Opportunity Abounds as Washington Builds the Modern Electricity Grid

an already strong reputation in grid modernization technologies. Established companies such as Itron (NASDAQ: [[ticker:ITRI]]), based outside of Spokane, is among the world’s largest makers of smart meters, which give utilities a real-time view of energy consumption, rather than estimating usage based on monthly reads of analog meters—a key unit in the bigger grid modernization picture. (Seattle City Light selected Itron competitor Landis+Gyr for the 420,000 smart meters it plans to install across its service area by the end of next year.) Grid technologies maker Schweitzer Engineering Laboratories, whose facilities in Pullman, WA, host one of the state’s early CEF-funded storage projects, is a household name in the industry. Newer companies have landed on the map for energy storage innovation, too, with a string of significant international investments and M&A deals during the last two years adding further momentum.

Grid modernization M&A in Washington Avista Utilities (NYSE: [[ticker:AVA]]), the Spokane, WA-based investor owned utility with a sprawling service territory in the Northwest’s Inland Empire and a portfolio of grid modernization and energy storage projects, is being acquired by Canadian utility giant Hydro One  (TSX: [[ticker:H]]). Demand Energy Networks, based in Liberty Lake, WA, was acquired by a subsidiary of Italian utility giant Enel early this year. Demand recently won a major deal to put its energy management systems into commercial buildings in Manhattan, allowing them to dynamically control usage and help alleviate electricity supply constraints during periods of peak demand. 1Energy Systems, which makes software to integrate batteries and other distributed energy technologies with the electricity grid, was acquired last summer by South Korean conglomerate Doosan Heavy Industries & Construction. (1Energy, based in Seattle and now known as Doosan GridTech, was an early proponent of an energy storage standards body called MESA, which was just joined by one of the most storage-hungry utilities in the country, Southern California Edison.) EnerG2, a maker of specialty materials for energy storage, and one of the longer-tenured companies in the industry in Washington, was acquired by German materials giant BASF, also last summer. Powerit Solutions, a Seattle-based provider of demand-management services for companies with heavy industrial processes, was snapped up by Philadelphia-based Customized Energy Solutions in early 2016. Battery maker UniEnergy Technologies is backed by investors including Bolong Holding of China, and Japanese financial services firm Orix, which made a $25 million strategic investment in the company in late 2015.

“When you get [large international companies] either investing or buying up your technology, that really gets people’s attention,” Young says, adding that the Department of Commerce has recently hosted foreign investor delegations from China, Japan, South Korea, Germany, and Italy.

To continue the momentum, the American Jobs Project report suggests more of what Washington is doing already: It calls for a strengthened foreign direct investment strategy; improved small business access to university and national lab resources (which both of the state’s flagship research universities and PNNL already provide); and incentives for utility innovation, such as the CEF.

The report also calls for tax incentives for companies in the grid modernization industry, and more opportunities for high school students to connect with careers in grid modernization.

The state also needs to cultivate a new crop of startups in this sector—one that’s notoriously difficult for young companies because of the inherent conservatism of utility customers and typically long sales cycles for anything that attaches to the electrical grid. There are significant efforts afoot here, with new incubators, seasoned entrepreneurs launching second or third ventures in the industry, and specialized investors focused on the space—though never quite enough of the latter. (Xconomy will explore the next generation in a subsequent story later this year. We’re collecting data on startups and established companies in energy storage and grid modernization in the Pacific Northwest. Please send an e-mail to [email protected] to make sure you’re on our radar.)

In the meantime, work on Horn Rapids progresses with construction expected to start early next year. When it’s complete, Washington will have, in a single project, an end-to-end pipeline to further develop grid modernization expertise.

“We’ve now got this ability to reach from training of electricians all the way up to training of PhDs,” Schwartz says. “It’s really about building the ecosystem for grid modernization.”