[Matt Lecar][October 25, 2006]In my last column, I talked about the long road that Advanced Metering Infrastructure (AMI) has followed to its current “tipping point” in the marketplace. This time, I’ll take a fresh look at Broadband over Powerline (BPL), which has also spent years wandering in the innovation desert. Although lagging well behind AMI on the deployment curve, there are signs that BPL, too, may soon find its way to an oasis, as new money and new entrants explore its potential role in the smart grid.
The Access Mirage
As you’ll know if you’ve read our past BPL features, we’re highly skeptical of consumer broadband access as a driving force for BPL — especially in areas where consumers can already get those services via cable or DSL. The technology is there, but BPL has no first mover advantage. Deploying the necessary couplers, repeaters, and network management infrastructure to turn the grid into a commercial “data pipe” involves a big up-front investment. With cable and DSL already competing aggressively on price, and wireless broadband charging ahead, there’s little “low-hanging fruit” left to earn a return on new investment.
New Kids on the BPL Block
So why continue to pay attention to the BPL space? At least in North America, one increasingly important driver is the smart grid. Two major moves were announced last week, during the annual BPL Conference of the United Power Line Council. The first was from integrator BPL Global, which revealed it has raised $25M in new financing from two US venture firms along with a consortium of Kuwaiti investors (people who know how to navigate deserts!) and DQE Communications (a subsidiary of Duquesne Light, BPL Global’s principal client to date).
I spoke to CTO Jeff Tolnar about the company’s smart grid strategy. He told me the key to Global’s approach is a common messaging bus and standard application protocol interfaces (APIs) to communicate with the various Intelligent Electronic Devices (IEDs). This requires partnerships with the major electrical equipment and metering hardware vendors. Jeff thinks that when the IEEE interoperability standard comes down in the next 12-18 months, business will boom, as utilities seize the opportunity to “talk” with more of their assets over a unified wide area communications platform.
Rural access: the camel’s nose under the tent?
Another announcement this week was the unveiling of Utility.net, a new entrant in the BPL space. The company will license technology developed by International Broadband Electric Communications (IBEC) for the co-op and muni market. It hopes to sign up rural or remote IOU customers that are under-served by other broadband technologies. Although the amount of initial funding from Los Angeles merchant bank Mandeville Partners has not been made public and is likely small, CEO Cheryl Smith brings big ticket credibility. She quit her job as CIO of health services giant McKesson (#16 on the Fortune 500) to launch the company; she had previously served as CIO at Keyspan Energy and VP at Verizon, so she obviously knows about the power and telecommunications businesses.
IBEC’s technology combines DS2’s new 200 Mbps medium-voltage chip with proprietary signal regeneration software. But the big breakthrough came earlier this year with a partnership to build the BPL coupler into a standard piece of grid equipment that utility linemen already know how to install. Earlier this year, IBEC teamed with Cooper Power Systems to put its couplers inside Cooper surge arrestors.
When I spoke with Cheryl, she explained the company’s approach to the smart grid. The network to serve rural customers will be built from the substation out and will thus necessarily go through some urban and suburban areas. Utility.net’s customers will have access to high-value data, including the ability to detect faults and outages within 3500 feet on low voltage lines and even to quickly locate problems within underground urban networks. As they accumulate real world experience, Cheryl believes these benefits will drive utilities to extend their BPL deployments beyond the rural access market that is her company's initial value proposition.
Conclusion: While the jury’s still out on the BPL smart grid business case, there’s enough interest to attract new money and new players to the table. Watch this space for further announcements as the evidence starts to come in from early deployments. And for GlobalSmartEnergy's upcoming Opportunity Report about BPL's Smart Grid potential.