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PRELIMINARY MARKET ASSESSMENT & OUTLOOK :
Real-time Automation & Controls in the North American Electric Utility Marketplace (2003-2007)
Michael A. Marullo, Director
Strategic Market R&D
InfoNetrix LLC
2
Presentation Topics
Market Intelligence ‘101’ Marketplace Characteristics Principal Market Focus: RTAC Prevailing Market Conditions Future Market Outlook Market Dynamics 7 Signs of Market Evolution Supplier Dynamics Other Observations & Conclusions
Market Intelligence ‘101’ Marketplace Characteristics Principal Market Focus: RTAC Prevailing Market Conditions Future Market Outlook Market Dynamics 7 Signs of Market Evolution Supplier Dynamics Other Observations & Conclusions
4
Market Planning & Positioning Launch a new product or product line Learn what prospective buyers want, need & expect Expand or change your geographical presence
Competitive Analysis Identify new, existing or emerging competition Evaluate sales/marketing channel alternatives Understand market leadership, shares & penetration
Business Planning & Diversification Initiate an acquisition, merger or divestiture Understand market changes and change with them Identify new markets, applications & solution sets
Market Planning & Positioning Launch a new product or product line Learn what prospective buyers want, need & expect Expand or change your geographical presence
Competitive Analysis Identify new, existing or emerging competition Evaluate sales/marketing channel alternatives Understand market leadership, shares & penetration
Business Planning & Diversification Initiate an acquisition, merger or divestiture Understand market changes and change with them Identify new markets, applications & solution sets
Using Strategic Market Data
5
2003 Market Study Parameters
Electric Utilities in U.S. & Canada Transmission & Distribution Management Solutions
EMS (i.e., Network Security Applications) TMS (Transmission SCADA/AGC) GMS (Merchant Power & Divested Gen Assets) DMS (Including Distribution Automation T&D Substation Automation Field Data Devices (RTUs & ‘RTU-like’ Devices)
Base Year: 2002 (constant US dollars) 5-Year Outlook Period: 2003-2007 Calendar Year Bookings Confidentiality!
Electric Utilities in U.S. & Canada Transmission & Distribution Management Solutions
EMS (i.e., Network Security Applications) TMS (Transmission SCADA/AGC) GMS (Merchant Power & Divested Gen Assets) DMS (Including Distribution Automation T&D Substation Automation Field Data Devices (RTUs & ‘RTU-like’ Devices)
Base Year: 2002 (constant US dollars) 5-Year Outlook Period: 2003-2007 Calendar Year Bookings Confidentiality!
6
RTAC Market Horizons™ Report
REPORTREPORT
1: Executive Summary1: Executive Summary
2: Marketplace Characteristics2: Marketplace Characteristics
3: Drivers, Issues & Trends3: Drivers, Issues & Trends
4: Future Market Outlook4: Future Market Outlook
5: Supplier Environment5: Supplier Environment
REPORTREPORT
1: Executive Summary1: Executive Summary
2: Marketplace Characteristics2: Marketplace Characteristics
3: Drivers, Issues & Trends3: Drivers, Issues & Trends
4: Future Market Outlook4: Future Market Outlook
5: Supplier Environment5: Supplier Environment
APPENDICESAPPENDICESA: Abbreviations
B: Glossaries
C: Relevant Organizations, Publications & Events
D: Supplier Listings
E: Application Descriptions
F: Utility Restructuring
G: Electric Competition in the States: A Summary
H: Standards References
APPENDICESAPPENDICESA: Abbreviations
B: Glossaries
C: Relevant Organizations, Publications & Events
D: Supplier Listings
E: Application Descriptions
F: Utility Restructuring
G: Electric Competition in the States: A Summary
H: Standards References
7
Marketplace Characteristics
Marketplace Structure & Composition
QuickTime™ and aPhoto - JPEG decompressor
are needed to see this picture.
