Utility Horizons - Second Quarter 2013 - (Page 13)

Inside Tracks... Insider Perspectives on Utility Automation the market over several years, but I believe we are now seeing them mature and come to fruition. uhQ: Let’s start with your ﬁrst prediction: Consolidation of Smart Grid vendors continuing at a steady pace. How much have recent industry events mirrored this prediction regarding vendor consolidation? Murray: The rapid pickup of pace in Smart Grid vendor consolidation that we saw in 2012 has continued to bleed over to 2013. Due partly to a steady decline in clean tech investment over the past 18-24 months, almost every player in the industry has become involved in M&A activity in order to secure additional funding or to compensate for gaps in customer demand. In 2012, we saw M&A activity top $19 billion with large-scale acquisitions such as Cooper by Eaton, Tropos by ABB, and eMeter/ RuggedCom by Siemens which were all strategic plays to strengthen existing portfolios and to expand market share, and of course, there were others1. So far in 2013 and perhaps beyond, it appears that investor conﬁdence may be on the rise as the industry continues to mature and maintain a steady – albeit leveled – pace of consolidation and technology streamlining. uhQ: What about IPOs? Initial public offerings have been pretty stagnant throughout the recession years, but do you think the SilverSpring Networks IPO might be the harbinger of a rebirth of IPOs? Murray: A sustained tough climate for IPOs has not been demonstrated more clearly than by Silver Spring Networks and its road to IPO. In mid-March, 2013, SSN announced the terms of its IPO, nearly two years after its initial announcement in July 2011 at just over half of the initial $150M valuation. Although this achievement was momentous, it does reﬂect the trend of ﬂagging interest in ‘greentech’ investment of late. The upside, however, is that although the overall smart meter deployments may be slowing, there is still growth opportunity in complementary technologies such as distribution automation and demand management. At the same time, the smart metering side still shows continued upward movement as evidenced by rising smart meter deployments in water and gas utilities. uhQ: Two questions on your second prediction (The era of ROI begins): First, is there a relationship between the initial DOE-fueled growth – and eventual leveling off – of smart meter technology adoption, and second, what might be the long-term effect of that up www.UtilityHorizons.com and down trend? Murray: In 2009, funding for DOE-backed upgrades for an aging electric grid spurred a renewed interest in green technology in 2011, and the Smart Grid became a reality in 2012. Since we turned that corner on Smart Grid, initial deployments of smart meter projects have progressed. In 2013, we’ll see utilities focus more on the ROI component, whether they are wrapping up a DOE-funded Smart Grid project or looking to bolster the case for advanced applications. We’ll also see utilities that have already deployed AMI focus on adding niche applications to improve the value of their existing investments. For those utilities that haven’t made an investment yet, we’ll see a more focused effort to address speciﬁc operational needs with a keen focus on optimizing wholesale energy cost and electric network performance. A recent survey of our public power utility customers, found that the majority of respondents (44%) said that completing their existing Smart Grid investments would be their number one area of investment in 2013, while the second largest group (34%) said that implementing value-add applications to AMI would be their focus. Now that many utilities have their basic AMI infrastructures in place and are beginning to see some basic payback in terms of operational efﬁciency gains and reduced time and cost to reliably read meters, they are setting their sights on maximizing the tangible value of their investments in Smart Grid – whether DOE funded or not. Considering the longer term, the initial grab for billions in DOE Smart Grid funds has subsided and results are now expected. Utilities are also becoming more judicious with respect to which value-add applications they will pursue. In general, they are looking for high performance, maximum impact, and tangible results that reasonably ensure a measurable payback. Another report from the DOE: Economic Impact of Recovery Act Investments in the Smart Grid, suggests that as of March 2012, the approximately $2.9 billion spent on Smart Grid projects has fueled an economic output of $6.8 billion in the U.S. and created the equivalent of about 47,000 full-time jobs. These ﬁndings seem to indicate that investments in green technology have been worthwhile and that investors are anxious to analyze and report ROI – thus, utilities will be equally anxious to identify new ways to uncover positive ROI. uhQ: In your third prediction, you say that Demand Q2 - 2013 • UTILITY HORIZONS • 13 http://www.UtilityHorizons.com

Table of Contents for the Digital Edition of Utility Horizons - Second Quarter 2013

Utility Horizons - Second Quarter 2013
Publisher’s Message
Contents
The Queue
Automation Rising!
Inside Tracks
Focal Point
Automation and Innovation at Epcor Water Services
BLeading Edge: Advanced Technology Perspectives
Consumer Engagement: The Future Goes Mobile
Demand Response: Why the Future Is in the Cloud
Building Paths to Smarter Water Management
Bullet-Proofing Your Scada System Against the Evil-Doers
Education Matters
Standard Bearings
Regulation De Rigueur
On the Horizon
Purviews
Intersections
Eventualities
Thinking It Through With Sparky Flamedrop
Loose Ends

Utility Horizons - Second Quarter 2013

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