Smart grid technology promises to make electric grids more reliable and efficient, reducing risks of costly blackouts and deferring the need to buy more generation and transmission capacity. The technology reduces the need to send meter readers into the field and gives utilities a more accurate, real-time picture of the grid's performance.
The Silver Spring agreements, which are with two investor-owned utilities in the United States and one abroad, would cap a big year for the Kleiner Perkins-backed company. Silver Spring scored a contract announced in July with Pacific Gas & Electric to provide networking infrastructure to support all of the California utility's 5 million electric customers.
Chief Executive Scott Lang said Silver Spring has already inked multiyear contracts worth $500 million, and he expects that value to reach $1 billion within 12 months. He said the company would be profitable by next year, pulling in revenue exceeding $75 million.
Multiyear smart grid projects generally ramp up from an initial, lighter unveiling, meaning most revenue from such contracts comes several years after projects begin, Silver Spring Vice President Eric Dresselhuys said.
"We've seen major pushes by nearly every state toward more efficiency and a smarter grid," Mr. Lang said. "Utilities didn't have these technologies available to deploy until the last year or two at the economics that can be done today."
Mr. Lang said one of the strongest selling points of his technology is that it uses Internet Protocol. He said this will make it easier for the networked grid to communicate with third party-developed products and services, like programmable thermostats. Other smart grid companies are using IP as well.
Florida Power & Light has already installed 100,000 Silver Spring-networked meters. The Redwood City, California, startup also has deals with utilities Modesto Irrigation District, Oklahoma Gas & Electric, and American Electric Power, among others.
Silver Spring rivals Elster, Eka Systems, Itron, and Trilliant have all been busy securing deals to build more intelligent grids for electric utilities. Big technology companies such as IBM and General Electric are entering the space as well.
Jacob Grose, an analyst with Lux Research, said about 20 million smart meters have been installed worldwide, and he said that number should increase by more than 60 million in the next five years.
"We're projecting that 2008 was the beginning of when this industry took off," Mr. Grose said.
The research group forecasts the market for metering hardware and software plus networking technologies for smart grid will grow to $4.7 billion worldwide by 2013 from $2.7 billion in 2008. Mr. Grose said power distribution is a conservative industry and many utilities are waiting on the sidelines to see the success or failure of early adopters.
Besides the savings from avoiding blackouts, Silver Spring and other industry players are telling utilities that smart grid technology will help them expand to more customers, like those with plug-in electric vehicles and rooftop solar systems.
Smart grid companies are also offering "home area network" capabilities as part of their network infrastructure. Appliances, once equipped, could talk with the network using the meters so that people could track energy usage and cost in real time. This should help consumers reduce their monthly bills by keeping thermostats lower or running appliances at low-demand periods.
But John Quealy, an energy analyst with Canaccord Adams, said utilities are most interested in security, reliability, and cost, not the bells and whistles.
"Utilities are buying a 20-year asset, not a BlackBerry," Mr. Quealy said.
Still, at least one utility, PG&E, hopes to offer home area network capabilities through its Silver Spring build out. It would provide benefits for customers and the utility, PG&E representative Paul Moreno said.