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Marketplace Characteristics
1 10 100 1000 10000FPA REC SM MUNI MUNI LG PROV LG IOU C&I
~3,500+ Electric Utilities (USA & Canada)
CCAANNAADDAA
UUSSAA
11
GMSGMSEMSEMS
TMSTMS
FIELD DATADEVICES
(FDDs)
RTACSYSTEMS
DISTRIBUTIONSYSTEMS
TRANSMISSIONSYSTEMS
SSASSA
TMSRTUs
Transmission RTUs
RTAC Market Organization
EMS/GMS RTUs
RTAC
Remote Terminal Units (RTUs)
Distribution RTUs
Substation Controllers (SSCs)
DMSDMS
12
RTAC Market Snapshot
Transmission-level Systems EMS - Heavily tied to ISO/RTO plans & progress GMS - No major changes from 2002 forecast TMS - Expected short-term spending jump; then flattening out TMS - Most likely will track TMS profile (above)
Distribution-level Systems DMS - Sustained growth after blackout hysteria subsides DA - Good growth, especially among smaller utilities Substation Automation - Ramping up demand over 5 years
Field Data Devices (RTUs, SSCs & RTU-like devices) New generation of IEDs & SSCs continued to hammer RTUs Continued downward ASP pressure for entire outlook period Increasing demand for standard, cheap ‘commodity’ devices Communications flexibility surpassing basic I/O issues
Transmission-level Systems EMS - Heavily tied to ISO/RTO plans & progress GMS - No major changes from 2002 forecast TMS - Expected short-term spending jump; then flattening out TMS - Most likely will track TMS profile (above)
Distribution-level Systems DMS - Sustained growth after blackout hysteria subsides DA - Good growth, especially among smaller utilities Substation Automation - Ramping up demand over 5 years
Field Data Devices (RTUs, SSCs & RTU-like devices) New generation of IEDs & SSCs continued to hammer RTUs Continued downward ASP pressure for entire outlook period Increasing demand for standard, cheap ‘commodity’ devices Communications flexibility surpassing basic I/O issues
14
Prevailing Market Conditions
NOV 09, 1965 ≤13 Hours NY, CT, MA, RI, PA, NJ + ON (Canada)
JUL 13, 1977 ≤26 Hours NYC
JUL 02, 1996 Minutes to Hrs AZ, CA, CO, ID, MT, NE, NV, NM, OR, SD, TX, UT, WA, WY AB, BC (Canada) Baja California Norte (Mexico)
AUG 10, 1996 ≤9 Hours AZ, CA, CO, ID, MT, NE, NV, NM, OR, SD, TX, UT, WA, WY AB, BC (Canada) Baja California Norte (Mexico)
JUN 25, 1998 ~19 Hours MN, MT, ND, WI ON, MB, SK (Canada)
NOV 09, 1965 ≤13 Hours NY, CT, MA, RI, PA, NJ + ON (Canada)
JUL 13, 1977 ≤26 Hours NYC
JUL 02, 1996 Minutes to Hrs AZ, CA, CO, ID, MT, NE, NV, NM, OR, SD, TX, UT, WA, WY AB, BC (Canada) Baja California Norte (Mexico)
AUG 10, 1996 ≤9 Hours AZ, CA, CO, ID, MT, NE, NV, NM, OR, SD, TX, UT, WA, WY AB, BC (Canada) Baja California Norte (Mexico)
JUN 25, 1998 ~19 Hours MN, MT, ND, WI ON, MB, SK (Canada)
15
Prevailing Market Conditions
A dark night to remember…
It shouldn't happen every evening, but a crisis like the lights going out has its good points. In the first place it deflates human smugness about our miraculous technology, which, at least in the area of power distribution and control, now stands revealed as utterly flawed. I have never regarded as trustworthy many of the appurtenances of modern America; automatic elevators, for example, have always chilled me with their smooth mindlessness -- and it is somehow delicious to contemplate the fact that all our beautiful brains and all those wonderful plans and all that marvelous equipment have combined to produce a system that is unreliable.
A dark night to remember…
It shouldn't happen every evening, but a crisis like the lights going out has its good points. In the first place it deflates human smugness about our miraculous technology, which, at least in the area of power distribution and control, now stands revealed as utterly flawed. I have never regarded as trustworthy many of the appurtenances of modern America; automatic elevators, for example, have always chilled me with their smooth mindlessness -- and it is somehow delicious to contemplate the fact that all our beautiful brains and all those wonderful plans and all that marvelous equipment have combined to produce a system that is unreliable.
