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Page 2 >> By Jesse Berst
Hosted services are here (and to stay)
The concept is simple. A supplier sets up a central set of smart grid applications. Then it lets utilities order them à la carte for a monthly fee. The applications and the data reside at the supplier site and the utilities tap into those apps over the Internet. The approach has at least four key advantages:
· Fewer personnel costs and issues. Only the largest utilities have the budget and know-how to recruit, train and manage the kind of top-notch IT personnel needed to support state-of-the-art applications.
· Improved security. Suppliers have far more resources and experience to guarantee that applications meet the most stringent security requirements
· Expandability. The utility can start small and add new applications whenever it is ready
· Lower capital costs. The supplier takes on the expense of buying the servers, hiring the personnel and installing the software. The utility simply pays a monthly fee
Suppliers hope that dozens or even hundreds of small utilities will eventually sign up, giving them great economies of scale along with recurring revenue.
Munis and coops at the forefront
As the "smart grid as a service category" continues to gain steam, it looks like munis and coops may be the early leaders. That certainly makes sense, since small utilities have far fewer IT resources to assign to install and run new programs in-house. What's more, munis and coops are more interested in minimizing capital costs. IOUs are less likely to be interested in that aspect, since they can hope to recover their capital costs by adding them to their rate base.
GE pushes forward
GE Digital Energy intends to be a major player in this burgeoning sub-sector. The company is building a host of applications – AMI, GIS, MDMS, distribution management, volt/VAR optimization, outage management, asset management and more – under the banner Grid IQ: Solutions as a Service. It offers them in three flavors. They can 1) host the data and the applications, 2) host the data only or 3) implement the apps on the utility's own computers.
Which applications are most popular? AMI is the "door opener" says Mike Carlson, GE's GM of smart grid solutions. "It's the hot button. They see the value proposition. And they want to help customers get energy management tools. Outage management is the #2 request. In the future, Carlson expects distribution management systems (DMS) and asset management to grow in popularity.
Carlson also expects munis and coops to be primary targets for the service, as illustrated by two recent wins in the Southeast: Norcross, Georgia and Leesburg, Florida.
Next page: What Norcross and Leesburg are doing >>
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