GE leads smart grid consolidation

Engineering conglomerate General Electric (GE) has continued its push into the smart grid space with the acquisition of Northern Ireland-based grid monitoring specialist Kelman Ltd.

In a move that further highlights the consolidation beginning to affect the sector, GE Energy has shelled out an undisclosed sum for Kelman and announced that the firm will be integrated into its transmission and distribution operations.

Kelman specialises in advanced monitoring and diagnostic technologies for high-power transformers, providing utilities with the opportunity to monitor the health of transformers remotely and have data sent back automatically using online dissolved gas analysis (DGA) devices.

Bob Gilligan, vice president of GE Energy's transmission and distribution business, said that the technology and its ability to provide utilities with real-time information about the state of their transformers represented "an excellent fit" with GE's overall smart grid initiative.

Interest in smart grid systems has soared, with utilities and regulators alike arguing that the ability to track energy use in real time and provide customers with more accurate information on the energy they use helps to enhance grid efficiency and encourage businesses and households to curb energy use.

A US study earlier this year claimed that improving the efficiency of the grid could slash energy use by between seven and 11 per cent by 2020, while advocates of the technology claim that advanced smart grid systems capable of automatically turning off electrical appliances, such as freezers and washing machines, at times of peak demand could deliver even deeper cuts.

Major trials in both Europe and the US have been undertaken to test the technology, while the UK is currently mandating the installation of smart meters at business premises and is considering mandating the rollout of similar technology to domestic customers.

However, booming interest in the technology is likely to herald a major shift in the make-up of the sector as multinational energy, technology and investment firms begin to enter the space and snap up the smaller startups that have to date dominated the market.

It is a trend evidenced by GE's acquisition of Kelman, as well as Scottish and Southern Energy's £1m investment in UK smart grid outfit Onzo earlier this year and US provider BPL Global's securing of $23m in fresh funding to finance its global expansion. Meanwhile, established technology firms such as IBM have also signalled their interest in the sector, ploughing millions into R &D as they seek to provide the IT infrastructure that will underpin many smart grid applications.

David Mayne, energy and utilities senior analyst at research firm Datamonitor, predicted that further consolidation in the market was likely, particularly among those manufacturing and engineering firms already providing grid technologies. "I would expect to see the existing metering and systems firms fleshing out their portfolios through acquisitions so that they can offer a full solution to energy suppliers," he said, adding that there were hardly any smart grid technology providers with an end-to-end portfolio covering network monitoring, two-way smart meters and the supporting IT.

However, he warned that significantly increased demand for smart grid systems was unlikely to be seen unless governments take a lead and mandate their installation. "There is a cost attached to smart grids and a lot of the energy suppliers are not entirely convinced of the benefits," he said. "They are waiting for the government to tell them that they have to do this."