With the release of its Apollo system, DR firm Comverge could be driving a much-needed upgrade to the smart-grid IT backbone.  The firm's software links home digital control units, smart thermostats and smart meters to utility IT back-ends -- at eight US utilities and other businesses, an equity research analyst told us.

          “It's an event of moderate significance” that could be compared to, perhaps, the first inklings of Perestroika, said Michael Carboy of Signal Hill Capital Group in a recent interview.

          “I haven't seen any solid, integrated platforms that are able to link easily to [utility] back offices, to give back offices the controls they need” of smart meters, said Carboy.  “The early implementations done in the demand-response world were custom code that would run from the back office and control end devices in an almost Soviet way.  They offer no bilateral exchange of information.  They're not web-based.  This is web-based.”

          Comverge reported it was releasing its Apollo system a few weeks back, calling it “an enterprise class, 100% web-based application, designed to provide a platform for advanced demand management applications as well as future Comverge software applications.”

          Comverge CTO Bud Vos told the press that the app “represents a defining step forward for the demand response industry.”

          While the firm didn't report winning new contracts or nailing down hard-won revenues at the time, its news constituted a “step in the right direction,” said Carboy, who noted that neither he nor Signal Hill holds Comverge shares.  Carboy also isn't paid to provide research coverage for Comverge and Signal Hill doesn't do investment banking with the firm, he noted.

          Apollo “represents a degree of functionality” that any smart grid technology vendor needs to be credible, he added.  That means providing a suite of hardware and software so utilities have something to work with.

          “Philosophically, as we consider the smart grid, we need to understand the willingness of the utilities to overhaul their IT back offices -- to enable the smart grid from their side of the world.  I've seen a lot of chest-beating about smart meters but I don't see anybody really addressing the IT back office hairball that exists at most utilities.”

          Comverge seems to be having some success in its effort to make itself indispensible in the emerging smart grid industry.

          DR player EnerNOC (see unrelated story this issue), for example, is often mentioned in the same breath as Comverge.  But, Carboy said, utilities “can not affect the turning on and turning off of equipment without Comverge being part of the picture.”

          Apollo represents “an essential part of the evolution to what the smart grid truly will be” -- when utilities have upgraded IT systems, despite a widespread rate-base system that is turning previous infrastructure investments into “stranded assets,” and when mechanisms are installed in homes to “act as nexus point for the control of energy loads,” said Carboy.

          Before firms such as Comverge and EnerNOC can make any real headway, utility managers have to move away from the model of selling megawatts and states need to legislate “time-of-use” tariffs for energy use, said Carboy.  Such tariffs, he predicted, will take a couple of years to debate and a couple of years to phase in.