4q16 navigant research leaderboard report - demand response management systems (1) (1)

Navigant Research Leaderboard Report: Demand Response Management Systems Assessment of Strategy and Execution for Nine Demand Response Management System Providers Published 4Q 2016 Brett Feldman Principal Research Analyst Lauren Callaway Research Analyst

RESEARCH REPORT

Navigant Research Leaderboard Report: Demand Response Management Systems

©2016 Navigant Consulting, Inc. Notice: No material in this publication may be reproduced, stored in a retrieval system, or transmitted by any means, in whole or in part, without the express written permission of Navigant Consulting, Inc.

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Section 1 EXECUTIVE SUMMARY

1.1 Market Introduction

As the scale of demand response (DR) programs has increased, their operational reliability has become more critical and options have expanded for communication protocols and devices. There is a need for more centralized management and control, similar to what is done on the power generation side of the electricity market. Numerous vendors have come from many different angles to offer solutions that are categorized as demand response management systems (DRMSs).

DRMSs are developed to help energy providers manage DR programs and improve program ROI. To date, vendors indicate that the uptake of DRMS has been slow, but there are drivers across the globe and across different utility types that point toward increasing interest. The core functions of DRMSs are to allow utility operators to view and add to the database of loads available for DR, to call events and/or issue pricing signals, and to perform post-event measurement and verification (M&V) to determine how much customers need to be compensated for load reduction. In addition to this core functionality, there are many other functions and analytical tools that can be built upon this platform.

1.2 Criteria Overview

This Navigant Research Leaderboard Report examines the current vendor landscape for DRMSs. It analyzes the strengths and weaknesses of the key players in this global industry and displays those rankings visually in the Navigant Research Leaderboard Grid. This Leaderboard Report utilized specific guidelines to determine which market participants should be included:

• Companies must offer DRMS capabilities for both the commercial and industrial (C&I) and residential sectors.

• Companies should be able to provide their DRMS solutions independent of DR program implementation services.

The criteria by which manufacturers are compared in this Navigant Research Leaderboard Report include:

• Vision

• Go-to-Market Strategy

• Partners

• Technology

• Geographic Reach



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• Sales, Marketing, and Distribution

• Product Performance

• Product Portfolio

• Pricing

• Staying Power

Detailed descriptions of each criterion are provided in the “Criteria Definitions” section of this report.

1.3 The Navigant Research Leaderboard Grid

The nine companies rated on the above criteria were evaluated based on numerical scores to determine which competitors are Leaders, Contenders, Challengers, or Followers in the market. As the global DRMS market has heated up in recent years, leading companies have invested heavily to develop their capabilities and strategy. There are also a number of companies focused on other aspects of the smart grid arena that are now starting to tackle the DR space, but have a great deal of ground to cover in order to catch up to the incumbents.

To qualify for the Leaders category, a company must perform exceedingly well in both Strategy and Execution—there are not many companies that currently meet these requirements. Contenders, which are companies that have exhibited the required staying power in the market despite relatively slow growth, boast significant financial reserves for future investment. The companies that fall into the Challengers category utilize varying strategies for capturing market share, and have some hurdles to overcome before establishing themselves as market Leaders. Overall, in a competitive space such as the DRMS market, the Challengers and Contenders in this Leaderboard Report represent credible competition for the Leaders.



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Chart 1.1 The Navigant Research Leaderboard Grid

(Source: Navigant Research)

The DRMS industry is still nascent relative to the energy industry in general. This report combines both the C&I and residential DR markets, as well as investor-owned utilities (IOUs), municipal utilities, electric cooperatives, and retail electric suppliers, which are all very different segments. Few companies attempt to serve all sides; consequently, few offer a complete solution set.

Siemens

AutoGrid

GE

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Lockheed MartinHoneywell

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LEADERSFOLLOWERS CHALLENGERS CONTENDERS LEADERSFOLLOWERS CHALLENGERS CONTENDERS



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Section 2 MARKET OVERVIEW

2.1 Market Definition

At this point in the industry’s evolution, there is no concise definition of a demand response management system (DRMS). In general, it is a system that has some level and combination of demand response (DR) program enrollment, device tracking, forecasting, dispatch, data communication, and settlement capabilities. Some vendors offer comprehensive DRMS solutions while others have systems that focus on specific parts of the value chain, specific customer segments (residential versus commercial and industrial, or C&I), or specific utility user types (investor-owned utility [IOU], municipal/cooperative, retailers). This report utilizes a relatively broad definition to include many of the systems that offer partial solutions—and not just the full-service models.

It is also important to distinguish DRMSs upfront from distributed energy resources management systems (DERMSs). DERMSs may include DR, but they also include resources like distributed generation and energy storage. While many of the actual system components may be the same, the application may vary slightly. In the future, these tools are likely to converge and fall under one product category.

2.2 Market Drivers

The key drivers for advancing DRMSs include technical, policy, and economic factors:

• Simplified DR program management: A DRMS allows utilities to automate and integrate multiple DR programs, including residential and C&I programs. A DRMS manages program enrollment and customer devices, communicates real-time data, sends customer notifications and feedback, dispatches events at local or substation levels, and performs billing calculations and settlements.

