Accelerate Uptake of Smart Grid Technologies by Deploying Interoperable Solutions to Win Utility Accounts
Smart grid tech missing consumer opportunity Companies mentioned: Mercom Capital, Silver Spring Networks, Pike Research, EnerNOC, National Grid, Mitsubishi, and RuggedCom
Weekly Intelligence Brief 12-18 April 2012
Other companies mentioned: Varentec, Vizimax, H.I.G.Capital, Archangel Informal Investments, BDC Venture Capital, Braemar Energy Ventures, Hitachi, Khosla Ventures, Pasadena Angels, Tech Coast Angels, Yaletown Venture Partners, Siemens
Smart grid tech not tapping consumer market
The US smart grid investment sector has seen little growth in the first quarter of 2012 with $62m invested across 10 deals, compared to $66m over 10 deals over the same period last year. Funding amounts and deals are staying flat after peaking in 2010, according to figures from Mercom Capital Group.
While B2B deals have dominated the smart grid investment sector to date, not including smart meters, it is anticipated that as more consumer-based software, services and devices come to market larger value and consistent deal flow will occur.
"There seems to be a disconnect in smart grid between consumer interest and awareness, and the market offerings of smart grid technologies and products,” said Raj Prabhu, managing partner at Mercom Capital Group.
The top VC deal in the first quarter of this year was a $30m round raised by Silver Spring Networks, followed by $13.7m raised by Tendril. Other companies that attracted venture capital include power router company Varentec (raised $7.7m); automation systems developer Vizimax (raised $4.1m) and Smart Wire Grid, a transmission line wire technology specialist, which attracted $4m.
Active investors in this space include H.I.G.Capital, Archangel Informal Investments, BDC Venture Capital, Braemar Energy Ventures, Hitachi, Khosla Ventures, Pasadena Angels, Tech Coast Angels and Yaletown Venture Partners.
RuggedCom attracted the highest M&A deal value in the first quarter when it was acquired by Siemens in a $382m transaction.
Public cellular networks create money stream
Annual service revenue from public cellular network nodes in global smart grid applications will surpass $1bn by 2020, accounting for a 27% compound annual growth rate through 2020, according to Pike Research.
Cumulatively, a total of 73 million cellular machine-to-machine (M2M) communication nodes will be shipped for use in smart grid applications during the period from 2011 through 2020.
"With new pricing and service offerings specifically tailored for the large number of end points, but relatively low aggregate data volume typical of grid applications, public cellular is becoming a real competitor to private utility-owned networks," says Bob Gohn, vice president of Pike Research.
"The end result is a significant and growing monthly stream of revenue to the carrier, without taxing the carrier's network resources."
According to research findings revenue streams will grow through more bandwidth-intensive applications that utilize the network, particularly distribution automation tasks, and the increased use of wide area cellular gateways and collectors.
However, this area of the market will be dependent on a given region’s appetite for smart grid applications and deployments. Europe is the leading region for both public cellular node unit shipments and revenue throughout the forecast period (2010-2020).
Pike Research expects that that annual service revenue in Asia will reach $300m per annum by 2017 due to usage of higher-bandwidth-intensive distribution automation and substation automation applications, compared with the lower-bandwidth smart meter applications.
EnerNOC bags National Grid NYC gas deal
EnerNOC, an energy management solutions company, has been selected by National Grid to manage natural gas consumption at approximately 4,000 commercial, institutional, and industrial customer sites in Brooklyn and Queens, two highly populated areas of New York City.
The agreement will be in effect until March 2017 by which time EnerNOC will have provided National Grid with wireless hardware that automates fuel switching at the utility’s enrolled customer sites.
When on-site sensors detect that outdoor temperatures have dropped below a pre-defined level, EnerNOC’s devices will automatically shift fuel consumption, optimizing the use of fuel sources based on weather and availability.
Mexico set to pass landmark Climate Change Act
Mexico could become the second country in the world after the United Kingdom to pass a binding Climate Change Act, it has been reported.
According to a Business Green report, Mexico’s House of Representatives approved the proposed law late last week, voting by 280 votes to 10 in favour of the bill with one abstention.
The country’s Senate is now poised to approve the legislation, which would lead to more renewable energy projects to be deployed across nation, which borders on the US.
The countries energy ministry will now have to engage with smart grid network developers to devise appropriate networks and emission reduction energy production and conservation.
EV battery costs drop 14 %
The average price for electric vehicle batteries has dropped by 14 per cent from the previous year to $689 per kilowatt hour as of the first quarter of 2012. Oversupply of the batteries by manufacturers is pushing prices down.
If the costs are passed down the supply chain, electric vehicles could see a rise in consumer uptake.
Bloomberg New Energy Finance has reported that the average price of a lithium-ion battery pack for electric vehicles was $689/kWh in the first quarter of this year, down from around $800/kWh a year earlier and 30 per cent lower than 2009 levels of over $1000/kWh.
State of Connecticut awards EnerNOC with 2 yr deal
A new monitoring system will allow facilities managers at up to 100 state buildings in Connecticut to achieve cost savings by identifying and addressing inefficiencies in energy use associated with building operations.
The State of Connecticut has selected EnerNOC’s EfficiencySMART to reduce energy use and costs at up to 100 state facilities through 2014. EnerNOC will provide metering and monitoring equipment as well as cloud-based software that gives facilities managers access to real-time energy data, allowing for specific and timely actions to reduce energy consumption at colleges, medical campuses, correctional facilities, and other state buildings.
The deal came about as a result of a new Connecticut state program called Lead by Example, a partnership between the State’s Department of Energy and Environmental Protection (DEEP) and the Department of Administrative Services (DAS) that demonstrates the economic benefits of energy efficiency by achieving energy savings in state buildings.
“The state of Connecticut spends more than $100 million a year to provide heating, cooling, and electricity for its buildings,” said DEEP Commissioner Daniel C. Esty.
Mitsubishi begins EV demo system
Mitsubishi, Mitsubishi Motors and Mitsubishi Electric have completed the development and begun the operation of “M-tech Labo,” a smart grid demonstration system that utilizes rechargeable batteries in Electric Vehicles (“EVs”) for electric-demand leveling of factory facilities.
The purpose of the project is to demonstrate load shifting by charging at night when demand is low, storing power produced from renewable sources in rechargeable batteries, and supplying such power back to the grid when factory facilities and offices face peak demand.
MC, MMC and Mitsubishi Electric also expect that utilizing EV batteries and used rechargeable batteries, instead of expensive, dedicated batteries, will lower costs while promoting the environmental-benefits of renewable energy and EVs.
Tokyo Institute of Technology is playing an advisory role for the project.
Vendors to get piece of global DR market
Recent developments have opened up opportunities for vendors in the demand response services sector, an area that has up to now been dominated by utilities and grid operators.
Global revenues for demand response services will climb from just less than $1.3bn in 2011 to more than $6.1bn by 2016, according to Pike Research forecasts.
Europe, which is the second-largest market to the US, is forecast to reach a DR services market size of $156m by the end of 2011.
The Asia Pacific region, while gearing up in the smart meter and grid areas is only likely to represent a small market share of around 5 per cent. However, growth in demand response services and products will double by 2016 with a market size of $6.2bn, according to Pike figures.