GTM Research expects the market for secondary transformer monitors to expand rapidly starting in 2014, as technology pilots are concluded.
Right now, secondary monitoring vendors are quickly inking public and private deals with other smart grid vendors to position their products for expected future growth -- enabled in part by the wide deployment of field area networks and the recent availability of cheaper AMI network interface cards.
Some examples include:
- AMI vendors including Echelon, Itron, Landis+Gyr, and Silver Spring Networks are partnering with transformer monitoring vendors to ensure interoperability and increase the potential value for existing customers.
- Additional negotiation and at least one deal has been brought to our attention between monitoring vendors and transformer vendors to embed monitors within new secondary transformers.
These enabling factors, coupled with increasing distributed generation penetration, the growing importance of asset management, and the expanding popularity of distribution automation applications, are providing the necessary elements for the secondary monitoring market to grow to more than a half billion dollars by 2018 before stabilizing in 2019.
It all seems very rosy for players like Ambient/ABB, Current, Elster, Grid 20/20, GridSense, IUS Technologies, and newcomer Telliformer in the mid- to long-term. However, there are risks that could significantly change the prospects for this market. There are three factors that could create opportunity, threaten to significantly slow growth, or provide major opportunities for savvy vendors.
1. The current competition from other sensors (including AMI and line sensors).
This first one is obvious, as the lines from the casual observer between LV and MV sensors often blur together as many of the high-level benefits are the same. The brewing low-voltage/medium- voltage sensor battle in the United States continues to heat up with new entrants like Awesense, Grid Sentry, and South Korean IUS Technologies entering the market over the last year. More than twenty vendors are currently competing to stake claim on a market that continues to lack answers to key questions, including the optimal penetration of sensors on a distribution line, the number of independent sensors that are required if the equipment on feeders is intelligent, and the amount additional value that can be generated from sensors that are more accurate, more precise, poll more frequently than a rival or include more powerful software or processing power.
2. Improving analytics from soft grid (e.g., GRIDiant), AMI (e.g., Silver Spring Networks), and MDMS (e.g., eMeter) providers can reduce the value of transformer monitors through the creation of virtual meters in the short and medium term.
Virtual meters can estimate key health parameters at different points on the grid (such as the secondary transformer) to estimate the stress on an asset, the quality of power, the outage status of a device, and assist with identifying theft. Widespread acceptance of these applications rather than direct measures could strip potential marginal hardware sales from the market.
3. Competition or cooperation with combined solid-state monitoring and control devices in the medium and long term.
The slow conversion of control equipment to solid-state components from wire-and-magnet equipment will begin to occur in the next five years. If demand develops for these devices to be deployed in a distributed fashion, the likely inclusion of monitoring and communications capabilities could provide an OEM opportunity for low-voltage sensor and communications manufacturers to gain market share. However, by opening up another revenue and value stream versus standalone sensors, it could shut them out altogether. Early indications point to Varentec and Gridco Systems challenging traditional players ABB, GE, and Siemens in this space.
The secondary monitoring market is beginning to look promising, as IOUs are starting pilots with greater frequency and prices on economy vendor offerings have fallen to as low as $750 a unit. However, significant challenges from software vendors and disruptive 21st-century solid-state hardware vendors will continue to grow for a market expected to exceed $500 million annually in 2018.
More information is available on the secondary transformer market from GTM Research’s new report, Transformer Monitoring Markets, 2013-2020: Technologies, Forecasts, and Leading Vendors.
For more information on the activities of AMI and MDMS vendors, look for the upcoming release of GTM Research’s AMI Analytics report.