Navigant Research Blog

Tendril, Siemens Announce Partnership

— July 5, 2011

Earlier this month, Tendril Networks and Siemens Energy, Inc. announced a strategic alliance to market the Tendril Connect platform to utilities. Tendril Connect, the core of Tendril’s home energy management offering, is one of the most comprehensive home energy management solutions available. The Siemens partnership could do big things for Tendril by connecting it with a new set of potential utility customers.

With its Tendril Connect platform, Tendril is aiming to get into the home for the benefit of both the utility and the consumer. It consists of a suite of energy management applications that will not just collect and analyze data but enable remote control of home systems on behalf of the utility and the consumer. The platform will enable personal energy use visualization, demand response, load control, energy efficiency, electric vehicle charging, and on-site renewable energy integration.

With deregulation and competitive retail electricity markets on the rise in the United States and abroad, Tendril is also setting its sights on competitive electricity suppliers by offering customized services that will match customers with the best suppliers and pricing plans given their energy usage behaviors.

Siemens, by virtue of its deep presence in the U.S. utility sector and its project management and implementation capabilities, is in a position to take Tendril’s technology to the next level. Tendril already counts over 30 utilities as customers, ranging from small municipal utilities to major investor-owned utilities such as SCE, ComEd, and National Grid and competitive suppliers such as Reliant and Green Mountain. Through its partnership with Siemens, Tendril will be on the fast track to landing new customers with larger footprints and, with any luck, selling them more fully-fledged versions of its platform.

In addition to augmenting these existing utility relationships, Siemens’ venture capital wing, SVC, will help sharpen Tendril’s market strategies and support its financial and operational planning efforts. The size of SVC’s investment into Tendril was not disclosed, however.

In the United States, the near-term path to success for home energy management players will be through partnerships with utilities. In other countries, such as the United Kingdom, home energy management companies such as AlertMe and PassivSystems are making a play by selling straight to the consumer. While Tendril’s long-term ambitions are international, it’s focusing on the United States today, and its partnership with Siemens will help cement the relationships it needs to expand its uptake in the United States.


The ZigBee “IP-ification” Wars

— May 30, 2011

Sometimes it seems that ZigBee is the technology everyone loves to hate.

Born circa 2002 out of the desire for a standard for the elusive “Internet of Things”, ZigBee is a set of specifications using the IEEE 802.15.4 radio standard for connecting “things” ranging from home devices (light switches, thermostats, appliances, etc.) to industrial and building controls.  Though the ZigBee standards process included the usual technical arguments, politics, and bickering, it ultimately resulted in a low cost, self-healing, low power (i.e., battery operated) and scalable (i.e. thousands of nodes) technology. ZigBee includes both a mesh “network stack” and “application profiles” that specify the messages used in specific applications (home automation, building automation, etc.).

During ZigBee’s development, a fateful decision was made to NOT use the Internet Protocol suite. This seemed a rational decision at the time: max packet sizes are far smaller (127 vs. 1500+), there was no IP mesh specification, no concept of battery-conserving “sleeping nodes”, and the 15.4 radio silicon had extremely constrained memory.  These constraints led ZigBee engineers to eschew the overhead of IP’s layered architecture, and they set out to “build something that actually worked”.  While most “IP engineers”, noting the power of the internet, saw this choice as just plain stupid, few worked to address the Internet-of-Things challenge.  No small amount of professional (and sometimes personal) enmity emerged between these groups.  (Full disclosure: I was a marketing executive with the leading ZigBee firm in 2007 and 2008.)

When the smart grid community began looking for a Home Area Network (HAN) solution, they latched onto ZigBee as the only viable, mature, multi-vendor solution available.  They worked quickly to develop the “ZigBee Smart Energy Profile (SEP)” for HAN applications.  Today, tens of millions of smart meters are deployed in Texas and California based on this initial specification.

However, the failure of ZigBee to leverage IP emerged as a critical flaw.  ZigBee emerged as a vertically integrated set of solutions that was difficult to connect the IP-based outside world without resorting to application-specific gateways, and was also difficult to adapt the application profiles to other protocols such as HomePlug and Wi-Fi. In contrast, at least theoretically, IP’s layering allows translation between lower layers of the protocol stack while keeping the application layers transparent.

