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Why a British Utility Is Buying a Sensor Startup for $60 million

Smart Home Device - Home Control

Energy companies are now tech companies.

Energy company Direct Energy is acquiring an Israeli startup called Panoramic Power that uses sensors and software to monitor the energy use of businesses, the companies announced on Thursday. Direct Energy, based in Houston, is the subsidiary of British utility Centrica.

Direct Energy plans to spend $60 million on the deal, which will help the service provider move more aggressively into the commercial and industrial sectors and also grow its business in North America. Direct Energy has 5 million customers in the U.S. and Canada and formerly owned natural gas power plants in Texas (it sold them at the end of 2014).

Centrica, which also owns natural gas wells in Canada, has faced competition and low energy prices in the U.K., and is now making a bigger push into markets like the U.S.

The acquisition shows how energy companies are increasingly becoming tech companies, and are looking to use computing technology—wireless networks, sensors, algorithms, connected devices—to make their operations more efficient and drive sales. Energy retailers like Direct Energy are starting to offer their customers connected home devices and energy management services as a way to keep customers engaged.

Direct Energy was one of the first energy companies to work with smart thermostat maker Nest, now owned by Google’s Alphabet GOOG 0.28% , as well as SmartThings, now owned by Samsung. The retailer has been working with Panoramic Power since the summer of 2014.

Six-year-old Panoramic Power, co-founded by entrepreneurs David Almagor and Adi Shamir, raised funding from Israel Cleantech Ventures, 83North, Qualcomm Ventures, Israeli Electric, and Autodesk. The company makes sensor devices that clamp onto electric lines at the circuit breaker, monitor the flow of electricity, and transmit that data wirelessly to the cloud to be analyzed.

The startup uses machine learning to crunch the data and delivers reports and updates to users, which are mostly businesses that want to lower their energy use and monthly bill. The company’s customers include McDonald’s MCD 0.63% , 7-Eleven and The Northface. Direct Energy says it could use Panoramic Power’s tech for other markets beyond business users

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