BIG $$$ IN SERVING SMART GRID

Smart Grid Managed Services; Infrastructure, Application, and Business Process Outsourcing for Smart Grid Utilities: Market Analysis and Forecasts
Marianne Hedin and Clint Wheelock, 3Q 2010, (Pike Research)

"…The goal [of utilities around the world and in the U.S.] is to replace [aging] infrastructure with an Internet-enabled grid that will provide high-quality,
reliable, and real-time information to both utilities and consumers…[Creating] the smart grid…is vital for each utility’s future…[Utilities will] have to design different strategies, revamp their business processes, and develop new skills…[I]nstallation of new metering technology with more timely, detailed, and reliable information enables two-way communications between the energy provider and the consumer…As a result, utilities can now influence consumption more effectively…

"…In addressing these challenges, utilities have often been compelled to turn to a services provider for assistance…At times, the challenge has been so daunting that a utility has contracted out certain aspects of its smart grid deployment to a vendor to manage it on an ongoing basis…Pike Research anticipates that smart grid managed services will become an important and fast-growing [and accelerating] market opportunity in the coming years…"

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"…Because the smart grid managed services sector represents an emerging and nascent market, it is currently relatively small, with estimated worldwide spending of $470 million in 2010. However, with a fast-growing global smart grid market that Pike Research has estimated at $18 billion in 2010, we believe it is reasonable to anticipate that robust demand for various services offerings will follow…By 2011, Pike Research forecasts that the smart grid managed services market will reach $821 million, a 75% growth rate over 2010. We expect that growth will continue to be strong, and the smart grid managed services space will become a multi-billion market opportunity by 2015. All regions offer good prospects…

"…Multiple market forces are fueling a growing demand among utilities for smart grid technology and smart grid-related services…Pike Research has grouped them into four major drivers: economic, environmental, social, and technological…New technology developments have played a major role…Communications and information technologies have evolved together to facilitate the implementation of smart grid programs, including new transmission and distribution automation technologies, wired and wireless communications technology, high-voltage transmission lines, demand-response solutions, home energy management applications to connect into home area networks, and smart meters to help consumers make decisions about their own power consumption…"

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"…The competitive landscape in the smart grid managed services market reveals a rather unique and interesting situation. This market has attracted vendors from several different industries, such as the information technology (IT) sector, the communications product and services sector, and the manufacturing sector, where vendors are specializing in various smart grid devices, such as smart meters…Telecom providers like Ericsson, Verizon, Alcatel-Lucent, and AT&T, among others, present tough competition…Large, traditional IT companies, such as IBM, CSC, SAIC, Capgemini, Accenture, Lockheed Martin, Siemens, Wipro, HCL, and others, are increasingly posing a competitive threat to the legacy and pure-play communications services and equipment providers...Tendril, Trilliant, and Itron are examples of dedicated technology companies with services arms…EnerNOC…might even be considered the “800-pound gorilla” in this market…

"…Pike Research expects that competition will intensify…There are many different ways of winning in this space, but Pike Research emphasizes the importance of the following three factors…[1] Domain expertise within the utility sector, including a long track record of having served clients…especially as a managed services provider…[2] Information technology, as well as operations technology (OT), expertise to tie IT requirements with OT demands…[3] Ability to address customer relationship management needs among utilities…"