• Cost reductions: By successfully implementing DR programs through DRMSs, utilities can reliably and verifiably avoid the cost of investment in peaking generation plants and peak demand purchases in the wholesale market as well as transmission and distribution upgrades. DRMSs also provides the ability to bid DR in the organized wholesale markets for capacity, energy, and ancillary services purposes.

• Integration with other systems: Due to the increasing size of and reliance on DR programs, utilities can no longer operate these programs in a silo outside of their other operating systems, as was typically done in the past. A DRMS integrates with a utility's advanced metering infrastructure (AMI), meter data management system (MDMS), and legacy systems such as SCADA, customer information systems (CISs), customer billing data, weather data, and geographic information systems (GISs). Many vendors provide DRMSs that can be interfaced directly with the existing demand management systems at utilities, building automation systems, home energy management systems,



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and industrial systems at the customer sites. Some vendors also partner with other vendors/companies to complement their DR portfolio offering.

2.3 Market Barriers

The list of barriers to DRMS implementation is not necessarily as long as the list of drivers, but the slow rate of DRMS development points to the depths of the barriers as being major hurdles to be overcome:

• DRMS cost: The user must be able to justify the cost of the DRMS based on the expected benefits it will garner. DRMS solutions have a wide range of cost—from hundreds of thousands of dollars to several million. The cost varies with the type of DRMS solution (on-premise versus software as a service [SaaS]), the number and scale of programs to be integrated, the number of enrolled customers, and the extent of integration with the internal systems and the third-party equipment. In general, on-premise DRMSs cost more than the SaaS solution. Vendors charge a mix of fixed fees plus service fees or annual license fees.

Utility funding for DR may come from various sources within the organizational construct. In some cases, it is considered a demand-side management (DSM) program expense, while others treat it the same as other operational systems where costs can be recovered in rates. The SaaS model creates a complication if it gets treated as an operational expense as opposed to a capital expense as most systems are. Some utilities use available government funding (e.g., the US Department of Energy Smart Grid Investment Grant) or revised rate cases to cover portions of the DRMS cost.

• Integration complexity: DRMS integration takes time depending on how much existing infrastructure can be leveraged. Interoperability with legacy systems (such as SCADA) is complicated and requires significant interactions with different departments in the utility from both a personnel and an IT perspective. DRMS deployment can take anywhere from 3 to 4 months for small level integration to 12 to 18 months for high level integration (or even 2-3 years for the phased implementation approach).

• Flexibility and interoperability limitations: Even though vendors claim that their DRMS solution is highly flexible, utilities note that several features/functionality cannot be customized (e.g., a minor change like changing fonts in the customer notification emails is not easy). Most utilities have limited trained staff to operate these complex systems, and interoperability is sometimes overstated by vendors. Integrating equipment provided by multiple vendors could be a challenge.

2.4 Market Trends

There are a number of trends in the DRMS field that warrant discussion. The future of DRMSs lies in the integration with other enterprise software systems and expansion of DRMS capabilities. Vendors are seeing less demand from utilities for systems that are capable of DR only. As this demand grows, the lines between DRMSs, DERMSs,



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advanced distribution management systems (ADMSs), and customer engagement will blur, and these will be sold and implemented as one system.

2.4.1 On-Premise Solutions versus SaaS

Utilities or aggregators wishing to obtain a DRMS have two options for implementing the application and data storage: on-premise or SaaS. In an on-premise structure, the system is run and data is stored on servers owned and controlled by the customer; in a SaaS configuration, vendor or third-party-owned servers are used in a cloud configuration. The main reasons to choose a SaaS option are price and implementation time. Vendors have cited implementation times as low as 2 weeks and implementation prices of $100,000 or less for a simple system. When compared to on-premise systems that typically cost somewhere in the $1 million-$5 million range and can take several months or years to fully implement, SaaS is appealing—particularly for small utility customers. On top of this, a SaaS model makes it easier for a vendor to offer continuous updating of the system. For these reasons, SaaS solutions are gaining popularity in American markets.

There are also compelling reasons to choose an on-premise solution—chiefly, data security, a financial incentive to capitalize on IT infrastructure, and integration with other IT/ operational technology (OT) systems. Though utilities are increasingly becoming more comfortable with storing customer data on remote servers, many still have concerns with this practice. Many European utilities favor on-premise solutions. If utilities wish to integrate with other IT/OT systems (e.g., CIS and GIS), it is often advantageous to use an on-premise solution.

2.4.2 ADMS

A future trend involves the incorporation of DRMS functions into ADMSs. An ADMS is a central system that many utilities utilize to manage their grids. Rather than having the DRMS as a separate outside system, ADMS vendors are starting to plan how DRMS functionality could be included in an ADMS to simplify the operation for the utility and reduce the need for multiple platforms. This move may prove to be a barrier for third-party DRMS vendors if ADMS vendors are able to take that decision out of the utilities’ hands.

2.4.3 DERMS

Taking a wider view of the distributed grid, customer load is just one of several customer-owned assets that operators can call on to participate in grid management. Controlling load is no different than controlling customer-owned EVs, rooftop PV, storage, or diesel generators—and therefore, it makes sense for these devices to be managed through the same platform. This is particularly the case when performing load forecasts. If operators can integrate distribution load flow models with forecasted customer loads and distributed energy resources (DER) behavior under various scenarios, they have a powerful grid management tool. This integrated platform will eventually be able to support much more advanced programs, such as the transactive management of DER. Without the integration of these systems, an advanced, distributed, and clean electric grid is not possible.



