It’s earnings season, and competitors on the grid edge are posting their performance. In last week's dispatch, we covered the bright spots in Itron's and SolarEdge’s earnings calls, as well as Tesla’s unveiling of its Solar Roof and plan to raise $1.5 billion in debt to finance its Model 3 production ramp-up.
Earlier in the week, we’ve already covered the news of Enphase’s second-quarter earnings call, including the retirement of its long-time CEO, Paul Nahi, as the microinverter maker struggles to compete against SolarEdge and a host of inverter rivals. Here we look at two more important companies we’re tracking -- smart grid networking player Silver Spring Networks, as well as wind, grid, and possibly electrified naval ship technology provider American Superconductor.
Read on for the latest on New York's REV initiative, the legal battle over the Clean Power Plan, and news from Energy Impact Partners.
Silver Spring Networks’ Q2: Smart meters, streetlights and Starfish IOT
Silver Spring Networks reported second-quarter 2017 net income of $18.6 million, or 34 cents per diluted share, on revenues of $261.6 million, compared to income of $26.1 million, or 50 cents per diluted share, on revenues of $121.95 million in the same quarter last year. The big jump in revenues was also matched by the increasing cost of revenue, driven by higher deliveries of its networking nodes for large-scale deployments with customers like Con Edison, ComEd and CPS Energy. The Redwood City, Calif.-based company installed 670,000 endpoints in the quarter, its highest tally since the first quarter of last year.
In terms of non-GAAP measurements, which Silver Spring uses to reflect its financials with utility contracts that tend to see a long lag between delivery and revenues, the second quarter saw billings (i.e., revenues) of $78.7 million, up 9.6 percent from the same quarter last year, and beating Wall Street projections of $69.3 million. The company ended the quarter with nearly $118 million in net cash with no debt, CEO Mike Bell said in a Wednesday conference call.
Important wins in the quarter included a distributed automation rollout with mid-Atlantic utility Pepco, leveraging its existing 1.4 million smart meter network to connect distribution grid sensors and controls, similar to projects underway with AEP and ComEd. Silver Spring’s networked streetlights business also continued to grab market share, with a deal to network an additional 28,000 smart streetlights in London. And its Starfish internet-of-things platform has a new customer, Ireland’s ESB Telecoms Ltd., with plans to extend its network across a wide set of endpoints.
Jeffrey Osborne, senior alternative energy analyst at Cowen, noted that the company’s implied recurring revenue fell to $1.83 per endpoint, down 61 cents from the previous quarter -- an expected result, since the company’s higher-margin managed services and software-as-a-service (SaaS) revenues typically lag initial endpoint deliveries.
Silver Spring, and its smart metering rivals such as Itron and Landis+Gyr, have been making concerted efforts to expand their business models from selling equipment to implementing and managing software and services for those networks. While these business lines are still a small share of its overall revenues, second-quarter professional services billings rose to $13.1 million, up 21 percent from the same quarter last year, and managed services and SaaS billings were $16.1 million, up about 8 percent from the same quarter in 2016.
Silver Spring is projecting third-quarter billings from $74 million to $79 million, and full-year 2017 billings to end up from flat to up 5 percent from 2016.
American Superconductor plays the long game in wind and grid tech
This week also saw an update from American Superconductor, the company that gets its name from its superconducting cable and grid gear, but whose primary business has been the technology that goes into wind turbines. That latter business took a huge hit back in 2011, when China’s Sinovel, which accounted for nearly three-quarters of its revenue, stopped taking shipments -- and then was accused by AMSC of stealing its technology.
AMSC’s multiple lawsuits since then have all been dismissed by Chinese courts, making it a poster child for the challenges of protecting intellectual property when doing business in China. Meanwhile, the company’s stock price has plummeted from a peak of $434 per share in 2010 to less than $50 per share after the Sinovel loss, and to just under $3 per share in recent weeks.
This week, the Devens, Mass.-based company reported a first-quarter net loss of $15.3 million, or 91 cents per share, on revenues of $8.9 million, down from a net loss of $10.4 million, or 76 cents per share, on revenues of $13.3 million in the same quarter last year. While analysts noted that the results beat Wall Street expectations, they also noted that AMSC’s fortunes still remain tied to a single wind power company today -- India’s Inox Wind, which accounts for about 60 percent of AMSC's total revenue.
AMSC’s grid work could help the company break out of this reliance on a single customer. The company’s voltage control and reactive power compensation systems are being used to integrate wind power into transmission grids, and its superconducting cable is being tested as part of resilient electric grid projects in Chicago and New York.
AMSC’s technology could also see future growth as part of the U.S. Navy’s goal of creating an electric-powered fleet. The company has been working with the Navy to use its superconducting materials for ship electric propulsion, as with its high-tech Zumwalt-class destroyer, as well as for degaussing ship hulls to deter magnetic mines. AMSC landed a $4.5 million Department of Energy grant in January and an $8.4 million Navy contract in June to continue that work, and delivered a beta version of its degaussing system to the Navy for testing and evaluation last week.
A trans-Pacific energy tech partnership: SMUD, NEC and SpaceTime Insight
Asian and U.S. companies are busily partnering up to share energy technology capabilities -- but it’s rare to see a U.S. utility offer its services outside its national boundaries. But that’s just what the Sacramento Municipal Utility District (SMUD), the public utility serving California’s capital city and environs, is planning to do, with the help of two corporate friends.
On Monday, SMUD announced that it’s working with Japan’s NEC Corp. and California’s SpaceTime Insight to bring their combined energy expertise and technology solutions to Japanese utilities and power providers, as well as others in the Asia-Pacific region.
