In Jeff’s column on GigaOM Pro this week (subscription required), he looks into the benefits of using 6LoWPAN for an end-to-end smart grid network, from home energy devices to a wider neighborhood smart meter management system. In fact, if NXP and Cisco started working on integrating somehow, 6LoWPAN would take an important step forward, effectively competing with home wireless leader WiFi and the utility-leading home wireless standard ZigBee.

Whatever the dominant home energy wireless standard is, the important piece will be creating an ecosystem for innovations, applications and end devices to emerge. That’s why Google is working on an open source wireless mesh standard with partner Lighting Science Group, and NXP is open sourcing the software that will run over its chips and across 6LoWPAN. The future of lighting and home devices is networked, and digital — why fight it?

To read the rest of Jeff’s column check out GigaOM Pro.

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• Is Cisco’s Path to Networked Lighting Via 6LoWPAN?
• Networking the Smart Grid
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That’s the gist of a Cleantech Group report (pdf) released by the Department of Energy Thursday that calculated 2010 U.S. smart grid product spending at $2.75 billion dollars. A nearly equal amount is being spent on smart grid services, the report found, adding up to a $5 billion-plus smart grid market, which is in line with other recent estimates.

As for sectors’ product sales, the report put smart metering — or AMI — at $1.1 billion, distribution grid management at $1.5 billion, and demand response at a mere $150,000 million, although the last category was boosted by $1.1 billion in service revenues, the report noted.

It may be surprising to see distribution grid management — grid control gear and the communications and software to run them — outpace smart meters in terms of revenues. But report author Greg Neilchin said it makes sense, given the scale and cost of the equipment involved in grid-side projects (in the tens of thousands of dollars and up) compared to smart meters, which are meant to cost less than $100 each.

The report also put the role of smart grid startups into perspective against the role of corporate giants in the field. While $1.7 billion in venture capital has been invested into smart grid companies between 2007 and 2010, most of that has gone to suppliers of smart meter-enabling technology — where startups are assumed to make a fraction of the total product spend on meters supplied by the industry’s Big 5 incumbents — and home and building energy management products, where markets are limited to pilot projects.

As for distribution grid management, “you can assume the vast majority of that’s accruing to legacy vendors,” Neichin said, referring to companies like ABB, Siemens and General Electric. That legacy turf is being crowded in turn by would-be smart grid giants like Cisco, IBM, Google, Lockheed Martin and others. All are partnering with startups, as well as with each other, to land smart grid projects. Mergers and acquisitions have boomed in the smart grid space: from 10 in 2007 to 30 in 2009, a figure already matched by this year’s M&A tally. Further acquisitions are “just completely reasonable and realistic to expect,” Neichin said.

Demand response — turning down big power loads to help utilities manage peak demands — is a different market altogether. Big demand response aggregators such as EnerNoc, Comverge  and CPower (recently acquired by competitor Constellation Energy) make most of their money in service revenues, with relatively little spent on the underlying technology, Neichin said. That could begin to shift, as demand response providers acquire or develop technology offerings – smart meter-home energy control from Comverge, or commercial and industrial building energy efficiency software from EnerNoc, for example — to sell as add-ons for existing demand response customers, or perhaps in their own right, he said.

For more research on smart grid check out GigaOM Pro (subscription required):

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Image courtesy of Vaxomatic.

I delve into all of these details over at GigaOm Pro (subscription required), starting with the important point that Arch Rock’s “top-to-bottom” open standards claim is centered on a set of standards that are still under development. Specifically, the company’s PhyNet-Grid product is aligned with the Institute of Electrical and Electronics Engineers (IEEE)’s 802.15.4g effort, aimed at developing standards for the physical and media access control (MAC) layers of utility networks.

That’s important, because none of Arch Rock’s competitors — including rumored IPO candidate Silver Spring Networks and quieter but well-funded competitor Trilliant — can claim that their smart meter mesh networking technology is thoroughly compliant with IEEE standards that ensure “end-to-end” IP. But then, neither can Arch Rock, since the standard isn’t complete yet. With much at stake — the National Institute of Standards and Technology is looking to 802.15.4g to inform its smart grid standards-setting process  — there’s plenty of evidence in the record that all the mesh players are pushing to make room for this technology as well.

