Plaid Alone Won’t Cut It
The Foundational Stage of the Energy Data Ecosystem
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Almost three years ago, Equal published Lessons from Plaid for a Future Energy Unicorn, outlining a vision for the future of energy data. In the piece, we proposed the need for a platform that could unlock data hidden across siloed devices and stakeholders. Since developing this thesis, we’ve gained deeper conviction that we are at the cusp of energy’s “Digital Moment.”
Particularly, we’ve observed three mega trends:
Large energy players who have traditionally stayed in their lanes are now crossing verticals i.e. Sunrun’s shift from solar to storage
Energy companies are now asking for real-time visibility and a single source of truth to deliver on use cases i.e. VPP programs needing data at finer intervals
Companies are repositioning their focus to drive long term value, not just shipping products i.e. Integrating AI with best-in-class operations
We believe this Digital Moment presents the opportunity for multiple unicorn-sized companies (if not larger). At the foundation of this thesis is our investment in an energy cloud platform called Texture and we have subsequently made another investment (yet to be announced) that builds off Texture with its own VPP/Financing-enabling infrastructure. We are witnessing each of these teams gaining traction with mainstream energy incumbents at a pace that we have never previously seen.
Working with these two teams, we've come to realize that “Plaid for Energy” was the wrong analogy to demonstrate the magnitude of the opportunity. Plaid came into an industry where there were already well established frameworks for connecting institutions in the financial sector (i.e. Swift). Plaid's opportunity was to connect an emerging landscape of fintech players to this legacy system – which it did very effectively. However, what the energy ecosystem lacks is the foundational infrastructure required for any of these parties to operate with one another. Plaid was able to build upon much of the previously established infrastructure of the financial services industry. For energy, we still need to build much of that infrastructure to successfully enable the use cases customers crave for. We need Plaid, we need Swift, we need Akamai, we need Cloudflare, etc. We’ve always said that the next phase of energy will be turning the “grid into the internet” and we believe we’re seeing the foundational players of that future being built today.
Major Consideration #1 (Data Pipeline): Energy Data Surging From Millions to Trillions
Let’s take a step back. We believe there is a massive opportunity to create a network for energy data and the time to act on it is now. In the U.S. alone, there are about 130 million smart meters and over 250 million DERs installed in homes (think smart thermostats, generators, rooftop solar, electric vehicles, batteries, etc). That means there are already more data-producing energy devices than smart phones in the US and this number is growing! DER capacity is expected to add another 217 GW through 2028, more than doubling today’s capacity in the next few years.
With these devices, energy companies are collecting data from every home, business, and industry. The scale of data generated is unprecedented:
130 million smart meters + 250 million DERs = 380 million data-producing devices
380 million devices, each sending a data snapshot every 15 minutes = 1.5 billion snapshots per hour
That’s over 36 billion data points per day, 1 trillion per month, and 13 trillion per year
This is just the beginning. Right now, data is typically collected at 15 minute intervals, but that’s changing. In a world with more volatility (erratic consumption patterns, significant pricing spikes, extreme weather, etc.) and new customer use cases (CRM, VPP, etc.), many stakeholders are increasingly pushing for an ability to access and adequately leverage more granular data. From 15 minutes to finer intervals like milliseconds, the volume of data simply explodes. Now more than ever, we need foundational players that will design a data ecosystem that can handle this bandwidth.
Major Consideration #2 (Internal Communication): Turning Low Value Data into High Value Data
Utility Data Architecture — Meter Error (Equal Analysis)
Managing this data deluge is already straining today’s legacy systems. The utilities sector’s data architecture consists of a series of systems stitching together static, time-stamped data. This fragmented approach is creating system-wide errors, turning data into a burden. For example, small mistakes in meter data can spiral to widespread errors across meter systems, outage systems, billing systems, etc. (see direct and indirect impacts in the figure above). Because of this, utilities are facing penalties in the tens of millions of dollars due to poor data quality.
Even setting aside data accuracy for a moment, legacy data architecture is constructed in a way that dilutes the potential of that data as a tool. Static data flows across systems, but often without dynamically being tagged to its data attributes (including IT / OT data for location, customer information, weather, etc.), the exact information that makes this data actionable. Energy data lacks needed relational modeling – structuring and contextualizing data to empower important decisions that keep the lights on and the grid functioning.
With massive data demands, energy companies need standards that turn low-value data into high-value data. We need foundational players to define the guardrails that ensure data accuracy while empowering informed decision-making.
Major Consideration #3 (External Communication): Designing Interoperability for the Ecosystem
Improved internal communication alone isn’t enough. As we see the ecosystem shift from verticalized, asset-specific energy companies to horizontal, all-encompassing energy companies, stakeholders increasingly need to be able to communicate with each other. One example is VPP (Virtual Power Plants) programs that connect solar, battery, thermostat, and generator assets. The inherent value of these assets are determined by data provided from asset owners, OEMs, developers, retailers, VPP aggregators, utilities, etc. This data must “ping-pong” across stakeholders to effectively communicate. As it stands, however, some of the largest U.S. utilities are managing these VPP programs with outdated FTP (file transfer protocol) systems — yes, the way we shared music in the 90s. That approach simply can't keep up with the quality, speed, and communication demands for modern program management.
On top of this, VPPs rely on a vast array of data inputs including meter data, network topology, flexible loads, energy prices, weather conditions, and DER outputs. Without seamless communication across parties, these systems cannot function effectively. Moreover, this data must also follow a constantly evolving five-phase lifecycle: 1. data creation, 2. data communication, 3. data decision support, 4 data privacy, and 5. data storage. All of this has to flow seamlessly to foster precise, high quality decision-making. We need foundational players to establish protocols for interoperability across the energy ecosystem, connecting an already deeply connected ecosystem whose data systems lag behind it.
The Inflection Point
Energy data is at a critical inflection point — with the volume, velocity, complexity, and communication of data exploding. We believe that the players that seize this moment have a once-in-a-generation opportunity to define the rules for the energy data ecosystem. At Equal, we are working with the foundational players who are setting the standards — the standards for data pipelines, internal communication, and stakeholder interoperability. We are investing in the Plaid’s, the Swift’s, the Akamai’s, the Cloudflare’s, etc. Ultimately, we believe these players will need to work closely together and form a keiretsu. True industry change requires more than disruptors; it demands a movement — a collective of visionary companies, each surgically proficient in its role, working in synergy toward a shared goal.
We see a massive opportunity to build the foundational players that will design the energy data ecosystem. If you're building in this space, we’d love to connect. Reach out to grace@equal.vc!