IDC Energy Insights Community > Smart Grid Blog

Western European Utilities IT spending to reach $10 billion in 2014

Wed, 28 Jul 2010 13:59:29 +0000

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We are publishing tomorrow our latest IT Spending Forecast report, which covers the market sizing and forecast estimates for the utilities industry in Western Europe in the 2009–2014 timeframe. We would like to give you a preview on some of the highlights:

Smart grids, operational excellence and costs reduction, together with the need to comply with energy policies and regulation continue to drive utilities IT investments. This translates into an estimated 2009–2014 CAGR of 3.2% of IT spending.

In 2010, total yearend IT spending by Western European (WE) utilities is expected to be $8.8 billion. IT services makes up 63.7% of total IT spending for utilities in 2010. Following IT services are packaged software and hardware, which make up 19.6% and 16.7% of IT spending respectively.

Electricity's IT spending is already the most substantial in 2010, and this subindustry is not expected to decrease its spending any time soon, as it will have the fastest-growing above-average CAGR between 2009 and 2014. The Western European water sector is the third-largest spender in IT among utility companies, spending around 80% of what gas companies spend and 20% of what electricity companies spend.

Among WE countries, the U.K. is the single country with the largest IT spending in electricity, followed by France and Germany. Both Italy's and Spain's 2009-2014 CAGRs are below the Western European electricity average CAGR, with 2.32% and 2.29% CAGR in the IT Spending forecast period, respectively.

Comments? Thoughts?

Click here to read the press release

Keywords

IT Spending, Western Europe

My Home Energy Monitor: Part 3 (So Now What?) (2 Comments)

Thu, 15 Jul 2010 23:20:19 +0000

Entry by Rick Nicholson

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I just returned from vacation and my home energy monitor is still working - collecting and displaying my home's energy consumption and cost data. At least the thing's reliable. I still can't use Google PowerMeter effectively (see my previous blog post) and that issue won't be addressed until next month when my web bridge device arrives in the mail. So what do I do now?

What I'd like to do is to set a goal of reducing my energy consumption by a certain amount - let's say 10% to start - and see if my home energy monitor can help me achieve it. However, without Google PowerMeter or some reasonable alternative set of analytics it's really not very easy. The first problem is that the data displayed on my monitor doesn't help me set a goal against the current baseline of usage and then give me feedback on whether or not I'm achieving it. I wish the designers would have thought of that. The second problem is that I'd really like to know which end-uses in my home are the biggest contributors to my energy consumption and some guidance on where to target my efforts. Is it the appliances? Air conditioning? Lighting? Or possibly all of our electronics? My home energy monitor isn't much help since it only monitors energy usage on a whole-house basis. Google PowerMeter won't help here either. What I really need are sensors for each end-use category or at least for multiple circuits. But that would take more money and effort. I tried explaining this to my family and they just rolled their eyes and expressed the opinion that this "smart" technology was really stupid (and that I should stop playing around with it and do something useful). Curses, foiled again!

Selling the Value of Smart Metering – Communication, Communication, Communication

Thu, 15 Jul 2010 17:39:10 +0000

Entry by Jill Feblowitz

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J.D. Powers just released its 2010 Electric Utility Residential Customer Satisfaction Study and notably, utilities are doing better. According to the survey of 85,000 customers, bills have reduced by 5% and reported outages by 8%. Communication seems to be the key according to study, as customers with outages are much more satisfied when the utility communicates well about status of restoration. Surprisingly, though, only one in six customers are aware of their utilities smart grid efforts. With those who are aware, overall satisfaction increases. So perhaps utilities need to take the lessons they have learned about communication on outages and other issues and apply those to smart grid awareness.