Then there’s the real world to think about. Arch Rock launched PhyNet-Grid in June by saying it would have gear in pilot deployments by the end of 2010, begging the question of how a startup could get up and running so quickly. The Cisco acquisition and Itron partnership answer those questions, but leave unanswered how the market will react to this new offering. Pike Research projects the smart meter space will continue to be dominated by proprietary mesh technologies, though standards-based systems will increase their share.

As for how Cisco will bring Arch Rock’s technology to market, Paul De Martini, CTO and VP of strategy for Cisco’s smart grid business unit, gave some more details in an interview last week. One key point he made was that Itron will be able to remotely upgrade its OpenWay meters to support a Cisco-Arch Rock system, which opens Cisco’s market to some of Itron’s existing customers — though not those that have older, one-way communicating meters using so-called AMR technology.

Of course, mesh isn’t the only network the smart grid will need. Certain grid automation functions require super-fast connections that are a better fit for fiber, specialized wireless systems like S&C Electric’s SpeedNet — and, perhaps, WiMax. Grid Net is the current champion of WiMax for smart meters, but its partner General Electric is also using WiMax for distribution grid management. But for networks that connect to millions of end-points, mesh remains a strong competitor against WiMax, as well as cellular networks — though players like Verizon, AT&T and Sprint are said to be lowering their prices to attract smart grid business.

De Martini also discussed some plans for Arch Rock’s low-power networking technology. Arch Rock got its start in low-power wireless sensor networks for data centers and commercial and industrial buildings, and that technology — centered on a different standards effort called 802.15.4e — will play a role in Cisco’s and Itron’s mesh networking partnership by offering the ability to keep working during power outages, he said. But whether it survives as a building sensor network product line is open to question. De Martini said that Cisco would support Arch Rock’s existing data center and C&I customers, but wouldn’t say if it would seek new ones. Instead, he pointed to how low-power sensors could be used to monitor transformer temperatures and other grid functions.

For more research on the smart grid check out GigaOM Pro (subscription required):

Moving Into Substation Networking, Cisco Seizes Smart Grid’s Low-Hanging Fruit

Google’s latest smart grid play: white space

Smart algorithms, the future of the energy industry

The debate hit a turning point last week when Internet networking giant Cisco announced plans to acquire wireless network firm Arch Rock, and also inked a deal with smart meter heavyweight Itron to work on a network reference design for the smart grid based on IP. Cisco’s roots are in IP — as the leading supplier of routers that built the Internet — but Cisco’s recent all-out market assault on the smart grid market shows that the company thinks there’s a natural IP-based cross over from its Internet business.

Of course, Silver Spring Networks — which has been the leader in scoring utility smart grid network deals — has been touting IP as the underlying network technology for years. Cisco’s entrance into the smart grid market validates that Silver Spring Networks made the right bet back when the company was founded in 2002. Now it just needs to keep convincing utilities that its offering and its utility roots — not the 10-ton, Cisco-branded product — is more attractive.

In policy circles, an IP-based smart grid has seemed to win out as well. The FCC took a strong position on advocating IP and broadband as the underlying architecture for utilities’ smart grids. The smart grid stimulus package leaned toward IP in its allocations, and the NIST standards body has also embraced IP. Part of all this support is probably at the behest — and a little lobbying — of the Internet companies, like Google, Cisco and IBM. The old-school meter makers tried to resist at first, but companies like Itron have come around.

Remember, while the future of smart grid architecture is looking like IP, many of the current smart grid networks are based on proprietary and non-IP radio frequency standards. All those networks will take a while to upgrade and replace and the new networks will take years to build out. The IP-based smart grid will still emerge eventually, but it’s clearly on its way.

For more research on the smart grid check out GigaOM Pro (subscription required):

Moving Into Substation Networking, Cisco Seizes Smart Grid’s Low-Hanging Fruit

Google’s latest smart grid play: white space

Smart algorithms, the future of the energy industry

Image courtesy of Kevin.