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2.4.4 Customer Engagement

In the same vein, vendors are seeing a demand for the incorporation of other customer program management into DRMS customer portals. As time goes on, utilities are offering greater numbers of customer programs, and as the number of programs grow, it becomes cumbersome for both the utility and customer to interface with multiple separate systems. For a utility looking to implement a range of customer programs—from energy efficiency incentives to DR to pricing programs—it is advantageous to have one system to handle all customer outreach. That way, customers can go to one location to enroll in all programs and view their energy consumption and performance for all programs in one customer engagement management system.

2.4.5 Global DRMS Spending

Navigant Research estimates that $46.1 million will be spent on DRMSs on a global basis in 2016. By 2025, a total of $232.2 million in DRMS spending is expected around the globe. The largest amount of DRMS spending is anticipated to be in North America, primarily in the United States. This will hold true throughout the forecast period, even though other regions will eventually start to support more DR programs.

North America represents the majority of DR spending throughout the forecast period of 2016-2025. However, Europe and Asia Pacific will increasingly make significant investments in DRMSs over the forecast. Although Latin America and the Middle East & Africa will likely increase DR investments as well, overall spending in these regions is anticipated to be small compared to the other regions. This is mainly because Latin America and the Middle East & Africa are a few years behind other regions in adopting DR and are not expected to start retrofitting buildings for DR until 2017.

Chart 2.1 DRMS Spending by Region, World Markets: 2016-2025


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Section 3 THE NAVIGANT RESEARCH LEADERBOARD

3.1 The Navigant Research Leaderboard Categories

Navigant Research scored the vendors in this Navigant Research Leaderboard Report according to four categories: Leaders, Contenders, Challengers, and Followers. These categories are defined below.

3.1.1 Leaders

Leaders are vendors that scored 75 or above in both Strategy and Execution. These companies have differentiated themselves from the competition through exceptional software development, strong market and customer relationships, and a sustainable business model. Leaders are currently in the strongest position for long-term success in the DRMS market.

3.1.2 Contenders

Contenders are vendors that scored between 50 and 75 in both Strategy and Execution. While these companies have a solid foundation for growth and long-term success, they have not attained a superior position in the market. They are well-positioned to become Leaders, but have not yet fully executed their product launches, need to differentiate themselves via unique DRMS technology or cost breakthroughs, are seeing weaker-than-expected demand, or have limited market penetration.

3.1.3 Challengers

Challengers are vendors that scored higher than 25 in Strategy and Execution but are not yet Contenders for market leadership. While the vendors are fundamentally sound, they face significant challenges stemming from a lack of strategic vision or investments or risks to successful potential execution. Challengers may also be early in their arc of DRMS launch, therefore resulting in Execution scores that are based on small numbers of DRMSs.

3.1.4 Followers

Followers are vendors that have failed to distinguish themselves and scored below 25 in Strategy and Execution. These companies are not currently expected to challenge the Leaders unless they can substantially alter their strategic vision and expand their resources. Their long-term viability is in doubt unless systemic changes are made within the organization. None of the companies ranked in this report are Followers.



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3.2 The Navigant Research Leaderboard Grid

The DRMS industry is still nascent in relation to the energy industry in general. This report combines both the C&I and residential DR markets, as well as IOUs, municipal utilities, electric cooperatives, and retail electric suppliers, which are all very different segments. Few companies attempt to serve all sides; consequently, few offer a complete solution set.

Siemens and AutoGrid result as the two Leaders in the DRMS space based on the criteria inputs, which are described in detail within each profile. Note that this ranking is not based purely on technology capabilities. Both companies scored the highest in this Leaderboard Report with excellent Strategy scores and Execution scores that qualified them as Leaders. Each of these Leaders has different strengths and weaknesses within Strategy and Execution and come at the market from different perspectives, but overall, these firms have the strongest position within the DRMS market. All vendors in this ranking are competitive; however, there is significant differentiation between the Leaders and the Challengers.

Chart 3.1 The Navigant Research Leaderboard Grid


Siemens

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GE

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Lockheed MartinHoneywell

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LEADERSFOLLOWERS CHALLENGERS CONTENDERS LEADERSFOLLOWERS CHALLENGERS CONTENDERS



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Overall scores for all nine companies in the DRMS rankings are shown in Table 3.1. There is wide deviation in terms of Strategy and Execution. If a firm is strong in one area, it is typically also strong in the other. However, there is deviation within each category, such as in pricing, geographic reach, or partners. Strong emphasis in the ranking was placed on technical differentiation, diverse and compelling offers that are responsive to the market, and scalability.

Table 3.1 The Navigant Research Leaderboard Overall Scores Rank Company Score

1 Siemens 81.4 2 AutoGrid 81.0 3 GE 76.4 4 Comverge 70.5 5 Lockheed Martin 67.4 6 Honeywell 63.9 7 OATI 60.7 8 ABB 53.8 9 Nexant 44.3




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Section 4 COMPANY RANKINGS

4.1 Leaders

To qualify for the Leaders category, a company must score 75 or higher in both Strategy and Execution. This Navigant Research Leaderboard Report features two Leaders: Siemens and AutoGrid. While Siemens is a multinational corporation well-ensconced in the utility OT arena, AutoGrid is a Silicon Valley startup that is looking to bring big data software analytics to the stodgy energy industry.

