The Way to Make It Happen is to Build It from Scratch

(Orrick) – For years, energy executives have spoken of a day when consumers could “stream” clean energy into their homes as easily as they can stream movies onto their TVs. Patrick Maloney is bringing that reality home for thousands of customers through his startup, Inspire Energy.

Today, customers in seven Midwestern and Northeastern states can sign up for the Inspire plan, which offers customers all the energy they need for one flat monthly subscription price based on an analysis of the home’s specific energy needs. Inspire’s customers’ energy is still delivered by their utility, but their energy use is fully offset by renewable energy credits sourced from wind power that enable Inspire’s customers to support clean renewable energy.

In Pennsylvania, Inspire has gone one step further with its Reduce & Redeem program. Customers who reduce their energy use below Inspire’s forecast receive rebates on their energy bill. The programs are paired with an Inspire-supplied smart thermostat and home energy app to help customers become more energy efficient.

“There have been massive changes in consumer demographics and preferences,” Maloney says. “Nearly nine in 10 Americans believe clean energy is important to our future. At the same time, nearly every home has become connected over the past 10 years. If you could create a business model that capitalizes on those converging trends, we could create a groundswell of change.”

Though Maloney once sold a startup to a major utility, he has grown skeptical about the ability of utilities to lead that groundswell. It’s often difficult for a utility to take big technology risks when its investor base expects consistent returns, Maloney says. Furthermore, many utilities are incentivized to utilize their legacy infrastructure investments and are heavily regulated.

“You couldn’t go to an energy conference in the past 10 or 15 years without hearing utility executives talk about the utility as a technology company, delivering the full connected-home experience, powered by clean energy,” Maloney says. “The problem is no one is actually doing it…. I became convinced that the actual way to make it happen is to build from scratch—to start as a customer-centered technology company and integrate more technology as you get deeper into the value chain.”

Maloney launched Inspire from an incubator in 2014, which was a difficult time for cleantech startups. Orrick partner Andrew Erskine, who met Maloney in 2013, said investors found Maloney appealing nonetheless due to his clear vision and extensive industry experience. The business model was also less capital-intensive than cleantech peers focused on infrastructure or hardware solutions.

Based in Santa Monica with offices in Philadelphia, Inspire got a vote of confidence earlier this year from one big player, Shell Energy North America, which will provide the company with a credit line for energy trading and a revolving credit facility to fuel company growth. Inspire claims nearly 100,000 members in its seven states, and Shell’s backing allows it to reach more than 1 million.

One of Inspire’s first projects was to build a data platform that forecasts both customer usage and market prices to enable the subscription model. “The data platform allows us to take in data from a plethora of sources to create what we call the world’s first aligned incentive model for clean energy,” Maloney says.

Bringing smart climate control and lighting control into customers’ homes improves the customer experience and also “gives us access to a plethora of data that we can integrate back into our platform to optimize how the home performs,” Maloney says. “This is the triple bottom line: the better our technology gets, the more we’re able to decrease energy usage. We achieve savings and we give some of that value back to the member.”

The energy sector is brimming with major players, from long-timers like utilities, major oil companies, and energy industrials to newcomers like the big consumer tech and software companies. Maloney believes his startup has the unique ability to bridge the worlds of consumer technology and utilities.

None of the big consumer technology firms that are fighting to dominate the “connected home” are energy companies at heart, he observes. “We’re licensed by the federal government and states as a utility, and we’re trading commodities every day. We own both sides of the market—the customer and the supply—so we’re in a unique position through our technology to optimize both sides and create more value than anyone else.”


To read about more companies, leaders and visionaries changing the way we work and live, visit Orrick’s Profiles in Innovation Series.

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