Last week, Silver Spring Networks filed an S-1 for its long anticipated IPO. It was so long anticipated that many had about given up, but through a series of smart grid acquisitions, including Toshiba’s pending payout for Landis+Gyr, we had renewed speculation.

Expected pricing for the IPO was not announced, but the $3 billion target valuation rumored at the beginning of 2010 would seem rich given the $2.3 billion price for the more diverse Landis+Gyr, and the current $1.8-2 billion valuations for Elster (who IPO’ed last fall) and for industry powerhouse Itron. It could be argued that these valuations are not really comparable, since Silver Spring Networks is focused on the “smart” part of smart metering, namely the communications infrastructure and associated software, while Landis+Gyr, Elster, and Itron have significant legacy metering businesses. Certainly, Silver Spring Networks impressive revenue growth rate exceeds these competitors, and it has maintained the number one position in our U.S. Advanced Metering Infrastructure (AMI) utility vendor selection tracking since we started. Still, each Silver Spring Networks AMI module is ultimately housed in a smart meter (typically from Landis+Gyr or General Electric) with roughly twice the value, something that Itron, Landis+Gyr, and Sensus are able to harvest.

Silver Spring Networks’ undisputed lead in U.S. utility AMI was built by its strong commitment to the IP communications protocol at a time when competitor’s products were universally proprietary. This success drove a dramatic change in the industry, where virtually all AMI vendors have now adopted the IP protocol in one way or another. This has not yet approached the goal of multi-vendor interoperability for smart meters, as key parts of even the Silver Spring Networks implementation, such as the “meshing” protocols, are “pre-standard” (i.e. proprietary). Itron, leveraging its existing Automated Meter Reading (AMR) dominance, established an early AMI lead with its OpenWay system, but was especially hurt by the strength of Silver Spring Networks’ IP story. This was the catalyst for the Itron/Cisco partnership that may yet position Itron to ultimately “out IP” Silver Spring. Certainly, the competition is getting fiercer, but it remains a game of catch-up to Silver Spring Networks.

All the smart meter and AMI vendors are faced with some daunting challenges. The U.S. AMI market is currently in full deployment mode, initiated by regulatory mandates in Texas, California, Pennsylvania, and elsewhere, and fueled by $3.5 billion in stimulus funding. But we have long forecasted that this party will subside in the not-too-distant future, as smart meters approach their terminal penetration rate of the overall electric meter installed base, which in itself is not growing much. Continued growth will require diversification in target markets (i.e. beyond electric AMI), products (software and services), and/or geography (i.e. Europe, Latin America, Asia).

Perhaps herein is Silver Spring Networks’ greatest opportunity. They pioneered and preached the ability of an IP-based networking platform to unleash all kinds of high-value applications that will bring life to the smart grid, paralleling how open IP networking is the foundation for today’s internet culture. Who better to deliver on that promise by leveraging the infrastructure that they themselves are building for their customers? Demand response, distribution automation, electric vehicle integration, and managed services are among the smart grid applications that are in their sights. No doubt, these are different businesses and technologies, but it would seem Silver Spring Networks is reasonably well positioned to benefit, even if more than 90% of current revenues are AMI hardware and software based.

So whether Silver Spring Networks ultimately IPOs or gets scooped up in the current acquisition frenzy, it promises to be an interesting journey.

No doubt, a few eyebrows were raised when Gamesa, one of the world’s largest manufacturers of utility-scale wind turbines, recently invested in a company that builds micro-solar photovoltaic (PV) systems and mobile microgrids that are being deployed in Afghanistan by the U.S. military. This is rightly so, since it shows that Gamesa is looking at the small picture and seeking to broaden its horizons within the clean energy technology continuum.

Gamesa’s investments in SkyBuilt Power, which has also attracted support from the Central Intelligence Agency’s (CIA) venture capital fund, In-Q-Tel, appear to be an extremely canny move, given that this company has taken the concept of micro power to whole new levels. In fact, products include solar blankets that can literally fit into a suitcase and could be carried on an airplane!

For its part, Gamesa is determined to ensure its long-term growth both in the wind turbine supply business, where it just now launching even larger wind turbines for the burgeoning offshore market in Europe’s North Sea, but also in a broad array of other renewable and sustainable technologies. To channel this new strategy, Gamesa has established Gamesa Venture Capital, a corporate venture capital fund, through which it will invest up to 50 million euros in the next five years to buy stakes, initially minority holdings, in startup or growth companies engaged in the development of technologies promising the highest potential for future growth. In return, Gamesa will offer the companies its market position, manufacturing, finance, and local supply chain to achieve greater market competitiveness. Perhaps after five years or so, Gamesa will consider taking the companies over as new business lines or as sources of enhanced value via spin-off sales.

