The energy sector is going through a digital transformation, as smart meters enable the collection of more granular customer data and proactive consumers push for greater transparency into their sources of energy and consumption habits. In this context, Uplight was formed in 2019 as a merger of two Colorado-based cleantech startups, Simple Energy and Tendril (who had recently acquired several other startups), to provide a comprehensive suite of products for electric and gas utilities to meet their strategic goals and drive a better customer experience. As an end-to-end solution Uplight integrates data from hundreds of customer touchpoints, providing consumers with tools to understand their energy usage and enabling utilities to foster deeper customer relationships.
Value Creation and Capture
Uplight seeks to create value by being a one-stop shop for utilities to understand more about customers from their usage data and implement strategies to change customer behavior. As Uplight was created through the merger of several innovative cleantech firms with distinct products, the areas of value creation are numerous. Some of these include:
- Nudging Customer Behaviors – Uplight helps utilities deliver personalized home energy reports (HERs) to their customers that educate them about their historical energy usage and provide advice on how to adopt more energy-efficient behaviors. Changing these customer behaviors enables utilities to meet regulatory goals and deliver energy savings, while increasing satisfaction and engagement with their customers.
- Diversifying Revenue Streams – One of Uplight’s core offerings is a marketplace that enables customers to purchase additional energy-related products and services, such as smart thermostats and other connected home products, through a utility-branded portal. In addition to providing a supplemental revenue stream, these products can also increase customer loyalty and satisfaction resulting from a simplified buying experience.
- Demand Management – As solar and other distributed energy resources (DERs) grow in popularity, many utilities are experiencing strain on their systems due to the unpredictability of these resources. By integrating data, influencing consumer behavior and encouraging the adoption of new rate schedules, Uplight can help utilities shift periods of peak load and reduce operational costs.
- Reducing Service Costs – By providing customers with more information and self-service tools, Uplight can help reduce the call volume to customer support centers and minimize the time needed to resolve support issues.
- An End-to-End Solution – Finally, Uplight creates value for its utility customers by providing an end-to-end platform, facilitating ease of adoption and eliminating the need for utilities to integrate various platforms to provide these services to their customers.
In terms of value creation, Uplight captures value largely through the fees it charges to utilities to integrate and utilize use its services. Uplight also captures a tremendous amount of knowledge by working with over 75 different utilities across the country. Through these relationships they are able to build expertise in the industry, understand context and trends across different geographic regions and leverage the learning from extensive consumer behavior data to continue to improve its product offerings.
Challenges, Opportunities & Recommendations
One of the major challenges facing Uplight is competition from other large competitors in this space. By positioning themselves as a one-stop-shop for utilities, they are now competing with large players such as Oracle’s Opower and General Electric, as well as smaller startups like Bidgely. They also may face competition from utilities who see this as a core competency looking to build out these services in-house, which would eliminate the need from a third-party vendor such as Uplight. Finally, large utilities tend to make slow and methodical purchasing decisions, potentially putting pressure on their cash flow and locking them out of markets where competitors have already won deals.
Despite these challenges, there are also significant opportunities for Uplight to expand in this space. Right now, we are still at a very early stage for utilities leveraging the power of data analysis and there is a lot of room for product expansion as the need for more and more insightful data grows. This market will also likely continue to grow as smart meters, smart thermostats and other IoT devices proliferate, and DERs continue to put strain on electricity grid infrastructure. Finally, this is still an extremely fragmented market and Uplight can benefit immensely from the position it has been able to establish already. By leveraging its 75 utility partners with 100 million customers and $53 million investment from AES (one of the world’s leading power companies), Uplight can establish itself as a trusted partner, drive further product improvements and potentially pursue strategic acquisitions in the future to solidify its position in the market.