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Market Insight

PV inverter and smart-meter suppliers race to develop and launch digital energy solutions

February 13, 2019


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Highlights

  • In recent years, smart meter and photovoltaic (PV) inverter suppliers involved in the new energy transition have been rapidly developing new internet of things (IoT) software platforms to create new revenue sources.
     
  • Within smart metering, a key indicator for IoT adoption is advanced metering infrastructure (AMI) – over 80 percent of the communicating meters forecast to be shipped in 2019 will be enabled with AMI solutions.
     
  • More than 11 million PV inverters will be shipped in 2019 alone, most will be connected to a software platform and controlled by the inverter companies.

Analysis

Fundamental to new initiatives to develop IoT software platforms is the creation of a new energy ecosystem. In this ecosystem, complimentary components all work seamlessly together, so the energy generated, consumed and billed can be implemented effortlessly for residential and commercial owners. Examples of these components include electric vehicles (EVs), smart home appliances, heating and cooling systems, smart meters, and solar and battery energy storage systems

Traditionally, solar inverters and smart meters have been considered disparate and not interconnected. However, in the new digitalized energy world, software platforms are unlocking what were once siloed and separate components.

Solar inverter suppliers have been developing their own proprietary in-house IoT software platforms to sell solar and energy storage hardware and digital services to commercial business chains, large utilities and other non-traditional customers with access to thousands of homeowners.

Smart meter suppliers in recent years have been similarly strategically diversifying their portfolios from hardware vendors, in order to become service providers. As hardware prices declined rapidly in recent years, PV inverter makers, smart meter manufacturers and other cleantech energy hardware suppliers have been rapidly pivoting their businesses to provide IoT energy solutions.

The four fundamental pillars for an IoT strategy are the following: connect, collect, compute and create. Businesses connect devices, that collect data for computation analysis to create unique solutions. For many smart-meter and PV-inverter suppliers, the first two pillars have been in progress for years, but the next stage of their growth will focus on data computation and the creation of new business opportunities.

Growing installed base of smart meters and inverters creates new business solutions

The data gained from IoT enables the creation of more complex applications. One example is condition monitoring, which is the process of monitoring the condition and health of a device or system. This monitoring allows for the continuous automated assessment of products and relevant infrastructure, which can highlight any potential issues or the need for repairs. These insights allow for planned maintenance and a reduction in energy supply downtime.

SolarEdge and other suppliers boast a large installed base of inverters in certain utility areas and can add battery energy storage systems to their PV systems. Recently, these suppliers have been piloting virtual power plants (VPPs), which allow utilities companies to potentially aggregate multiple residential-PV and energy-storage systems and use the homeowners’ batteries to store or export electricity, to help balance the grid and reduce electricity production volatility. While this VPP concept is still in its infancy, it could be an additional revenue source for PV inverter suppliers in the future.

Availability of smart hardware to aid utilities roll-out of IoT solutions

To truly gain a holistic view of what is happening in this new energy landscape, utility companies need to shift from a singular product-grouping view to a total-system view of the new energy ecosystem. Doing so vastly increases the amount and depth of data available for more complex solutions under their control, such as condition monitoring, asset health management, additional renewables penetration and battery energy-storage systems.

However, with this increased amount of data, companies need change their business model, if they want to survive in such a data-heavy environment. Smart meter and inverter suppliers that evolve from ‘product-only’ to ‘system view and services’ increase their range of utilities and other potential clients.

In recent years, SMA and other PV inverter suppliers have been developing platform systems where the inverters are the brains of the new energy system. Doing so allows battery systems, EV charging and heating and cooling systems, and other hardware components to be controlled seamlessly, which helps homeowners and commercial customers reduce energy consumption. ABB and other industrial players have produced software platforms that can help utilities manage distributed energy resources, like renewables and battery-energy storage.

The desire for services within smart metering is predominantly focused on “meter-to-cash” billing automation. IHS Markit estimates $56.9 billion will be spent on meter-to-cash focused solutions globally between 2019 and 2023. Yet, IoT also opens many more revenue streams, as metering data can be used with the VPP and to ensure power quality, fault analysis, health and condition monitoring. 

Competitive landscape begins to blur

This business-model evolution has blurred the competitive landscape, as former competitors can suddenly become partners or even clients. In addition, IT providers, platform operators, and other entirely new competitors are stepping into the IoT in energy environment. For example, Huawei is a leading solar inverter supplier, but in the coming years it may partner with other solar-inverter or smart-meter suppliers as 5G is rolled-out, enabling utilities to handle more data and transfer it faster.

Research by Market
Power & Energy Technology
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