Adding digital intelligence to the power grid is a complex and unfamiliar task for utilities, and they’re going to want well-funded, experienced partners to hold their hands on the way to the new intelligent world. That’s going to drive the “smart grid managed services” market — which includes consulting, design and advising — from a mere $470 million today to more than $4.3 billion in global revenue by 2015, according to a Pike Research study released Wednesday.
Vendors that aren’t getting partnered up with the likely leaders in the field now might have trouble fitting in down the road. Some of those smart grid managed services leaders include IBM, Accenture, CapGemini, GE Energy Services, Lockheed Martin, SAIC and Siemens. These are companies that have been advising utilities on how to deploy and manage new smart meter networks, distribution automation systems and back-office control platforms.
While much of these consultants’ work so far has been in integrating and managing technologies that utilities have already chosen, the integrators are also busy putting together their own lists of preferred partners for various pieces of the smart grid puzzle. Take IBM, which on Tuesday announced a new smart grid communications service for utilities, which included a long list of its partners, including Cisco, Itron, Juniper Networks, Landis+Gyr, Motorola, RuggedCom, Sensus and Trilliant.
IBM is far from alone in making broad partnerships. Cisco, which wants to network large swaths of the smart grid, has a list of “ecosystem” partners that includes General Electric, SAIC, Arcadian Networks, Infosys, CapGemini, Oracle, Itron, Landis+Gyr, Siemens, Schneider Electric and Verizon. Then there’s Siemens, which has its own list of partners helping it approach the smart grid from its incumbent position in power generation, transmission and distribution. Accenture has utility clients including ComEd (Exelon), Xcel Energy, Baltimore Gas & Electric, and CapGemini has Canadian utility clients Hydro One, Bruce Power, and Ontario Power Generation. Telecom companies like Ericsson in Europe and Verizon and AT&T in the U.S. are also moving strongly into smart grid managed services.
Utilities are already using managed services, but mainly for application-specific tasks such as implanting demand response programs or managing smart meters, Pike Research noted. But “infrastructure outsourcing,” or services to manage the IT backbones of utility smart grid systems, will grow to $1.6 billion in revenues by 2015, outpacing the $1.5 billion projected for application-specific offerings, Pike predicts. Services that help manage business processes like billing and customer support will also see strong growth, to $1.2 billion by 2015, Pike predicts.
Report author Marianne Hedin writes that utilities will be driven to managed services mainly because service providers have better understanding of the latest technologies and can deploy them in a more cost-effective manner. But I would add security concerns to this list, too. Paul De Martini, CTO and VP of strategy for Cisco’s smart grid business unit, told me last month that utilities are turning to integrators for smart grid projects to solve security concerns they don’t feel capable of handling on their own. Companies like SAIC and Lockheed Martin have pointed to their experience with military-grade security as a key benefit to their newly launched smart grid efforts.
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