PROJECT EASY GREEN

The long-awaited IPO of Silver Spring Networks is here. On Thursday, the company filed to go public to raise $150 million.

The company, which provides meters, mesh radio networks, and software for end-to-end smart grid projects, has been a popular choice for utilities in the U.S,  such as Baltimore Gas & Electric, Pacific Gas & Electric and Florida Power & Light Company. Silver Spring reports that it has won contracts for more than 17 million devices.

Silver Spring saw phenomenal growth in the last few years, with total revenue of $58,000 in 2008, followed by $3.3 million in 2009 and then $70.2 million in 2010. The first quarter of 2011, revenue was $46.7 million. The company is operating at a loss — it reported a net loss of $148 million for 2010 — although the first quarter of 2011 saw its lowest margin of loss, with costs running just $1.3 million over net revenue.

In the filing, the Redwood City Calif.-based company said it anticipates continued losses and negative operating cash flow for the foreseeable future, and because its quarterly results are unpredictable, it may fail to meet the expectations of Wall Street.

The sharp increase in revenue is due largely to utilities spending stimulus funds. Although Silver Spring did not point to the end of stimulus dollars, it also noted that if the market develops slower than expected, it could be another risk factor. But for now, a lot of the funds are still yet to be spent, even though they are allocated, which is another factor that could hurt Silver Spring if they are delayed through 2011.

“In 2010, the rate of smart grid adoption slowed due to uncertainty surrounding the timing and tax treatment of U.S. government stimulus funding, negative publicity and consumer opposition, and regulatory investigations. These uncertainties caused many potential utility customers that had been considering smart grid programs in the United States to further evaluate their smart grid initiatives and delay their procurement processes,” the company said in the filing. “We expect the effect of the delay in awards caused by these factors to result in lower billings in 2011 compared to 2010. To date in 2011, we have seen an increase in smart grid-related requests for proposals and believe many utilities will move forward with their smart grid initiatives.”

Although 2011 may be a slow year, utilities are still moving forward with smart grid plans, and if the White House’s smart grid policy framework actually becomes policy, there will be many more utilities looking for a whole lot more smart meters. And of course, there’s always China — and Silver Spring notes that international expansion is among its ambitions.

These days, Silver Spring is not just about metering and the communications that come with it. The company has delved into demand response, home energy management and plans to get into electric vehicle charging. 

If the IPO goes through, Foundation Capital, with 41.5 percent of Silver Spring’s stock, could have a win. Other investors include Kleiner Perkins and Google Ventures. The company has raised $271 million since it was founded in 2002. The initial IPO plan, filed with the U.S. Securities and Exchange Commission on Thursday, did not include share prices. 

Two of the largest meter makers, Itron and Landis+Gyr, will integrate their communication platforms into each other’s meters. The move is to appeal to utilities that are looking for multi-vendor solutions for smart grid projects.

The Itron Centron II meter will have the option of having the Landis+Gyr Gridstream communications module, and the Landis+Gyr Focus AX-SD meter will be enabled with Itron’s OpenWay systems. The products will be available later this year.

“Our customers have asked for multi-vendor systems. Working on these projects with Landis+Gyr demonstrates our dedication to offering best-of-breed solutions,” Russ Vanos, vice president and general manager sales and marketing, Itron North America, said in a statement. “By enabling system interoperability, we can help utilities of all sizes reduce both implementation and ongoing communications costs, as well as improve efficiencies and accelerate return on investment.”

The move comes less than a month after Toshiba purchased Landis+Gyr for $2.3 billion and as Itron’s stock price hovers around a 52-week low.

Despite the shift towards distribution automation and other projects to bring visibility and automation onto the grid itself, there are still tens of millions meters that will be installed in coming years across the globe. BC Hydro recently picked Itron for its meter deployment, and the State Grid Corporation of China, which controls the grid on 80 percent of mainland China, is using Landis+Gyr for a 10,000-meter pilot. If successful, the payoff could be a contract for tens of millions of meters in that country alone.

Utilities are becoming more sophisticated about their smart grid deployments, not only in terms of the scope of projects, but also in choosing flexible technologies that will allow for future-proof systems.

The partnership between the two meter giants comes on the heels of an announcement on Monday that the six largest meter manufacturers have formed a nonprofit organization to focus on smart meter advocacy and education.

The Smart Meter Manufacturers' Association of America includes Echelon, Elster, GE, Itron, Landis+Gyr and Sensus. The SMMAA claims it is seeking to “educate legislators, regulators, media and other stakeholders about the benefits of smart meters and to advocate for federal and state policies that support their deployment.”

The impetus to form the group seems to be a mix of damage control after serious smart meter backlashes in the past year, and lobbying to make sure that policy will still push for smart meters after the bulk of the smart grid stimulus funds (which largely went to AMI) has been doled out.

