Opower, the big data energy player to beat

After five years, energy software startup Opower is now processing data from more than 50 million homes, and says it will be able to save 2 terawatt hours of energy by the end of 2012. That amount of energy use is equivalent to 200,000 average U.S. homes of a year, or $200 million in energy cost savings.

Opower has been able to do this by building out its big data infrastructure on Hadoop, and by constructing a sophisticated software engine, which it’s dubbed Opower 4. Opower 4 is its new platform that collects data from 75 utilities, including 96 billion meter reads, crunches that data and provides recommendations to utility customers that encourages them to reduce their energy consumption.

While Opower started its life mailing detailed paper utility bills to utilities’ customers, it now largely interacts with utility customers through digital means — email, text message, and via websites. It’s digital alerts say things like: you’re headed for a high bill this month. It’s newer digital products include a Facebook app and software for connected thermostats, working with thermostat giant Honeywell.

At the same time, paper reports still play a substantial role in its service — of the 15 million homes that are fully connected into the Opower platform, 7 million of those are getting paper reports. The combination of paper reports and digital recommendations deliver, on average, 1.5 to 3.5 percent reduction on an energy bill.

While a lot of startups are trying to do what Opower is doing, and big data energy tools are emerging with a growing frequency, Opower has quietly been able to amass a reach with its platform that puts it well ahead of competitors. Opower is analyzing 16 percent of all of the smart meters in the U.S.

Opower’s SVP Marketing Rod Morris tells me that he thinks Opower’s strategy of starting out with a basic data analytics service, and adding on more complexity and control over time, has made it the defacto choice for utilities. In contrast other competitors have had less success, after starting their businesses selling more complex systems like home energy dashboards, and then later moving into developing an Opower-style platform and software layer.

Honeywell & Opower’s iPad smart thermostat app

It will be interesting to see how Opower’s newer offerings, like its Facebook app and thermostat service, fare, following Opower’s success with its basic platform. Opower has its thermostat service deployed in pilot projects with three utilities, and Honeywell is providing the hardware. You can think of Opower’s thermostat service as Honeywell’s answer to Nest or other smart thermostat services like EcoFactor and EnergyHub.

Opower has raised $64 million in venture capital from NEA, Kleiner Perkins and Accel Partners over the years, and has been considering an IPO since at least last year. Opower is one of the few successful venture-backed cleantech startups out there.