4.1.1 Siemens

Overall Score: 81.4

Strategy: 82.8

Execution: 80.0

Siemens is a large, multinational technology corporation founded in 1847 and based in Munich, Germany with reported 2015 revenue of €82.3 billion ($90.8 billion). The company has developed its EnergyIP platform as a suite of utility operating systems, with the DRMS being one of those applications. This arrangement allows for easy integration between different systems. Siemens also created a joint venture with Accenture called Omnetric to implement the integration of its utility systems. This partnership provides a wealth of system knowledge and go-to-market capabilities.

Siemens’ DRMS 4.0 software is an integrated DR solution that offers a centralized application with a range of features to address C&I and residential customers. The fully integrated solution connects utility informational and operational systems, including customer information, billing and accounting systems, meter data, SCADA, and real-time electricity market information on price and supply to provide more intelligent, optimized, and actionable DR event dispatch. In addition, the software provides utilities with the capability to implement surgical DR, in which load aggregations can be defined by individual substations to enhance reliability. This technology enables automatic sensing that triggers DR functions for specific substations and feeder lines when under stress.

Several factors guide Navigant Research’s ranking for Siemens. The company’s DRMS is scalable and being used in IOUs, municipal utilities, electric cooperatives, and retail electric suppliers, supporting both MultiSpeak and OpenADR protocols. Siemens’ vision for its EnergyIP platform appeals to utilities looking for comprehensive solutions, and its partnership with Accenture provides an advantage in sales and implementation strategy. The company is active in the North American DRMS market, has projects in numerous



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countries in Europe, and is moving into the Asia Pacific market. However, it is known for being pricier compared to some competitors.

www.siemens.com

Chart 4.1 Siemens Strategy and Execution Scores


4.1.2 AutoGrid

Overall Score: 81.0

Strategy: 82.8

Execution: 79.3

AutoGrid, a privately held Redwood Shores, California-based provider of software platforms for energy management and analysis, is one of the newest players in the DRMS space, with roots in a Stanford University project. Since its founding in 2010, the company has raised nearly $42 million in three rounds of funding. Its most recent round in May 2016 raised more than $20 million, and it was led by an investment firm representing four major

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utilities in the United States and United Kingdom—Southern Company, National Grid, Xcel Energy, and Oncor, along with Total.

The company focuses on the DRMS space with its AutoGrid DR Optimization and Management System (DROMS) offering. AutoGrid’s embedded OpenADR Server 2.0 has been certified for full compliance with the OpenADR 2.0b profile specification. It also supports SEP2.0 (ZigBee) for utilities to send signals to thermostats, EVs and smart inverters. DROMS blurs the line between DRMSs and DERMSs, and it also allows operators to manage DER alongside DR programs from the same dashboard, enabling the monetization of DER in wholesale markets. Since DROMS is a cloud-based offering, it can also be implemented quickly and at low cost.

DROMS can be used for both C&I and residential applications, including behavioral DR, direct load control (DLC), peak time rebate, and critical peak pricing. The Austin Energy residential project, which uses the DROMS Bring Your Own Thermostat (BYOT) model, was the first live field implementation of OpenADR 2.0.

Navigant Research’s Leaderboard ranking for AutoGrid is based on several points. DROMS has a modular design, so it can be scaled for all types of customers—from large IOUs to small municipal utilities, electric cooperatives, and retail electricity suppliers. The company’s SaaS focus can reduce costs and implementation times compared to on-premise DRMS solutions. AutoGrid has a strategic partnership with utility data provider Silver Spring Networks to offer the Silver Spring UtilityIQ Demand Optimizer, which is a white-label AutoGrid solution for utilities. It also partners with leading DSM implementation vendors to provide full-service solutions for utilities and has strong links into the European energy market through its European-based strategic investors.

www.auto-grid.com

http://www.auto-grid.com/



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Chart 4.2 AutoGrid Strategy and Execution Scores


4.2 Contenders

The Contenders category includes companies that scored between 50 and 75 in both Strategy and Execution. Navigant Research identified five vendors in the Contenders category of this Leaderboard Report. Vendors fall into this category because while they do not consistently set themselves apart within the Strategy and Execution criteria, their efforts are consistent with the industry and the market. Many firms use DRMSs as part of their larger portfolio of energy product and service offerings, including those in the Contenders category. These companies are looking to eat into the market share of the Leaders, and are strategic in their efforts.

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4.2.1 General Electric

Overall Score: 76.4

Strategy: 70.0

Execution: 82.3

Atlanta, Georgia-based GE Energy Connections (formerly GE Energy Management) is a division of GE that provides hardware, software, and control systems to the electrical power industry. This business segment earned 6% of General Electric’s (GE's) $117.4 billion in revenue for 2015. GE was founded in 1892. In November 2015, GE completed the acquisition of Alstom Power, the division of Alstom focused on the energy industry. This acquisition significantly improved GE's strength in the DRMS area through Alstom’s long-standing product offering, DRBizNet.