The organization welcomed the fact that the ball is already rolling on some policy issues. On Monday, the White House released a policy framework that calls for allowing every U.S. customer to have access to detailed information about his or her electricity bill. If that were to become legislation, it would make the case for more smart meters to collect that information. Let the lobbying begin.

Water is like the weather in green tech: everyone talks about it, but no one ever does anything about it.

We might see increasing momentum, however, toward tackling problems associated with water if the annual survey from consulting firm Black & Veatch is any indication. The firm found that water management was one of the most significant issues facing utilities. In fact, water supplies were even a bigger concern than nuclear disposal or carbon regulation.

The rise of water as a concern likely has much to do with current events. Many regions around the country are limping through prolonged droughts. Power plants need water for cooling. In the past few years, some utilities have had to temporarily curtail certain plants in the Southeast because of a lack of water. The increased consumption of natural gas also poses challenges.

"You need significant quantities of water for hydraulic fracking," said Mark Gabriel, senior vice president at the consulting firm.

Many utilities, he added, "are right now investing in reclamation and how they can be more efficient."

Pundits at conferences over the past several years have touted the need for technologies for purification, desalination and water management. Several startups and established companies like Veolia have also attempted to fill the void. Water, however, isn't booming like solar. One reason is the customer base. Quite a bit of water technology gets bought by municipal water agencies, which tend to be extremely conservative and chronically short on funds. Some startups like Altela and 212 Resources have focused on selling to oil companies and mining outfits. (This segment of the water industry can be classified as "resource recovery".) The interest among utilities could open another revenue opportunity. Who knows?

Other interesting notes from the survey:

–The aging nature of the electricity infrastructure in America is a growing concern. Gabriel noted an Edison survey that predicts that nearly $1 trillion will get invested between now and 2030 in improving the transmission and distribution system.

–Natural gas is becoming the fuel of choice, but uncertainties — volumes, prices, the size of available resources — loom.

–Approximately 70 percent of the respondents strongly believe commodity and energy prices will rise significantly in the next five years, but only around 35 percent strongly believe that renewables will become "unquestionably competitive" with traditional fossil fuels in the same time frame. In fact, nearly 50 percent strongly disagree that renewables will hit that point in five years. Still, 60 percent see sustainability as a growing component of their business.

–Of those surveyed, 77.4 percent believe there is a future for coal with the economics are considered; 79.7 percent believe storage will move to the mainstream.

–Nuclear safety concerns have shot up dramatically.

Landis+Gyr just announced that Toshiba, a leader in electronics and power systems, will acquire Landis+Gyr, a leader in smart grid metering, for $2.3 billion in cash after a bit of a bidding war involving General Electric and others.

Landis+Gyr has over 8,000 utility customers worldwide, and the acquisition immediately makes Toshiba a major player on the smart grid landscape. General Electric was rumored to be an early bidder but ultimately dropped out. With Landis under its belt, Toshiba will become one of the primary players for smart meters and utility infrastructure equipment.

The Swiss-based company is best known for its metering, but Landis+Gyr also has applications for distribution automation, an area of the market that is expected to grow to $9.6 billion by 2015, according to GTM Research. But meters aren't exactly old hat. There will be hundreds of millions of smart meters worldwide in coming years. The State Grid Corporation of China, which controls the grid on 80 percent of mainland China, is using Landis+Gyr for a 10,000-meter pilot. If successful, the payoff could be a contract for tens of millions of meters. 

The equipment aspect of Landis+Gyr, along with a sales channel to utilities and industrial customers, plays to Toshiba's strengths, allowing it to leverage its precision engineering and focus on cutting-edge R&D. Landis+Gyr also has a home area networking device that could be improved and expanded under the Toshiba brand. 

The big winner in the acquisition, according to a recent article by Michael Kanellos, is an investment organization called Bayard Capital. Bayard Capital bought Landis in 2004 for an undisclosed sum. Bayard, which invests in energy and water technologies, then rebranded all of its properties under the Landis+Gyr name. Other shareholders include Allianz Capital Partners, DLJ Merchant Banking Partners, and Dubai International Capital. 

Landis was a struggling company in the '90s and changed ownership several times. 

The Maine Public Utilities Commission will require Central Maine Power to offer an opt-out program for customers who don’t want smart meters, according to a statement from the Maine PUC on Tuesday.

The utility, which has about 600,000 customers, will have to provide two options: leaving an analog meter in place or turning off the transmitter in the smart meter.

Like the proposal by Pacific Gas & Electric, ditching the new technology will come at a cost. Having the transmitter turned off will cost $20 upfront, as well as a $10.50 monthly charge thereafter. Keeping that old analog meter is really for the dedicated folks out there (i.e., the ones still making calls on rotary phones) — it will come with an initial charge of $40 and a monthly charge of $12. The rate is cut in half for low-income residents who are eligible for Low Income Heating Assistance.

