Smart meters and the Sensus success secret (shhhhh.... it’s private)

Smart meters and the Sensus success secret (shhhhh.... it’s private)

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By: Jesse Berst

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When I first started speculating about survivors of the coming smart meter shakeout, Sensus was barely on my radar. A year later, I’m starting to think it may be one of the winners. If so, it will be because of a different, private approach to meter communications.

 

Sensus census

The 100-year-old, Raleigh, NC-based company employs 4,000 people in 41 facilities on five continents. Privately held Sensus sells meters under the iCon brand, along with a growing range of hardware and software for distribution automation. But it is with its FlexNet communications network that the company truly sets itself apart. FlexNet supports Sensus’s own iCon meters, of course, but has also been used with meters from GE, Landis + Gyr and Elster.

 

The Sensus differentiator

Most Sensus competitors sell radio frequency (RF) mesh systems, typically running over a public spectrum (like the spectrums used for roam phones or for WiFi). A few years back, Sensus acquired point-to-point radio RF technology and the rights to private spectrum across most of the U.S. In theory, point-to-point private spectrum offers several advantages:

  • Less interference from other devices (since you are not sharing the spectrum)
  • Longer range
  • Lower latency (great for time-sensitive grid applications)
  • Better penetration inside buildings (for things such as apartment sub meters)
  • Stronger security
  • Lower operations and maintenance costs

As a result of these benefits, Sensus is now running at more than $1 billion in annual sales, with more than 200 projects and 8 million smart meters in the field. FlexNet has been finding favor with co-ops and munis, who appreciate the ability to serve both urban and rural customers with the same system. But Sensus has also won its share of large, IOU projects, including Southern, Exelon and PECO. Larger utilities often choose Sensus because of its robust security and its greater headroom for future expansion.

 

Weaknesses

Up-front cost. When I pushed Sensus CEO and President Peter Mainz about costs, he would not answer directly. He said only that Sensus wins on "total cost of ownership." Typically, that is code for "we cost more up front but we think it will pay for itself over the long run." This argument will resonate with utilities that have a long-range plan in place. If they already intend to run multiple applications over the communications infrastructure, they will be more receptive to a "build it for the long haul" approach, even if it costs more up front.

 

Marketing. Even in a sector famous for "if we build it, they will come” arrogance, Sensus stands out for its lackluster marketing and PR. The company’s own SEC filings admit that its competitors "may have substantially greater financial, marketing, technical or manufacturing resources, and in some cases, greater name recognition...”

 

When I quizzed Mainz on the company's marketing mediocrity, he did not deny it. To paraphrase: "You are right. That's how we've always done things here. We focus on engineering." Interesting approach. Do something wrong once, you have to admit it is a mistake. Do it wrong over and over again, and you can declare it a proud tradition.

 

What next?

Maybe Mainz thinks sophisticated marketing won't matter where he wants to go next. With the U.S. smart meter market approaching a plateau, he believes the growth opportunities will next be in Europe, and then in the developing world. In Europe, Sensus will have to overcome the continent’s preference for powerline communications over radio frequency. Emerging markets will trail Europe, Mainz believes, but when they arrive they will arrive at huge scale.

 

But don't think that Sensus is relying only on electric power AMI for its growth. The company's technology has advantages for gas and water meters too. And the company has quietly been buying and building a growing range of grid applications that sit nicely on top of its communications infrastructure.

 

If Sensus continues to find favor, it may abandon the private approach in at least one area -- namely, in ownership. The firm already sells publicly traded bonds, but some observers speculate it may want to imitate rival meter maker Elster’s initial public offering, which took place last fall.

 

Would you buy Sensus stock if the company went public? Do you believe in its private spectrum, point-to-point approach? Use the Comment form to share your opinion.

 

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