Everyone agrees that better education of customers might have mitigated the customer backlash that utilities are facing in California and Texas. Perhaps this is part, but certainly not all, of what prompted the Maryland Public Service Commission to deny BG&E's smart grid proposal, even though the company has been approved for ARRA funding. [Note: actually, the major objections by the PSC were to mandatory time-of-use pricing and capitalization in the business plan.] A quick look at BG&E's education plan filed with the Commission yesterday has some good elements, although may be missing some obvious messaging opportunities like the IVR system:

Pre-installation communications. Prior to installation there will be communications to the customer on the value of smart metering to them. Channels with be mass media and website communications, blogs, twitter, facebook and mobile demos. BG&E references Duke's Envison Smart Energy as an example.
Installation communications. Touch points with customer at installation include an introductory letter a month ahead of installation, coordination of appointments with customers where needed, leave-behind information, automated appointment reminders, customer follow-up.
Post-installation communications.
- Web portal for customers including usage and bill presentment, disaggregated bills, and energy budgeting, savings summaries, environmental impact, and benchmarking to others.
- Multi-channel communication (event notification) with customers who have opted for peak pricing programs based on customer preference – via e-mail, phone, television announcements, website, text messaging
- Education of utility personnel (even retires) to the benefits of smart grid through letters, video messaging, "town hall" meetings of employees, fact cards for personnel without access to computers
- Segment specific messaging on benefits of dynamic pricing – will be targeted to "bargain hunters", "comfort lovers", "privacy resisters", "green altruists", and "digital control enthusiasts".

The key will be to get customers to understand from the very beginning even before a truck rolls to make the installation: "What's in it for me?" And that is best done through targeted messaging to customers based on customer segmentation and preferred method of communication (cell, e-mail, social networking, mail, etc.) That means segmentation beyond the usual residential, multi-family, etc. similar to the segments that BGE is positing for peak pricing event communications (see above). However, customer relationship management (CRM) at utilities is typically CRM-lite which is a layer over the Customer Infomration System (CIS). CRM-lite is developed for incoming communications for inquiry, rather than out-going communications for sales and marketing. However, there are some utilities that have more robust CRM applications (Oracle and SAP both offer them), including customer segmentation and campaign management. Utilities that are planning to roll out smart meters soon don't have time to implement robust CRM unless they have a CIS provider that offers it and can implement quickly. Utilities may need to rely on software as a service (Saas) or a business process outsourcer to manage the ongoing - and it will be ongoing - campaign.

Once the meters are installed, it is critical to get customers engaged as soon as possible to demonstrate the value of the meter. That may take some hand holding and personal touches from Customer Service Representatives (CSRs). Expect longer call durations. Our research shows that the amount of customer contact and call duraction goes up immediately after installation of smart meters, so CSRs will need to be trained in how to guide customers through the web portal. There may also have to be some pro-active communications, as well as responding to customer questions. All this will take concerted efforts by marketing and IT in partnership, because customers will expect to receive communications via their preferred communication channel and somehow that has to be tracked. So this would support demonstrating how customers can reduce bills through monitoring consumption and taking action to conserve.

The next step is to use that information to get the customer into utility sponsored programs. These may be energy efficiency, where savings are general, but still important to the utility and to the customer's wallet in the long run. Why not put a link in the web portal that will lead customers to online enrollment in programs that they might qualify for? Seems simple, but for many utilities I've talked to, it seems like there are barriers to getting this done.

Then there's enrollment in some type of time-based pricing program. BG&E will need to sell hard, as in their most recent proposal the company has withdrawn mandatory time-of-use and replaced it with voluntary at the behest of the Commission. Customers will need some type of online calculator to help them understand how they will benefit. This could appeal too, to the gaming set or for customers who are active day traders.

Once a customer is signed up for a program, such as demand response (DR - BG&E calls this peak pricing), there's more interaction associated with each event. The customer needs to be notified of the event, if they are not set up for an automated response. And participation needs to be verified through analysis of the smart meter data. Smart meter data returns through the AMI to the MDM and then to CIS for credit to the bill, in most cases. For DR events, why not use the same infrastructure as the utility has built for outage restoration notification and follow-up? Many utilities have set up automated call backs to check on restoration with customers that can segment the call backs by feeder and location which would be perfect for calling events in a capacity constrained area.

Your thoughts?

