It’s been a whirlwind year for Packetized Energy, the Vermont-based clean energy sector start-up spun off from a large U.S. Department of Energy project in 2016 by three University of Vermont electrical engineering faculty, Paul Hines, Mads Almassalkhi and Jeff Frolik.
After completing a pilot with Burlington Electric Department at the end of 2017, the company launched ambitious demonstration projects with Green Mountain Power and the Vermont Electric Cooperative that put its innovative technology to the test under real market conditions – and is in the midst of launching another pilot, with PG&E in California.
No less a figure than Scott Johnstone, former head of the Vermont Energy Investment Corporation, a global leader in the energy efficiency field, came on board as CEO.
Packetized Energy added a software engineer, hardware engineer and business project manager to its roster, bringing the fledgling firm’s total staff, not including the three faculty founders, to seven.
The company completed a month-long stint at the new energy accelerator, Accel-VT, rubbing shoulders with some of the top energy entrepreneurs in the country and earning the company acclaim as one of the most promising firms in its cohort.
And in a fitting symbol that capped its momentum, the company left the co-working Inspire space at Green Mountain Power’s headquarters it has occupied for the past year-and-a-half and moved into its own offices in Burlington’s trendy Chace Mill.
A Vermont Unicorn?
What’s behind the impressive series of breakout moves?
Packetized Energy, it turns out, is the hottest of hot commodities in electric utility circles, the creator of a set of clever algorithms with products to match that could go a long way toward addressing the great challenge facing the energy sector and the planet: how to harness the increasingly abundant, but fickle, power of renewables like wind and solar when the sun doesn’t shine and the wind doesn’t blow.
If the company delivers on its promise, it could be a very big deal indeed, says private equity guru and serial entrepreneur Bob Zulkoski, chairman of the Vermont-focused investment firm Vermont Works, an early investor in Packetized Energy.
As the founder of a successful company “also in the energy resource field, I’m very familiar with this space,” he says. “Packetized is one of the few companies I’ve seen in Vermont that could become what’s called a unicorn,” a company whose assets are valued at $1 billion or more. “They are in the right place at the right time with a very innovative approach.”
Funders agree. The company has won over $3 milllion in support from the Department of Energy's ARPA-E and National Accelerator Laboratory, or SLAC, initiatives and the National Science Foundation's Small Business Technology Transfer (STTR) program, who have recognized the innovations that Packetized brings to the energy industry and are actively partnering with the company to move its technology forward.
In describing how Packetized Energy’s products manage energy supply and demand compared with the current system, Almassalkhi sounds like a Vermont progressive.
“We’re bottom up; the traditional system is top down,” he says.
The change is indeed radical.
Currently utilities are “sucking data from devices, creating models of how everyone uses energy and then basically pushing out schedules to the devices,” Frolik says. “It’s very data intensive both in terms of communications and computations.” And it doesn’t work or scale very well.
Packetized’s bottom-up approach couldn’t be more different.
The company produces smart controllers for the big energy loads in the home: hot water heaters, batteries like the Tesla Powerwall, electric vehicle chargers and HVAC systems
It has also developed a cloud-based software platform, called Nimble, that both speaks “packetized” with the device controllers and can listen to demand or pricing data from utilities.
Sidestepping the complexity of trying to predict consumer behavior, the controllers ask a simple question: How much energy does my device need right now? If the water in the water heater is too cool, for instance, it asks the cloud-based server if it can have a small “packet” of energy from the grid to warm the water.
The Nimble platform coordinates in real time whether device requests are granted, based on market needs.
“Instead of the water heater turning on right away,” says Almassalkhi, “a device basically asks, ‘Can I turn on’? And our cloud service says, ‘Okay, yeah, it looks like all is good, go ahead and turn on.’ And another device may come up and say, ‘Okay, I want to turn on, and Nimble says, well, not right now. Come back a bit later.’”
If the hot water heater is getting on the cool side and really needs energy, it will nag the server more frequently. If it’s still turned down, it will take matters in its own hands and start warming the water, so consumers aren’t left in the lurch. Nimble software then adapts to this behavior in how it responds to future requests.
By heating the water in short bursts spread throughout the day and by staggering consumers’ mini-power requests so they don’t happen all at once – a similar process applies to energy request from HVAC, batteries, and electric vehicle chargers – Packetized Energy helps power consumers and power producers achieve a Zen-like state of balance.
“It’s like having a pile of sand shaped into a peak,” says Almassalkhi, who has won two awards from the Department of Energy totaling nearly $4 million to support the research underlying the company’s products. Hines won a National Science Foundation grant that has supported basic research the company’s products tap into.
“What we do is shake the pile so it flattens out.”
Hines uses a different analogy. “Our software turns devices like water heaters into virtual batteries for the grid,” he says. “They store energy when it’s clean and affordable, so the grid doesn’t need to supply electricity when energy sources are dirty and expensive.”
Packetized’s 2017 pilot with BED showed that the company’s controllers, installed on eight hot water heaters in Vermont’s Chittenden County, could successfully exchange packetized information with the cloud service and heat water in small, distributed increments.
The new demonstration projects with GMP and VEC are both larger, with smart controllers in the process of being installed on 450 hot water heaters around Vermont, and ripe with market significance.
“These projects are showing that this technology is for real,” Frolik says.
Academic articles and industry consultants have guessed at how much money utilities would save if they used renewable energy more consistently and avoided paying top dollar for supplementary power when demand exceeds supply.
But the Packetized trial is among the first to produce real-world data on cost-savings.
“We’re seeing what the real financial benefit is to the utility of installing our devices in the field and interacting with the grid in this new way,” Frolik says.
If the project is successful, and utilities save up to what the company projects, about $200 per water heater per year – early returns indicate that number is achievable -- it’s easy to imagine all heck breaking loose.
“I would say about half the utilities in the country know who we are,” says Almassalkhi, and some are already exploring the technology. There would be keen interest, to say the least, he says, if the current projects pay of as anticipated.
“They’re hitting the market at the right time with an innovative product,” says Corine Farewell, director of UVM’s Office of Technology Commercialization, which has worked closely with Packetized’s faculty founders as the company got off the ground. “They have a strong team, including a very strong CEO in Scott Johnstone. They have great partners in BED, GMP and VEC. And they have customers. They’re hitting all the right notes.”
Johnston couldn’t be happier in his new job.
“If we’re going to have clean, affordable and easy-to-use energy, the real focus of the next wave is dealing with demand-side management and using flexible energy to optimize the grid,” Johnstone says.
“That’s what Packetized Energy is here to do and create, and that’s what is so exciting about the work we’re doing. When you consider all the grid-edge devices that will be interacting with the grid as the Internet of Things comes online, the potential of this company is really limitless.”