5 Top Smart Grid Trends for 2010

ATLANTA - January 2, 2010 - These are just a few of many key trends that we expect will continue to pick up steam in 2010.

1. Storage Scales. 2010 will be the year that energy storage moves from pilots and proof of concepts into utility scale deployments with hundreds of megawatts contracted and coming on line across a range of promising technologies including distributed thermal energy storage, batteries, compressed air and more. Increasingly, electric energy storage will be recognized as foundational to the Smart Grid.

2. Communication Consolidation. In 2010 the utility industry will begin the move to consolidate communications infrastructure with a “network of networks” approach that draws together multiple heterogeneous communications technologies including local area mesh networks best applied for metering applications, peer to peer private radio networks, PLC and other communications under wide area, IP-based private wireless network umbrellas and management programs. Expect to see an accelerating and increased use of IP based applications and technologies across the board.

3. Consumer Segmentation & Education. Utilities will increase their use of consumer marketing strategies and tactics to research, segment, and educate their retail electric customers based on individual interest and needs. 2009 taught utilities some hard lessons about engaging consumers with smart metering deployments. In 2010, expect utilities to introduce custom programs with energy service and network providers to help craft services including energy efficiency audits, home area network management, and other value added services to help consumers to take advantage of benefits from smart metering system deployments. The smart meter is not the only gateway to the home. Increasingly, IP-based network convergence will provide multiple communications channels and options for consumers. Down the road, we see the consumerization of smart grid evolving into the the most ubiquitous forms of access including iPhone and Droid applications.

4. Demand Response & Distributed Resource Market Integration. Expect continued adoption and accelerated incorporation of demand response within wholesale markets. Also, as smart meters roll out in unbundled markets including Texas, energy retail providers will begin to incorporate demand response management services to differentiate their offerings and add additional value for consumers. Integrated investor owned utilities will begin work in earnest to invest in new portfolio management tools to optimize smart grid commercial operations with demand side optionality and the incorporation of Virtual Power Plants as an increasingly larger and more viable resource category.

5. Start Up Fatigue and Buyouts. Early stage venture investors who bought into Smart Grid hype in 2007-2009, particularly around software start ups, may become fatigued by the plodding nature of utility investments in Smart Grid. Larger venture and private equity funds will begin picking winners and losers in their portfolios based on market contract backlog. Look for a culling and consolidation of smaller companies as segment leaders solidify their positions and turn cash flow positive at scale. Crowded segments ripe for consolidation include AMI mesh and home area networking.

Source : The Mcdonnell Group, 02/01/10