I am a Model of the Modern Home Energy Management System (2 Comments)

Fri, 09 Jul 2010 19:50:02 +0000

Entry by Jill Feblowitz

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Marcus, Rick, Sam, Jay and I got together one day to name all the vendors now supplying home energy management systems. Seems like home energy management is to the residential consumer, as Starbucks was at one time to the coffee consumer. Lots of products are out there to help the utility provide energy efficiency and demand response opportunities to their customers. So we decided to put together a little ditty, to the tune of "I Am A Model of the Modern Major General" for your summer entertainment.

Sung to the tune of "I Am the Model of the Modern Major General", Pirates of Penzance

We'd like to introduce you to the latest growing hot market,

It's overrun with vendors from the giants to the new entrants.

It's seems like it’s a throw-back to the old days of the dot.com biz.

Home energy will help you to become a great big power whiz.

So let's recite the many names that have now come across our desk,

There's Tendril, Gridpoint, Silver Spring, and Powermand and eMeter,

Home Automation, Energy Inc, Aztech and even Energate.

AlertMe, Emphase, Agilewaves, Ecofactor are not so late.

There's Google with its Power Meter hooked to the utilities,

Microsoft with Hohm is trying to bring Google to its knees,

Let's not forget the many apps that promise to bring green back home.

There's bound to be an Apple app to use on your iPad or phone

There's bound to be an Apple app to use on your iPad or phone.

We're reminded of Aclara, Energy Hub and OpenPeak.

There's Green Energy Options and Blue Line Innovations.

And don't forget 4Home, Comverge, and Onzo and Control4,

Visible Energy, Energy Lens, and Integral Analytics.

Let's not forget the many more, although there may be some we do.

We hope that you forgive us if we don't sing well of these too,

Like Energy Aware along with Wireless Monitoring.

We'd be amiss if we forgot Energy Monitoring.

With Cisco we know now that you can talk to your appliances.

And then for portals integrators are some great alliances.

Accenture, IBM, CSC, Wipro and then Infosys.

But we can say for sure that our new state will surely be greenness.

We'd like to introduce you to the latest growing hot market,

It's overrun with vendors from the giants to the new entrants.

It's seems like it’s a throw-back to the days of the dot.com biz.

Home energy will help you to become a great big power whiz.

It's seems like it’s a throw-back to the days of the dot.com biz.

Home energy will help you to become a great big power whiz.

Keywords

home energy management, personal energy management

Electric Vehicles and Business Models: Updates from Italy (2 Comments)

Thu, 01 Jul 2010 16:25:34 +0000

Entry by Roberta Bigliani

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We just issued a new Perspective covering pilot initiatives on Plug-in Electric Vehicles. Our major focus is an update on what is happening in Italy, also leveraging the results of the roundtable discussion I chaired at the end of May during IDC Energy Insights' Energy & Utilities 2010 Forum. Part of the discussion was around business models.

Of course the finalization of such business models in Italy (and I would say across Europe as well) is still to come, but during the conference at least four possible models were envisioned for public charging:

1. Charging stations managed as a post-sales service: this could be compared to the solution adopted for fueling natural gas vehicles and would imply competition among charging stations as in the traditional gasoline market. Roles would be assigned as follows:

- The charging station owner is responsible for making the agreement with the electricity supplier.

- The distribution company (DSO) is in charge only for the connection.

2. Charging stations infrastructure is managed by DSOs: this model would imply an extension of the role of the distributor, which will need to be regulated. Fair access to all suppliers needs to be granted. This case could be compared to the one of public telephone booths.

3. Creation of a company to manage EVs charging infrastructure countrywide: this company would operate as a regulated business; this is the model that in my understanding will be adopted in Spain.

4. Battery swapping: creation of stations where one would go to swap a battery rather than go there to charge the battery. This is somehow similar to what Better Place is working on.

Do you have any opinion on which could be the most suitable business model to stimulate real development of public charging infrastructure? Any other ideas or visions?

