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Home > Process Automation & Safety > Posts > Telvent’s Role in the Schneider Electric Smart Grid Play
January 20

Telvent’s Role in the Schneider Electric Smart Grid Play

Keywords: Smart Grid, Clean Energy, Energy, Electric Distribution, T&D, Demand Response, SCADA. 

Recent Acquisitions by Schneider Electric
The energy industry is, in all its forms, a "long cycle" business. Large investments must be made years in advance before they can return significant cash flows, and the assets developed through these investments must produce for many years for the investment to succeed. Everyone knows this is true for gigantic and mature energy businesses like oil & gas exploration and production. But it is also true for the evolving Smart Grid. The long-lived nature of our vast electric infrastructure precludes its quick replacement with a more intelligent one.

Furthermore, "adding intelligence" to the existing infrastructure sounds simple, but is quite complicated. The Smart Grid vision implies that individual electric consumers who are able to regulate their own demand (by advanced control of their home equipment and appliances) have the potential to participate actively in the balance of supply and demand. Whether residential, commercial, or industrial, the common thread among all these future smart consumers is that they are served by the utility's distribution system.

Thus, the Smart Grid really will bring the biggest changes in two places: the electric distribution system itself and "inside" the homes, buildings, and factories that it serves. The challenge of a smart electric infrastructure boils down to making these big changes within our buildings and in the electric distribution system. What types of "long cycle" investments will encourage this? That is the question faced by electric infrastructure suppliers.

It's not surprising that the last two years have seen any number of acquisitions in the Smart Grid and clean energy spaces. Besides the long cycle nature of business, the 2008 recession has made life more difficult for venture-stage firms, even those with significant backing. In ARC's opinion, two major supplier firms have used this opportunity to acquire most successfully. French supplier Schneider Electric is one of these.

Date 

Company 

Business 

Geo. Strength 

Jun-09 

Conzerv 

Industrial energy management

India 

Jun-09 

Microsol
Technologia

Power conditioning 

Brazil 

Jan-10 

"Areva-D"

Electric distribution equipment

France 

Jan-10 

CIMAC

Systems integration

MEA 

Apr-10 

SCADAgroup 

Control/automation systems

Australia 

Oct-10 

Electroshield-TM  

MV electrical equipment 

Russia 

Mar-11 

Summit Energy 

Energy services, procurement

North America 

Jun-11 

Telvent 

Grid, pipeline management

Spain, NA

 

Some Recent Acquisitions of Schneider Electric
Schneider Electric acquired a number of firms in the energy space recently (see table), but has shied away from meter makers and the more gadget-oriented venture firms. Instead, the company acquired several innovative but larger firms with well-established market presence among utilities and other energy customers. These firms vastly expand Schneider Electric's footprint in electric distribution and smart consumption. While many of these firms deserve mention, the focus here will be on Telvent, the most recent acquisition. Telvent is a Spanish-based firm that has distinguished itself in distribution system management.

Telvent Overview
The electric distribution system is the part of the grid that changes state most often. Distribution equipment is more extensive and far more numerous than transmission equipment and must be serviced without disturbing customers as services expand and renewable resources are added. Demand response directly impacts the distribution network. Telvent has focused its product development on managing and optimizing distribution systems in real time. The common thread in its businesses is SCADA-like management and use of remote data streams. Electric distribution is Telvent's biggest segment in North America, but oil & gas management is not far behind. The company's large transportation business is more closely split between Europe (Spain) and the Americas.

Telvent's most established products, such as its distribution management systems (DMS), use secure and robust communications to track the state of the system and then apply specialized modeling and optimization tools to integrate sensor data streams and take appropriate actions. As distribution systems grow in complexity, this capability will also grow in both size and importance to utilities. In terms of overall investment, utilities will likely spend significant amounts on distribution simply because their distribution systems are so vast and poorly automated.

Telvent's leading electric DMS customer, Progress Energy, is merging with Duke Energy to form the largest single US electric utility. Clearly, Telvent has plenty of opportunity to grow in what is already its strongest market.

Telvent in Schneider Electric's Smart Grid Play
Telvent's oil & gas, environment, transportation, and weather businesses complement Schneider Electric's drive to serve utilities and assemble a product portfolio attractive to municipalities striving to be "Smart Cities." Cities of all sizes feel pressure to improve their infrastructures, expand services to meet growing populations, and increase economic competitiveness in the global market.

With Telvent, Schneider Electric is positioned to deliver such efficient and sustainable urban infrastructures. Schneider's SmartCity offering combines hardware, software, and services to help improve efficiency, sustainability, and services across multiple infrastructures: electric power, water, public services, buildings, and homes. Schneider Electric and Telvent combined can provide both innovative, expert solutions and work with a full range of best-in-class partners (especially local ones), to meet cities' needs. Within the Schneider Electric Smart Grid strategy, Telvent provides the software, modeling, and analytics that support such best practices and applications.

This application capability is a great complement to Areva-D, which supplies the actual intelligent edge devices (protective relays, feeder and bay controls, substation control systems, etc.). The combination of Areva-D and Telvent, both new to Schneider Electric within the last two years, largely fills out the utility side of distribution system management. Other Schneider Electric acquisitions, such as Conzerv and Summit Energy, address end user needs rather than those of utilities. Both emphasize greater intelligence within equipment, and utilization of this intelligence in models and analytics to support high-value real-time applications.

Acquisition Challenges
As always, the challenges and opportunities for success facing such an expanded enterprise involve some issues. On the positive side, there is the highly complementary geographic distribution of business. Telvent is very strong in the Americas and in Spain, but almost a non-entity in other regions. Areva-D and Schneider Electric both have bigger presences in Europe as well as in the critical Asian market, where electric infrastructures are growing at 8-10 percent per year. To effectively complement each other's geographic strengths and weaknesses, Schneider will have to rapidly develop cooperative ties among these business units, which two years ago were part of three competing companies.

Besides this, development plans must be coordinated and rationalized, and that includes the ongoing development that is coordinated with Alstom, which purchased the Areva transmission business. Certainly, the complexity of Schneider Electric development plans will increase substantially. Finally, the existing Telvent business has a large exposure to Spain (especially in services), where government austerity plans make greater geographic diversity a priority.

Last Word
While the task of integrating these businesses smoothly will remain challenging, it's instructive to recall how far these acquisitions have expanded the scope of Schneider Electric in the Smart Grid space. The company has come from virtually nowhere three years ago to become a major player; providing the equipment, software applications, and services to address the fastest growing segments in both utilities and commercial/industrial customers. That's a great deal of progress in a short time.

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