SEP made the investment alongside Scottish Enterprise through the Scottish Investment Bank and the University of Strathclyde, the firm said in a statement.
SGS develops real-time grid management software that offers power companies affordable ways to manage electricity network congestion issues at a local, regional or national level and cope with increasing volumes of low carbon generation and demand.
The business was founded in 1998 and today employs more than 30 people, and claims to have ambitious recruitment plans over the next three years.
SEP said the new funding allows SGS to position itself to meet substantial international demand for smart grid technology, a huge potential market estimated to be worth more than $56bn by 2020.
The investment will enable the company to act on ambitious product development plans and take advantage of emerging opportunities in the UK, Europe and North America.
To do this the company will also grow its Glasgow base, expand its London office and open an office in New York to take the technology to the North American market.
The company’s UK business is currently playing a key role in innovative low carbon network projects with five of the UK’s six electricity distribution companies, namely UK Power Networks, SSE, ScottishPower Energy Networks, Western Power Distribution and Northern Power Grid.
It has also attracted widespread interest from distribution and transmission companies in Europe and North America, SEP added.
“Smarter Grid Solutions’ active network management technology offers a world-class solution to the key challenges currently facing power companies across the globe,” Tony Robison of SEP, who led the investment from the firm’s Environmental Energies Fund, said in the statement.
“This investment, combined with the excellent track record of the management team and the sheer scale of the potential market on offer, will enable the company to build on its position as the leading provider of active network management solutions to the smart grid sector.”
The deal follows SEP’s recent reinvested in Irish electronics business Powervation through a $7m Series C financing round, which also saw participation from new strategic investor Semtech Corp.
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