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Keywords

Electric Vehicles

Beyond the Smart Meter: Existing Back Office IT Can Help to Reduce Consumption (1 Comment)

Wed, 30 Jun 2010 16:27:17 +0000

Entry by Jill Feblowitz

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ACEE just released a study concluding that smart grid technology in itself is not enough to lower energy consumption. The premise is that customers need to be presented information that will help them take actions to reduce consumption. Recommendations were for online or in-home displays of consumption and benchmarking with customers in their neighborhood. It is true that there is currently limited deployment of in-home displays. In a study we conducted in the fall of 2009, IDC Energy Insights found that only 6.6% of utilities were deploying in-home displays. Another 14% were piloting these devices. Utilities are, however, taking steps to present consumption data to their customers. Take for example, Austin Energy, which made a commitment to display data one of their top priorities. So, we agree that it requires people and process, but there are other pieces of technology that utilities should be integrating to make real reducations happen.

Utilities are missing a link to action that could easily be accomplished by connecting the dots with back office systems. Here's the scenario. A customer thinks that their energy bill is too high and goes to view consumption data. The data is presented in terms of costs – not just KWH consumed – so that impact is apparent. The customer also see how well their household is performing compared to their neighbors or peers. The next step that would lead to action would be to show the customer which appliances are contributing the most to costs and to provide the customer with recommendations on how he or she can reduce their costs. That's the information piece. Better yet, the customer is directed to a site where he or she can enroll in an appropriate energy efficiency program that involves installation of energy saving equipment and appliances. So now a measure that is more efficient is installed – a persistent savings.

This seems simple enough. But, utilities have not put all the pieces together from a systems perspective. The pieces that are needed are display to the customer, the same display to the customer service representative (CSR), live chat (if the interaction with the customer is online), analytics (bill disaggregation, recommendations, referral to appropriate energy efficiency program taking into account where customer is currently already enrolled), and a link to enrollment in the appropriate energy efficiency program. To make this happen requires integration with CIS, CRM and energy efficiency program management system. This will also require utilities to bring together customer service, energy efficiency and IT to build the business process. And finally, touching some sacred cows – such as the legacy CIS that does not have robust CRM capabilities. Are utilities ready?

Of course, all this discussion does not even get to enabling automated demand response. But, we'll leave that for another day.

My Home Energy Monitor: Part 2 (You've Got Data!) (2 Comments)

Sat, 19 Jun 2010 00:53:01 +0000

Entry by Rick Nicholson

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Well sort of... My home energy monitor has now been dutifully collecting data once every twelve seconds for a week now. The display tells me how much energy I'm currently using (2.84 kW at this exact moment), how much it's costing me ($8.14/day), and how much I've used in the last day, week and month. For instance I've used 25 kWh in the last day and 200 kWh in the last week. Not bad. But what I'd really like is some more sophisticated graphing and analytics.

Enter Google PowerMeter. I have my home energy monitor connected to my computer and my computer sends the data to Google PowerMeter. Or at least that's the idea. In fact, this only works when my computer and display unit are actually connected. My computer - like many of you out there in the real world - is a laptop. It doesn't sit on my desk at home 24x7. It goes with me to work, it goes with me on trips, it even goes with me to other rooms in the house. This means there are huge gaps in my Google PowerMeter data. You'd think that the software would be smart enough to "catch up" on the missing data when I reconnect. If only that was the case. To solve this problem I've ordered the web bridge which will keep my monitor connected to the web and feeding data to Google PowerMeter all the time. Unfortunately it's not available until August. This isn't as easy as I thought it would be. Stay tuned...

Nuclear Power Expansion Almost There for Southern Company

Mon, 21 Jun 2010 11:18:00 +0000

Entry by Jill Feblowitz

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Southern Company is on the road to expanding its nuclear fleet with a loan guarantee from the federal government. The plan is to build two additional units at an existing site in new Waynesville, Georgia. According to SNL Energy, "Total guaranteed borrowings would not exceed 70 percent of the company's eligible projected costs, or approximately $3.4 billion, and are expected to be funded by the Federal Financing Bank. Any guaranteed borrowings would be full recourse to Georgia Power and secured by a first priority lien on the company's 45.7 percent ownership interest in the two new units." New nuclear projects depend on loan guarantees, given their high cost and the risk of the project not making it through to operating licensing. Utilities with nuclear generation, or any new plant construction, will want to watch this project.