When the NIST standards efforts got turbocharged in 2009 by ARRA stimulus funding, the obvious benefits of IP’s layering, combined with good politicking, led NIST to essentially mandate the use of IP-based protocols.  Additionally, the 6loWPAN specification emerged from the IETF describing how IP packets could be squeezed into small 15.4 frames.  Many claimed a more powerful IP-based alternative to ZigBee could be developed in a smaller memory footprint.  The ZigBee Alliance had no choice but to agree to an IP-based ZigBee standards rebuild.  Smart engineers from both groups began earnestly working together to develop a new standards suite, nominally called “Smart Energy Profile (SEP) 2.0”. The reconciled groups made fast progress against impossibly aggressive deadlines.

However, this April a draft SEP 2.0 ballot failed, causing old animosities to resurface.  At issue is the choice of transport layer protocols: TCP and HTTP as is typical in today’s internet, or UDP and CoAP (Constrained Application Profile) protocols.  TCP/HTTP is notoriously inefficient in terms of bandwidth and end-node processing (witness generations of “TCP offload engines” in server network adapters), while UDP/CoAP is simpler, but new, unproven, and hence obviously not in widespread use.  While nuanced technical pros and cons exist, the heart of the matter is broader and has potentially serious industry implications.

ZigBee is most often implemented in “systems-on-chip (SoC)” that combine a processor, radio, memory, and other functions into a single low-cost chip.  Fitting the ZigBee software into these constrained devices was a concern even before the move towards IP.  Despite optimism that IP-based code would be smaller, current draft implementations are significantly larger, and TCP/HTTP in particular stresses the RAM capacity in these devices.  This potentially threatens the upgradeability of millions of ZigBee-enabled meters and devices already deployed.  For ZigBee SoC vendors and their customers, this is a serious concern.  For others, forcing a new, though more efficient, protocol is too much to ask if ubiquitous protocols already exist, even if it fundamentally challenges existing hardware.  And here enters the politics….

The TCP/HTTP advocates (roughly equal to the original IP proponents) charge that the UDP/CoAP advocates (roughly equal to the original ZigBee proponents) are deliberately stalling SEP 2.0 in order to force the industry to lock-in their original ZigBee solutions (SEP 1.x) for upcoming HAN rollouts.  The UDP/CoAP folks counter that they just want a more scalable solution and protect existing investments. Besides, they say they already have SEP 2.0 solutions available, so there is no advantage to a delay.  They claim the installed base is not being taken seriously, and some technology vendors that lost the initial HAN selections, such as Wi-Fi, might benefit if existing ZigBee installations were rendered obsolete.   So there are many possible political motivations surrounding this ostensibly technical disagreement.

In the meantime, utilities and their suppliers are largely caught in the middle.  If they have not been paying close attention, they should start.  Even if UDP/CoAP is a technical kludge, it has happened before in support of existing installed bases – just look at PPP-over-Ethernet, a spec that allows use of dial-up modem protocols over Ethernet and ATM-based DSL links.  There is nothing particularly elegant about this, yet it allowed an easier carrier infrastructure transition from dial-up internet access to today’s ubiquitous broadband.

The worst possible outcome will be a stalemate adding to HAN technology deployment delays.  Unfortunately, this appears to be the most likely outcome, and contributes to our relatively pessimistic view of near-term HAN adoption. 


Upcoming Smart Grid Technologies Conference

— April 15, 2011

One of the fun parts of being analyst is participating in many of the smart grid conferences around the world. These events are invaluable for meeting face-to-face with the leading utilities, technologists, and regulatory leaders in the various regions. While the PowerPoint is always appropriately focused on the vision and promise of smart grid implementations, the reality emerges in the back-and-forth discussions and personal networking that accompanies these events.

One series of conferences that I have particularly enjoyed over the last year have been the Smart Grid Technology Conferences developed by Smart Grid Update. At the risk of shameless self-promotion, I’ve been privileged to chair these events in San Diego and London, and will do so again in San Jose on June 1 and 2. (Note: Pike Research has no commercial interest in these events.) These events are unique in that in addition to individual presentations from leaders with real-world implementation experience, there are a series of highly interactive panels that aim at avoiding what I call the “lemming syndrome,” consisting of panels with a series of generic presentations followed by a brief Q&A session where each panelist takes five minutes each to essentially say, “I agree,” to a generic question.

Instead, at these conferences we aim to dive right into a discussion with the panelists (dispensing with any PowerPoint) and invite direct participation from the audience. And because these conferences have been relatively small with high-quality attendees, these discussions have been engaging, informative, and fun. Unlike larger conferences with competing break-out sessions, the audience stays together for two days, allowing greater opportunity for relationship building and networking.

