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Wednesday, April 27, 2011

Driving the smart grid boom with M2M

Machine-to-machine (M2M) will make or break the sector

By Nick Flaherty

With 1.3 billion smart meters worldwide by 2020, it is the applications layer of the M2M supply-chain which can make or break smart-grid implementations for utility-sector companies, says Analysys Mason.

It forecasts 1.3 billion residential and commercial smart meter connections by 2020 with a CAGR of 56% over a 10-year period, according to a recent forecast. This high level of growth happens primarily in the developed world economies from 2010–15, but by 2016 it expects very high levels of growth in the emerging world, especially in the Asia–Pacific region.

Utility/energy-sector M2M device connections worldwide, 2010–20 [Source: Analysys Mason, 2011]

Utilities must do three things to be successful in the smart-grid space, says the research. First, they must prioritise deployment of the top cost-reduction and revenue-enhancing applications associated with the smart grid. The complementary aspects of cost reduction and revenue enhancement promise utilities a multitude of new opportunities. But choosing too many applications or deploying them in a haphazard fashion will reduce the effectiveness of these new programmes.
Second, they must work with a system integrator (SI) or communication service provider (CSP) that can provide a pre-integrated or pre-tested solution. SIs or CSPs need to offer solutions that include equipment, communications, a hardware/software platform and applications. Trying to piece together a solution from 5–7 vendors will prove financially painful and time-consuming.
Third, they must pick application vendors with a proven track record in actual deployments in their countries of interest. While M2M solutions are relatively new in the energy/utility sector, the company identifies some notable successes from Trilliant, eMeter, EnerNOC and others. And the experiences of application vendors matter a lot in this new field.
The roll-out of smart metering is the first step in smart-grid development and introduces the potential for utilities to start offering additional value-added services to residential and commercial customers. In the UK, for example, suppliers will be under licence obligations to complete the roll-out of smart metering to 25 million households, most likely by the end of the decade. A degree of flexibility is expected in the pattern of installations, with some utilities seeking to engage with local delivery partners to increase deployment efficiency, and others focusing on early adopters. The regulator Ofgem has suggested that suppliers’ discretionary installation rate could peak at an annual 17% meter replacement rate during the middle of the decade 2010–20.
Is the applications layer of the M2M supply chain which can make or break smart-grid solutions and a utility’s ability to meet its cost-reduction or revenue-generating goals. The top applications include pre-paid metering, home energy management, residential or commercial security, smart metering, storage management and demand response programmes. However, identifying the field of vendors for each of these six applications is no trivial task. Providers include Eschelon, OPower, Tendril, Eragy, Alertme, eMeter, Trilliant, Current Energy, EnerNoc and many others. Top application providers for smart-grid solutions will have exponential growth for their services. Making sure they have the proper supply-chain partnerships is key in quickly bringing to market cost-effective, value-enhancing solutions.
Research and consulting from Analysys Mason and Cornwall Energy delve deeply into the utility-sector supply chain, regulatory and policy issues, business planning, and technology feasibility of smart-grid implementations. Future research highlights the top application vendors in the M2M smart-grid space.
For more information, please contact Steve Hilton, Principal Analyst,
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