Southern Company is just completing a project to roll out IBM's Maximo to all of its generation fleet, including both nuclear and fossil. IBM, as other vendors of EAM such as Ventyx (now acquired by ABB), have been talking for some time about closer integration between engineering and design and asset management. The idea is to have a seamless hand-off of asset data across the asset life cycle – from design and engineering to build to operations and maintenance and finally to decommissioning. It's not just a matter of a more elegant concept. Long term benefits are to be able to inform future design. In the short run, easy availability of asset data informs root cause analysis of failures and maintenance planning.

The hand-off to date has been difficult at best in the past. This was in part due to technology maturity, but also due to the planning process. Utilities should consider operations and maintenance during the design process and include requirements for integration with asset management applications in their design specifications. If this can be accomplished with nuclear with the most complex assets and regulatory requirements, then integration of engineering and design and asset management for other types of generation will be that much easier.

Keywords

nuclear, enterprise asset management

And They're Off! Smart Grid Grant Awardees Announced (1 Comment)

Tue, 27 Oct 2009 22:07:41 +0000

Entry by Marcus Torchia

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Take 400 applications, 200 reviewers, 5 months, $3.4 billion, one Secretary of Energy and bang! 100 utilities are off to the races. This afternoon the DOE announced the awardees that were eligible for the $3.4 billion in ARRA 2009 smart grid investment grants as defined by Section 1306 of the 2007 EISA. It is worth noting that the $615m in smart grid demonstration project grants (Section 1304 of EISA) are yet to be awarded. So what's the net-net?

100 applications were approved to receive some amount of grant money in what is officially the 1^st of three rounds of grant money to be disbursed. The reality, however, is this is the last of one round of funding....

.....The entire $3.4 billion is committed. Which means if you are a utility waiting to apply for the 2^nd and 3^rd rounds of funding, don't hold your breath too long. You will quickly be red-faced. Put in perspective that the first round was over-subscribed by approximately $16 billion. Said another way, for every dollar in grant money available, five dollars of project costs chased it. This could bode well for future stimulus money candidates should Congress deem it necessary to pump the economy with more deficit-funded dollars. But let's talk here and now.

Utilities that got grant money can breath a sigh of relief. But now the waiting game begins for the cash. It is not at all certain when the funds will be released though the imperative is sooner rather than later. This is when the DOE administrative powers will need to prove their mettle. The flip side? For the utilities that were denied the windfall, they can now get to work preparing for rate cases. Or in some circumstances, scrap the proposed project altogether. Mixed blessing there.

The utilities are a pragmatic bunch though. A recent study IDC Energy Insights conducted between May and July found that 2/3 of utilities believed they would get 15% or less of project money from the government through ARRA grants. And a third believed they would get 40-50% of project money. On weighted average, they were about accurate, if highly bifurcated between the smallest and largest utilities.

The vendors will have a field day pounding down the doors of the grantees. A few weeks ago at GridWeek, the opinion of one well connected utility industry insider said that 30-35% of utilities are committed to a vendor(s) already. Leaving 65-70% of utilities still undecided about which vendor or technology they will decide to move forward with. Utilities should expect a deluge of selling activity over the coming weeks and months.

There is merit for a utility to decide quickly. Utilities can lock in vendors before the vendors are too stretched on other projects. Utilities need to expect that product vendors and system integrators will be full tilt trying to sell gear, software and services. So the utilities would be wise to demand certain timelines and compensation should project run over time or budget as no fault of the utility.

A downside to fast decision making rears its head if the utility has not fully vetted the technology or the vendor's product capabilities. Utilities need to keep in perspective that some of their peers have been testing and trialing for years. Today's coolest technology can become tomorrow's Tyrannosaurus rex if hasty decisions are made. The upside is the grantees are using, on average, a 40% off coupon on their technology investment. Poor choices are easier to live with when you have that kind of discount. I'm pretty certain that a cavalier attitude like that will put a fast end to one's rising career should an investment go south. Additionally, claw-back provisions allow the government to recoup costs should an investment meet epic failure.

