| Lisa had just left her Yoga class which she described | | | | exciting IPOs ever. It was a company that made |
| as a Zen-like experience. We were meeting for lunch | | | | electricity out of nothing. They delivered to the |
| at a small cafe in downtown San Francisco. "I love | | | | power grid hundreds of megawatts of electricity |
| the experience. I always feel more rejuvenated after | | | | without burning coal, oil, or gas. They didn't rely on |
| a class," she said. "Understanding what your body can | | | | solar power, tides, wind, or magic. No, they didn't use |
| and can't do is difficult. The hardest part is achieving | | | | nuclear energy either. |
| balance." | | | | I was on the inside and got to see it all. |
| Lisa is not the only one trying to achieve balance. | | | | As part of the deal team, we conducted extensive |
| The operators of our power grid are constantly | | | | diligence on a company called EnerNOC (ENOC). We |
| striving to balance the supply and demand of | | | | learned everything we could about how the business |
| electricity. When they're not successful, everyone | | | | operated. What fascinated me most was how the |
| knows about it. . . . we have blackouts. | | | | technology worked. |
| You see, energy can't easily be stored in large | | | | The company had truly found a better way. |
| quantities. | | | | Quite simply, EnerNOC uses technology to reduce |
| Every time we turn on a TV or run a washing | | | | demand. To explain, lets go back to our example. |
| machine, the power company needs to send more | | | | With everyone turning on air conditioners power |
| energy to the grid. Traditionally, coal or natural gas | | | | demand starts peaking. The power grid operators |
| power plants generate the electricity we use. Not | | | | recognize this and call EnerNOC. |
| only is this infrastructure difficult and expensive to | | | | Instead of starting up another power plant burning |
| build, but it also pollutes the environment. | | | | fossil fuels, EnerNOC uses its technology to change |
| Carbon dioxide, arsenic, greenhouse gasses, the list | | | | the way systems use electricity. It cycles air |
| of pollutants is extensive and nasty. | | | | conditioners differently, it reduces lighting, it lowers |
| But on a hot day nobody cares. | | | | temperatures on water heaters. |
| When temperatures soar, power grid operators really | | | | They basically do lots of little things to save |
| sweat. You see, more and more people turn on air | | | | electricity. Because their biggest customers are |
| conditioners which demand huge amounts of | | | | industrial and commercial buildings, these little changes |
| electricity. On really hot days the demand often | | | | add up to huge amounts of power. Importantly, |
| exceeds what power plants can provide. People in | | | | most people never even know that this is happening. |
| the industry call this "Peak Power". | | | | And the best part is, EnerNOC gets paid to do this. |
| When electricity demand peaks above supply, power | | | | Keep in mind most new power plants are about 500 |
| grid operators start paying through the nose. | | | | megawatts in size and can cost between $2 and $3 |
| Oftentimes they pay as much as ten times the | | | | billion to build. EnerNOC can supply more than 600 |
| normal price of electricity. It's all basic economics. | | | | megawatts of power to the grid. And they can do it |
| More demand and less supply . . . prices go up. | | | | cheaply, without pollution. |
| Some power plants have been built to address this | | | | The alternative energy industry is an exciting one. It |
| very problem. These "peaking plants" are typically | | | | will no doubt play a huge role in our future, especially |
| gas-fired generators that sit unused most of the | | | | as oil gets more and more expensive. |
| year. They're available for those 5 or 10 days a year | | | | Early stage companies like EnerNOC can change the |
| when demand spikes. | | | | way our energy infrastructure operates. Best of all, |
| Now bear with me for a moment. | | | | they can make money doing it. Investing in early |
| Many of you know that as an investment banker I | | | | stage companies like these provide great |
| worked with alternative energy companies. I met | | | | opportunities for long term growth. |
| companies producing biodiesel, cellulosic ethanol, solar | | | | This may be a good time to establish positions in |
| power, fuel cells, and things you've never dreamed | | | | EnerNOC as it has pulled back with the market. Going |
| of! I have seen hundreds of technologies and met | | | | forward, I see substantial demand for these types of |
| with thousands of businessmen and women. | | | | service providers. |
| A year or so ago I participated in one of the most | | | | |