Cisco’s acquisition announcement today comes after it said yesterday that it has teamed up with smart meter heavyweight Itron to develop a reference design for smart grid network architecture, and several months after it launched a home energy management product, a hosted residential demand response-type service and upgrades to its building automation programs. In May, Cisco launched its first smart grid product, which was basically hardened networking gear for utility substations.

With the acquisition of Arch Rock, Cisco will now own a wireless mesh network technology product that can connect smart meters to utilities’ control stations and could link up to its other building automation services, its box for home energy management and its smart grid substation gear.

While Cisco only entered the smart grid market a few months ago, the company has been signaling its entrance into the market for some time. Cisco CEO John Chambers has said that the company has an ”unlimited“ budget for the smart grid, and Cisco Senior VP of Smart Grid Laura Ipsen told us she sees a $20 billion opportunity in the smart grid.

Arch Rock’s network product, dubbed “PhyNet-Grid,” has been designed to connect smart meters to the utility back office using wireless mesh technology — an architecture where each node can act independently and is self-healing — and is based on the wireless standard created by the Institute of Electrical and Electronics Engineers (IEEE) called “802.15.4g.” Arch Rock CEO Roland told me that the gear — which it was targeting to third-party manufacturers first, not directly to utilities — was the first that was based “from top to bottom on open standards.”

Of course, Cisco, with its Internet infrastructure background, has been basing its smart grid network technologies around Internet Protocol and open standards, too. Other potential competitors have as well, like Silver Spring Networks, which was actually called “the Cisco of the smart grid” before Cisco entered the scene.

I’m expecting to see more small acquisitions like this one as Cisco tries to figure out its smart grid strategy and looks to offer real products to utilities. To date, a lot of the products that Cisco has announced — like its reference design plan with Itron — aren’t market-ready. Earlier this year, Cisco announced an investment in Grid Net, which makes smart meter software and started out with an emphasis on the wireless standard WiMAX.

Cisco’s Ipsen told us in April that Cisco has been “looking across the landscape, from (electricity) generation to consumption,” for potential acquisitions in the smart grid, and that Cisco could acquire into “spaces where our customers from an architecture approach are looking for technology.” She said while there’s a lot of play in smart meters right now, Cisco also thinks “distribution automation” — networking of the power grid at the level where electricity is distributed, in contrast to the building level — is a hot area.

For more research on the smart grid check out GigaOM Pro (subscription required):

Moving Into Substation Networking, Cisco Seizes Smart Grid’s Low-Hanging Fruit

Google’s latest smart grid play: white space

Smart algorithms, the future of the energy industry

Over at GigaOm Pro (subs. req.), I take a look at three startups — Sentilla, Arch Rock, and SynapSense — with different approaches to data center energy efficiency, both in technology and market focus. Sentilla’s software-centric approach offers lower costs, while Arch Rock’s plan of installing wireless sensors and software controls in data centers, commercial and industrial buildings gives it potential reach. But it’s Folsom, Calif.-based Synapsense’s complete focus on data centers with its sensor-plus-software approach — and its presence in HP’s Environmental Edge data center platform and General Electric on data center monitoring — that have given it what appears to be an early lead.

There’s a lot of buzz around the market for helping data centers’ save energy, both on the IT and facility sides of the equation. U.S. data center power use is expected to double by 2015 to add up to $7.4 billion in annual power bills, the EPA says — and that could drive a fourfold increase in the green data center market to some $41.4 billion by 2015, Pike Research estimates.

Still, power bills only add up to 2 to 4 percent of a typical data center’s operating costs, notes Martin Reynolds, vice president and data center analyst at Gartner. In today’s economy, spending on efficiency improvements to chase such small potential returns is a tough sell, he said. In fact, the chief short-term market opportunity lies not in offering simple energy savings, but in allowing data centers to expand capacity once they’ve reached their limit on how much power they can draw from the grid.

That could lend an advantage to a lower-cost software-only solution like the one Redwood City, Calif.-based Sentilla offers. In fact, Sentilla has dropped wireless sensors to concentrate on software that estimates IT power draw based on usage, CTO and co-founder Joe Polastre told me last week. That means, first off, identifying underutilized servers and older, power-wasting servers, which waste up to $24.7 billion per year, according to a 2009 Uptime Institute report (pdf). Fellow startup Viridity Software is also pursuing a software-centric approach in data center efficiency.