In the end, the smart grants will go some way to produce the effects the DOE and Congress is looking for, which is stimulate the economy and get people working. The DOE estimates that the $3.4b in grants will generate $8.1b in total project spending. Averaged over 5 years that will produce about $1.6 billion in additional spending on the smart grid. By IDC Energy Insights estimates, 2010 U.S. smart grid spending will exceed $12 billion, which includes the impact of stimulus grant money. The net-net is the grant money helps speed the roll out of projects on the drawing board.

My question to the utility community is which vendor's are top of mind for your smart grid project? And for vendor's which projects are most interesting and why?

Check out the list here in case you haven't seen it already:

http://www.energy.gov/recovery/smartgrid_maps/SGIGSelections_State.pdf

Keywords

smart, grid, stimulus, arra, awardees, doe, chu, eisa, 2007, drant, grantees

Smart Grid Technology Investment Exceeds $1.8B Year to Date (1 Comment)

Tue, 15 Jun 2010 21:27:16 +0000

Entry by Rick Nicholson

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From January to May 2010 there were 30 publicly announced smart grid investment deals in the United States and Canada totaling over $1.8 billion. Technology types included application software (typically used by utilities for customer care and billing, meter data management, distribution management, etc.), communications, energy efficiency and demand response (including hardware and software to provide consumers with energy management capabilities), grid connected energy storage, and electric vehicle (EV) charging infrastructure. Types of investments included acquisitions, debt, equity, and government grants.

Smart grid investment highlights in North America included:

ABB's blockbuster acquisition of Ventyx for $1 billion. Although the Ventyx product suite includes more than just smart grid applications, Ventyx will become part of ABB's network management business and ABB is clearly planning to integrate its existing transmission and distribution operational technology (OT) products with the relevant Ventyx information technology (IT) offerings.
Better Place closing a $350 million funding round led by HSBC, which qualifies as one of the largest clean energy investment rounds ever. This deal led a surge of investment in EV charging infrastructure that also included ECOtality's $300 million line of credit from Shenzhen Goch Investment and Coulomb Technologies' $14 million series B funding round led by Voyager Capital and Rho Ventures and its $15 million grant from the U.S. Department of Energy (DOE) through the Transportation Electrification Initiative.
Eleven energy efficiency and demand response (EE/DR) deals that included acquisitions (Akuacom, SmallFoot, Standard Renewable Energy, Zensi), equity investments (ecobee, EcoFactor, Energate, Energy Inc., Lucid Design Group) and DOE grants (Honeywell, Whirlpool).
Eight smart grid communications deals that included acquisitions (Eka Systems) equity and debt investments (Ember, Grid Net, Power Tagging, Tantalus, Trilliant) and DOE grants (Ateros, M2M).

The application software category comprised over 54% of all smart grid technology investments. EV charging infrastructure was the second largest technology investment category with over 37% of the total. Analyzing the data by investment type shows that acquisitions were the largest category followed by equity investments.

For additional details see our upcoming report Smart Grid Investment Perspective: January-May, 2010.

IDC Energy Insights Community > Smart Grid Blog

Western European Utilities IT spending to reach $10 billion in 2014

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My Home Energy Monitor: Part 3 (So Now What?) (2 Comments)

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Selling the Value of Smart Metering – Communication, Communication, Communication

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I am a Model of the Modern Home Energy Management System (2 Comments)

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Electric Vehicles and Business Models: Updates from Italy (2 Comments)

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Beyond the Smart Meter: Existing Back Office IT Can Help to Reduce Consumption (1 Comment)

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My Home Energy Monitor: Part 2 (You've Got Data!) (2 Comments)

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Nuclear Power Expansion Almost There for Southern Company

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And They're Off! Smart Grid Grant Awardees Announced (1 Comment)

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Smart Grid Technology Investment Exceeds $1.8B Year to Date (1 Comment)

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