As it has long telegraphed, home energy startup Sense is finally exiting the direct-to-consumer hardware market, and transitioning fully to a utility-driven, software-only model.
Starting in January, the company will no longer sell its physical home energy monitor. Instead the company is going all in on embedding Sense software — which takes millions of measurements per second — into smart meters. The transition is one that Sense, and other players in the space including both startups and industry incumbents, have been working towards for years.
It’s a shift driven in part by the steep challenges consumer energy monitors have faced in the form of high up-front costs and complex installation requirements that limit adoption. And it’s not just energy disaggregation hardware; smart panel maker Span is also pivoting towards utilities, recognizing that scale is attainable only through the grid operators controlling upgrades and infrastructure.
For Sense, CEO Mike Phillips explained, the pivot is only really becoming possible now for two reasons. First, AI-enabled smart meters are starting to hit the grid at scale; and meanwhile, utilities themselves are under increasing pressure to lean in on grid-edge visibility and demand-side management as they grapple with load growth and congestion on the distribution grid.
Providing the level of visibility into home energy use at scale can’t happen unless utilities have adopted the right infrastructure, Phillips said, namely smart meters. Given that foundational requirement, Sense’s pull away from hardware is really about timing: “No utility is going to rip out existing meters and put in new ones just to do this, so we’re having to catch all the utilities at the right time in their meter replacement lifecycle,” he explained.
The smart meter revolution has been predicted for several decades now, but never fully realized. Most early deployments stem from a 2009 push by the federal government into advanced metering infrastructure. Those upgrades were more functional than smart, though — designed for automated billing or outage detection — and utilities weren’t able to fully leverage the data they collected. But there’s a new generation of intelligent smart meters coming to the grid now, including more than 3.7 million that have Sense’s software embedded.
The company’s utility customers, including National Grid, are in states that didn’t install the first generation of smart meters, so they were “leapfrogging” those that did. Now, the company is focusing on California, where utilities were early adopters of the first generation of smart meters, and are preparing to upgrade to the next generation.
“I want to reiterate how big a shift this is from the previous smart meters,” Phillips added. “The industry is stepping up to this next generation of infrastructure. Once these are at scale, we see the entire distribution grid in real time from the edge.” That additional visibility — and in theory, via demand response programs, control — will ultimately save consumers money on things like feeders, power lines, and transformers, Phillips said.
Maintaining customer focus
Phillips is clear that Sense isn’t entirely abandoning the direct-to-consumer model. Consumers with a Sense-enabled smart meter in their homes will still be able to use the Sense app to track live electricity consumption. Sense also isn’t white-labeling the apps, in order to maintain some distance between customers and their utilities.
“Consumer privacy and trust is super important,” Phillips said. “It gives the utility a little distance from the kind of detail that we have within the home, but with the consumer opt-in…we can share various data sets with the utility.”
For now, utilities are mostly interested in the grid-side benefits of a platform like Sense, Phillips said, as opposed to the home side. “We’re doing subscription models for running the Sense platform and various use cases on the grid side, so utilities are paying us on an ongoing basis for a variety of services, those tend to be data feeds into other systems,” he explained.
That grid-side focus is something Phillips said he sees beyond utilities, in the investor world too. “I spend a lot of time with investors and VCs and it always drives me crazy when they say ‘So what if I save $50 a month on my bill?’”
Consumers care about those savings, and now more than ever, he added. That’s why Sense doesn’t want to abandon the consumer-side benefits of its technology, even if scaling them in a direct-to-consumer way isn’t feasible.
That said, Phillips acknowledged that exactly how consumers will interact with Sense moving forward though remains an open question. As more and more of this new generation of smart meters gets rolled out, it’s critical that consumers and utilities both be able to leverage the massive amounts of data they’ll provide.
And that goes beyond energy savings: “It’s also giving people better visibility into outages and giving them ways to know that they’re going to have reliability when the storm is coming,” he said. “I think that having the grid be more intelligent can have other consumer benefits, not just whether you can find some energy hogs in your home.”
