Today, BusinessWeek published my story on Silver Spring Networks–the most important green technology company you’ve never heard of. Silver Spring makes digital power meters that utilities are buying up by the millions to lay the foundation for a smart electricity grid.
Here’s the top of the story:
Silver Spring: A Growing Presence in Green Tech
Its smart energy meters are winning big customers in California and an investment from Google
California’s ambitious green agenda is swiftly pushing startup Silver Spring Networks into the black. In July 2006, the Golden State leapfrogged to the forefront of the environment-friendly tech movement when regulators gave the state’s largest utility the go-ahead to spend big on so-called smart meters that can moderate energy use. Once a dumb electro-mechanical machine that garnered little attention outside a once-a-month reading, the lowly meter has become a cornerstone of energy innovation by morphing into a two-way communications device.
And thanks to a measure approved by the California Public Utilities Commission, Pacific Gas & Electric (PCG) had $1.7 billion to spend on them. To fulfill its mandate, in July 2008 PG&E tapped a digital meter technology from Silver Spring Networks in Redwood City, Calif. Over the next four years, PG&E plans to replace all 5 million of its electric meters with Silver Spring’s technology.
Smart meters are part of what’s known as the smart grid, an upgraded national power infrastructure designed to dole out energy more efficiently and make both consumers and companies more knowledgeable about their use of electricity, gas, and other utilities. The government stimulus package signed into law on Feb. 17 includes billions of dollars for smart grid technology. “Smart grid is pretty critical to the future of our company,” says Andrew Tang, senior director of PG&E’s smart energy Web division. Rolling out millions of Silver Spring meters will mark “the beginning of a smart grid solution.”
A Green Startup You Never Heard Of
Demand for smart meters in particular may make six-year-old Spring Networks the most important green technology startup you’ve never heard of. Thanks to contracts from PG&E, Florida Power & Light, and other utilities, Silver Spring boasts a backlog of orders for meters and related technology worth $500 million, a princely sum for a company of Silver Spring’s age. The company is on track to generate positive cash flow in the second half of 2009, says President and CEO Scott Lang. “We are trying to transform the power industry for the 21st century,” Lang says.
Before the government announced plans for smart grid spending, Lang says Silver Spring was on track to hit $75 million in sales this year. The company now is revising those estimates “significantly upward,” Lang says, though he won’t say by how much. Silver Spring’s backlog is expected to double in the next 12 months, he adds.
Some of the most powerful players in Silicon Valley believe Silver Spring could be one of the first home runs to emerge from the clean tech boom. The latest sign: On Feb. 9, Google (GOOG) confirmed that it made an investment in Silver Spring. Representatives from Silver Spring declined to comment, but a source close to the company says it was in the range of several million dollars.
Google Investment Builds Confidence
Last October, Kleiner Perkins Caufield & Byers, an early investor in Google, led a $75 million investment in Silver Spring. According to the National Venture Capital Assn., that brings the total raised by Silver Spring to $167.5 million. That money will help fund a global expansion and should give utilities more confidence to form a partnership with the little-known player on a critical project. “This company is potentially one of the largest outcomes in clean tech,” says Warren Weiss, a Silver Spring director and general partner with Foundation Capital, one of Silver Spring’s early investors.