Phil Carson | Nov 24, 2010

It's that time of year when pundits forecast trends. Pike Research appears to be first out of the gate, so we'll pass them the crystal ball today. Of course, they work pretty hard to quantify market directions, so this isn't a séance but the synthesis of key findings from their 2010 output.

Security threats become tangible.

"People have paid lip service to it, now they're going to worry more about it," said Bob Gohn, a Pike Research senior analyst. "You do security to pass the audit, not necessarily to be secure."

Gohn cited the "Stuxnet" virus now spreading globally, thought to be generated by a friendly government and aimed at Iran's nuclear facilities, mentioned in a recent Seymour Hersh article in The New Yorker and dissected at a popular blog site, "Schneier on Security."

"We now have a proof point," Gohn said. "This virus has appeared embedded within utilities' SCADA (supervisory control and data acquisition) equipment in distribution networks. This sort of thing, if exploited, could cause some serious damage. It will make regulators take notice. There's more scrutiny coming."

Distribution automation rises in prominence.

"AMI (advanced metering infrastructure) has been the talk of the town," Gohn said. "But under the hood, it's distribution automation. It's able to deliver efficiencies through dynamic volt/VAR control and greater reliability through faster restoration of the grid."

"You don't have to engage consumers, you can do it transparently and it has a solid business case," the analyst added. "It's a no-brainer."

Utilities seek swift connection between smart meters and consumer benefits.

"The 'Bakersfield effect' continues to echo throughout the industry," Gohn said. "It's a firestorm that continues to rage. It'll cause utilities to approach rate cases more carefully. We'll see better-run pilots that'll show that consumers are actually going to see some benefits, realize some cost savings and be better energy consumers as a result."

AMI growth in Europe and China may double global demand.

Smart meter vendors sit up and take notice. Europe is just on the threshold of massive meter rollouts, with 27 million slated for installation in the United Kingdom and 35 million in France.

"The really big deals-the 100 million meter deployments over the next three to four years-will begin to align in 2011-2012," said Gohn. "That's why the focus on AMI will start shifting from the United States to Europe."

"China's a different story," the analyst continued. "The official pronouncements have said that smart meters will rollout after transmission and distribution capacity and improvements are done. But we're seeing reports that single-digit millions of meters are being deployed now through 2011. And there's talk of deployments in the realm of 300 or so million meters in the next five years. If that's true, that's like a doubling of the protected market for smart meters in that timeframe. That demand is likely to be served by indigenous Chinese companies, which will seek to export their goods into new markets, creating competition for incumbents."

2011 will not be the 'Year of the HAN.'

"The explosion in home-area network shipments and nodes that so many vendors want to see happen? Not this year," Gohn said. "We'll still be mired in pilot-itis."

"Home area networks are meant to change people's behavior and we have many consumers who don't want their behavior changed-it's the 'Bakersfield effect' again," the analyst said. "We'll need additional pilots that aren't just about proving the technology, but will really explore the consumer's response to the technology. What combination of technology and rate design will deliver the best benefit and make consumers happy?"

Demand response goes mainstream.

"Demand response will mature and become less of a standalone business and more of an application in energy management, a service offering by utilities to their commercial/industrial customers," Gohn said. "It may become integral to commercial building controls and utilities won't need a third-party to do that for them. Or the third party offers a whole suite of energy management systems that sit alongside building controls. That's a long-term trend that will accelerate this year."

The real impacts of stimulus grants will be felt.

"Lots of smart grid and AMI projects were in the pipeline in 2008 when the federal government announced that grant money was forthcoming," Gohn said. "That froze the market for 12 to 18 months. Sales plummeted, jobs were lost. Now we're past that and finally seeing traction. We're going to see a positive effect in 2011."

Worldwide standards efforts begin to bear fruit.

"Between the progress NIST (National Institute of Standards and Technology) has made and other standards groups around the globe, we're starting to see delivery on these efforts," the analyst said. "That work, of course, is never done. But we'll have standards and preliminary standards that people can actually use."

Utilities begin to take up the data challenge.

"We'll move from utilities saying, 'Holy #$%&*, what do we do with this data?,' to making use of it through analytics," said Gohn. "Utilities in Texas and California are generating real data that can be mined for business intelligence."

Telecom providers must prove their case.

"Traditional data and telecom providers talked up their potential in the past two years," Gohn said. "In 2011, it's 'put up or shut up' time. Especially for the wireless telecom vendors. They need to establish attractive costs and reliability factors, for capital and operating expenses."

This story first appeared in Intelligent Utility Daily and was written by its editor, Phil Carson.

 

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