GE’s main focus in its DRMS offering is operator usability, and to date, it is the only DRMS vendor that has entered the wholesale energy management market. Its solution, DRBizNet, has been adopted by PJM Interconnection, Midwest Independent System Operator, and California Independent Systems Operator. The DRBizNet offering comes with a fully OpenADR-compliant DRMS that allows OpenADR devices to be directly managed. In addition to OpenADR, GE Energy also serves the MultiSpeak market. DRBizNet can also be utilized by utilities for retail distribution customer participation in DR programs.

For smaller utilities, GE offers DRBizNet Light, a more modular version of the full DRMS product. It includes program management, customer enrollment, DR capability forecasting and DR event management and notification. It can be up and running in 10-12 weeks, most of which is training time for the utility staff. DRBizNet Light can also be upgraded to the full version over time if the utility decides to increase its program potential.

GE earned the highest Execution score of any vendor based on its strong sales capabilities, flexible product portfolio, and commitment to the sector with the Alstom acquisition. However, it scored lower on the Strategy component than the Leaders due to fewer strategic partnerships and less of an international presence in the DRMS space.

www.ge.com

http://www.ge.com/



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Chart 4.3 GE Strategy and Execution Scores


4.2.2 Comverge

Overall Score: 70.5

Strategy: 68.5

Execution: 72.5

Founded in 1997 and headquartered in Norcross, Georgia, Comverge is a privately held company and a significant player in the energy management, smart grid, and DR technology and services markets. At the heart of Comverge’s offering is IntelliSOURCE, its enterprise DR management system, which can be integrated with other utility systems like SCADA, CISs, ADMSs, and billing. IntelliSOURCE can be applied to both DLC and price-responsive residential DR programs, supporting homes with and without smart meters. With the software platform, utilities can temporarily and automatically cycle off central air conditioning and other high energy use appliances during peak hours when electricity prices are high or the reliability of the grid is threatened (or both).

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In 2016, Comverge announced IntelliSOURCE Enterprise, which provides a suite of fully integrated modules that enable utilities to manage DR, energy efficiency, and customer engagement programs, coordinate BYOT and DER, and utilize consumer energy data analytics opportunities. The modules can be deployed incrementally to manage specific program components. All modules are designed with an open architecture that enables them to integrate with existing solutions.

Hindering its score in this Leaderboard, Comverge is still mainly known as an implementation vendor, where the DRMS is tied to those services. With IntelliSOURCE Enterprise, the company is attempting to brand the DRMS as a standalone product and change that image. It also uses partnerships with program administrators and technology vendors to go-to-market effectively. Comverge has projects in South Africa and Japan to expand its opportunities abroad.

www.comverge.com

Chart 4.4 Comverge Strategy and Execution Scores


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4.2.3 Lockheed Martin

Overall Score: 67.4

Strategy: 62.3

Execution: 72.3

Bethesda, Maryland-based Lockheed Martin was formed in 1995 and reported 2015 revenue of $46.1 billion. The company offers a platform called SEEsuite that is composed of two components: SEEload, which is a DRMS for program administrators; and SEEview, which is a customer-facing enterprise energy management solution and automated DR (ADR) client for the C&I market. SEEload is OpenADR 2.0a- and b-compliant and also supports MultiSpeak. This flexible platform allows utilities to incorporate load management for C&I and residential customers and utilizes advanced analytics to optimize DR for increased efficiency and economic viability. SEEload offers a single platform for the entire lifecycle of program management, from enrollment, forecasting and dispatching, settlements, and measurement and verification (M&V) to analysis and reporting. It has the ability to localize control down to the service transformer level.

Strategically, the biggest next step for Lockheed Martin is entering the aggregation market and supporting demand bidding. The company has already completed the first round of integration with some of the ISOs, and it has positioned itself to be a Distribution Resource Planner in California. Lockheed Martin sees flexibility and ability to manage large systems as its strengths in the DRMS market. The company’s offerings can support all program types across all customer classes, and its communications network can support all protocols simultaneously. The company seeks out large, complex projects that span across multiple service territories. Cost is a barrier for the adoption of its product—only a handful of utilities have both the capital on hand and the need for an advanced system like Lockheed Martin’s.

With its focus on large-scale projects, Lockheed Martin may miss out on smaller opportunities with municipal utilities, electric cooperatives, and retail electric suppliers, decreasing its score in this Leaderboard. The product is also viewed as being on the expensive side of the DRMS spectrum, even if it has a lot of functionality value. The company does not have as strong of a partner network as some other vendors and is limited to the North American market at this point.

www.lockheedmartin.com

http://www.navigantresearch.com/



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Chart 4.5 Lockheed Martin Strategy and Execution Scores


4.2.4 Honeywell

Overall Score: 63.9

Strategy: 54.0

Execution: 72.5

Honeywell, founded in 1906 and based in Morris Plains, New Jersey, had revenue in 2015 of $38.6 billion, with an estimated $9.4 billion from its newly established Home and Building Technologies strategic business group. Its DR Automation Server (DRAS) is a SaaS offering that provides utilities and RTOs/ISOs with two-way communications with energy management systems (EMSs) for C&I facilities and load control devices in homes and small businesses. Honeywell helped develop the OpenADR communication standard with Lawrence Berkeley National Laboratory and is a founding member of the OpenADR Alliance that supports over 70 major vendors of OpenADR-based technology.