“For the long-term success of smart meter implementation and to maximize its potential to the fullest, the public needs to be actively engaged in monitoring their usage and real-time price of electricity and modifying their behavior accordingly,” MPUC Commissioner Vendean Vafiades said in a statement. “To achieve this goal, we need to shift the focus to the benefits of smart meters and allow the small minority to opt out.”

The decision comes after 10 CMP customers filed various grievances about the safety of the new hardware, with cited complaints ranging from electromagnetic field health concerns to the risk of smart meters catching on fire. The opt-out, however, is all those customers will get. The Commission also said it will not investigate safety issues including fires associated with smart meters or another request to look at the smart meter’s interference with electronics and medical devices. The regulators said that CMP, which is owned by Iberdrola USA, has already adequately addressed those concerns.

Several scientific studies have found no connection between EMF and health risks, although some assert that certain individuals can suffer from acute sensitivity to it. While some protestors seem amenable to opt-out provisions, others seek more drastic measures, like a complete rollback of the meter program. In Maine, however, the power of choice seems like enough to quiet skeptics. Adam Taylor, a Falmouth-based attorney who helped file the grievances with Maine's PUC, told Maine Public Broadcasting that his clients were simply looking for a choice.

CMP will have to put together a customer education plan to let residents know about the opt-out option during the smart grid deployment, which will be completed early in 2012. The likelihood is that few customers will actually go through with the opt-out, and by offering it, CMP can silence a vocal minority.

Pacific Gas & Electric is still waiting for final approval of its opt-out plan, but the decision in Maine could bolster the case for its requirement that those who opt out must pay a premium.

In the '70s and '80s, Japanese companies became global household brands.

In the current decade, they could put more emphasis on being background brands — and in the process pave the way back to profitability.

Toshiba is close to buying Landis + Gyr, one of the large meter manufacturers, for $2 billion, according to various news reports. General Electric was rumored to be an earlier bidder, but has dropped out. (Interestingly, sources at our Networked Grid symposium last week amid the 'GE will buy Landis' rumors said that a deal with GE would not likely go through.) With Landis under its belt, Toshiba would become one of the primary players for smart meters and utility infrastructure equipment.

Most consumers don't associate Toshiba with heavy equipment. Instead, they think of TVs and notebooks. (This story is being written on a Toshiba laptop.) But somewhat faceless components and electronics sold to other large businesses, however, will increasingly become the way Japanese companies capitalize on the energy boom.

Why? Japanese companies have phenomenal engineering capabilities. Flash memory, carbon fiber and LCD TVs are three of the inventions in recent decades that in large part colonized the world because of Japanese research. (Flash came out of Toshiba, in fact.) Modern hybrid cars were first invented in the U.S. but Toyota and Honda popularized them. Project Sunshine in the 1970s paved the way for the global solar industry.

Many of these conglomerates, however, just aren't as good at product marketing anymore. Samsung and LG from South Korea not sit atop the TV market. Apple took digital music away from Sony. Amazon took e-books away from Sony. Sure, the Wii and the Prius came out of Japan, but the brand cache of Japan Inc. has been in a tailspin for decades. I travel to Japan approximately once a year. You see some of the most stylish household appliances in the world in Tokyo — tabletop dishwashers, automatic light dimming systems, ultra-thin household insulation, air conditioners that sense occupants and refrigerators that try to save you energy by adapting dynamically to your lifestyle — but manufacturers are hesitant to try to aggressively export many of these items.

By focusing on selling equipment to utilities and industrial customers, the conglomerates will play to their strengths: precision engineering, a strong focus on cutting-edge R&D, a long history in energy efficiency, and a willingness to conduct trial after trial until a product works.

The conglomerates have been in the grid equipment business for years. Mitsubishi and NEC showed me some of their latest technology back in 2008. But momentum has been picking up. A concerted push into the U.S. smart grid market began in early 2010 when 33 companies — including Mitsubishi, Sharp, NTT Docomo, Kyocera and Panasonic — unfurled a research collaboration with Los Alamos National Labs on smart grid and home networking.

Since then, Hitachi and Panasonic formed a partnership to explore neighborhood and home-area networking. Hitachi also participates in the Singapore-Tianjin Eco City Project, a planned community outside of Tianjin in China. (Hitachi has some interesting sociological applications, too. Geomation crunches satellite data to determine the best time to harvest wheat or rice. Life Microscope probes your vital signs to help you lose weight (back in 2008, Hitachi employees lost a collective 5.1 kilograms with the program).

Other interesting developments:

Sony has started to sell lithium phosphate batteries for grid storage.

Panasonic has vowed to become number one in green electronics by 2018. They have also placed a big bet on energy efficient homes.

Fujitsu is promoting wireless protocols for smart grid.

And Nissan and Mitsubishi want to be leaders in electric cars.