“We want to make the utility industry intelligent and efficient,” said Choi Kyu Chong, director of the Smart Grid & Electricity Market Division of the Knowledge Economy Ministry. South Korea expects it will be able to save the cost of building a reactor by 2016 by helping households and utilities to manage electricity consumption through the meters, he said.
State-run utility Korea Electric Power Corp. has awarded contracts to companies to install the meters from a program that has won a 1.47 trillion won ($1.3 billion) commitment from the government. Photographer: Jean Chung/Bloomberg
The country is investing in smart meters amid opposition from citizens and political parties over plans to expand its reliance on nuclear energy after the Fukushima disaster last year in Japan. State-run utility Korea Electric Power Corp. (015760), also known as Kepco, has awarded contracts to companies including LS Industrial Systems Co., Iljin Electric Co. and Nuri Telecom Co. to install the meters from a program that has won a 1.47 trillion won ($1.3 billion) commitment from the government.
Smart meters show customers what they pay for power at each time of the day, which utilities say will smooth demand fluctuations by encouraging more people to shift consumption to off-peak hours when it’s cheapest to generate electricity. The devices cost from 20,000 won to 140,000 won a unit, depending on whether they are for small or large electricity users.
Energy consumption in South Korea, the fourth-largest user in Asia, more than doubled in the 12 years to 2010, the highest rate among developed countries, according to the Korea Energy Economics Institute, a state energy policy adviser. Electricity prices in the country only cover 87 percent of the cost of generating electricity, according to the government.
“While Korea’s overall approach to smart grid has been technologically advanced, the program can be only effective if the country raises its electricity tariffs,” Ali Izadi- Najafabadi, an energy technologies analyst at Bloomberg New Energy Finance, said in an e-mail.
South Korea plans to replace all analogue meters at households with the new devices by 2020. The government on Feb. 28 said it plans a 14-fold increase in the number of meters to 10 million units by 2016.
As many as 30 bidders have participated in a series of tenders by Kepco to supply 2.3 million smart meters. LS Industrial Systems Co. (010120), Iljin Electric Co. and Nuri Telecom Co. were among companies selected to supply the meters to Kepco, said Sung Ki Jong, an analyst at Daewoo Securities Co. in Seoul.
Western smart meter makers like Landis+Gyr (LGYZ), the world’s biggest, may start to participate as Kepco ramps up the volume of meters to be installed, said Izadi-Najafabadi.
“As the government has focused on pilot projects so far, the demand for the meters is quite small, making it difficult for suppliers to earn lots of money,” Sung said. “With larger numbers to be installed over the next few years, there is scope for suppliers to make real money.”
Kepco plans to issue a tender for 1.5 million units in June or July, and in 2013 for more than 2 million units. It plans to install the meters at 15.2 million households between 2016 and 2020.
If South Korea meets its 2016 target to install the meters at half its households, it will be second in Asia only to China, which plans to install them at 80 percent of households by 2016, according to New Energy Finance. In Europe, Italy already has these meters in all houses, while in the U.S., they are installed in about half of all households.
The meters are part of the Smart Grid project announced by the government in 2009 to help reduce energy consumption by 3 percent and cut electricity consumption by 10 percent by 2030. In 2030, when the project is completed, it will lead to the reduction of 230 million metric tons of greenhouse gas emissions and 47 trillion won of energy imports, according to government estimates.
South Korea, the world’s biggest producer of ships, televisions and computer memory chips, plans to legislate a cap- and-trade carbon trading system.
Nature of Business radio, created and hosted by Chrissy Coughlin, is a weekly show on business and environment.
For those of us who reside in New England, it’s no secret that we are really cold for half of the year and swelteringly hot for a lot of it, too. (Okay, yes, we have a couple of comfortable months, in between.) And we constantly chafe at our monthly utility bills despite our efforts to keep costs down.
We simply resign ourselves to pay the bill and try better next month to keep our kilowatt-hours down. I, for instance, don a sweater or a down jacket in the winter months. Good times. The truth is that utility bills are quite nebulous and leave us feeling out of control over the situation. I say Power to the People.
And so does Powerhouse Dynamics. I spoke with CEO Martin Flusberg about his company, their eMonitorand how it works in both the commercial and residential space, and the effect it is having energy savings. Finally we have an affordable energy savings solution and the word is out.
Powerhouse Dynamics has been around since 2008. Martin joined the team in June 2009. What intrigued him about this company from the start was the level of granularity associated with the eMonitor. As he points out, “It’s one thing to say I am using 3,000 kilowatt-hours of energy but much more powerful, for instance, to know where it is being used and what to do about it.”
He was also intrigued by the fact that there was a large untapped market for this product. Large commercial operations already have products for energy management that tend to be very expensive. There was nothing out there, however, for smaller entities such as restaurants, retail stores, small health clinics, schools, and convenient stores and the like whose energy costs tend to be one-third higher per square foot.