The offering includes SpaceTime’s data analytics and “situational intelligence” software platforms, NEC’s experience with Japanese utilities and its IT and energy storage capabilities, and SMUD’s expertise in public power electric utility operations. SMUD promises that the suite, tested through its own application of the two partners’ technologies, will provide advanced asset management, better operational reliability and efficiency, and bundled products like energy storage, energy management and electric-vehicle charging controls.
SMUD isn’t the first utility to take its homegrown expertise in applied technology to broader commercial markets. GTM has been tracking the “megatrend” of utility holding companies buying up renewable and distributed energy providers, retail energy providers, and other competitive energy businesses to compete outside their regulated service territories. But it’s less common to see these kinds of efforts from publicly owned and operated utilities, which have traditionally been tied to the cities or regions they serve.
But SMUD, one of the more advanced public utilities in terms of rolling out grid edge technologies, sees the partnership as “part of a broader strategy to monetize its expertise in ways that will allow it to invest more in building out a modern energy grid,” to manage the increasing levels of renewable and distributed energy coming onto its grid and better serve its customers.
As for why the partners are starting in Japan, there’s the obvious tie-in between NEC and its home markets, as well as the opportunities emerging from Japan’s moves to deregulate its utility sector, which has opened up its monolithic energy sector to an increasing number of competitors.
Small wind and energy storage team up
The world’s wind power giants are already adding energy storage to their portfolios. Now we’ve also got a small-wind player jumping into the game. Vermont-based Northern Power Systems, maker of “distributed wind” turbines in 60- and 100-kilowatt configurations, announced this week that it’s offering turnkey battery-wind systems, tapping three different battery chemistries -- zinc hybrid cathode systems from Eos Energy Storage, vanadium redox flow batteries from UniEnergy Technologies, and lithium-ion batteries from Samsung SDI.
So far Northern Power Systems has integrated its wind turbines with a 1-megawatt/4-megawatt-hour UniEnergy system at Washington State University’s Pullman campus, and a 1-megawatt/4-megawatt-hour Eos system serving a hybrid solar and wind demonstration project being developed by Engie in Brazil.
Distributed wind power is defined by the Department of Energy as anything connected to an end user or the distribution grid, as compared to the vast majority of multi-megawatt wind turbines connected to transmission grids.
According to DOE’s 2016 Distributed Wind Market Report released this week, the sector reached a cumulative capacity of 992 megawatts from about 77,000 turbines in all 50 states, the vast majority of turbines being 100 kilowatts or less -- still a tiny share of the country’s 82,143 megawatts of installed capacity as of the end of 2016.
New York REV launches its utility-business idea marketplace
New York’s Reforming the Energy Vision initiative has been looking for ways to unlock opportunities for collaboration between the state’s utilities and businesses -- and now it has a website to make that happen.
This week’s launch of NYREVconnect.com offers businesses a place to submit “responsive ideas for feedback and technical support, and be potentially matched with New York state investor-owned utilities to pursue innovative partnerships,” across categories like smart meter network access, improving efficiency and reducing peak loads, integrating electric vehicles, and selling services through utilities’ online energy marketplaces.
REV has already led to 19 demonstration projects across these categories, the rollout of public-private microgrid partnerships through the NY Prize competition, the creation of non-wires alternatives efforts like the Brooklyn-Queens Demand Management project, and the Distributed System Implementation Plans from the state’s major utilities to integrate distributed energy resources into their grid operations and planning.
(P.S.: Greentech Media will be getting into the details of this ambitious effort at next month’s New York REV Future 2017 conference.)
Policy update: Federal court postpones Clean Power Plan litigation
Amidst the multitude of federal actions on clean energy and grid edge, one that would appear to present the most foregone conclusion -- the Trump administration’s abandonment of the Obama-era Clean Power Plan -- is being delayed again.
On Tuesday, the U.S. Court of Appeals for the D.C. Circuit postponed for 60 days litigation over the validity of the CPP, giving the U.S. Environmental Protection Agency more time to review its options for the rule. It’s the second postponement from the court, which was handed the case through a February 2016 ruling by the U.S. Supreme Court to stay the plan’s implementation and send it back to the D.C. Court of Appeals to decide either to uphold the law or remand it back to the EPA.
EPA Administrator Scott Pruitt, who was party to lawsuits against the CPP as Oklahoma Attorney General, has made clear his intention to do away with the plan, as directed by a March executive order from President Trump. But the EPA has yet to come up with an alternative to the plan to comply with earlier Supreme Court decisions upholding the central tenet that carbon dioxide is indeed a pollutant that the EPA can regulate.
The plan was designed to lower carbon emissions from U.S. power plants by 2030 to 32 percent below 2005 levels, a centerpiece to U.S. efforts to meet its commitments under the Paris climate agreement -- which, of course, Trump has vowed to withdraw from.
Meanwhile, cities, states and companies are redoubling their efforts to combat climate change, and most U.S. utilities remain committed to reducing their reliance on increasingly economically uncompetitive coal-fired power.
Investment watch: EIP adds another utility member
In last week's column I covered Energy Impact Partners, the multi-utility investment fund that’s put its money behind energy storage, data analytics, home energy sensors and controls, and most recently, electric vehicle charging.
This week, the group landed a new utility member: Alliant Energy Finance, the wholly owned subsidiary of Wisconsin-based Alliant Energy. This brings EIP’s total member roster to 14 utilities with more than $250 billion in market capitalization -- although the group hasn’t revealed how much money its partners have brought to the table for investment.
