The major suppliers to the Smart Grid market, whilst confident about its long term future have for a few years realized that there could be some long delays in its development. Their concerns have hinged around the immense technical and commercial challenge that the electrical utility companies face and their capability to finance it.
The smart ones came to the conclusion that with the aid of Smart Building owners they could circumnavigate some of these road blocks and make a significant contribution to the reduction of CO2 whilst all the stakeholders benefitted. Through interfacing Smart Buildings with Smart Grid, even at the latter’s current stage of development, energy conservation and demand control would reduce the electrical load and where the site generated relatively clean distributed power this could be exported to the grid further reducing the CO2 emissions from the fossil fuelled power plants that will soon have to be retired.
All of this can be achieved for an investment of no more than 1% of the total investment needed to deliver a comprehensive Smart Grid and provides a very substantial and quick Return On Investment. More important is the fact that it will not need money from the public purse as private finance will be available for around 70% of the investment.
Most of the major suppliers driving the Smart Building to Smart Grid interface business are manufacturer / installers of sophisticated building and electrical network management controls and also offer EMSCo Services. To complete the full spectrum of technical and commercial attributes in order to offer a total solution to their clients they have carefully built up the additional, mainly software expertise needed through acquisition. Their target is not just to supply and install interface systems but also to wrap this up in an EMSCO building performance contract that will bring even richer rewards.
We have in this Blog post analyzed the strategic acquisitions in the Smart Building to Smart Grid Interface Business of 4 of the largest and leading companies in the Smart Grid and Smart Building Controls industrys including Schneider Electric, ABB, Siemens and Honeywell. The portfolio of acquisition of these companies in the last two years extends much further into the Smart Grid arena, but our analysis shows that control management and hardware acquisitions grew by a factor of 10 in 2011.
Schneider Electric operates leading businesses in building controls, electrical network management equipment and more recently EMSCO services. Last year Schneider acquired Telvent for $2 billion and extended their move into software and real time monitoring and control in 3 key infrastructure markets: Smart Grid, efficient infrastructures, and smart cities. The company is working on “smart city” projects in the U.S., France and China that link buildings and the grid.
In May this year they purchased M&C Energy Group for an undisclosed sum from owner Lyceum Capital. M&C expects to see about £35 million ($56.5 million) in annual revenues in the year ending in June for its energy procurement and sustainability services business. Last year it purchased Summit Energy, the U.S.-based energy services provider with about $20 billion in energy contracts and 650 customers, for the sum of $268 million.
Schneider Acquired Viridity to increase its expertise in Data Centre Power projects through their data centre infrastructure management software, EnergyCenter 2.0, which provides a link between the infrastructure, IT equipment and the applications that run on them.
ABB operate leading businesses in building controls and the full spectrum of electrical transmission and distribution equipment. ABB in 2011 purchased Australian renewable power integration company Powercorp whose portfolio includes automation and control technologies to manage the integration of renewable energy into isolated grids and keep generation in balance with consumption and Minicom leaders in enterprise asset management software.
In January 2011 they acquired Obvient Strategies t&d software for managing and monitoring distributed assets. In 2010 they acquired Ventyx for $1 billion leaders in software for real time information on electricity demand, pricing and availability. ABB says the acquisition strengthens its portfolio of control technologies and brings expertise for the integration of renewable energy into conventional micro and remote island grids.
Siemens operates leading businesses across the globe in building controls and the full spectrum of electrical transmission and distribution equipment and EMSCO services. The Siemens Building Technologies Division in February this year acquired Pace Global, a U.S. based energy service provider. The acquisition underscores Siemens’ commitment to helping customers increase the value of their companies by optimizing energy and resource efficiency. Pace Global’s expertise enables Siemens to substantially expand its portfolio of sustainability and energy management services for companies and cities. Pace Global’s business model combines strategic corporate consulting with energy procurement and CO2 management. The services offered by Pace Global enable Siemens to build a new customized solution portfolio to support its customers in developing strategies, applying them in daily operations and implementing measures.
Siemens is testing out grid building connectivity in New York City and other places. That’s where Siemens has put eMeter, the smart grid software vendor it bought in November last year, as well as grid router and server maker RuggedCom, which it bought for $381 million this year. It’s working with New York City utility Consolidated Edison on a grid-building demand response platform, where it already has a lot of buildings running its technology. RuggedCom which had revenues of around $94 million last year and employs 360 people, makes heavy-duty routers and Ethernet cables specifically designed for challenging environments such as those found in electric power substations and smart grids. Siemens also has a stake in Powerit the not so well known but significant player in industrial energy management and demand response. lt has just launched a new version of its Spara EMS platform that represents the first step in moving to a cloud-based platform.
Honeywell operates leading businesses across the globe in building controls and EMSCo services and has more recently bought into the electrical network management controls business. Honeywell is one of the top 4 suppliers and installers of both domestic and commercial building controls in the world. It also one of the world’s leading EMSCO service suppliers.
It moved into the Smart Grid business in 2010 when it acquired OpenADR server maker Akuacom. It is now working on ADR projects in the Hawaii, China and the U.K. to connect utilities and grid operators to building control systems, combining with Honeywell’s Tridium unit which was acquired some years ago. Honeywell recently announced the release of the new Attune Advisory Services. This new SaaS offering includes dashboards, reporting, and support services worldwide in an effort to reduce energy and operating costs by up to 20% and at the same time draw new business for Honeywell’s international services business.
Lets be quite clear, the Smart Building to Smart Grid Interface Business is a relatively small business compared with Smart Grid. Our report http://www.memoori.com/smart-buildings-2012 estimates it will be worth $25 billion over the next 20 years just over 1% of the investment needed to deliver Smart Grid and will peak in peak in 2020 at $2.2 billion.
So why all the fuss about Smart Building to Smart Grid Interfaces? Well the business is available here and now with decades of latent potential business stacked up waiting to be converted. It delivers on CO2 reduction at minimal cost and will provide a welcome breathing space to find the best solution to ADR and the all important cyber security solution. But for the 4 suppliers above, plus many others, its an opportunity through EMSCO services to increase this business by an order of magnitude with the majority feeding off their heritage estate. That’s a nice business.