Cleantech Market Intelligence
Utilities Warm to Cloud-Based Smart Grid Analytics
Managed services for smart grid applications — also known as smart grid as a service (SGaaS) — haven’t exactly lit a fire under utility executives. Despite the numerous advantages to outsourcing non-core activities like communications, software applications, monitoring, etc., many large utilities, citing security, control, and economics, prefer to keep these functions in-house.
But as smart grid deployments extend beyond the largest utilities, it seems likely that organizations constrained by finances or personnel will be obliged to consider the SGaaS model if they want to take full advantage of smart grid technology.
Vendors are repackaging their solutions in a spectrum of managed offerings, from hosted to managed to full business process outsourcing. And cloud service providers, including Amazon, Microsoft, and Google, are actively courting utilities’ business.
On July 14, Itron announced that it has selected Microsoft’s Azure cloud platform for its managed Itron Analytics solution. Microsoft Azure will maintain the infrastructure, allowing Itron and its customers to focus on the analytics. Itron says its analytics solutions can be installed locally, run by the utility in the cloud, or operated and managed as part of Itron’s Total Services.
The Whole Enchilada
Itron’s Total Services boxes up the metering, communications, and meter data management, along with analytics, in a fully managed offering. In other words, Itron will not only turn the knobs, but will also respond to the information coming in. Texas New Mexico Power (TNMP) in Lewisville, Texas engaged Itron to provide meter data analytics for its 230,000 meters earlier this year.
TNMP told me that “a smart meter can trigger hundreds of alarms; our staff may not have the expertise to best respond, whereas Itron’s analysts do have that proficiency.” TNMP is also working with ABB’s Ventyx unit for an outage management system (OMS) that will be hosted and administered by Ventyx.
Hefty Growth Ahead
Navigant Research’s report, Smart Grid as a Service, forecasts that the SGaaS market will grow strongly over the next decade. Our forecast includes a host of managed services for utilities, including home energy management, advanced metering infrastructure (AMI), distribution and substation automation communications, asset management and condition monitoring, demand response, and software solutions and analytics. We expect to see a $1.7 billion market in 2014 growing to more than $11 billion in 2023. Software solutions and analytics sold under a software as a service (SaaS) model are the largest category of SGaaS spending today, followed by AMI managed services.
Annual SGaaS Revenue by Category, World Markets: 2014-2023
(Source: Navigant Research)
Challenges to the model do remain, however. Most notably, the rate of return model that most investor-owned utilities work under encourages them to make their own capital and personnel investments. But for smaller utilities (e.g., cooperatives and municipals here in the United States), the speed with which solutions can be deployed, and the absence of large upfront investment, will be attractive.