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With the DRAS technology, Honeywell is one of few vendors certified for OpenADR 2.0b on the virtual top node side. It also has one of the only products, a gateway for end users, certified on the virtual end node side (the Akuacom DRAS is also an OpenADR Golden Unit, serving as a benchmark for certification testing of the 2.0b standard). In 2016, Honeywell moved to the Microsoft Azure platform. The company offers an end-to-end platform in the DRAS but also partners with other market players to reach out to customers.

Honeywell prefers to offer DRAS as a SaaS solution, which is most common in the United States, but often implements DRAS as an on-premise solution in international markets like China and Australia. The company is also active in the UK market, where DR is focused on load balancing, frequency response, and fast-frequency reserves, which requires load response times in fractions of a second.

The DRAS is not considered a full-scale DRMS, so it does not always get to compete for DRMS procurements. Honeywell has not had as strong a partnership ecosystem in the space as the leading vendors, but it is working to improve that situation through deals that were not public at the time of publication.

www.honeywell.com

http://www.honeywell.com/



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Chart 4.6 Honeywell Strategy and Execution Scores


4.2.5 OATI

Overall Score: 60.7

Strategy: 52.0

Execution: 68.3

Founded in 1995 and based in Minneapolis, Minnesota, privately held Open Access Technology International (OATI) offers a DRMS solution called webDistribute—a comprehensive DR and DER management program. It can model an entire distribution grid and locate where DER are on an asset basis. Each asset is modeled individually, allowing for surgical dispatch. The program can manage the entire lifecycle of a program, from design through implementation, and can create resources as aggregations of assets using various aggregation criteria. OATI also offers a customer portal, WebSmartView, which supports DR (among other customer programs).

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webDistribute can be used for all customer segments, including residential, C&I, and agricultural. It is entirely a SaaS product, hosted at a remote data center with all communications facilities provided. Because it is SaaS, there is little upfront cost, and overhead is shared by all clients. SaaS also allows for continuous updating, and a short schedule of project implementation—in the range of a couple of months.

OATI has had some success in smaller DRMS implementations, but has not competed as strongly in the larger IOU deployments. The company is strictly focused on the North American market at this point. It does not have a strong partner network in this space currently. All of these factors reduced its score in this Leaderboard.

www.oati.com

Chart 4.7 OATI Strategy and Execution Scores


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http://www.oati.com/



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4.3 Challengers

Challengers are vendors that scored higher than 25 in Strategy and Execution but are not yet Contenders for market leadership. Companies with this ranking lack the scalability and staying power of other players in the market. While these vendors are fundamentally sound and have the potential to become Leaders, they face significant challenges.

4.3.1 ABB

Overall Score: 53.8

Strategy: 46.3

Execution: 60.5

ABB, formed in 1988 and based in Zurich, Switzerland, reported annual revenue of $35.5 billion in 2015. The company develops utility-scale IT systems for energy management such as ADMSs (i.e., incorporating an embedded operations management system), network management, and generation management systems (GMSs). Its DRMS offering is designed to incorporate DR into the DMS, GMS, and EMS and to connect the transmission and distribution system with the utility’s control center. As communications and hardware equipment becomes less expensive and as communication standards such as OpenADR are adopted by equipment vendors and building and home EMSs, ABB sees opportunities to automate existing DLC programs to create a closed loop for performance feedback.

The ABB DR Management offering allows for advanced distribution monitoring by leveraging existing AMI and providing real-time system and pricing information, in addition to incorporating and optimizing the use of distributed resources. The system can handle dispatchable DR, thermostats, DLC devices, and voluntary programs like pricing. It has fast response and real-time M&V capabilities. Contracts are based on a perpetual license with a true-up mechanism along with an annual maintenance fee.

ABB had some early success in the North American DRMS market, but has not been as successful recently. It does have some involvement in innovative projects in Europe in Sweden and Germany. In addition, it does not have strong sales or partnership strategies for DRMS, and focuses on a limited market base as opposed to all possible customer types and sizes.

www.abb.com

http://www.abb.com/



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Chart 4.8 ABB Strategy and Execution Scores


4.3.2 Nexant

Overall Score: 44.3

Strategy: 33.8

Execution: 52.8

Nexant, a privately held company founded in 2000 and headquartered in San Francisco, California, offers a suite of software platforms for utility and municipalities to support its business processes. Its iEnergy software platform is designed for utility DSM and customer engagement initiatives. These are enterprise-built applications that integrate with other systems to manage energy efficiency programs and customer engagement. iEnergy is a platform for utilities managing DSM programs and provides two-way communications for improved customer satisfaction while achieving energy savings.

- 10 20 30 40 50 60 70 80 90 100

Vision


Partners

Technology

Geographic Reach


Product Performance

Product Portfolio

Pricing

Staying Power

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Nexant’s second platform is Grid360 Distribution Analytics. This offering is a fully SaaS-based near-term and long-term distribution operational planning platform that evaluates and optimizes DER (solar and wind—including smart inverters, energy storage, microgrids, EVs, DR, energy efficiency, and more). It can provide notification services or work with other systems to do so. Forecasting capabilities include what/if scenarios, load curves, and participation rates. It has granularity to the device level and can integrate with DMS, AMI/MDMS, CIS, billing, and financial systems. Integration takes 3-4 months for a small utility and 6-8 months for larger projects in phases. It can be implemented in a single tenant model, in which every customer has their own instance, or a multi-tenant model, where the application is the same instance across customers.

