Distributed energy resource management company Uplight, which acquired AutoGrid from Schneider Electric in late 2023, is looking for a buyer, Latitude Media has learned.
The company is pitching itself as “an AI-enhanced, full-stack platform built for the grid’s new demand,” according to a slide deck viewed by Latitude. AutoGrid’s tech stack, which was integrated with Uplight into a single platform late last year, appears to be a significant selling point. The deck outlines “the demand stack” with layers of demand-side management solutions to serve as peaking, mid-tier, and baseload resources.
Hannah Bascom, Uplight’s chief growth and commercial officer, confirmed that the company is “actively seeking investment” to support its next phase of growth.
“Uplight is uniquely situated to help utilities navigate this evolving landscape and deliver reliable, sustainable, and affordable energy to their customers,” Bascom said, adding that Uplight sees a “significant market opportunity” to help utilities grapple with “unprecedented load growth,” challenges in building new generation, and extreme weather.
Uplight isn’t alone in this reevaluation. That load growth, especially from data centers catering to artificial intelligence, is defining the business models of many virtual power plant companies today, an investor in the utility energy sector explained. It’s spurring them to move more quickly, and get more creative.
According to several analysts who spoke with Latitude about the potential sale of Uplight, the technical integration challenges facing VPPs and the breadth of the AI opportunity mean that any potential buyer would need significant capital, and also expertise in systems integrations and energy technology platforms. Tech giants — like Google or Oracle, for example — with robust platform capabilities and an increasing focus on energy infrastructure, might be the most likely candidates, one analyst said.
According to a source familiar with the matter, Uplight is asking for just over $1 billion. The sale is being facilitated by investment firm Evercore.
The evolution of VPPs
For the last several years, VPP deployment has been relatively slow, with companies focused on increasing megawatts under management. Utilities, for their part, are still trying to figure out how to integrate VPPs in with their advanced distribution management systems, the utility investor said, but most haven’t been interested in scaling standalone VPP offerings. But that may be starting to change.
One emerging trend, he said, is companies strategically building VPPs in locations where data centers need power but the grid lacks capacity.
In theory, that model can offer a real value proposition both to utilities — who would be eager to meet part of a data center’s power demand without major grid upgrades — and to data centers themselves, as they race to come online faster. And it has the potential to scale very quickly compared to the “slow and steady” approach VPPs have been pursuing for the last several years, the investor said.
“Time will tell whether that is a sustainable model and there’s enough money for these companies to scale and survive, but it’s certainly taking off right now,” he added. “It’s too early to tell…but I think this is the one thing that can potentially accelerate the space.”
Scale could help bring more utilities on board, but most would still prefer a single, consolidated platform. In normal market conditions, the investor said, that dynamic would lead the VPP market to a consolidation phase. But policy uncertainty and macroeconomic factors including high interest rates have dampened enthusiasm for mergers and acquisitions and made IPOs difficult across all sectors.
Uplight’s decision to sell now — rather than wait it out to IPO — may also highlight a broader challenge facing the distributed energy sector: Integrating customer-side resource management systems with utility grid operations is proving more difficult than anticipated.
“Integrating these products is not easy, and they need to be integrated to get that economy of scale,” the investor explained. “[Companies] likely thought that [integration] would be the easy part, and that selling the whole bundle would be the harder part. But it turns out it’s actually the other way around.”
How Uplight got here
Uplight’s own trajectory is a good example of the industry’s efforts to make integration as seamless as possible. Its history dates back to 2019, when private equity investors facilitated the merger of six energy efficiency and utility customer engagement startups including Tendril, Simple Energy, EEme, EnergySavvy, and FirstFuel.
In 2021, Rubicon Technology Partners, a private equity firm, sold its majority stake in Uplight (at a valuation of around $1.5 billion), to a group of buyers co-led by Schneider Electric, which sought to add distributed resource management capabilities to its grid management portfolios.
In 2022, Schneider purchased AutoGrid, pulling its VPP platform — and its more than 6 gigawatts of DERs under management — into the fold. It promptly sold AutoGrid to Uplight in 2023, combining its investments in customer engagement and demand-side management on the Uplight side with DER orchestration on AutoGrid’s side.
In the aftermath, the company promised to offer utilities a way to “integrate, orchestrate, and monetize” distributed energy resources in a single, integrated platform.
But while there were numerous customer announcements in the months after the acquisition, new partnerships and product launches have been noticeably sparse post-integration.
