Itron acquisition to game change demand response

Itron’s buyout of Comverge could bring a new level of utility demand response to the grid.
Published: Thu 11 May 2017

Itron has announced an agreement to acquire the US energy solutions company Comverge in a deal worth approximately $100m.

Georgia-headquartered Comverge is best known for its demand response activities but also has solutions in energy efficiency and customer engagement.

Itron has pioneered the concept of putting intelligence at the grid edge with the OpenWay Riva platform, with a growing utility app-based ecosystem

With the acquisition, Itron should be able to deliver a new level of demand response potential based on the near real-time and local intelligence capabilities of OpenWay Riva.

“The acquisition of Comverge enables Itron to offer a unique solution set that brings Comverge’s demand management solutions to the edge of the network using OpenWay Riva’s edge intelligence and processing capabilities,” said Philip Mezey, Itron’s president and CEO in a statement.

“This will enable utilities to better integrate distributed energy resources and optimise grid performance and reliability.”

The demand side opportunity

Demand management and energy efficiency are emerging as key measures in the move towards more sustainable energy use and greater renewable integration, with smart metering the enabler.

Indeed Engerati has identified top impact areas of smart metering to include demand response and flexibility services to the grid.

To date demand side response has been limited mainly to large power users. However, with the wider rollout of smart metering at residential level, the opportunities for participation of this sector of the market are growing.

In Britain, for example, smart metering could enable around 10% demand side flexibility across both commercial and industrial and residential customers.

Comverge, which was ranked the top demand response vendor by Navigant Research in 2015, has enrolled and deployed nearly 3m energy management devices into mass market demand management programmes.

Comverge’s offerings are cloud-based and combine software, hardware and services aimed to help utilities optimise every aspect of a demand management programme, from participant recruitment and device installation to call centre support and measurement and verification.

The combination of demand response and energy efficiency offerings is based on the premise that individually they could cannibalise one another but bundled together they are complementary and able to yield improved savings, along with the accompanying customer engagement benefits.

Itron-Comverge deal

In a conference call on the deal, Mezey said that Itron has a history of partnership with Comverge in providing demand response solutions to joint customers. With the acquisition, he anticipates a more seamless offering from the synergies between the companies’ portfolios.

Positioning Comverge’s solutions as immediately adjacent to Itron’s advanced metering portfolio, Mezey said: “We change the game when we combine demand response and energy efficiency with the edge application functionality.

“This has the potential to enhance the capabilities of near real-time demand response and engage in energy efficiency programmes with devices inside the home.”

The possibility of future acquisitions also isn’t ruled out. Commenting on Itron’s recent strong financial results, Mezey said this has given the company both “the financial capacity and operating capability” to carry out acquisitions that align with its growth objectives.

“We are especially focused on expanding our portfolio of outcomes-based solutions aimed at higher growth opportunities leveraging the power of OpenWay Riva.”

The development of the Riva platform has been focused on the utility sector and use cases connected to Itron’s core competencies. But it is also has application to the broader Internet of Things (IoT), which Itron is investigating through its Idea Labs.

The Comverge transaction, which takes place through the purchase of its parent company, Peak Holding Corp., is expected to close in the second quarter of 2017, and the integration to be completed in 2018.

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