollars of infrastructure capital.

Schneider has ​“the vision of unifying a set of solutions that go from the control center for the distribution network up to the consumer,” Arup Barat, AutoGrid’s head of marketing, said in an interview. ​“This acquisition is not to enter” a new market for Schneider, he said — ​“it’s to scale.”

AutoGrid’s core technology, built on unstructured data analytics and management techniques developed by CEO Amit Narayan at Stanford University, is well suited to scaling up to get millions of disparate DERs to work together, Barat said. Traditional utility command-and-control methods aren’t ideal for managing lots of different devices using varying control and communications technologies, he noted.

AutoGrid got its start managing radio-operated load-control switches, WiFi-connected smart thermostats and other home energy control devices for demand-response programs that pay customers to let utilities reduce their energy use when the grid is stressed. It has since scaled up and out to tap into a much wider variety of devices for a wider array of energy market services, and it has expanded beyond utilities to serve commercial and industrial customers, energy services providers and residential customers with batteries from companies including Swell and Sunrun.

The fast-expanding world of VPPs and DERMS

The term ​“virtual power plant,” or VPP, is often used to describe technologies that can integrate and control lots of distributed generation resources, storage systems and flexible loads in ways that mimic how power plants can ramp up and down to balance the power grid. Solar and battery providers including Tesla, Sunrun and Sonnen have used the term to describe their work aggregating customers’ DERs to serve grid needs. So have demand-response aggregators such as Voltus, Enel X, CPower and Centrica’s REstore and startups such as Virtual Peaker and Enbala, the latter of which was acquired by generator and battery vendor Generac in 2020.

For utilities and grid operators, similar combinations of technologies that can detect, monitor and control these grid-edge devices tend to be classified as a distributed energy resource management system, or DERMS. GE, Siemens, Hitachi and Schneider are all working on these technologies, as are startups Smarter Grid Solutions, Spirae, Camus Energy and Opus One, a recent GE acquisition.

Whatever the terms used, the main challenge in moving from pilot projects to large-scale deployments has been designing a system that can adapt to changing circumstances and integrate an increasing and changing mix of devices, all without breaking down under the scale and complexity of the task, Barat said.

“Scalability is a very important capability,” he said. ​“Truly distributed demand response that you can count on and make part of your planning requires a different approach. You need in your platform the ability to verify every single asset, at a local level as well as an aggregated level.”

Barat pointed to AutoGrid’s work with Hong Kong–based utility CLP, which operates in China, Australia, India and Southeast Asia, as a test case for the company’s ability to scale to millions of devices. That work started with a microgrid pilot project in 2018 but has since expanded to ​“incorporate as many of [CLP’s] residential customers as it could,” he said, with ​“massive scale in terms of what they dispatch and control.”

In Europe, AutoGrid is working with Dutch energy company Eneco, Germany-based utility E.ON, French oil major Total and other customers to aggregate industrial, commercial and residential customers into wholesale energy markets. A similar partnership with NextEra Energy Services is aggregating industrial and commercial customers into the wholesale markets of U.S. mid-Atlantic grid operator PJM.

AutoGrid’s latest project with California community choice aggregator Clean Power Alliance is tapping smart thermostats, batteries and EV chargers to bid into the markets of state grid operator CAISO. This project also represents AutoGrid’s first entry into directly aggregating resources into wholesale energy markets on its own behalf, rather than orchestrating those aggregations for other customers.

Schneider is already tapping AutoGrid’s capabilities for its microgrids and utility distribution-grid controls. Schneider is also embedding more digital control capabilities into its latest Square D electrical panels and sees further opportunities for residential markets.

For instance, Schneider is a major shareholder in Uplight, the company formed by the merger of Tendril and Simple Energy, which works with many of the country’s largest investor-owned utilities; this could offer AutoGrid an opportunity to expand its role in a variety of utility programs. Schneider’s purchase earlier this year of EnergySage, a startup offering an online marketplace for residential solar and batteries, offers similar avenues for expansion into residential applications.

The combined U.S. grid capacity of rooftop solar, batteries, EV chargers, backup generators and flexible loads is expected to reach nearly 400 gigawatts by 2025, according to forecasts from research firm Wood Mackenzie. The Federal Energy Regulatory Commission has ordered the country’s grid operators to open up their energy markets to these DERs, which could create significant new opportunities for them to earn money providing grid services. 

That represents a major source of grid flexibility that could be used to reduce reliance on fossil-fueled power plants and cushion power grids against the risk of extreme-weather-induced blackouts, Peter Asmus, AutoGrid’s director of strategic marketing, noted in a March blog post.

“To combine all that in one platform is the trend,” Asmus said in an interview this week. ​“If we could have one vendor that could do all of this, that’s the ideal case.”