Home Area Network (HAN) Sweet Spots

The recession has undercut the valuations of many promising companies with great products and ideas.  Some will weather this down turn others have become targets at far cheaper prices than a year ago.  Even before the recession the forces of consolidation ruthlessly culled the traditionally small wind power players as larger, global companies absorbed them or drove them out of business.

Start-ups focused on carbon management software solutions, sensor technology for monitoring energy use, solutions that use smart meter data to name a few are ripe for acquisitions. Scores of these companies are emerging from the Silicon Valley cleantech blossoming.  Each solution seeks to leverage or drive the emerging standards for smart grid technology, open access to the Home Area Network (HAN) gateway to the customer, and attract private equity to launch, grow, scale their business—and then become millionaires by selling the company.

End-to End Solutions for Sustainable Businesses

The acquisition spree has already begun as those who seek to be dominant market players assemble the features, functionality and skills to go to market.  I wrote earlier that I thought the big four of this class are Oracle, SAP, IBM and Microsoft.  But there are many others in the next tier down for whom a competitive auction process would be both good and bad.

In announcing SAP’s acquisition of Clear Standards, a privately held firm that helps businesses track and report greenhouse gas emissions and energy consumption, SAP co-CEO Léo Apotheker said, “Having this ability also correlates to an organization’s efficiency and competitiveness. With the acquisition of Clear Standards, we will accelerate our vision to deliver a complete set of solutions to enable end-to-end sustainable businesses.”

Sounds expensive doesn’t it?

In my view, the sweet spots in this space are players who integrate and manage the technology, devices, software and services that will be critical to the success of the utility demand management programs and emissions reduction policies.  It is also true that these players have the potential to deliver a Home Area Network (HAN) solution that would make all these technology easy to use for customers.

And once installed for energy management, the HAN opens the door to a wide variety of entertainment and other ways to suction dollars out of your wallet.  They are sweet spots because if they work as expected, we will love them and use them.

As a home owner I am not likely to call Oracle, SAP or IBM for a Home Area Network Solution, but AT&T, Comcast, PG&E have a great shot at my business because I know them well and trust them to provide reliable service.  That is why, I believe many smaller players will position themselves to be fast to market, nimble, customer friendly and as plug and play as they can make their products to gain market share from partnering with a more traditional service provider.  It just might work for a while, but scaling the benefits and managing the cost exposures across an entire supply chain in no small feat.  Expect niche players to be plentiful and some of them with have terrific solutions.

Here are a few that I think are worth watching[1]:

  • Greenbox Technology, the San Bruno, Calif.-based startup founded by the Metromedia creators of Flash. Greenbox uses a web-accessible dashboard and its proprietary software to manage data from sensors installed on appliances and household devices.  Its big advantage is the reputation of its Flash founders and its early success in working on a pilot project with Oklahoma Gas & Electric and Silver Spring Networks.
  • Verdiem, www.verdiem.com/edison.aspx provides enterprise software solutions to reduce energy consumption of PC networks.  It has a good track record in the telecom and data center space. It has launched a home version of its software called Verdiem Edison to enable home users to monitor PC power usage, reduce energy waste, save on energy costs, and help preserve the environment its product description says.
  • Silver Spring Networks is rapidly joining the big leagues as the result of the credibility it gains from deals with utilities like Pacific Gas & Electric Co., Florida Power & Light, American Electric Power and others.  Silver Spring’s networking technology interconnects all those smart metering collection points with the utility networks to improve communications. Silver Spring expects about two million meters with its technology to be in use by the end of this year.
  • Trilliant, another smart meter networking player from Redwood City, California uses an version of the 802.15.4 wireless standard to allow meter interoperability with each other and with concentrator points. Trilliant has deals with more than 100 utilities, including Ontario’s Hydro One.
  • SmartSynch, provides meters with devices that communicate over existing cellular networks so naturally it has partnered with AT&T to leverage that technology which has primarily been used in commercial and industrial settings into the residential market where it would directly challenge to the dominant RF mesh providers above in seeking control over the home area network (HAN) gateway by the telecom and cable companies.
  • Tendril, an early backer of ZigBee, the 802.15.4 wireless standard that is widely used to move data from smart meters to home devices. Tendril not only makes many of those smart devices but licenses its software to third-party device makers, including smart meter manufacturers.
  • EnerNoc manages a portfolio of more than 2,000 megawatts that it can curtail through a range of demand response programs.  It has plenty of competition in this fast growing energy demand management space from players like CPower and Comverge.  As efficiency and demand response become more important to utilities in reducing emissions expect to see more of these players. Comverge in particular has entered the residential aggregation space.

I repeat my hypothesis that the place to be—the sweet spot—in this convergence of energy environmental economics is to focus on the Home Area network and the interoperable connection of smart grid technologies, smart meters, monitoring devices and the software and services that can be integrated into a Home Area Network.

Then the new business model for utilities is a play to shift from central station generator to distributed generation and home gateway keeper with plenty of clean tech services thrown in for fun and profit.

[1] I hold no stock or financial interest in any of these companies.