Constellation Energy (NYSE: CEG), a large, diversified power producer, has bought demand response specialist CPower.

CPower has often been the third banana in demand response. EnerNoc (Nasdaq: ENOC) has been the leader in demand response services linking utilities and commercial/industrial facilties, and Comverge (Nasdaq: COMV) has been the leader in demand response services for the home. CPower competes directly against EnerNoc and is one of the largest players in Texas. It has also been trying to move away from classic demand response services -- i.e. turning down the power during peak events -- to demand management, i.e., modulating power on an ongoing basis to curb overall consumption.

"Demand response is a technology with many uses. The ability to manage peak load is one very simple deployment of that application," CPower CEO Gary Fromer said in June. "The issue is can you do it across more and more customers and do it more surgically?"

The company has claimed it managed 2,800 megawatts of peak capacity. Constellation's release says CPower manages 850 megawatts of demand response capacity. Either way, Constellation now says it will have 1,500 megawatts worth of demand response capabilities.

Will there be more mergers? Very well likely. Honeywell, Cisco, and Schneider Electric, among other giants, are boosting their portfolios in building management tools. Demand response services plug right into those. Several states like Pennsylvania have also imposed regulations requiring utilities to increase their demand response portfolios. Some utilities may conduct their own demand response programs, but as Schneider's Phil Davis has pointed out, that could bring its own problems. By providing demand response services, utilities would suddenly be inside-the-meter in large commercial outfits. Could a utility balance the security and privacy issues of managing the power consumption at rival companies in the same region? It just might be easier to have a third party service provider.

EnerNoc and Comverge are both publicly held and EnerNoc has continued to inch close to profitability. These two companies might be expensive. Luckily, others exist. SureGrid is one. Energy Connect is another.

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