ConsumerPowerline gets a boost

Demand-response energy management company ConsumerPowerline added $6 million to its Series A round last week. The deal reflects sustained confidence from venture investors in energy management as public market competitors see their shares spiral.

The New York-based startup, which raised $17 million in a Series A round in September, did not identify investors in the latest close in its regulatory filing. Investors in the first close last year included Expansion Capital Partners, Bessemer Venture Partners, Schneider Electric Ventures, Consensus Business Group and the New York City Investment Fund.

ConsumerPowerline sells systems and software to corporations that use electric energy to help them minimize their power costs. The system, potentially, can open opportunities for selling power back to the electrical grid during peak usage times.

As power production and transmission have become deregulated, variable pricing based on electrical demand has been the goal of many energy providers. Three California companies—Pacific Gas & Electric Co., Southern California Edison and San Diego Gas & Electric Co.—have been the most aggressive in their push for a demand-based pricing scheme. They hope the plan will prevent the type of energy crisis that caused rolling blackouts in California eight years ago.

The California Public Utilities Commission

approved a variable pricing plan in May 2006 that would charge large businesses more money for energy used during peak hours.

“Less than 6% of America’s electricity generation currently comes from renewable resources,” says Expansion Capital Principal Alex Sloan. “That’s definitely a growing market for venture investment, but what about cleantech opportunities in the other 94% of energy that we’re using? That’s a huge opportunity.”

It’s this opportunity that has helped rocket venture investments similar to ConsumerPowerline into the public markets. VCs such as EnerTech Capital, Technology Ventures, Nth Power and Rockport Capital, among others, backed East Hanover, N.J.-based Comverge (Nasdaq: COMV) with more than $47 million in funding before it went public in April 2007 at $18 per share. Shares in the company were trading at less than $11 last week, down from a 52-week high of nearly $40 per share.

EnerNOC (Nasdaq: ENOC), another publicly traded competitor in this space, raised $27 million from Braemar Energy Ventures, Draper Fisher Jurvetson, Draper Fisher Jurvetson New England and Foundation Capital before it went public last May at $26 per share. Shares in the company were trading at $10 last week, down from a 52-week high of $50.50 per share.

To be sure, some of the poor post-market performance of Comverge and EnerNOC may be attributed to overall market conditions. The Nasdaq Composite Index is off nearly 25% on the year.

Wall Street analysts seem to be stumbling over these companies’ lack of profitability. Analysts at Broadpoint Capital rated EnerNOC as “neutral” and predicted a two-year time horizon before the company reaches profitability.

Analysts at Renaissance Capital predict Comverge may hit profitability during 2008, but they cite increased competition from demand-response providers as one of the reasons margins are tightening.

Analysts may have concerns about the margins its competitors are seeing, but ConsumerPowerline has been making deals with customers. The company has sold systems to Macy’s, Morgan Stanley, Equity Office Properties, Newmark Properties, The University of Massachusetts Amherst and The City of San Francisco. —Alexander Haislip