But what about all the data you can’t get without sensors? San Francisco-based Arch Rock said it’s sticking with both wireless sensors and software for its data center offering, That’s critical to address the facility side of data center energy management — cooling systems can make up more than half a data center’s total power spend. Pike Research said the facility side will make up 46 percent of the green data center market by 2015, while energy-efficient IT equipment will grab 41 percent and monitoring and management will yield a relatively small 14 percent.

No doubt, covering all of those bases could give a startup’s technology a boost over those that would have to be mixed and matched with other technology. That’s where SynapSense CEO Pete Van Deventer claims an advantage. While Arch Rock is also targeting commercial and industrial buildings, SynapSense has chosen data centers as its sole focus, he said. Not only that, but Van Deventer says it takes responsibility for making sure the sensors, networking and software platform work as a complete package — “If you just provide the sensors, or you just provide the software, you’re going to fail,” he said.

No doubt SynapSense’s role with HP and General Electric will give it a chance to prove this point, as well as lay the groundwork for its recent decision to offer a potentially disruptive automation capability as well. Sentilla’s Polastre said that most data center customers aren’t ready yet to give startups the chance to automate their mission-critical operations, but Van Deventer said that customers are ready for it.

For more information on green data centers, read (subscription required):

Report: Green Data Center Design Strategies

Viridity’s EnergyCenter software can start delivering per-server power usage and utilization information, along with a host of other data, within hours of being installed. That’s all at a cost of $500 per rack, according to Michael Tresh, director of product development.

Viridity (not to be confused with smart grid software startup Viridity Energy) uses server power usage modeling and server utilization data to target what Tresh called the “low-hanging fruit” in data center power waste — primarily older power-hungry servers that need to be replaced, and servers that are being underutilized. EnergyCenter also delivers information and advice on the best way to physically organize servers in a data center, and now has clients including LexisNexis, Highbridge Capital and F5 Networks.

The software-only approach differs from a host of other data center efficiency startups, such as Arch Rock, Sentilla and Synapsense that have focused on using wireless sensors to collect data. The main benefit to Viridity’s approach is lower cost, Tresh said.

On the other hand, sensors can deliver information that software alone may not be able to, such as temperature and humidity data that can help data center operators fine-tune their cooling systems, which can account for up to half of a data center’s energy costs. As analyst Katherine Austin put it in a September GigaOM Pro report (subscription required), it’s difficult to make a decision on whether to shift cooling strategies or run data centers a few degrees hotter without real-time data to know which sections of the data center might be at risk of overheating.

Data centers used about 1.5 percent of electricity in the U.S. in 2006, but that share has been surging since then, driving data centers to seek out more ways to save power. Pike Research predicts that green data center equipment will grow from a $7.5 billion business today to $41.4 billion by 2015.

At the same time, power bills tend to make up less than 5 percent of a data center’s operating costs, making investment in saving power a difficult call, particularly in today’s tough economic times, said Martin Reynolds, VP at Gartner Research. One exception is when a data center finds it can’t expand because it has maxed out the power available at its location, he noted.

Where are data centers concentrating their efficiency efforts? Last month, research firm Forrester reported that 70 percent of companies are already taking energy-saving steps such as virtualizing servers. Pike Research said that power and cooling infrastructure will make up the largest portion of the green data center market with 46 percent of the revenue, while energy-efficient IT equipment will generate 41 percent of the revenue, and monitoring and management will grab 14 percent.

As for how startups in the space will fare, Reynolds predicted most will be acquisition targets. Giant power company Eaton announced plans to acquire data center energy management hardware company Wright Line Holding earlier this month, and last month, General Electric said it invested in SynapSense. Reynolds noted that HP, IBM and VMware are working on integrating energy management with their data center IT equipment management platforms as well.

For more information on green data centers, read (subscription required):

Report: Green Data Center Design Strategies

Image courtesy of Viridity Software.

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