THE VIEW FROM HERE by Loudon Wainright;
Life Magazine, Vol. 59 No. 2 (19 November 1965)
17
Prevailing Market Conditions
Potential business benefits achievable
Pro
xim
ity t
o c
ore
busi
ness
PC Maintenance
Remote Metering
Internet
Systems integration
SCADASCADA
External ApplicationDevelopment Call Center
Operation
Asset Management
SOURCE: DATAMONITORSOURCE: DATAMONITOR
Impact & Importance of SCADA Among Utilities
18
Prevailing Market Conditions
Political Hyperbole…Political Hyperbole… “The cascading nature of this blackout offers an object lesson of how
the electricity grid requires regional coordination and planning, a challenge the nation is still striving to meet”
- FERC Chairman Patrick H. Wood III
“It appears that the cascading power outages throughout the Northeast only reinforce our need to focus on reliability and transmission infrastructure development rather than creation of a new national market system. The power grid system was built to provide electricity to local customers, and a national market system is not feasible without significant infrastructure additions.”
- Senator Richard C. Shelby (R-AL)
“… a final bill will include a provision to delay implementation of any FERC plan on regional transmission organizations until 2005” - An assurance reportedly given to Shelby by Pete V. Domenici (R-NM), Senate Energy & Natural Resources Committee Chairman. (House leaders have not agreed to this, aides said.)
Political Hyperbole…Political Hyperbole… “The cascading nature of this blackout offers an object lesson of how
the electricity grid requires regional coordination and planning, a challenge the nation is still striving to meet”
- FERC Chairman Patrick H. Wood III
“It appears that the cascading power outages throughout the Northeast only reinforce our need to focus on reliability and transmission infrastructure development rather than creation of a new national market system. The power grid system was built to provide electricity to local customers, and a national market system is not feasible without significant infrastructure additions.”
- Senator Richard C. Shelby (R-AL)
“… a final bill will include a provision to delay implementation of any FERC plan on regional transmission organizations until 2005” - An assurance reportedly given to Shelby by Pete V. Domenici (R-NM), Senate Energy & Natural Resources Committee Chairman. (House leaders have not agreed to this, aides said.)
20
5-Year Market Perspective (2002 Report)
0
50
100
150
200
250
300
350
400
450
2002 2003 2004 2005 2006 2007
T&D Systems Field Devices
$Mil
$258.7
??
?
?$262.6 (Est.)
Down by 10-12%
from 2002 Forecast
Down by 10-12%
from 2002 Forecast
21
Preliminary 2003 Market Assessment
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
2002 2003
EMS/GMS TMS DMS
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
2002 2003
EMS/GMS TMS DMS$Millions$Millions
Mitigating Factors:Mitigating Factors:
• Economic UncertaintyEconomic Uncertainty
• Political Turmoil (+ Iraq)Political Turmoil (+ Iraq)
• Downward ASP PressureDownward ASP Pressure
• Stalled Energy LegislationStalled Energy Legislation
• Security ConcernsSecurity Concerns
• ISO/RTO/SMD DelaysISO/RTO/SMD Delays
Mitigating Factors:Mitigating Factors:
• Economic UncertaintyEconomic Uncertainty
• Political Turmoil (+ Iraq)Political Turmoil (+ Iraq)
• Downward ASP PressureDownward ASP Pressure
• Stalled Energy LegislationStalled Energy Legislation
• Security ConcernsSecurity Concerns
• ISO/RTO/SMD DelaysISO/RTO/SMD Delays
22
RTAC Systems Market (2002 Report)
RTAC market includes…
Energy Management Systems
(EMS) - Network Security &
Market Systems Interface
Generation Management
Systems (GMS) - EMS w/o
transmission applications
Transmission Management
Systems (TMS) - SCADA/AGC &
Substation Automation (SSA)
Distribution Management
Systems (DMS) - SCADA,
Distribution Automation (DA) &
SSA
RTAC market includes…
Energy Management Systems
(EMS) - Network Security &
Market Systems Interface
Generation Management
Systems (GMS) - EMS w/o
transmission applications
Transmission Management
Systems (TMS) - SCADA/AGC &
Substation Automation (SSA)
Distribution Management
Systems (DMS) - SCADA,
Distribution Automation (DA) &
SSA
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
2001 2002 2003 2004 2005 2006
EMS/GMS TMS DMS
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
2001 2002 2003 2004 2005 2006
EMS/GMS TMS DMS
CAGR = 9.3% ($)CAGR = 9.3% ($)
$Millions$Millions
23
Q1 & Q3-2003 Projects (3-30 Months)
1
10
100
1000
10000
100000
No of Projects Total $Value
Q1 SystemsQ1 RTUQ1 CommsQ1 ConsultingQ2 SystemsQ2 RTUQ2 CommsQ2 Consulting
Q1 Q2
Q1 Q2
386 Projects @ $137.7 Million386 Projects @ $137.7 Million
25
Market Dynamics
Principal Market Drivers Politics & Fear! Security (NERC-1200) Do more with less mantra Demand for Interconnectivity
Host level• Mainly ICCP