The topics for this year’s conference line up well with the issues we at Pike have identified as the most important for smart grid in 2011: Communications, Data Management, Cyber Security, Standards Development, Distribution Automation, Demand Response evolution, and Home Energy Management. You can get a flavor for some of the discussion here.

Of course, there are many other good conferences out there as well. So if you are interested in getting a jump on the true state of the smart grid, get out and join in the fun at a conference of your choice. Chances are, you won’t be sorry.


Smart Meters and the Power of the Pen

— April 8, 2011

When a fellow considered an energy expert receives a bill for electricity that totals over $2,800, what does one do?

Well, if one works for Pike Research, a leading global authority on anything to do with the smart grid, one writes about it, and vents one frustration in the public domain. The end result? A 60% retroactive bill reduction!

Now, reflecting upon my own situation, I realize I was somewhat guilty of not doing a little homework on the impact of relying upon an all-electric water heating system would have on my bank account during one of the coldest and wettest winters on the California north coast. Guilty of being too busy – a common affliction – I never bothered to look at these heaters and see that each ranged from 1 to 1.5 kilowatts a piece in electricity demand.

Just the same, not receiving an electricity bill for three months because the utility thought the bills were unreasonably high also seems rather ludicrous – especially within the context of smart meters being able to provide real-time data on energy usage. When the customer has no access to the data, then the value of the data is only going one way – to the utility.

These are the points I made to a gathering of utility customer service representatives looking to learn how e-tools and IT could improve service for their customers in Portland, Oregon last week. The five-year old organization – Energy E-Business Consortium – consisted of utility folks from all across the country. They wanted was someone from Pike Research to brief them on the latest thinking on how utilities might offer smart grid services. What they got was me, someone that has never sent a text message, whose expertise is a deep knowledge about policy and on the distributed energy future, but has an absolute disdain for gadgets. In short, I’m the average consumer out there, a renter, and not one to be tinkering with devices to see how much energy each of them uses by turning them on and off and going to look at the smart meter.

My basic message to these poor souls – the smart grid is not a one size fits all solutions. Yes, Pacific Gas & Electric (PG&E) is now offering an opt-out program for folks that are worried about the radio frequencies, security (and accuracy) of the data being generated by wireless smart meters, but charging extra but getting less information from customers seemed a bit backward to me. Glad I’m not someone working for PG&E trying to explain that value proposition to consumers or regulators.

The irony of my own experience with smart meters and high bills is this: Once I published a blog describing my own rather shocking experience in billing from a smart meter in a new home on March 24 (”Asking Dumb Questions About PG&E’s Smart Meters”), I immediately started getting phone calls from PG&E after not hearing a peep for over a week. And suddenly I was informed that the utility was willing to offer me a discount that amounted to $1,700!

The latest PG&E representative I talked to that offered this rate discount noted that this was an adjustment outside of the normal tariffs, and “was an unregulated rate.” Being a policy wonk, that raised some questions in the back of mind, but getting such a large refund somehow dampened my need for further explanation. Though I wondered how many PG&E customers had access to these “unregulated rate adjustments” and suddenly felt that I was among the privileged few, not because of a vast financial fortune, but due to the power of the pen.

I also discovered that PG&E had, in 2007, been slapped on the wrist by the California Public Utilities Commission (CPUC) for “improper back billing practices,” and that the CPUC had established a three month limit on back billing for residential customers. (My bill covered roughly three months.) As part of this CPUC directive, PG&E was required to submit regular bills – generally monthly. Perhaps PG&E’s generous reductions were motivated by these legal considerations?

The utility claimed the reason for this major reduction in my bill was that since I was informed of my large electricity bill, my consumption had declined by more than 60%. How? I just turned off all of the heaters and wore extra sweaters, long underwear and a knitted hat. Luckily, spring has sprung. Interestingly enough, a PG&E meter reader came out to the house and verified the smart meters were indeed correct. And despite what the PG&E rep on the phone told me that raised my ire – that PG&E would not be able to offer me any tips on how to reduce energy consumption — he did offer some tips.

The kicker to all of this is that my landlord has suddenly taken an interest in investigating installing solar photovoltaics (PV) to the roof. Who would have guessed that the largest electricity bill I have ever had might persuade a tight landlord to switch to solar? Stay tuned – maybe this story will have a very happy ending after all.

Of course, I still have the smart meter, and a future blog post will address the growing hysteria surrounding radio frequencies. I’ll also discuss other ways for utilities such as PG&E to offer alternatives that would still allow all citizens/consumers/ratepayers an opportunity to be a part of the solution.


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