On Monday, Exelon (NYSE:EXC) and Constellation Energy (NYSE:CEG) made official their long-awaited $7.9 billion merger. The combined nuclear power plant powerhouse and retail power and demand response leader will have a market cap of $34 billion and generate 34 gigawatts of power (19 gigawatts of it nuclear) to serve 38 states, parts of Canada and the District of Columbia.
That makes it the biggest power utility in the United States -- but not for long. Duke Energy’s proposed $26 billion merger with Progress Energy could create a six-state Southeast giant with 57 gigawatts of generation and 7 million customers.
Consider it the latest in an emerging landscape of mega-utilities with a potentially outsize impact on the development of the smart grid. We’re talking about four utilities and subsidiaries that have collected about $1 billion in Department of Energy smart grid stimulus grants, and are matching those grants with their own money to deploy smart meters, distribution automation, demand response and other smart grid systems.
Exelon utilities Commonwealth Edison (Chicago) and PECO (Philadelphia) each won a $200 million grant tied to smart meters and distribution grid upgrades, while Constellation’s Baltimore Gas & Electric won a $200 million smart meter grant. Duke and Progress each won a $200 million grant for smart meters and distribution grid automation systems, virtual power plant deployments and home energy management.
These are some of the biggest smart grid deployments in the country, and some of them share the same vendors. Silver Spring Networks, for example, is working with Exelon’s ComEd, Constellation’s BG&E and Progress Energy. But they’re also limited in scope to each individual utility, which means they separately cover the IT burden of managing, verifying and making bills from the data being pulled from these new smart meters.
Consolidating some of those types of back-office functions could be a target of one of these mega-merger utilities. Silver Spring recently raised $24 million from EMC (NYSE:EMC) and agreed to work with the data storage giant on ways to do smart meter data management from the cloud, but it’s only one of a number of IT players -- like Verizon (NYSE:VZ) and eMeter, or the team of IBM (NYSE:IBM), Teradata (NYSE:TDC), SAP (NYSE:SAP) and Itron (NASDAQ:ITRI) -- aiming at similar smart grid data management needs.
Merging power generation and demand response is another potential result of the Exelon-Constellation merger. Constellation has a thriving demand response business for its commercial and industrial customers (built on its acquisition of C-Power in 2009) and links customers to their power usage and market positions via its VirtuWatt web platform. Constellation also actively buys and sells energy for those customers, putting it in a good position to better balance generation with demand.
As for the Duke (NYSE:DUK)-Progress (NYSE:PGN) merger, it’s more a marriage of similar multi-state utilities to one another. Duke is an important utility when it comes to smart grid, though it’s had some struggles with state regulators that have stalled some of its deployments. But Duke is still planning to spend $1 billion over the next five years to bring smart grid technologies to its customers, and works with partners including Echelon, Ambient and Cisco.
Progress, for its part, is working with vendors including Schneider Electric’s Telvent on a distribution management system (DMS) aimed at cutting 385 megawatts of peak load via utility-controlled volt/VAR optimization. Given the struggles that utilities like Duke, ComEd and others have been having with state regulators on their smart meter plans, we could expect a shift to more and more of these distribution grid automation projects, which don’t get those pesky customers involved.