Network Level• DNP
• Modbus
• IEC 60870
• CEIDS (Feeder level)
Regulatory Bodies FERC (USA) Provincial (Canada)
Return to financial stability
Principal Market Drivers Politics & Fear! Security (NERC-1200) Do more with less mantra Demand for Interconnectivity
Host level• Mainly ICCP
Network Level• DNP
• Modbus
• IEC 60870
• CEIDS (Feeder level)
Regulatory Bodies FERC (USA) Provincial (Canada)
Return to financial stability
Key Issues & Trends Security & Reliability Continued Uncertainties
Market Economic Investment Recovery
Holistic Solution Sets Simple Intuitive Inexpensive (with ROI)
PBR & Accountability Return to Stable Operations
Commercially Technically Physically
Key Issues & Trends Security & Reliability Continued Uncertainties
Market Economic Investment Recovery
Holistic Solution Sets Simple Intuitive Inexpensive (with ROI)
PBR & Accountability Return to Stable Operations
Commercially Technically Physically
26
Market Dynamics
Challenges Suppliers
Security Survival in a down market Cost reduction strategy Transition from leased comm
lines to newer tech Downward price pressure
Utilities Security Mandates Cope with reduced staff &
resources Assimilate acquisitions Return to core business and
core values Preparation for next round of
restructuring Blackout prevention/recovery
Challenges Suppliers
Security Survival in a down market Cost reduction strategy Transition from leased comm
lines to newer tech Downward price pressure
Utilities Security Mandates Cope with reduced staff &
resources Assimilate acquisitions Return to core business and
core values Preparation for next round of
restructuring Blackout prevention/recovery
Critical Success Factors Price & ROI Open standards & open
integration at all levels Reliability & Reputation for:
Quality service & support Proper applications and
skillful execution Delivery of tangible value
Ability to augment good products with good services
Viable migration path to next generation technologies and applications
Emphasis on Business Case
Critical Success Factors Price & ROI Open standards & open
integration at all levels Reliability & Reputation for:
Quality service & support Proper applications and
skillful execution Delivery of tangible value
Ability to augment good products with good services
Viable migration path to next generation technologies and applications
Emphasis on Business Case
27
Market Dynamics
1. Regulatory Policy & Governance
2. Economics & Investment
3. Technology/Integration/Standardization
4. Data Integrity & System Security
5. Web & Wireless Solutions
6. Enterprise Asset Management (EAM)
7. Customer Care & Satisfaction
1. Regulatory Policy & Governance
2. Economics & Investment
3. Technology/Integration/Standardization
4. Data Integrity & System Security
5. Web & Wireless Solutions
6. Enterprise Asset Management (EAM)
7. Customer Care & Satisfaction
SIGNSSIGNS™™
of Market Evolution
TheThe
28
1. Regulatory Policy & Governance
2002-2003: Solid but Modest Recovery Looming security issues (NERC-1200) FERC moves still fail to assure solid
investment incentives; SMD delayed Utilities returning to core business Blackout shining a light on need for
investments; TDMS gaining ground 2004-2007: Good to Excellent Growth
Traditional solutions to transmission constraints won’t pass muster
Wall St. likes return to core business Investment funds available for ROI Economic recovery appears good PBR continues to gain momentum
2002-2003: Solid but Modest Recovery Looming security issues (NERC-1200) FERC moves still fail to assure solid
investment incentives; SMD delayed Utilities returning to core business Blackout shining a light on need for
investments; TDMS gaining ground 2004-2007: Good to Excellent Growth
Traditional solutions to transmission constraints won’t pass muster
Wall St. likes return to core business Investment funds available for ROI Economic recovery appears good PBR continues to gain momentum
SIGNSSIGNS™™
of Market Evolution
TheThe
29
2. Economics & Investment Issues
Transmission
Short-term (1-2 yr) spending increases
Knee-jerk reaction to blackout
Flattening out after 2004
Distribution
More emphasis on customer service
Some RECs may cash out
Return to Core Utility Market
Improving investment outlook
Increasing management mind-share
Reduced staff = more outsourcing
Transmission
Short-term (1-2 yr) spending increases
Knee-jerk reaction to blackout
Flattening out after 2004
Distribution
More emphasis on customer service
Some RECs may cash out
Return to Core Utility Market
Improving investment outlook
Increasing management mind-share
Reduced staff = more outsourcing
SIGNSSIGNS™™
of Market Evolution
TheThe
30
3. Technology, Integration & Standardization
Technology Windows still #1, BUT Linux on the rise Outsourced design, integration & support Next generation RTU/SSC designs in 2003 RCM/CBM slowed (temporarily?)
