With Cash from Siemens and ArcelorMittal, Powerit Looks to Expand, Tap the Smart Grid

6/29/09

In the world of cleantech, there’s a lot of focus on alternative energy sources and power generation. But for Seattle’s Powerit Solutions, the name of the game is energy efficiency. Powerit is the North American division of the company, which also has a European division in Sweden (where the company started). It is a leader in energy management and conservation for industry—one of the major strengths of Washington state’s cleantech cluster.

I spoke with chief executive Claes Olsson last week to find out how Powerit is trying to help companies save money and power, and how the firm plans to grow its business globally, all without working on the power generation side of things. “It’s pretty expensive to build up new sources of electricity,” Olsson said. “Energy efficiency is the low hanging fruit.”

The Swedish part of the company has been around since 1994, and the Seattle division since 2002. Olsson joined the company two years later, and in 2005, he said, “that’s when we really got going on the product.” With $6 million raised last month in new funding led by Siemens Venture Capital and ArcelorMittal (together with @Ventures and Expansion Capital Partners), and an expansion from five employees in 2007 to its current 47 (25 in the U.S.), the company does seem to be on the upswing.

“We have grown immensely,” Olsson said. “Our intention is to continue to grow but be smart about it.”

Powerit makes hardware and software to reduce energy consumption and electricity bills in industrial facilities. Part of the solution is energy efficiency—figuring out where energy is being wasted in companies and reducing it. But another big part is in “demand response,” which means understanding when utility companies’ rates are highest and tweaking a facility’s energy usage to avoid those costly peaks.

For individuals, avoiding those peaks might just mean remembering not to run your dishwasher until the late evening. For large industries, it means setting up an intelligent system to monitor those peaks and dial down expended energy as much as possible. Utility companies will send a warning that rates are about to jump, 10 minutes in advance, Olsson said. And the peaks are often extreme—a rate increase of as much as 100-fold, for example.

A third component of Powerit’s energy savings comes from “demand control,” Olsson said. This has to do with how utility companies set your bills. Electricity rates are based on peak usage times, not overall usage. So Powerit’s systems work to spread out energy usage or reduce energy use at their clients’ peak times, to lower their overall utility bills.

The company’s “automatic intelligence control system” relies on rules and priorities set by its clients, Olsson said, to ensure that high-priority equipment or appliances are kept running even during peak rates. So for example, if certain machines need to run continuously to maintain production, Powerit’s software will tweak heating or cooling appliances instead to reduce energy usage during peak times, and not touch the crucial machines.

This combination of energy efficiency and energy management makes Powerit unique, Olsson said. “On the industry side, knock on wood, we don’t have much competition,” he said.

Powerit’s connection to Siemens Venture Capital, a new investor, happened when Siemens built a biomedical company in San Diego. The company wanted to install an energy management system, and Siemens didn’t have one, so it bought one from Powerit.

Olsson hopes the recent funding will help Powerit expand in North America and Scandinavia, as well as in the rest of Europe, China, Brazil, and India. The firm is cautious about expanding too quickly, however, and has been talking to Siemens about being a channel partner to aid its expansion. Meanwhile, the investment by ArcelorMittal will help with the expansion too, Olsson said, as the steel company has factories around the world. “If we get channel partners, that can be a way to scale up faster without spending money,” he said.

The firm’s services cost on average $90,000, Olsson said, but can range up to $1 million, depending on the size and scope of the project. The typical payback time for customers is 10 to 18 months, and that doesn’t include incentives or rebates that vary region by region. Some customers, particularly in California, have installed Powerit’s technology and gotten the entire cost covered by incentives, he said.

Powerit came to Seattle because its original investor, the real estate company Stellar Holdings, was here, Olsson said. But Powerit doesn’t have many local customers, because energy in the Northwest is so cheap. Many of the company’s clients are in California—where energy costs are high and incentives abound—and on the East Coast. The Midwest is a growing market as well, Olsson said. The company’s customers include Frito Lay, IKEA, the San Jose Mercury News, and the organic food company Amy’s Kitchen, for which Powerit recently won the Connectivity Week Buildy Award. It has installed its products in around 100 locations in North America, and another 500 to 600 in Scandinavia.

“I think you’ll see us more and more out there,” Olsson said. “Everybody talks about the smart grid, and we’re there.”

Rachel Tompa is a freelance journalist based in Seattle. She can be reached at rmtompa@yahoo.com. Follow @

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