Great American Offers a Smarter Grid to Rural Utilities

logoMuch of the news these days about the smart grid buildout comes from the country’s large investor-owned utilities, like California’s Pacific Gas & Electric (s PCG), which tend to be centered around major metropolitan areas.

But Washington, D.C.-based Great American Broadband is betting that electric cooperatives — smaller, privately held electric utilities that deliver power to some 40 million people in rural America and are owned by the members they serve — will adopt smart grid technology, too.

The company tells us it’s in the process of negotiating a $3 million round of financing from a consortium of unnamed private investors. Great American Broadband plans to use the funding to help it develop its web-based dashboard, which lets utilities monitor and manage smart meters and other grid-attached devices (such as transformers).

To date, the company’s core business has been offering broadband services to Midwestern rural communities. But Great American now wants to offer these broadband services to electric cooperatives as the communications backbone on which they hang their smart grid applications. 

Unlike using the infrastructure of large telcos such as AT&T (s T), the arrangement gives utilities complete control over their networks, turning them into “virtual Internet service providers,” according to Subodh Nayar, president and COO of Great American (Nayar recently wrote a guest column for Earth2Tech entitled “Smart Meters Are Not the Answer to the U.S. Power Problem”).

Nayar thinks utilities will value having control over the networks on which their smart grid applications depend. “The utilities see what’s going on in their networks, monitor it and reset it when they need to,” he said.

Great American plans to use some of the new funding to buy the assets of existing rural ISPs to expand its operating footprint, Nayar said. In addition to offering broadband services, the company plans to move quickly to sign up electric cooperatives looking to adopt smart grid applications. Plenty of them should be interested, as some $4.5 billion was set aside in President Obama’s stimulus package to modernize the electric grid with smart technologies.

But capital costs are the biggest hurdle for companies building out communication networks, and Great American’s $3 million won’t go far in this line of businesses. The startup also won’t be the only company chasing rural utilities. Valhalla, N.Y.-based Arcadian Networks provides broadband services to rural communities, too, and is targeting the needs of utilities. And Arcadian’s war chest is significantly deeper, having raised $90 million in financing from investors including Goldman Sachs. But America’s rural regions are vast, and more than one company could emerge a winner in this growing market niche.