M&A: Google Nest Renew, OhmConnect Merger Targets Residential Energy Management

Google's Nest Renew Service and OhmConnect have completed a merger. The resulting company, Renew Home, develops a home energy management platform to help consumers optimize their energy consumption. Majority owner Sidewalk Infrastructure Partners invested $100 million into Renew Home, which focuses on so-called virtual power plants (VPPs).

This was M&A deal number 203 that Sustainable Tech Partner covered when the deal framework surfaced in 2023. See all M&A deals involving sustainability, climate tech and green IT services listed here.

Business History: Launched in 2021, Nest Renew is a service for Google Nest Thermostat users that lets them shift the energy use of their HVAC systems to save money, The Verge notes. Meanwhile, OhmConnect pays its users to reduce their consumption at peak times, The Verge Added.

Renew Home: Virtual Power Plant (VPP) Strategy, Partner Focus

Fast forward to May 2024. The merged company specializes in VPP (virtual power plant) technology. VPPs aggregate distributed energy resources (DERs), according to the U.S. Department of Energy.

An example VPP can span rooftop solar with behind-the-meter batteries, electric vehicles and chargers, electric water heaters, and smart buildings and their controls.

The resulting VPP system provides utility-scale and utility-grade grid services like a traditional power plant, Nest Renew asserts. In other words: Homes generate and manage their own power, potentially reducing or augmenting the need for traditional power plants.

To create VPPs, the company partners with three types of companies:

1. Energy providers and demand response programs;
2. home device makers; and
3. home service providers.

Amid that partner strategy, Renew Home integrates with Google Home APIs and third-party devices from LG, Honeywell, SunPower, Sense, and more. Moreover, Renew Home supports demand response and VPP programs with more than 100 utilities, the company said. Renew already controls nearly 3GW of electrical energy use, and is planning to expand to 50GW by 2030.

Renew Home: Executive Perspectives, Market Opportunities and Challenges

In a prepared statement, Renew Home CEO Ben Brown said: “The marriage of Nest’s innovative approach to managing energy use in the home with OhmConnect’s customer-focused grid services platform will be transformational. With our industry-leading partners, Renew Home will be able to coordinate the home energy use of millions of customers to help catapult us into a 100% clean energy future.”

Added Alan Machuga, CTO of Rheem -- a key Renew Home partner: “This is a pivotal moment for virtual power plants. We are excited to partner with Renew Home to help customers save money and energy – while supporting the grid. As a leading manufacturer of HVAC and Water Heating products, Rheem uniquely brings both potential for energy savings and energy storage, to which water heaters play a critical role.”

Demand for Renew Home-type services could be strong. Among the proof points: The global home energy management system market will reach $10.4 billion in 2030, up from $4.18 billion in 2022, according to Grand View Research. That's a 13.9% compound annual growth rate (CAGR), the researcher said.

Still, the potential market growth could face multiple headwinds. Among the key challenges: Evolving U.S. energy policies have hindered residential solar deployments since late 2023. Moreover, the electric vehicle (EV) market has faced slowing sales growth rates since late 2023. Finally, it's unclear if millions of consumers will tie together their smart devices into VPP systems.