Summary:

Sensus is the only one of the big five smart meter giants using a licensed star network, rather than an unlicensed mesh network, to connect smart meters. Now it has $675 million in debt financing to expand that technology.

SmartMeter_TomRaftery

UPDATED: Sensus is the only one of the big five smart meter giants that uses a licensed star network, rather than an unlicensed mesh network, to connect smart meters — a fact that could offer key advantages, as well as drawbacks, in the world of connecting meters and other smart grid devices. UPDATE: Now Sensus has $275 $675 million in new debt financing to help prove its model works better.

There’s a lot to differentiate it from the competition. Sensus uses licensed spectrum to connect about 9 million smart meters and counting in the U.S. via what’s called a star network architecture, which uses centralized towers, each of which manage thousands of endpoints. Competitors like Landis+Gyr, Itron and Elster, on the other hand, have cast their lots with mesh networks that use each node as a relay point for the other nodes, forming neighborhood networks all communicating via unlicensed, 900-megahertz spectrum.

Mesh networks tend to be cheaper and easier to deploy — if you’re putting hundreds of smart meters above ground, in relatively close “hops” from one to the other, in areas relatively free of interference. Star networks, on the other hand, can sometimes have better performance and security.

Sensus CEO Peter Mainz said in a Wednesday interview that Sensus’s tower-based star networks could deliver more reliability, as well as the critical ability to penetrate walls, manhole covers and other barriers between its towers and the meters it serves. Those are the kinds of barriers that gas and water meters tend to face, as well as electric grid gear that’s buried underground, as is common in urban areas like New York City — a potential challenge for mesh networks to meet. Other companies, such as On-Ramp Wireless, are working on technologies aimed at reaching underground meters as well.

Using licensed spectrum also places Sensus in a separate category. While unlicensed spectrum networks can be cheaper to deploy, they can also run into interference from other unlicensed equipment. In fact, utilities have been lobbying federal regulators to have some spectrum freed up by the move from analog to digital TV dedicated for utility-specific purposes — a move that could help utilities that want to rely on spectrum they control for mission-critical purposes, like distribution grid monitors and controls.

It’s hard to say if Sensus’ key differentiators have played a role in its success so far. The company has about 9 million smart meters deployed in the U.S., with customers including Southern Co., Exelon and PECO. Beyond smart meters it also has distribution automation capabilities it got with its 2010 acquisition of Telemetric, Mainz noted. Of course, the rest of the Big Five smart meter vendors have their own distribution networks up and running as well — and Landis+Gyr is rumored to be for sale, opening up its technology to prospective strategic buyers.

Which combinations of architectures and networks work best remains to be seen. Sensus did report to the U.S. Securities and Exchange Commission that its revenues for the year ending March 31, 2011 were “trending marginally lower” from the $844 million it reported in the 2010 fiscal year, though it hasn’t yet completed its full financial statements for the most recent fiscal year. On the other hand, it also ended March with a record order backlog of $151 million, up from $138 million at December 31, 2010, it reported.

As for its new debt financing, Mainz said Sensus wants to use it to build up a “liquidity structure and capital structure” to allow it to compete with its fellow smart meter giants for new contracts and new technologies, not only for electric smart meters but for smart gas and water meters as well. In today’s hot smart grid M&A market, that sounds like money talking to me, though Mainz wouldn’t name any specific holes in technology that Sensus planned to fill.

Image courtesy of Tom Raftery via Creative Commons license.

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