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Verizon Brings the Smart Grid to the Cloud

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For months, Verizon (s VZ) has seemed to be trailing rival AT&T (s T) on smart grid initiatives. Not anymore, if news from the smart grid conference Distributech in San Diego this week is any indicator. This week, Verizon said it has teamed up with meter data vendor eMeter to offer utilities cloud-based smart meter management services. At the same time, Verizon also touted its continuing work with power company Constellation Energy (s ceg).

Phone companies have been increasingly interested in leveraging their infrastructure and networks to offer machine-to-machine services like connecting smart meters (M2M is Taking Off From Kindle to Smart Grid, GigaOM Pro, subscription required). Phone companies can add only a limited amount of cell phone subscribers in the U.S., so M2M services will no doubt be a hot area of growth in the future.

Cloud-Based Smart Grid

Bringing the management of smart meter data to cloud computing style services could be a sea change for the utility industry. Verizon and eMeter are looking to offer utilities eMeter’s software on-demand that can be bought on a per-user basis, which could reduce the upfront capital investment for a meter data management system. Verizon has 200 data centers and a nationwide network, and it only makes sense for utility customers to leverage that infrastructure. Verizon also just bought Terremark (s tmrk), a provider of managed and cloud services, for $1.4 billion.

To put this in perspective, many utilities are basically still living in the days of batch processing. Those were the days when a computer operator fed a batch of punch cards into a computer, which would then process the information during a scheduled time, and hopefully deliver the needed information back the next morning. OK, so utilities are not that bad, but compare that type of computing to today, when most computer processing is done through real-time and “event-driven” processing; the data is fed in, and the computer quickly spits each bit of info out in seconds.

The problem is that utilities, particularly the big ones, are being forced to manage an emergence of a vast amount of data from smart meters and other energy management devices. Their outdated systems and networks just can’t handle all of that data. As Jeff put it last month, utilities are going to have to manage nine times the data they do today if they want to adapt to the smart grid. And that means utilities will increasingly be turning to tools that telcos, computing companies and web firms are using and building. (To learn more about managing massive amounts of data beyond the smart grid, come to our Big Data conference in New York on March 23).

Cloud computing has been one of the biggest trends for computing and the web of the past decade. We throw an annual conference around the trend called Structure. Cloud computing companies, like Amazon (s AMZN), and Microsoft (s MSFT), essentially offer web companies the ability to use computing power on demand as a service. Verizon isn’t a cloud computing company in the traditional sense, but it’s using its network and data centers to offer a cloud-like on-demand service.

Consert & Constellation

The other piece of Verizon’s smart grid play has to do with leveraging its 3G wireless network. Consert is a startup that — with $17.7 million in backing from Verizon Ventures, Qualcomm (s qcom), Constellation Energy and GE Energy Financial Services (s ge) — has built a home and building energy management system using Verizon’s 3G wireless network.

As GE Energy Financial Services Managing Director Kevin Skillern described it last year, Consert will be using Verizon’s 3G network to curb consumption of individual homes’ HVAC systems and water heaters, and aggregate those savings — which they claim come to between 10 and 15 percent — to offer utilities the equivalent of a “virtual peaker plant.” The energy reductions are done automatically through shaving off energy use by those systems at various times of the day. The consumer sets it in the install process and leaves it, and then isn’t supposed to notice the reductions.

It’s one of the first automated, wireless broadband-based, residential, demand response programs I’ve heard of, although EcoFactor has been working on a similar type of service. In September 2009, Consert said it conducted a smart grid pilot project in Fayetteville, N.C., which it says reduced energy consumption of consumers by 20 percent. In that trial, Consert attached controllers to HVAC systems, water heaters and pool pumps, to manage consumer energy consumption. Consumers also received a networked thermostat.

In Verizon’s announcement from Distributech this week, power company Constellation Energy (which is an investor in Consert) showed off an energy management website called VirtuWatt created by Verizon for Constellation’s industrial and commercial customers. Constellation customers can see the energy saved by the Consert and Verizon systems. The news is interesting in that Verizon just moved into the building energy management software market — a space that is crowded with players across industries from Serious Materials to eMeter to Pulse Energy to Cisco (s CSCO).

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