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Distributed Generation Is On The Verge Of Disrupting The Power Sector, Says Lux Research

Increases in distributed generation have resulted in challenges to the power sector’s traditional way of doing things, and could result in further disruption, according to Lux Research.

A new report, Powering the Future: Evaluating the Contenders That Aim to Rule the Distributed Grid, published this week, makes the bold claim that “The traditional power industry — underpinned by large, distant, fuel-burning plants and transmission over long distances to reach end users — is on the cusp of serious disruption from distributed generation.” Further, the authors of the report believe that technologies like the Internet of Things and big data are key to the future of distributed generation (DG).

“The DG landscape is still in early stages with many players and no definitive winner, but renewables-focused DG installers and large industrial conglomerates are best positioned today,” said Katrina Westerhof, Lux Research Analyst and lead author of the report.

No single company has risen to the top of the distributed generation pile, nor has any one company managed to solve every piece of the distributed generation puzzle, but according to Lux Research, the companies that are doing the best so far are the ones which have made partnerships to make the most of diverse skills. Of specific interest is SunPower, thanks to its partnerships with battery startups Stem and Sunverge. In addition, Lux Research highlighted other partnerships including SolarCity and Tesla, Toshiba and Landis+Gyr, and ABB and Samsung SDI.

“Much of the challenge and opportunity lies in software for controlling, optimizing, and integrating DG, and while IT companies like Google, IBM, and Cisco have yet to make a serious mark, they’re particularly well-positioned to solve these problems and should take advantage of big opportunities in the future.”

Further key findings from the report include:

  • DG startups are mostly long shots. Nearly all startups lack both the technological breadth and the business strength to rival incumbents, meaning acquisitions are likely the best exit opportunities for most. But three startups are better positioned than most — Sonnen, Stem, and Green Charge Networks, each of which has benefited from a larger partner.
  • IT and home automation firms lack breadth. IT companies have a large role to play in the grid of the future, especially as the Internet of Things and big data come into play. But to date, companies like Google, IBM, and Cisco have shied away from a hands-on role, and risk falling behind in the race as other companies step in to fill the IT gap.
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