By Jeff St. John
That market is China, and the doorstep is Hong Kong, where utility China Light and Power Hong Kong has picked Itron and Cisco for a 4,500-meter pilot project. According to Monday’s announcement, the two will link Itron’s cellular-enabled meters and data collection and management software with Cisco’s grid routers and connected grid management system -- the latter, Cisco’s term for its grid network management system launched last year.
Itron and Cisco started integrating their technologies two years ago, and rolled out their first big customer, Canadian utility BC Hydro, last year. Since then they’ve added customers including National Grid, Duke Energy and the Los Angeles Department of Water and Power, and have also collaborated on a powerline carrier (PLC) technology for European markets.
This is their first joint project in Asia, but not Itron’s first. In fact, the Liberty Lake, Wash.-based company has been working with Hong Kong’s CLP for some time as its meter data management software provider, integrating to the utility’s SAP back-end business platform, Philip Mezey, Itron’s new CEO, said in a Tuesday interview.
But the data from the utility’s 2.4 million existing electric meters are now almost entirely collected from register reads, he said -- in other words, utility workers walking around, reading meters, and typing in the numbers. With Cisco and Itron’s joint smart grid solution on board, CLP is now testing various business cases for bringing smart meter to Hong Kong customers, he said.
“We’re evaluating various business cases for two-way communications, and near-real-time communications, as well as consumer engagement,” including both single-phase (residential and small business) and three-phase (large commercial-industrial) meters, he said. Mezey, formerly COO and president of Itron, replaced CEO LeRoy Nosbaum (who rejoined the company eighteen months ago), to lead a round of restructuring in a planned transition.
Consumer engagement would play a large role in the project, Mezey said, though he didn’t get into particulars. Neither did he say whether or not Itron and Cisco were expecting their pilots to expand to full-scale deployments in the future. But he did note that the utility plans to upgrade most of its 2.4 million meters over the coming decade or so. That’s a big customer by any account, of course, on par with some of Itron’s biggest smart meter customers, such as Southern California Edison, San Diego Gas & Electric, Detroit Edison and CenterPoint Energy in the United States.
Still, it pales in comparison to the broader markets opening up in China. The country expects to need up to 300 million smart meters by 2016 or so, more than Europe and the United States combined. It’s all part of nearly $250 billion in grid investment expected in China over the next five years, as the country grapples with rapid growth and the rise of intermittent wind and solar power on the grid. (For more information, read GTM Research’s report, The Smart Grid in Asia, 2012-2016, Markets, Technologies and Strategies.)
But China has also made it clear that its domestic meter manufacturers will reap the lion’s share of this in-country deployment, with companies like Ningbo Sanxing Electric, Wasion, Hi Sun Technology, Linyang Electronics and Holley Metering lining up pilot projects, some of them reaching millions of endpoints.
China will also require cheaper, less richly functional meters for the bulk of its residential deployments. State Grid Corp. of China, the world’s largest utility, is targeting mass-market residential meters at about $50 apiece or less, compared to the $150-and-up ranges seen in North America and the $100-and-up for European smart meter projects.
Still, there’s plenty of room for smarter, and thus costlier, technology. Smart meter vendor Echelon has a joint ventures with China’s Holley Metering that’s putting its technology into Holley’s gear -- a model the San Jose, Calif.-based company has followed in Southeast Asia and Brazil as well. In China, Holley’s utility partners are installing Echelon’s PLC smart grid networking technology into already-deployed “smart” meters that haven’t yet been connected to a network -- a virtue of the country’s separate tracks for metering and communications.
It’s likely that utilities will pick and choose high-value customers for such applications. Brazil is another country that wants its smart meters to be able to reach specific, high-value customers. Of course, many commercial and industrial meters have been networked for decades, first by plain old telephone lines (so-called POTS systems), and then via succeeding generations of cellular networks, all the way up to today’s modern smart grid offerings on tap from AT&T (NYSE:T), Verizon (NYSE:VZ), Sprint (NYSE:S), and their European and Asian counterparts.
Itron is definitely exploring cellular communications for its Hong Kong pilot, Mezey said, though he added that Cisco’s IPv6-compliant wireless technology, now used to connect smart grid networks for all the partners’ projects, will also play a role in Hong Kong. The two are also looking at powerline communications in Hong Kong, he added -- a testament to the city’s high-rise landscape, where meters in basements may find it impossible to get a wireless signal up to apartments in the upper floors.
Interestingly, Itron is also using its 3G cellular modems, built on top of its acquisition of SmartSynch last year, in a partnership with Panasonic aimed at the Japanese market. Tokyo Electric Power Co. (TEPCO) plans to order about 17 million meters by 2019, and that’s drawn competitors including Panasonic/Itron, Elster, Silver Spring Networks and Japanese partner/investor Hitachi, and Toshiba, which bought Swiss metering giant Landis+Gyr last year. Beyond Tokyo, the country at large is putting smart grid spending in high gear to deal with its post-Fukushima disaster power crisis.
As for Cisco, it has been embedding its IPv6 wireline-and-wireless grid routers and switches in meters from Itron and Elster, as well as smart grid distribution gear from Alstom and Cooper Power Systems (now part of Eaton). Cisco has a deep set of smart grid developer partners, including OSIsoft for big data management, Proximetry for multi-communications network management, and Space-Time Insight for real-time geographic information systems (GIS), to name a few.
It’s all part of a growing trend toward integration in the smart grid field. Schneider Electric and OSIsoft are working on smart meters-as-grid sensors applications, as are Silver Spring Networks and big data management partner (and investor) EMC, and competitors such as Echelon, Elster, Landis+Gyr, Trilliant and Sensus. All will be targeting Asian markets at various price points. After all, if you include China in the picture, it’s the biggest market there is.