Nexant’s DRMS offering is relatively new in its software portfolio, and has not gained a lot of traction to date. The company is coming at the space from a different perspective than the other vendors, focusing on the DSM program administration aspect. Based on its limited market penetration, it does not have extensive experience with integration between DRMSs and other utility systems. It also does not have a wide partner network and is only active in the North American market to date.

www.nexant.com

http://www.nexant.com/



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Chart 4.9 Nexant Strategy and Execution Scores


- 10 20 30 40 50 60 70 80 90 100

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Partners

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Section 5 ACRONYM AND ABBREVIATION LIST

ADMS ........................................................................................ Advanced Distribution Management System

AMI ............................................................................................................. Advanced Metering Infrastructure

BYOT .................................................................................................................. Bring Your Own Thermostat

C&I ........................................................................................................................ Commercial and Industrial

CIS .................................................................................................................. Customer Information System

DER ................................................................................................................. Distributed Energy Resources

DERMS .......................................................................... Distributed Energy Resource Management System

DLC .................................................................................................................................. Direct Load Control

DMS ........................................................................................................... Distribution Management System

DR .................................................................................................................................... Demand Response

DRAS ................................................................................................ Demand Response Automation Server

DRMS ............................................................................................ Demand Response Management System

DROMS ........................................... Demand Response Optimization and Management System (AutoGrid)

DSM .................................................................................................................... Demand-Side Management

EMS .................................................................................................................. Energy Management System

EV ........................................................................................................................................... Electric Vehicle

GE ......................................................................................................................................... General Electric

GIS ............................................................................................................... Geographic Information System

GMS ........................................................................................................... Generation Management System

IOU ............................................................................................................................... Investor-Owned Utility

ISO .................................................................................................................. Independent System Operator

IT ............................................................................................................................... Information Technology

M&V ................................................................................................................. Measurement and Verification



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MDMS ........................................................................................................ Meter Data Management System

OATI .................................................................................................. Open Access Technology International

OpenADR ............................................................................................. Open Automated Demand Response

OT ............................................................................................................................. Operational Technology

ROI ................................................................................................................................Return on Investment

RTO ....................................................................................................... Regional Transmission Organization

SaaS ............................................................................................................................. Software as a Service

UK ......................................................................................................................................... United Kingdom

US ............................................................................................................................................. United States



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Section 6 TABLE OF CONTENTS

Section 1 ...................................................................................................................................................... 1

Executive Summary .................................................................................................................................... 1

1.1 Market Introduction ....................................................................................................................... 1

1.2 Criteria Overview ........................................................................................................................... 1

1.3 The Navigant Research Leaderboard Grid ................................................................................... 2

Section 2 ...................................................................................................................................................... 4

Market Overview .......................................................................................................................................... 4

2.1 Market Definition ........................................................................................................................... 4

2.2 Market Drivers ............................................................................................................................... 4

2.3 Market Barriers .............................................................................................................................. 5

2.4 Market Trends ............................................................................................................................... 5

2.4.1 On-Premise Solutions versus SaaS ........................................................................................ 6

2.4.2 ADMS ...................................................................................................................................... 6

2.4.3 DERMS .................................................................................................................................... 6

2.4.4 Customer Engagement ........................................................................................................... 7

2.4.5 Global DRMS Spending .......................................................................................................... 7

Section 3 ...................................................................................................................................................... 8

The Navigant Research Leaderboard ....................................................................................................... 8

3.1 The Navigant Research Leaderboard Categories ........................................................................ 8

3.1.1 Leaders .................................................................................................................................... 8

3.1.2 Contenders .............................................................................................................................. 8

3.1.3 Challengers ............................................................................................................................. 8

3.1.4 Followers ................................................................................................................................. 8



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3.2 The Navigant Research Leaderboard Grid ................................................................................... 9

Section 4 .................................................................................................................................................... 11

Company Rankings ................................................................................................................................... 11

4.1 Leaders ....................................................................................................................................... 11

4.1.1 Siemens ................................................................................................................................. 11

4.1.2 AutoGrid ................................................................................................................................ 12

4.2 Contenders .................................................................................................................................. 14

4.2.1 General Electric ..................................................................................................................... 15

4.2.2 Comverge .............................................................................................................................. 16

4.2.3 Lockheed Martin .................................................................................................................... 18

4.2.4 Honeywell .............................................................................................................................. 19

4.2.5 OATI ...................................................................................................................................... 21

4.3 Challengers ................................................................................................................................. 23

4.3.1 ABB ....................................................................................................................................... 23

4.3.2 Nexant ................................................................................................................................... 24

Section 5 .................................................................................................................................................... 27

Acronym and Abbreviation List ............................................................................................................... 27

Section 6 .................................................................................................................................................... 29

Table of Contents ...................................................................................................................................... 29

Section 7 .................................................................................................................................................... 32

Table of Charts and Figures..................................................................................................................... 32

Section 8 .................................................................................................................................................... 33

Scope of Study and Methodology ........................................................................................................... 33

8.1 Scope of Study ............................................................................................................................ 33

8.2 Sources and Methodology .......................................................................................................... 33



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8.2.1 Vendor Selection ................................................................................................................... 34

8.2.2 Ratings Scale ........................................................................................................................ 34

8.2.2.1 Score Calculations ........................................................................................................ 34

8.2.3 Criteria Definitions ................................................................................................................. 34

