Aveva’s $5B Acquisition of OSIsoft Highlights Data’s Role in the Energy Transition

Green Tech Media

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For the past 40 years, OSIsoft has built a commanding position as the utility industry’s provider of choice for “data historian” software. The San Leandro, Calif.-based company’s PI software platform creates massive time-ordered records of everything from the actions of pumps, motors and turbines in power plants to split-second information flowing from solar systems and smart inverters on the power grid.

On Tuesday, the privately held company with backing from investors including Japan’s SoftBank and Mitsui announced plans to be acquired by industrial software provider Aveva. The $5 billion deal, expected to close at the end of 2020, will consist of $600 million in Aveva shares and $4.4 billion in cash, with $900 million coming from Aveva’s balance sheet and a $3.3 billion rights issue of shares, with the remainder to be funded through debt.

The result will be a company that merges Aveva’s portfolio of design, operations and optimization software with OSIsoft’s massive data stores and analytics expertise, for what Aveva CEO Craig Hayman called “very strong value-creation potential” across their disparate and shared markets.

OSIsoft has built its market share on centralizing massive amounts of data. But both companies are confronting a world in which more and more of the capabilities they’re asked to provide exist on the fringes of the industrial systems they serve, OSIsoft CEO Patrick Kennedy said in a Tuesday press conference.

That’s particularly true in the energy field. “The power system communicates through wires at the speed of light,” said Kennedy, who will receive $600 million in Aveva shares and join the U.K.-based company as chairman emeritus. “As we try to create [less] greenhouse gases, as we put on renewables, as we put on other types of power facilities like storage, as people put batteries in their houses or their own generators and fuel cells, etc., they’re creating a much more complex situation, and one that stretches across multiple users.”

OSIsoft, which has more than 1,000 utility customers, has been involved in most of the data-driven utility initiatives involving the grid edge over the past decade. It was an early entrant into the field of tapping data from smart meters and grid sensors for “near real-time” operations ranging from outage management to grid analytics. It’s worked with solar inverter providers and wind farm operators to predict and map renewable energy’s grid impacts.

Many of these data sources are providing massive amounts of data at high speeds, Kennedy said. These data points, in turn, must be quickly processed to capture their full range of values. Kennedy cited the example of California grid operator CAISO, which requires processing “a trillion points” of data, and has been struggling to manage the state’s shifting resource mix to keep demand and supply in balance amid this month’s heat waves.

OSIsoft is also involved in providing the data behind complex microgrids, starting with its work on the University of California, San Diego’s first-of-its-kind microgrid. The UCSD microgrid has helped local utility San Diego Gas & Electric maintain grid stability amid grid emergencies and during wildfires, a growing concern in a state that “tend[s] to burn down transmission lines,” Kennedy said, in a nod to the grid failures that led to utility Pacific Gas & Electric’s bankruptcy last year.

One of OSIsoft’s more interesting partnerships on the grid edge is with SDG&E and Southern California Gas owner Sempra Energy on a joint venture called PxISE, which has built software to optimize the operations of multiple energy generating and consuming devices on the grid. PxISE uses data from synchrophasors, devices that can discern variations in alternating current energizing transmission and distribution lines at the speed of 50 or 60 cycles per second, to manage hard-to-solve reactive power and phase-angle-related disruptions that can arise on inverter-powered grids. The JV recently won approval from California regulators to test its control capabilities on two SDG&E microgrids.

“This is a great example of the kinds of things we’re going to see going on at the edge” of the grid, Kennedy said. Eventually, he envisions “distributed data historians” being installed on forklifts, wind turbines and a multitude of other machines operating outside centralized control systems.

OSIsoft is also a major provider of data to inform predictive analytics for power turbines and other critical generation equipment, which is a major market for Aveva through its merger with French grid giant Schneider Electric’s industrial software business. OSIsoft and Aveva have been working together on developing “digital twins,” or virtual copies of complex equipment that are used to spot potential failure points.

Customers such as Duke Energy are using OSIsoft, Aveva and Schneider Electric’s portfolio with control and safety systems that collect a large amount of data at “thousands of data points per second over time,” said Peter Herweck, Schneider’s executive vice president of industrial automation, in Tuesday’s conference.

A combined Aveva-OSIsoft creates “another giant” in the predictive analytics field, alongside contenders such as General Electric, Siemens and Hitachi ABB Power Grids, noted Elta Kolo, grid edge research content lead at research consultancy Wood Mackenzie. “The marriage of these two companies brings together complementary data that can take their predictive analytics capabilities to another level at an accelerated timeline,” she said. “Essentially, this will meet advanced markets, like that of California, where their needs are in these early stages of the energy transition.”

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