FirstFuel’s Analytics Software Looks to Help Utilities Better Spend the Billions Allocated for Energy Efficiency

“Utilities have a big problem,” says Swapnil Shah, CEO and co-founder of Waltham, MA-based FirstFuel Software.

“They have a big pile of money they have to spend to achieve certain goals,” he continues. “If they don’t achieve it, they get penalized by the state.”

The goal is to increase home and commercial energy efficiency so that they don’t have to spend huge money building new power plants. And the “big pile of money” comes from a tax portion of utility bills that’s put aside to provide incentives to increase energy efficiency, says Shah. (That budget—across the roughly 30 states that participate—was $6.6 billion in 2010, more than double the $3.1 million pool from 2007.) About 40 percent of that budget on average goes to improving energy efficiency in commercial buildings, he says.

Utilities have been sending auditors to buildings to analyze the structure and energy use and recommend improvements, but that method is expensive, inconsistent, and not scalable across thousands of properties. It’s a particular problem for commercial buildings, which can cost anywhere from $5,000 to $30,000 to audit, compared to the $200 or so it takes to perform a residential energy audit, Shah says.

That’s where FirstFuel’s software comes in. The analytics engine just needs utilities to supply a building’s address and a year’s worth of energy consumption data, culled from the hourly meter readings at the buildings. FirstFuel pulls in hourly weather patterns from outside sources and uses GIS mapping and satellite imaging to determine a building’s physical attributes.

Using this information, the software creates detailed reports that show where exactly energy is going in a building, and can offer detailed recommendations on how to reduce energy consumption—either through changing behavior patterns in the buildings or retrofitting. All this is done without an auditor stepping foot in the building or installing any devices, which other energy monitoring technologies often rely on.

“It can analyze hundreds to thousands of buildings in the time it takes to do one on-site visit,” says Shah. “It makes it a very scalable service.”

FirstFuel’s data is reported via a portal that utilities and building managers log into, as a white label solution that is branded as the particular utility’s own. Utilities can see the energy audit data across all of their properties at once and compare energy consumption at similar buildings to determine which ones should be targeted first. “They prioritize which buildings are wasting energy over others,” says Shah. And they can see exactly which energy functions—say lighting and cooling—are the biggest problems in a building.

If utilities can spend less money auditing buildings for energy efficiency, more of their budgets can go to rebates that help buildings pay for the cost of energy improvements, Shah says. “It’s not enough to get the information on what’s wrong—they can help you take action,” he says. “Utilities would rather spend their money on helping you, than on hundreds of auditors to give you information you may never act on.'”

Shah, who previously founded three enterprise software companies that went public or were acquired (Open Environment, WebSpective Software, and mValent), says he’s keeping utilities and government agencies as FirstFuel’s customer focus. There are more than 5.2 million commercial buildings across the country, and more and more states are mandating utilities act to reduce energy consumption, says Shah.

“Every building in this country has a utility supporting it—utilities become a really nice, scalable channel to get to a large number of buildings,” says Shah. FirstFuel will charge customers on a per-building basis for the initial audits and the continued use of its monitoring service.

The FirstFuel founding team, which also includes energy entrepreneur Ken Kolkebeck and Boston University professors Nalin Kulatilaka and Robert Kaufmann, got together early last year. The company nailed down about $500,000 in seed capital in the spring and a $250,000 Department of Energy grant to put towards developing its technology, says Shah. In September it announced a $2.4 venture financing from Battery Ventures and Nth Power.

The startup is currently working on pilot projects with three of the top 20 utilities in the country, and two government agencies, says Shah, who didn’t disclose the identity of any of the entities. If all goes well, FirstFuel will be on target to fully deploy its software with at least two organizations before the end of March, Shah says.

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