SBI Energy: Market Insights, Opportunities &Trends

What your utility company doesn’t want you to know about microgrids

While increasing population, rural development and overall increasing energy consumption is good news for utility companies, there is one technological movement underway that will hurt their revenue steam in the future. And that is the microgrid’s potential to sell electricity back to ‘macrogrid’. Check out my new 3 minute audio on the global microgrid market here: http://www.sbireports.com/Microgrids-2835891/

Exciting growth in the world of microgrids is setting the market up for a secure future within the world’s electricity infrastructure network. In 2010 the world market for microgrids reached $4.14 billion, up 15% from the previous year. This exuberant growth is expected to continue for at least a few decades, as the need for microgrids grows and as interest remains high. 

 A large variety of microgrid types are available to fit into every nook and cranny of the world’s electrical network, including: smart microgrids for those that are energy savvy; islanded, decentralized or remote electrification microgrids for hermit villages and islanders, hybrid microgrids for the more creative types and rudimentary microgrids for those that are thrifty or economically challenged. Microgrid installations around the world include everything from diesel generator-based rural electrification projects that supply electricity to small remote villages to large, futuristic cities and surrealistic theme parks that rely on the newest microgrid technologies.

 High interest in microgrids is helping to break a few of the barriers to microgrid market growth. Over the past decade, significant obstacles have stood in the way, such as a meager regulatory base and an array of less than perfect technologies. Government bodies and other organizations with investments in microgrid technologies have been working to develop microgrid guidelines; while universities and other research centers around the world are bent on developing methods and technologies to improve microgrid schemes. 

 North America currently holds the largest piece of microgrid pie, staking a near 74% claim of the market in 2010. While the country is expected to continue to expand its microgrid ventures, it will lose at least a small slice of pie to other countries’ quickly growing share. Asia has already begun to compete with its western cousin and is heading towards a near doubling of its market share by 2020.

 Overall the microgrid market is going to be exciting to watch. Its growth and trajectory will likely flow down already visible channels, as well as in unexpected directions, as the world tackles its electricity issues, and as the microgrid infiltrates the seemingly omni-potent, but aging macrogrid.

-SBI Research Analyst, Nana Lapham

(Source: sbireports.com)

This November, I asked Scott Smith, Vice President of Global Technical Architecture for meter data management company eMeter Corporation how utilities would handle the influx of data coming their way after smart meter installations. 

According to Smith, finding the data storage and communications hardware to provide the necessary functions is not the biggest obstacle facing utilities in a smart meter project.  The telecommunications industry has already covered the difficulties with high speed data transmission and large data storage requirements far exceeding what is needed. 

The challenge, says Smith, is that utilities have to move away from the “historical model” of thinking about Smart Grid implementations from a hardware perspective.  Instead, utilities need to be thinking about Smart Grid projects from a marketing (i.e. consumer relations) standpoint and from a business process perspective. 

For comparison, let’s look at the smart meter rollouts of Toronto Hydro in Ontario, Canada and Pacific Gas & Electric Co. (PG&E) in California. 

Toronto Hydro focused on developing its business plan around customer communication, implementing a time-of-use pricing model and effective use of the Smart Grid data.  The strategy won the company three awards, including the Outstanding Achievement in Marketing and Communications Award from the Association for Energy Service Professionals in May 2010 for its smart meter project.

On the other hand, PG&E simply dealt with its smart meter project from the beginning as an infrastructure change.  As a result, the lack of customer outreach has caused a customer relations nightmare for the utility.  This has resulted in thousands of complaints and even a lawsuit in Bakersfield that claimed the new smart meters were not reliably reporting actual electricity use.

According to Smith, the difference is not that Toronto Hydro implemented a better system technologically, (although to be fair eMeter is the MDM for the Toronto Hydro Smart Grid project).  The difference is that Toronto Hydro took pains to ensure that the business process and customer relations were in place to properly handle the transition to implementing its Smart Grid technologies before the first smart meter was even attached to a house.

-By Norman Dechampes, analyst for SBI Energy and author of ‘The Smart Grid Utiltiy Data Market’

More> http://www.sbireports.com/Smart-Grid-Utility-2496610/