Gamesa has targeted six key technologies for venture capital investments: ocean energy technologies such as tidal currents, next generation solar energy devices such as concentrated solar PV, energy storage to firm up variable renewables at the bulk and distributed level of service, green mobility options such as electric vehicles, energy efficiency, and off-grid micro-power. The first two investments related to the last category are a 28.7% equity stake in SkyBuilt Power and a 25% equity stake in WorldWater & Solar Technologies, both firms with solar PV products positioned for developing nations.

SkyBuilt Power is particularly interesting because of its sales channels with the U.S. military, a market that Gamesa is still trying to figure out. But with goals of obtaining 25% of total power supplies from renewables by 2025, the U.S. Department of Defense is obviously a good business target. Along with potential new business in the mobile military microgrid sector, which is also being looked at closely by military agencies in the United Kingdom, Canada, Australia and France, Gamesa believes micro-solar technologies have other intriguing applications.

“SkyBuilt Power could open the door to business with remote telecommunications sites initially interested in on-site solar PV, but perhaps also purchasing wind and storage technologies as a second stage,” acknowledged David Mesorero, director of Gamesa Venture Capital. “With the decline of feed-in tariff rates in Europe, I think Gamesa is seeking out new markets and game-changing technologies. We at SkyBuilt Power look at Steve Jobs and what he did to the laptop computer as a model. Our goal is to package instant solar and wind products that are dumber and dumber, plug-and-play systems ideal both for combat missions or village power in the developing world,” added David Muchow, President of SkyBuilt Power.

SkyBuilt Power’s portfolio is robust and in constant search of “transformational” elements. Among its current products are the following:

• SkyStation: Containerized system offering solar, wind, batteries, or other generators to be used for tactical operations centers, clinics, disaster relief, telecom power, and rapidly deployable micro-grid power
• SkyTrailer: Provides a mobile renewable power on trailers and can be set up in as little as 45 minutes
• SkySkid: Provides lightweight power on skids for remote communications and other uses
• SkyCase: A portable power station that fits into a case with high-efficiency solar blankets three times more efficient than any other product on the market
• SkyWater: Combines highly efficient water treatment technology with the mobile or fixed power solar systems
• SkyStructures: Insulated, fire resistant, panels that are rapidly deployable structures that feature renewable energy power systems designed to cut power use in the field



SkyBuilt is both a product purveyor and a system integrator, which makes it unique. The company’s impressive track record is to date been based on its portfolio of extremely modular solar PV products. While its portable solar PV products have obvious appeal for Forward Operating Base (FOB) mobile microgrids, the company is shifting market focus to stationary base microgrids, sensing a shift in priorities at the DOD with recently announced pullouts from Afghanistan. The investment by Gamesa will also allow the company to develop larger-scale projects.

As an integrator, the company’s forte is the ability to develop hybrid solutions, getting diverse technologies to work in concert as a system, the very essence of the microgrid vision. From small microgrid-in-a-suitcase for platoons, to larger scale solutions more relevant to a stationary base, SkyBuilt Power is building upon its work with Lockheed Martin and others to become a more expansive power service provider. Gamesa’s investments are critical to making this transition happen.

There is general industry agreement that electric vehicle (EV) charging needs to be smart enough to respond to the changing conditions on the grid (to limit the impact on the grid) and to changing prices (to maximize the savings of driving electric). The looming question that will help to shape the ultimate success of EVs is, “Will that smart charging be enabled through smart meters, or through other devices?”

The investment in smart charging management hardware and software from utilities, EV charging companies, and service parties will reach $111 million in the United States by 2015, as forecast by Pike Research’s Electric Vehicle Information Technology Systems report.

Automakers and third-party services companies are developing alternative technologies to smart meters, such as leveraging the EV charging equipment and connecting via the web or wireless communications. For the self-interested reason of having a role in the communications (and revenue) streams, as well as eliminating dependency on utilities’ smart grid infrastructure deployments, this option makes sense. For example, companies such as Coulomb Technologies are including smart meters in their EV charging equipment so that vehicle charging can be metered separately if a smart meter doesn’t exist in the home or office.

But many utilities want to leverage their huge investment in smart (AMI) meters and make them the hub for all electricity consumption, including EVs. Recent announcements reinforce that there is no clear winner today – and may never be.

