Streetlights might not seem like the first application of a smarter grid, but they could be in the future.

Municipalities have a tough time finding money in capital budgets for anything, let alone high-tech networks that promise they’ll pay off in the future as more applications are layered on.

For cash-strapped cities that still want the benefits of a smarter electric grid and more connected infrastructure, there is a growing roster of options for managed services that eliminate or vastly reduce the upfront cost of such technology.

Silver Spring Networks (NYSE: SSNI) announced it is expanding its hosted services for municipalities, with new offerings ranging from smart grid to street lighting applications.

Silver Spring’s MicroAP networking card includes a cellular modem that can be used to connect just one device, such as a smart meter, to the managed network. As more devices are added, a self-forming mesh network emerges, according to Anil Gadre, executive vice president of products and marketing at Silver Spring.

“It’s like umbrellas popping up to form a canopy,” said Gadre. He added that Silver Spring has spent the past five years gaining a better understanding of its municipal customer base, which includes Sacramento Municipal Utility District, CPS Energy and Modesto Irrigation District.

Most of Silver Spring’s municipal clients have started with distribution automation, which has been an affordable starting point. They are also often interested in other smart grid applications but are worried about having the in-house expertise to manage networks and implement systems, said Gadre.

Silver Spring’s Speed-to-Value program can cut the time needed to roll out a network by 15 percent to 30 percent, although Gadre said the cost savings vary depending on the city and the application.

Cities might want to start with putting in smart meters in a central business district, or adding distribution automation to specific feeders with issues. Although utilities might still need to pay for some hardware, such as additional sensors or meters, the network can be hosted by Silver Spring.

Silver Spring also sees potential for crossover between its streetlight network-as-a-service and grid services. Gadre noted that European cities the company is working with, such as Paris and Copenhagen, started with networked streetlights but are now looking at how to leverage the network for other applications. While cities can switch to LEDs, they don’t have to. Silver Spring estimates that networking traditional lights can save more than 40 percent of energy consumption and lower system costs by up to 30 percent.

“The streetlight savings are so compelling, it may turn out a year from now that streetlights are what [municipalities] buy, and once they have that canopy, they do [advanced metering] after,” said Gadre.

Silver Spring is hardly alone in its increased focus on the municipal market. Other companies like Sensus are helping cities leverage their smart grid networks for streetlights. Itron (Nasdaq: ITRI) just integrated its smart grid platform with Milsoft’s outage management system. The OMS will be offered as part of Itron’s Total service, which was launched earlier this year.

Total is a subscription-based smart grid solution that includes advanced metering, meter data management and other applications, such as prepaid options for customers. “Milsoft is a major player in the small municipal and co-op market for OMS and GIS software," said Ben Kellison, senior grid analyst with GTM Research. 

Integration with Milsoft should increase Itron's attractiveness among mid-market and small public utilities, added Kellison, a meter market traditionally dominated by Aclara, Sensus, Cooper Power Systems' Cannon PLC solution and Landis+Gyr's Hunt PLC and PLX platform. Landis+Gyr also moved further into cloud-based services earlier this year to integrate outage detection, meter data and conservation voltage reduction for smaller utilities.

GTM Research estimates

 that municipal utilities will spend $4.5 billion to $9 billion from 2012 to 2017 on smart grid technologies, with advanced metering and distribution automation deployments leading the list of projects, followed by demand response and consumer-facing services.

With resiliency and consumer engagement becoming increasingly important, cities are just scratching the surface of what’s possible with networked services. And even for investor-owned utilities, advanced applications are becoming not just a nice-to-have but a must-have.

“The bigger game seems to be a growing urgency -- ‘I have to engage consumers better than I have in the past,’” said Gadre. No matter what application utility customers have started with, the conversation now, he said, is “'What else can I do with this network?'”