Introducing David Energy: A New Kind of Energy Company
In conjunction with our recently announced $1.5 million Pre-Seed financing round led by Box Group and Greycroft with Great Oaks, Oceans, and a group of strategic angels participating (Zach Weinberg, Nat Turner, Irving Fain, Jonah Goodhart, Aniq Rahman, Jared Hecht, Steve Martocci, Josh Abramowitz, Tom McInerney, Kiran Bhatraju), I’d like to introduce David Energy.
The electricity sector has entered a period of transformational change. As we attempt to decarbonize our power system with solar, wind, batteries, and other new technologies, grid operators and consumers alike are encountering thorny problems. These challenges originate not from short-comings of these technologies, but because integrating them into energy markets requires fundamental changes in how we operate and interact with our grid. But these technologies also present a tremendous opportunity to make energy better across multiple dimensions.
The old ways of the energy industry are not sufficient for the new world we’re entering, and the changes that clean energy technologies are forcing in energy markets call for a new kind of energy company. That’s why we founded David Energy, the first Retail Electricity Provider to focus on Distributed Energy Resources. Our software platform will ensure that customers get cheaper, cleaner, and more resilient power, while having more control over their energy usage than ever before.
Electricity Grid 101
Currently, this is how the electricity grid works: Retail Electricity Providers (REPs) buy energy as a commodity in wholesale markets from big power plants and ship it to users on wires owned by utilities. REPs decide how much energy gets shipped based on what users are asking for, and the utility handles the logistics of getting it there. This is a centralized and one way process.
The wholesale electricity market is like any other market: buying happens in real time based on supply and demand, which is subject to daily and seasonal volatility. REPs add value because they do all sorts of hedging and trading that protects their customers from price spikes as they procure supply over the course of a year. The only wrinkle is that the local utilities own the last mile distribution to physically deliver the power to those customers; there’s no choosing between FedEx or UPS, but you can choose your REP.
What’s Changing
Clean energy technologies are changing how the grid works on both the supply and demand side, mainly through a subset of clean energy technologies called Distributed Energy Resources (DERs).
On the supply side, large solar and wind farms are changing how supply markets work, and demand that REPs get more creative in how they buy energy. They are variable sources, meaning they are “off” when the sun isn’t out and when the wind isn’t blowing. The good thing is solar and wind are quickly becoming our cheapest generators of energy, but they create difficulties because their supply isn’t constant. New tools are needed to capitalize on them.
On the demand side, DERs are changing how consumers act entirely. These are assets like rooftop solar, battery storage, smart thermostats, generators, and electric vehicles. DERs connect to the grid at the distribution level in a consumer’s house or building and produce power where it’s consumed. This allows users to respond dynamically to market signals with software in ways they never have before: they can sell solar back to the grid, turn batteries on and off when they like, or adjust their building’s HVAC system to lower their demand when prices are high. This means the grid is becoming more like a two way network, away from the old centralized model.
This is why we’re so focused on them at David Energy: DERs will not only halt climate change, they’ll make the grid better across multiple dimensions. While big solar and wind farms generate cleaner and cheaper power, so do DERs. But only DERs help with resiliency and control. Because they get installed in consumer’s houses and buildings to provide local supply, users lights will stay on when storms or wildfires knock out transmission and distribution wires (downed wires are what cause outages). DERs can be used to shift usage patterns, and over time be leveraged to solve the problems seen in supply markets.
So Why David Energy?
With the ability for a user to generate their own supply or intelligently control demand, we have to become a REP that can control these assets in order to connect supply and demand seamlessly. Users with DERs still buy surplus power from wholesale markets.
There is currently an unbridgeable gap in the market due to misaligned incentives. This is because REPs like when consumers use more energy: they buy wholesale power from big power plants, and then sell it to customers at retail prices. Saving customers money by lowering consumption onsite is thus at odds with how a REP traditionally makes money. But REPs also have access to market signals that pure DER software companies do not, so users are left with incomplete solutions.
To address this, at David Energy we’re combining software with being a REP and flipping the old business model on its head. We make money by getting paid a subscription to our software platform that will handle all of a user’s DERs and energy buying. There’s no huge markup on the power we buy; we just want to keep users happy so we can keep collecting our fees. By relying on SaaS fees, we can cut fat out of contracts and introduce transparency into an opaque, commoditized process. Furthermore, while we’re out buying supply, we can adjust demand. We’ll have a hedging tool no other REP does, allowing us to create ever cheaper contracts.
This all means that we’re aligning our incentives with consumers. We would love if they consumed less energy, even if we’re supplying it to them, because then they’re saving more money. If we can’t save them money, our service will be more expensive than traditional providers, and we won’t have any customers. More happy customers = more revenue for us.
Conclusion
Energy is the most fundamentally important driver of the modern economy. If we shut the power plants off, the motor of the world stops. One could even go as far to say that our ability to transform energy into its different forms — such as radiant into electrical, like a solar panel does — is a primary differentiator between us and the rest of the animal kingdom. And yet, we have absolutely no control over our energy usage. We are forced to pollute, we are forced to pay whatever the local utility offers us, and we are hopeless when there’s a power outage.
So at David Energy, we’re building a new kind of energy provider that will help halt climate change AND lower consumers’ energy bills AND make the grid more resilient AND give consumers’ more control over their energy usage. We need word-class people to build with us, so learn more about David Energy here and how you can join us on our mission to create the future of energy.
