Acquisition and Strategic Alliance Put Cisco Systems at Front of Smart Grid Push

Sept. 10, 2010
Through a strategic alliance and an acquisition on successive days last week, Cisco Systems, San Jose, Calif., further staked out its position in the

Through a strategic alliance and an acquisition on successive days last week, Cisco Systems, San Jose, Calif., further staked out its position in the pack of companies pushing to develop the market for intelligent control of electric power grids. At the same time, the company's move improves the likelihood that utilities can avoid being locked into proprietary communication protocols and will be able to make disparate networks work together — potentially creating a solution to one of the thornier problems in rolling out smart grid technologies.

Cisco has said it expects the smart grid to grow to a $100 billion market and began developing its smart-grid offerings last year.

Cisco's strategic alliance with Itron Inc., Liberty Lake, Wash., a manufacturer of intelligent metering systems for controlling electric and water utility systems, has the potential to substantially reshape the smart grid movement. The two companies agreed to work together to develop an open, enterprise-class networking protocol for electric utilities.

Cisco followed that announcement a day later with the acquisition of San Francisco-based Arch Rock Corp., a provider of Internet protocol (IP)-based wireless network technology for smart-grid applications.

The two moves put Cisco — already the reigning behemoth in computer networking — in a position to shape the development of advanced metering infrastructure (AMI) networks for utilities, based on the latest Internet protocol standard, IPv6.

Itron and Cisco plan to collaborate on developing open and interoperable, standards-based, secure technology for IPv6 implementation of field area communications to support smart metering, intelligent distribution automation and customer interfaces, the companies said in announcing the alliance. Such an approach will help ensure consistent and interoperable wired and wireless communications among the various components of the smart grid.

“The alliance between Cisco and Itron represents a major step forward in the realization of a modern, more intelligent energy infrastructure,” said Laura Ipsen, Cisco senior vice president and general manager for the Smart Grid business unit. “Together, we aim to enable standardization of the smart-grid architecture and help create an end-to-end communications platform. As a result, utilities will benefit from an energy grid that is more secure, scalable and reliable, as well as solutions that are easier to maintain and able to support future needs.”

Under terms of the agreement, Itron and Cisco will jointly develop a reference design to define a standard for smart grid field area and smart metering network communications using IPv6. IPv6 integrates network security into its framework, allows for simplified processing of data by routers and other network devices, and offers a wealth of extensibility options over the current IPv4 implementation.

Itron will license and embed Cisco IP technology in its OpenWay meters and distribute Cisco networking equipment and software as part of its smart meter deployments. Itron will continue to provide the complete solution and maintain its customer relationships.

“We want to respect the legacy systems that have been deployed thus far within smart grids while innovating for the future. Cisco believes that Itron's current-generation OpenWay solution is an excellent candidate for future upgrades to a full IPv6 implementation,” said Paul De Martini, chief technology officer and vice president of strategy for the Smart Grid business unit at Cisco. “With a true smart-meter platform providing full software upgradability, OpenWay will be a catalyst for launching this next-generation architecture.”

For Itron, partnering with Cisco gives it a well-known and widely used platform for assuring utility customers its smart meter networks will be able to change with future advances in technology. “Itron designed OpenWay to be able to adapt to evolving market needs. The move to embed Cisco IP communications continues to deliver on our promise of interoperability and open standards for OpenWay,” said Philip Mezey, senior vice president and chief operating officer for Itron North America. “This enables an expanding set of smart grid applications into the future.”

The addition of Arch Rock further expands Cisco's opportunities in the smart grid market, allowing it to offer utilities a scalable, secure, multi-directional wireless network for communication with smart meters and other intelligent devices based on open and interoperable IP standards.

“Arch Rock's wireless mesh technology enhances Cisco's IP-based, end-to-end smart-grid offerings,” said Cisco's Ipsen. “This acquisition further positions Cisco as a strategic partner to utilities working to better manage power supply and demand, improve the security and reliability of energy delivery, and optimize operational costs.”