M&A Trends Shine Spotlight on Data Acquisition, Transport, and Integration via SCADA devices at the Grid Edge

M&A goals are changing. Without question, many companies still use deals to achieve economies of scale and improve efficiency. But increasingly, they’re also trying to achieve transformation. This trend continues to build in 2020 as more Fortune 1000 M&A teams describe their largest transaction completed in the last five years as “transformational.”  

Technology is radically remaking the way people all over the world work, shop, communicate, travel, get an education, invest, buy a home, entertain themselves and more.  Energy technology is no exception given the advancements in renewables, batteries, thermostats, water heaters, lighting, and many, many more devices joining the Internet of Things (IoT) and changing the way we use energy.   Under intense pressure to innovate, many companies are clearly using strategic deals to attain the capabilities they need to stay competitive. For some, that can mean integrating two very different business models and for others, fulfilling a product gap that ensure their offering is more complete. Transformational deals are often a better strategy when compared to absorption, tuck-in or stand-alone strategies because they give an organization the opportunity to look beyond their core competency. 

This point was illustrated this past week by two transformational acquisitions – OSIsoft by Aveva at a market value of $5.0B and Open Systems International (OSI) by Emerson initiating  a $1.6B all cash transaction scheduled to close in early 2021 (a huge congratulations goes out to the vision and leadership of everyone involved in thos deal – Well done!).  

These deals demonstrate that utilities and energy companies have a growing interest in smart grid investments that reach beyond automated meter reading – extending to technologies that actively monitor transmission and distribution (T&D) grids to take autonomous action, allowing them to improve reliability and efficiency through deployment of microgrids, energy storage and other renewable energy sources. 

What might not be apparent in the acquisition headlines of last week is that foundational technologies play a critical role in standing up our energy transition to a smarter, more flexible, and dynamic grid of the future —a grid that can meet the future sought by Performance-Based Policy efforts and accelerate the digital transformation of the both the utility and broader industrial worlds.  

One of these foundational technology’s, Supervisory Control and Data Acquisition (SCADA) devices, which operate devices at substations and individual distribution feeders are key elements of this shift (and are the types of devices integrated with software provided by both OSIsoft and OSI). And according to a recent report from Pike Research, a part of Navigant’s Energy Practice, revenue from T&D SCADA devices will grow from $913 million in 2012 to more than $1.5 billion in 2020 – a 64% increase.  “SCADA devices perform a wide range of data collection, sharing, and coordinated control actions that make grids more efficient and reliable,” says senior research analyst Bob Lockhart. Without SCADA, the energy transition to a more flexible grid is simply not possible. 

Importantly, new SCADA devices at the  grid edge and community levels allow for automation of distributed energy resources (DERs) though the acquisition, transport, and integration of operational data; maximizing the remarkable opportunity to harness renewable energy sources and to accelerate the industry’s transformation to the smart power grid.  The ability of these SCADA devices to harmonize DER types, communication protocols, data models and standards within a unified product, enabling a standardized interface for all energy ecosystem players underpins the massive scale that is promised by this  emerging market.  

As we look back at this important week in our industry’s history we see large players embrace two important trends – (i) DERs are emerging quickly and needed everywhere, and (ii) foundational technologies that acquire, transport, integrate data on energy networks while harmonizing interoperability and exchange will play a leading role in advanced energy deployments and the transition to a smart and more dynamic grid.