Silver Spring Networks (NYSE: SSNI) saw its stock jump more than 20 percent on Thursday after its second-quarter results showed that it had beat analysts estimates for the second straight quarter.
The company reported a net income of $9.47 million and an adjusted net loss of $4.46 million or $0.10 per share, lower than the $0.17 per share that analysts had estimated.
While Silver Spring awaits the decision of U.K. contracts that are being awarded to build out countrywide wireless networks for smart metering, the Redwood City-based company is also expanding further in New Zealand.
Silver Spring will deploy its UtilityIQ software-as-a-service for SmartCo, a consortium of distribution companies. The SmartCo companies will then use Silver Spring’s platform to generate revenue from providing metering services to energy retailers while also improving network services, such as reducing outage restoration time and improving power quality, for their end-customers.
While New Zealand has not mandated two-way smart meters, the New Zealand Energy Authority has required that household electricity meters be certified that they accurately measure electricity consumption. Most of the meters have certification that expires in April 2015, so meters need to be recertified before then. Because of that deadline, many retailers are using this as an opportunity to update to smart meters, rather than re-certifying existing meters.
For the retailers, the smart meters will allow them to provide consumers with more accurate data and flexible rate plans, according to John Garner, general manager for Silver Spring in Australia and New Zealand. The SmartCo companies have decided to include home-area network radios in the smart meters, in case retailers want to connect the meters with thermostats or other load-control switches.
Having features like a radio that can communicate into the home was important to ensure that the retailers would buy in. The deal between distributors and retailers in a deregulated, competitive marketplace is unique. While SmartCo foots the bill upfront, it expects to earn a return by providing the smart-meter-as-a-service. “This is the first time that Silver Spring has provided our platform to a distributor who has then used it to generate revenue by providing metering services directly to retailers,” said Garner. The customer will own the meter data.
In other deregulated regions, like the U.K., there has been some wrangling over how to set up the smart meter deployment so the meter doesn’t have to be changed out every time a customer switches energy retailers.
“One of the key learnings of the New Zealand model is how to handle the aspect of customer churn and not limit the customers’ ability to choose its retail provider,” said Garner. “With the current SmartCo approach, there is the ability to provide value to the customer, retailer, and distribution company.”
Keeping everyone happy also means setting up a network that is robust enough to cut across the dramatic terrain of New Zealand. Silver Spring will deploy its Gen4 wireless mesh to the meters, which can adapt to New Zealand’s restrictive spectrum operating parameters, said Garner. SmartCo will then use a mix of options for backhaul, including cellular and Ethernet via the line companies’ backbone networks. Advanced Metering Services (AMS) will manage the deployment of meters and provide the meter data management system to integrate with energy retailers’ systems.
"SmartCo chose Silver Spring's standards-based platform because it was the only solution that served the needs of both our energy retailer customers and lines company owners," John O'Hara, executive chairman at SmartCo, said in a statement.
If all of the retailers choose the smart meters for their customers, the rollout would cover about 250,000 customers, according to GTM Research. That is more than double the deal Silver Spring landed in New Zealand last year with Unison, which serves about 100,000 customers. It’s all small potatoes, however, compared to the $7.5 billion contract Silver Spring and Vodafone are hoping to secure in the U.K.