For almost ten years, Budderfly has been making small- and medium-sized businesses across the United States more energy efficient by taking over their buildings’ energy infrastructure, and upgrading it with things such as new HVAC systems, LED lighting, controls, and metering.
And into some of these technologies, the energy-as-a-service company has also been embedding load management capabilities, with an eye toward turning the buildings into distributed energy resources able to participate in utilities’ demand-response programs.
Until recently, though, this DER capacity hasn’t been used for grid services.
But last month, Budderfly activated the load management capacity at roughly 200 of its locations across CAISO, ISO New England, PJM Interconnection, and SPP service territories — and took a significant step into the virtual power plant market.
Al Subbloie, Budderfly’s CEO and founder, told Latitude Media it was like “flipping some switches and turning on the ability to change a thermostat one or two degrees at a moment’s notice.”
Budderfly’s initial deployments focus on HVAC controls, but over the next few months, the company plans to expand to refrigeration, battery storage, lighting, and solar, as it progressively pulls more of its 7,500 sites into its VPP platform.
The move comes a little less than one year after Budderly announced the acquisition of Sunverge Energy’s distributed energy resource management system, which allowed it to connect and manage all DERs that Sunverge had installed. Matt Casey, then-managing director of Latitude Intelligence, described it at the time as a “great marriage.”
Beyond fragmentation
According to Subbloie, Budderfly’s path of improved energy efficiency runs through consolidation, both for its retrofitting and VPP activities.
“The current energy marketplace is way too fragmented,” he said, explaining that a company looking to improve the energy efficiency of a building would have to tackle 20 to 60 different projects, each with different providers, and bear the risk of integrating them all on a timely basis. “Most companies won’t commit the money that it takes to do the thing right and do the whole thing…and we live in a world of inaction because of it.”
To bypass this inaction, Budderfly aims to bring the fragments together. The company invests its own money to upgrade the entire energy infrastructure of its customers’ buildings, which range from fast-food franchises such as McDonald’s and Subway to fitness centers and retail stores.
Once the infrastructure has been upgraded, Budderfly takes over its management, billing its customers at a discount compared to what the utility was billing; it makes money from the cost savings from those energy efficiency upgrades. Contracts with customers last an average of 10 years.
Budderfly’s control of a building’s entire energy infrastructure — from the “things that create power [to the] things that use power,” Subbloie said — is also key to its VPP strategy. While the majority of DER aggregators require the active participation of the end user, Budderly can control the participation in demand-response programs of hundreds of its customer sites simultaneously.
“Just envision [hundreds of] different locations each using a lot of power for a small business,” Subbloie said. “That’s a lot of load flexibility, and we now have control and capability to give back to the utility at a moment’s notice.”
The small- to medium-sized business niche
The energy efficiency market is growing, and Budderfly certainly not the only company spanning both efficiency solutions and VPP deployment. But, according to an energy analyst familiar with its strategy, the fact that it targets small- to medium-sized businesses, with most buildings of under 200,000 square feet, makes it fairly unique.
“These are very small buildings, but there are a lot of them,” said the analyst, who spoke to Latitude Media on background. “So the nice thing about Budderfly’s business model is that it’s very repeatable. And because they’re small businesses, Budderfly has more direct influence over how they spend money on energy and participate in VPP programs.”
Major companies like J.P. Morgan or General Motors are likely to have their own energy management programs, while a Subway franchise, for example, is unlikely to devote time or money to it without Budderfly as a middle-man.
Even before its entry into VPPs, Budderfly’s business model seems to be working. The company has increased its revenue from $400,000 in 2017 to over a quarter of a billion recurring revenue in 2025, according to Subbloie. And last month, it announced a debt raise of $100 million from Nuveen and a $500 million equity investment from Partners Group, bringing its total capital raised to over $1 billion.
The numbers are emblematic of investors’ growing interest in energy efficiency. And Pavel Molchanov, managing director of the renewable energy and clean technology research team at Raymond James & Associates, thinks that interest is only going to grow.
“Why do we care about energy efficiency? Because the price of utility power is constantly going up,” he said. “And that means the value of energy savings becomes greater over time. So large businesses and small businesses all understand the value of energy savings.”