Powerhouse started off in the residential market as they initially rolled out the product. Through this experience they were able to glean valuable information from consumers as they increased the eMonitor’s functionality by adding remote control for thermostats and HVAC systems, as well as developing 3-phase power capability. Immediately consumers at both the residential and commercial levels were seeing 10-15 percent energy savings and in some cases 35 percent and higher.
So what do they do exactly? This will give you a general idea. Specifically these monitors go inside electric panel with sensors that clamp onto every circuit. The devices have a wireless radio that communicates to a centralized gateway that they install in the facility through direct Ethernet or Wi-Fi connection. It then uploads all of the data to the cloud where the troubleshooting and heavy lifting takes place.
Think of a freezer where defrost cycle kicks in every hour rather than once a day. Or driers that run all night that don’t need to. The eMonitor identifies these anomalies and imminent changes can be made to reduce energy. As Martin points out, “In the case of restaurants, for instance, they have a lot of equipment and things go wrong all of the time. With the eMonitor you can spot problems before it becomes a real problem.”
Everything with the eMonitor system is automated and customers can set up a whole series of customized alerts. For instance, it alerts the customer if the freezer door is open or has suddenly died. Or if you would simply prefer to have your AC turned down a notch.
The cost savings are the number one driver for customer interest in the eMonitor but what is also fantastic is that it is fun. There are benchmarking capabilities and be set up as a challenge for people to look at how they are doing compared to their peers. People certainly respond to competition and they love looking at the data.
Certainly, energy efficiency is not as tangible or as sexy as let’s say wind or solar or the Chevy Volt. It is true, that is hard to get excited about because you don’t really see it. Martin says, “We joke about our typical consumer has a Prius in the driveway and a hummer in the basement. The Prius is successful because it stood out.”
Now, energy efficiency has its Prius with the eMonitor. And with only 10 percent of small commercial facilities currently utilizing any form of energy management, the road (HOV lane) is wide open.
George Papoulias edited this podcast.
The market for energy management software (EMS) and services to help companies reduce energy use and carbon emissions continues to mature. Vendors are broadening their product lines by acquiring smaller, innovative firms. Twelve companies were acquired by larger firms last year, and more acquisitions are expected in 2012. Corporate managers who plan to purchase an EMS in 2012 need to be mindful of this trend as they evaluate vendors.
For decades, software for providing energy use information was an add-on to control systems, monitoring systems, and asset management systems. These early EMS capabilities were often simply displays of current energy use with no data storage or analytics and were frequently tied to proprietary hardware.
In response to the increased need for visibility of a company’s carbon emissions and energy use over the last few years, vendors have responded with a plethora of EMS solutions (here is our list of more than 100 such vendors). These newer solutions are full-featured applications with multiple options for data capture, sophisticated data analytics, configurable alerting systems, best practice databases, and innovative work order capabilities.
Large vendors are making these acquisitions to broaden their offering and to become full energy management services companies. These acquired capabilities include procurement, demand response, building commissioning, sustainability, bill management, and energy efficiency. Increasingly, corporate managers can look to one or a handful of companies to meet their energy management needs across a wide variety of applications and sites.
Energy Management Software Service Acquisitions in 2011
|Pace (utility bill management, carbon management)||Siemens|
|EPS Corporation (EMS for manufacturing)||Ameresco|
|AgileWaves (EMS)||Serious Energy|
|Summit Energy (utility bill management, procurement)||Schneider Electric|
|Servidyne (energy management and demand response)||SCIEnergy|
|EnergyConnect (demand response)||JCI|
|TRIRIGA (building energy management)||IBM|
|Site Controls (EMS)||Siemens|
|CPower (demand response)||Constellation Energy|
|Building Knowledge Networks (real-time energy management)||Ecova|
• This chart lists vendors that sell energy management systems sold to companies, not utilities;
• Pace and EPS acquisitions were announced in early January 2012;
• Ecova was formerly named AdvantageIQ;
• SCIEnergy was formerly named Scientific Conservation.
In our Enterprise Energy and Carbon Accounting (EECA) Guide that we developed with GreenBiz last year, four of the top 20 companies we analyzed were acquired: ENXSuite, Pace, Summit Energy, and TRIRIGA.
Valuations for these transactions are typically confidential. Schneider Electric paid $268 million for Summit Energy and expects to generate $65 million in revenue. This implies a 4x enterprise value to revenue valuation ratio.
Acquisitions affect product road maps, pricing models, contract terms, investment levels, and many other aspects of a solution offering. Managers evaluating current and future vendors for EMS systems need to be aware of these acquisition trends. Acquisitions sometimes work but sometimes do not, and vendors need to thoroughly evaluate the impact of any acquisition.