Aclara is acquiring General Electric’s electricity metering business. Just two years ago, St. Louis-based Esco Technologies sold Aclara. It is currently owned by an affiliate of private equity firm Sun Capital Partners.
The acquisition will strengthen Aclara’s position in the North American metering market. But these days, the North American smart metering market isn’t particularly robust, although it could rebound somewhat later this decade.
The bulk of Aclara’s business in the U.S. smart metering landscape is with small to mid-size rural electric and municipal utilities. GE, on the other hand, has supplied meters for some of the largest U.S. smart meter deployments to date, including Florida Power and Light, Commonwealth Edison, Pacific Gas and Electric, Consumer's Energy, Hydro One, AEP Ohio, and Indiana Michigan Power Company (an AEP company). For many of those contracts, GE has partnered with Silver Spring Networks.
“This move will likely do little to change the status quo for these relationships,” said Ben Kellison, director of grid research at GTM Research.
Aclara will acquire more than 300 employees and GE Meters’ global headquarters in New Hampshire, as well as a smaller manufacturing facility in Chicago. GE’s lengthy track record in meter manufacturing and technological prowess were key drivers of the acquisition. The terms of the deal were not disclosed.
“This expertise will support Aclara’s focus on addressing key technology trends including AMI integration, cybersecurity and standards, design for cost and field upgradability, all of which are important aspects of a smart infrastructure environment,” Brian Urbanek, managing director of Sun Capital and member of the Aclara board of managers, said in a statement.
GE is selling its electric meter business as it refocuses on core industries and moves further into offering suites of services. Just last week, GE finalized its acquisition of French industrial giant Alstom. Earlier this year, it sold off its real estate business and is unloading various assets in GE Capital that don’t relate to its Industrial Solutions vertical. GE also brought together its energy-efficiency and distributed-power offerings under one new company, Current.
Current combines GE’s commercial and industrial LED lighting,solar energy storage and electric-vehicle businesses with the predictive analytics of its industrial internet platform, Predix, to provide one-stop shopping for customers looking to solve increasingly complex energy problems.
“Both Current and GE’s acquisition of Alstom will increasingly rely on integration and solution delivery expertise as GE's revenue shifts more and more toward services, similar to several competitors,” said GTM Research's Kellison. But GE isn’t completely out of the metering game either, he added, noting that GE will still offer a solutions-as-a-service for AMI deployments with products such as Grid IQ.
It’s unsurprising that GE would unload its electric-metering business given the multi-year slowdown in the business, particularly in North America and a lagging European market.
There are nearly 60 million smart meters in the U.S. Many of those were installed with the help of federal stimulus grants. Last year, only 5 million meters were deployed, the lowest level since before stimulus dollars began to be put to use. This year is also shaping up to be a relatively slow year for installing smart meters.
It’s unclear when a rebound will happen, although some large metering deployments are expected to pick up speed later this decade with some key states, such as New York and Massachusetts, also making regulatory changes that would encourage advanced metering.
As the smart metering business has slumped, many meter manufacturers and metering network providers have expanded their offerings, mostly into smart city and internet-of-things applications, although take-up has been somewhat slow. GE will also continue to pursue those latter opportunities, but through Current and not related to its existing metering business.
Aclara is also looking to shift beyond just metering infrastructure. It is trying to transform itself into a “smart infrastructure company” that offers value-add services for utilities, whether that’s customer engagement for electric utilities or methane detection for gas utilities.
Although Aclara will continue to focus on value-add services in the North American market, the GE meter acquisition also gives the company a stronger foothold in Europe, as GE is a well-known global brand with a center of excellence in Bilbao, Spain.