8.2.3.1 Strategy ........................................................................................................................ 34

8.2.3.2 Execution ...................................................................................................................... 35



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Section 7 TABLE OF CHARTS AND FIGURES

Chart 1.1 The Navigant Research Leaderboard Grid ............................................................................. 3

Chart 2.1 DRMS Spending by Region, World Markets: 2016-2025 ........................................................ 7

Chart 3.1 The Navigant Research Leaderboard Grid ............................................................................. 9

Chart 4.1 Siemens Strategy and Execution Scores .............................................................................. 12

Chart 4.2 AutoGrid Strategy and Execution Scores .............................................................................. 14

Chart 4.3 GE Strategy and Execution Scores ....................................................................................... 16

Chart 4.4 Comverge Strategy and Execution Scores ........................................................................... 17

Chart 4.5 Lockheed Martin Strategy and Execution Scores ................................................................. 19

Chart 4.6 Honeywell Strategy and Execution Scores ........................................................................... 21

Chart 4.7 OATI Strategy and Execution Scores .................................................................................... 22

Chart 4.8 ABB Strategy and Execution Scores ..................................................................................... 24

Chart 4.9 Nexant Strategy and Execution Scores ................................................................................. 26

Table 3.1 The Navigant Research Leaderboard Overall Scores .......................................................... 10



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Section 8 SCOPE OF STUDY AND METHODOLOGY

8.1 Scope of Study

The scope of this report is limited to the Strategy and Execution associated with leaders in the global market for DRMSs. The companies active in this market are diverse, ranging from full-scale utility operational system providers to pure-play DRMS vendors. Note that company rankings capture the vendor’s standing at the time of the report and are not a retrospective of past accomplishments or an indication of future success. The ratings are likely to change rapidly as this market matures and business models continue to evolve. Moreover, the report is not exhaustive, as there are other global and smaller players in the market that were not included because of their specific focus on one aspect of the market or their lack of geographic reach.

8.2 Sources and Methodology

Navigant Research’s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Navigant Research’s analysis is primary research gained from phone and in-person interviews with industry leaders including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community.

Additional analysis includes secondary research conducted by Navigant Research’s analysts and its staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report.

These primary and secondary research sources, combined with the analyst’s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Navigant Research’s reports. Great care is taken in making sure that all analysis is well-supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients.

Navigant Research is a market research group whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. Navigant Research is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets.



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8.2.1 Vendor Selection

Vendors were selected based on market presence, commercial activity, and unique expertise related to DRMSs. Companies must offer DRMS capabilities for both the C&I and residential sectors. In addition, companies should be able to provide their DRMS solutions independent of DR program implementation services.

8.2.2 Ratings Scale

Companies are rated relative to each other using the following point system. The ratings are a snapshot in time, showing the current state of the company. These scores are likely to be fluid as new competitors enter the market and customer requirements evolve.

• Very Strong 91 – 100

• Strong 76 – 90

• Strong Moderate 56 – 75

• Moderate 36 – 55

• Weak Moderate 21 – 35

• Weak 11 – 20

• Very Weak 1 – 10

8.2.2.1 Score Calculations

The scores for Strategy and Execution are weighted averages based on the subcategories. The overall score is calculated based on the root mean square of the Strategy and Execution scores.

8.2.3 Criteria Definitions 8.2.3.1 Strategy

• Vision: Measures the company's stated goals in designing market solutions against the actual needs of customers based on the entire environment in which they will operate. Clear and compelling visions that are effectively communicated to the industry result in higher scores.

• Go-to-Market Strategy: Evaluates the company's strategy for reaching the target market, including the sales and marketing channels to be used, as well as the processes established for informing the target market about brand differentiation and unique product value.

• Partners: Measures the company's established partnerships with key organizations that will provide an advantage in financial backing, sales, business, and product development. Affiliations with well-known device manufacturers and other established vendors in the supply chain, as well as a track record of financial strength through fundraising or profitable product sales, positively affect scores in this Navigant Research Leaderboard Report.



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• Technology: Evaluates whether the company has developed and/or patented technology that provides a significant business advantage over competitors that is likely to have an enduring impact on its success. Higher scores are given if the company's technology is already a proven market success or delivers unique product attributes.

• Geographic Reach: An evaluation of companies’ ability to reach national and international customers through networks of distributors. Scores are lower if the company does not have a sales strategy suitable for sales in multiple regions.

8.2.3.2 Execution

• Sales, Marketing, and Distribution: Evaluates the company’s marketing and sales performance and current distribution channel. Higher scores are given to companies with a large global dealer network with access and support for current product.

• Product Performance: Evaluates the competitive performance of the system. Higher scores are given to companies that provide higher functionality and lower operating costs while delivering on customer expectations.

• Product Portfolio: Addresses the products' relative competitiveness in and suitability to the market. Points are awarded for product performance, uniqueness, and system design for the target market.

• Pricing: Determines the suitability of product pricing based on its feature set, including whether products are available at multiple price points and how pricing compares to that of competitor products.

• Staying Power: Evaluates whether the company has the financial resources to withstand weak or variable markets and price-based assaults by competitors. Also measures the company’s likelihood to continue to pursue products in the event of market softening. Higher scores are given to companies with better financial performance and greater capability to survive market downturns.



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Published 4Q 2016

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