Data Economics

Enabling chief data officers and investors to tie the financial value of data to enterprise value

Valuation of Utility Smart Meter Data

Sunil Soares

CEO, YourDataConnect

yourdataconnect.com

Since the inception of electricity deregulation and market-driven pricing throughout the world, utilities have been looking for ways to match consumption with generation. Traditional electricity and gas meters were read only on a monthly or quarterly basis. These meters measured only gross consumption and gave no insight into when the energy was consumed.

Now, several utilities either have rolled out, or are in the process of rolling out, smart meters. These smart meters typically capture usage data every 15 to 60 minutes for residential and commercial customers and communicate that information on a daily basis to the utility for billing and analytics.

These smart meters enable utilities to offer differentiated billing to customers, such as lower rates during off-peak hours and higher rates during peak hours. As a result, utilities are able to offer pricing plans that encourage customers to reduce usage during peak hours. Utilities can reduce generation capacity if they can appropriately manage customer peak demand. The utility does not need to build expensive power generation capacity that might be used for only a few days in a year. In fact, some utilities believe they can avoid building one or two expensive power plants altogether as a direct result of the smart meter program.

So, how do you put a value on smart meter data? In this example, we use comparable values from Innowatts™. Innowatts’ SaaS platform transforms how energy providers understand and serve their customers. Innowatts uses AI and learnings from smart meters to help energy retailers, utilities, and grid operators unlock meter-level data, understand their customers, and make businesses processes automated and smarter.

In May 2019, Innowatts announced it had raised $18M in its Series B funding round, for total funding of $24M. Assuming a 10% share was granted to Series B investors, we can infer a post-Series B valuation for Innowatts of $180M. By applying this valuation to Innowatts’ 21M smart meter customers in May 2019, we can calculate the value of the company’s interval data to be $8.57 per customer ($180M / 21M).

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