Last week, Tokyo Electric Power Co. (TEPCO) quietly named the winner of a big part of its multi-billion-dollar plan to install smart meters for all of its 27 million customers over the next decade. The winner is Toshiba, the Japanese grid giant that bought Swiss smart metering giant Landis+Gyr for $2.3 billion in 2011.
It’s a huge win, even if it doesn’t come with any promises of meter sales right now. That’s because TEPCO hasn’t yet picked the vendors it will choose for its actual meter purchases -- those contracts are to be announced in the third quarter of this year.
Even so, what TEPCO has awarded Toshiba and its partners is a pretty significant chunk of the project. Under the terms of the bid TEPCO has picked, Toshiba will be prime contractor on the project’s core communications system, along with cellular provider NTT and component provider NEC Corp.
As for Landis+Gyr, the company announced Wednesday that it will be “providing much of the project's technical foundation, including: supplying the head end system (HES), network expertise, RF communications modules, [and] large-scale product deployment experience.” In addition, Ecologic Analytics, the meter data management software (MDMS) vendor that Landis+Gyr bought last year, will be supplying the Gridstream MDMS to collect and manage data across TEPCO’s deployment -- a big win in and of itself.
Richard Mora, CEO and president of Landis+Gyr, wouldn’t name the financial terms of the TEPCO contract in a Wednesday interview, though he noted that the company will also be competing for a share of the actual meter hardware contracts coming later this year. Initial news reports pegged the expected price tag of TEPCO's entire AMI project at about 200 billion yen, or $2.6 billion.
Of course, we can expect to see lots of competitors for TEPCO's meter tenders. Some of the companies active in Japan include Itron in partnership with Panasonic, and Osaki Electric, which has partnered with Hitachi. Hitachi is also a partner and investor in Silver Spring Networks, which has identified Japan as one of its target markets in Asia.
In terms of specifics, TEPCO wants to deploy a multi-communications AMI platform that supports both the radio frequency (RF) mesh wireless technologies commonly used in North American smart meter networks, as well as cellular connectivity and the ability to communicate via powerline carrier (PLC) technologies, Mora said. TEPCO hasn’t yet decided the split between those three technologies in terms of how many meters will use each, he said.
Landis+Gyr has its own versions of both RF and cellular communications, allowing it to use both mesh technologies to link lots of meters in a low-power, low-cost wireless network, and to connect meters to cellular networks for point-to-point communications. The PLC technology is still being worked on, Mora said.
TEPCO announced its smart metering plans in early 2012, putting it years behind some of the biggest AMI deployments underway in the United States, including big Landis+Gyr customers like Pacific Gas & Electric and Oncor. But that also means that TEPCO’s plan is years ahead in terms of the technology and expertise available for smart meter systems, Mora noted.
That includes a focus on using internationally recognized technology standards for the communications technologies that will connect a lot of these meters, he said. For instance, Landis+Gyr is working on incorporating the IEEE 802.15.4g standard for the physical communications (i.e., the radios) that make up its mesh network, in a way that could allow other 802.15.4g-compliant systems to interoperate with its underlying communications platform, he said.
“TEPCO was really pushing us on standards, and part of that was the rationale to be able to migrate the solutions down the road,” he said. Still, with the 802.15.4g process still in the works, it’s as yet unclear how that interoperability may take place in the future.
Likewise, while TEPCO intends to support a “broad array of new pricing, demand response, and energy automation options that enhance the efficiency and reliability of the electric grid” via its two-way communicating meters, Mora said that just how those features are to be rolled out is yet to be determined, though “to the extent they wanted to do some in-home automation…the bandwidths on the network could certainly support that.”
One thing’s for sure: TEPCO’s smart meter project is one of the biggest, if not the biggest, underway in the world right now. That makes it a huge prize for competing smart meter vendors, along with some big projects in Europe that compare in terms of size, such as the nationwide smart meter rollout plans underway in the U.K., France and Spain.
TEPCO’s rollout is also expected to guide development of smart metering plans for other utilities in Japan, which is facing an unprecedented power crisis in the wake of the Fukushima nuclear power plant disaster and the subsequent shutdown of the country’s nuclear generation fleet. While the rest of Japan’s utilities haven’t been as quick as TEPCO to formalize their plans, the country wants 80 percent of its power consumers to be equipped with smart meters by 2017.
Then, of course, there’s the broader Asian market to think about. “I would liken Asia to where we were in the U.S. four or five years ago,” with AMI deployments mostly limited to pilot projects, Mora said. "We are seeing other opportunities in Asia, and we hope that the fact that we’ve been chosen in Japan bodes well for us.” Indeed, part of TEPCO’s plan with its new partners is to develop an AMI system that could be exported to other countries, he said, though he added that it’s far too early to talk about any developments on that front.
Toshiba and Landis+Gyr have plenty of competition on that front as well, from many of the same companies fighting over the TEPCO contract. For instance, smart grid networking partners Itron and Cisco have landed a pilot in Hong Kong, Echelon is building its AMI technology into projects in China, and Silver Spring Networks, the AMI networking vendor that held a successful IPO in March on the strength of its big U.S. deployments, is also doing projects in Singapore and Malaysia.