Integration Enterprise Application Integration (EAI)
making inroads… slowly
Enterprise Asset Management (EAM) still a
mystery to most… yet all agree it’s vital!Standardization
DNP (still) rules and…
UCA is (still) UCA , but:
IEC 60870 gaining momentum
Technology Windows still #1, BUT Linux on the rise Outsourced design, integration & support Next generation RTU/SSC designs in 2003 RCM/CBM slowed (temporarily?)
Integration Enterprise Application Integration (EAI)
making inroads… slowly
Enterprise Asset Management (EAM) still a
mystery to most… yet all agree it’s vital!Standardization
DNP (still) rules and…
UCA is (still) UCA , but:
IEC 60870 gaining momentum
SIGNSSIGNS™™
of Market Evolution
TheThe
31
4. System Integrity & Data Security
System Integrity
Web & Wireless• Data access/distribution questions loom
• RCM/CBM negatively impacted
• Web-based control a non-issue (for now)
Corporate I/T networks for real-time?
• Rationalization of R/T with I/T still a
mixed bag; no clear directions yet
Data Security Issues
Access by non-ops personnel
Corporate I/T prioritization
System Integrity
Web & Wireless• Data access/distribution questions loom
• RCM/CBM negatively impacted
• Web-based control a non-issue (for now)
Corporate I/T networks for real-time?
• Rationalization of R/T with I/T still a
mixed bag; no clear directions yet
Data Security Issues
Access by non-ops personnel
Corporate I/T prioritization
SIGNSSIGNS™™
of Market Evolution
TheThe
32
5. Web & Wireless Solutions
Web Data access/distribution questions loom
RCM/CBM heavily impacted
Web-based control a non-issue (for now)
Rationalization of R/T with I/T still a
mixed bag; no clear directions yet
Wireless
Coverage improvements driving use
Definitely impacted by security issues
Problem resolution will come
Web Data access/distribution questions loom
RCM/CBM heavily impacted
Web-based control a non-issue (for now)
Rationalization of R/T with I/T still a
mixed bag; no clear directions yet
Wireless
Coverage improvements driving use
Definitely impacted by security issues
Problem resolution will come
SIGNSSIGNS™™
of Market Evolution
TheThe
33
6. Enterprise Asset Management
It’s all the buzz!!!
Everybody says it’s hot, BUT
Hardly anyone seems to
know what it is, AND
Of those who think they do…
They all have different ideas
Soooo
Stay tuned for further
developments!
It’s all the buzz!!!
Everybody says it’s hot, BUT
Hardly anyone seems to
know what it is, AND
Of those who think they do…
They all have different ideas
Soooo
Stay tuned for further
developments!
SIGNSSIGNS™™
of Market Evolution
TheThe
34
7. Customer Care & Satisfaction
OMS - continuing good
growth
PBR - Still gaining ground
CIS/CRM - Redefinition phase
OMS - continuing good
growth
PBR - Still gaining ground
CIS/CRM - Redefinition phaseSIGNSSIGNS™™
of Market Evolution
TheThe
36
Suppliers To Watch
Rising OSI - Open Systems International OpenSoft (Pi Historian) Reliatronics (embedded RTUs) Survalent Technology (Canada) Telemetric (radio-modem)
Falling Hathaway/Systems Northwest (Danaher) LogicaCMG (UK) SchlumbergerSema (Convergent Group)
Changing ATS - now Microsol (Ireland) Metso - Now Telvent (Spain)
Re-entry Invensys
Rising OSI - Open Systems International OpenSoft (Pi Historian) Reliatronics (embedded RTUs) Survalent Technology (Canada) Telemetric (radio-modem)
Falling Hathaway/Systems Northwest (Danaher) LogicaCMG (UK) SchlumbergerSema (Convergent Group)
Changing ATS - now Microsol (Ireland) Metso - Now Telvent (Spain)
Re-entry Invensys
(Or, were they pushed?)QuickTime™ and aGIF decompressor
are needed to see this picture.
37
How well you focus…
…will determine your reality
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