For example, British Gas is taking a prominent role in EV charging infrastructure and marrying it to the company’s smart meters. The company, which serves as a utility, has become Renault’s charging equipment partner for its EV models, which follows a similar deal with Nissan. The smart meters will be used to provide the time of use tariffs and communications between the grid and British Gas’ charging equipment.

Taking a different approach is Siemens, which partnered with Tendril Networks to market the Tendril Connect home energy management platform to utilities. Siemens is developing commercial and residential EV charging equipment, and it is likely that Siemens will add interoperability with Tendril’s platform to enable data sharing and interaction with smart grid equipment. Tendril’s platform is agnostic on how the data gets moved, as it is open to using smart meters or a broadband connection.

As EVs themselves gain more intelligence and can communicate with utilities through smart meters, the need for intelligence in the charging equipment is greatly reduced. This isn’t a good trend for EV equipment vendors, who may see a portion of the business opportunity quickly dwindle.

The integration of EVs into the smart grid will be one of many topics around EVs and infrastructure that will be discussed during the Plug-In 2011 conference, which begins on July 18 in Raleigh, North Carolina.

In Boulder, Colorado, a city known for its entrepreneurial spirit, environmental enthusiasm, and “go local” attitude, the government has turned its attention to going local in energy. Since the city let its 20-year franchise agreement with the incumbent utility, Xcel Energy, expire without renewal, we are in the midst of a debate over the future of green energy in Boulder. The menu of options for addressing the sustainability of its power production is dwindling to two – accept the proposal from Xcel Energy to build a new 200 MW wind farm to support Boulder’s energy needs specifically or, create a municipal utility to establish local control.

Boulder has been known to cook up an idea or two – we are the home of young companies like Boulder WindPower, Tendril, and of course, Pike Research. With a penchant for entrepreneurial endeavors and a focus on local resources, city government is eying its own venture. The plan is a Local Portfolio Standard (LPS) that pairs energy efficiency with local power generation sources – mostly wind, rooftop solar, hydropower, and natural gas – to achieve a very low carbon-intensive power portfolio. Instead of farm-to-table, think creek-to-plug. According to consultants working for the city, efficiency and renewables could account for more than half of forecasted energy demand by 2020. The LPS would also establish local decision-making power, create local jobs, and support local industry.

Successfully creating a municipal utility is not a far-fetched idea; several cities in recent years have pursued such a strategy to achieve their energy and climate change goals. They have been able to do so while keeping cost increases to a minimum. Boulder believes it can do the same, as it currently has a diversity of resources at its fingertips. Among them, Boulder Housing Partners owns approximately 16% of all rooftop solar in the city limits. Research indicates that as much as $21 million annually could be retained by the city, money that could be invested in energy efficiency programs instead of ending up in shareholders’ pockets.

A healthy bit of competition still exists as Xcel has offered an alternative to municipalization. The proposal involves adding up to an additional 200 MW of wind power to a wind farm being constructed by NextEra Energy, Inc. The additional megawatts would be dedicated specifically to Boulder. Thanks to a mélange of market forces (industry slow down, large scale project, and new technology) the price of Xcel’s project is approximately 30% lower than any contract offered in the last five years. The cost would be roughly $29-$42/MWh over the next 20 years, with Xcel covering the avoided costs and Boulder paying for the renewable energy credits (RECs). The project would be completed by 2013 resulting in up to 70% renewable energy in Boulder in the first year. The LPS would move considerably slower at delivering renewable energy, as litigation alone could take between three and five years.

The costs associated with starting such a venture, both monetary and otherwise, could increase risks for local consumers in terms of price stability. Boulder has a diverse population – a concentrated mix of residential, university, small business, and corporations – that all define affordable at different price points. Despite their differences, all consumers value reliability and cost stability. The acquisition of Xcel’s generation resources and infrastructure is estimated to cost between $350 million and $400 million. So, the real question is what are consumers willing to pay for local control and reliability over the long-term?

The hurdles that stand between now and a final decision are daunting. A draft legislative proposal is due in the middle of July, more technical and financial analyses are required, and a final vote won’t come until November when the issue will be presented to residents via the ballot. There is an obvious appeal of municipalization, I think greatest of which is the ability to leverage the wealth of clean resources in the surrounding area. With that in mind, I have some reservations about the conservative estimates Boulder is relying upon to make its financial case. Likewise, I think the city needs to articulate a concise plan of action regarding Smart Grid City and how that initiative will continue to advance. Regardless of the outcome, what we are experiencing here in Boulder may be a trend of consumers demanding new technologies from their power provider, or seeking out alternative strategies to achieve the same end.