Drift has raised additional funding to take on traditional utility companies with its new energy marketplace platform.
The Seattle startup just reeled in $7 million of a larger round, confirmed Greg Robinson, CEO and co-founder of the 3-year-old company. Total funding in Drift is more than $10 million; investors include IA Ventures, First Round Capital, Lerer Hippeau Ventures, Macro Ventures, Liquid 2 Ventures, and others.
Founded in 2014, Drift operates a peer-to-peer marketplace that lets residential, business, and commercial customers buy power directly from local solar, wind, hydroelectric, and other sources. The company, which launched in New York this summer and plans to expand with the fresh investment, promises customers savings of 10 percent or more compared to traditional utilities. Customers also have the option of picking from low-emission sources or cheaper power options, depending on their priorities.
Drift uses machine learning and artificial intelligence to predict how much energy a customer will need; it earns revenue by charging a weekly $1 subscription fee that accounts for actual energy used, the cost of procuring the energy, and a transaction fee.
Many incumbent utility companies, meanwhile, make money off how much power is used. They tend to prioritize providing reliable and secure power, versus offering lower prices, CNBC noted.
“Unlike traditional utilities and retail power companies, we are using the latest technology to bring the advantages of sophisticated energy trading to everyone,” Robinson told GeekWire. “Advantages like: choice, transparency, and savings.”
Here’s more about how Drift’s software works, via a blog post from June:
Energy costs are determined, in part, by energy forecasts. Forecasts are influenced by ever-changing factors, from weather to the relative costs of different energy sources. We have developed sophisticated algorithms and complex models, statistics, and code to create more accurate forecasts. This increased accuracy means you aren’t paying for inaccurately overpriced energy.
Margins are small in the energy business, but as we sought to increase efficiency across the board, we realized we could additionally reduce costs by selling power to our users at wholesale, rather than retail prices.
Drift says it gets rid of middlemen by removing “opaque fee structures” from the traditional energy procurement process. That may be one way to curb residential electricity prices, which have been growing since 2003, according to data from the U.S. Energy Information Administration.
The startup also gives smaller power providers, ranging from local solar plants to wind farms to large buildings with excess power, an easy way to sell electricity. Drift uses blockchain technology to help process the peer-to-peer transactions.
“We’ve made buying low cost energy directly from power makers as simple as buying something on Amazon,” Robinson noted.
Fast Company reported that tech giants like Microsoft, Google, Apple, and Facebook are also setting up direct deals with wind farms as a way to get lower energy prices.
Government regulation could be one challenge for Drift. There are 14 U.S. states, along with the District of Columbia, that currently offer “retail choice” programs for electrical energy, according to a 2016 report prepared for the Electric Markets Research Foundation. This map from Electric Choice shows which states have deregulated electric and gas markets.
In New York, the only state where Drift operates, Gov. Andrew M. Cuomo has put forth a “Reforming the Energy Vision” (REV) plan that “connects a vibrant private sector market with communities and individual customers to create a dynamic, clean energy economy.”
Robinson, a University of Washington grad who was previously CTO of Questar Energy Systems, co-founded Drift with his former bandmate Ed McKenzie, an engineering veteran of companies like Microsoft, Google, and Ubermind.
“Greg and Ed previously started a cleantech company, but realized that the real issue in energy was not the end user but rather the artificially inflated price caused by the broken supply chain,” Drift’s website notes.
The company employs 20 people and plans to expand based on its growing waitlist.