Honeywell's Golden Valley-based Building Solutions unit announced the establishment of separate "smart grid" division Monday that will help utilities and building owners better manage energy demand, save money and solve grid and equipment problems that lead to electrical brownouts.
The new stand-alone unit comes as demand global demand for electricity is expected to grow 40 percent by 2036.
Honeywell's new Smart Grid Solutions division is expected to generate fresh revenues by selling automated thermostat-control software and devices that reduce buildings' heating and cooling costs. Relatively new efforts were launched in China, Australia, India, the United Kingdom over the last 18 months and met with "big success," company officials said Monday, adding that the biggest market has been in the United States.
Smart Grid Solutions will be centralized in Golden Valley under Honeywell's Buildings Solutions business unit.
Paul Orzeske, president of Honeywell Building Solutions, said the idea is to make energy grid smarter and more efficient.
"The grid won't be smart until it allows utilities and [energy] users to work together to reduce consumption and boost stability,'' Orzeske said. "Honeywell is providing the applications and services that will make the energy infrastructure smarter and enable it to deliver benefits from the power plant to the consumer."
Smart Grid Solutions was created from several Honeywell divisions. As a new solo unit, it is starting with hundreds of millions in revenue and will grow from there, said Jeremy Eaton, Smart Grid Solutions general manager and vice president in a phone interview Monday.
Officials declined to discuss revenue, capital or job expectations from the venture. But if cross-selling opportunities are any measure, analysts said they expect the new focus should work over time.
Honeywell already has hundreds of utility customers and separately provides energy-control products in 150 million homes, 10 million buildings and thousands of industrial facilities. Under the new strategy, the unit will link the utility and building customers in an effort to help businesses track and reduce energy loads.
According to Pike Research, a smart technologies research firm, the global market for "grid response services" was $1.3 billion in 2011 and is expected to reach $6.1 billion by 2016.
"Smart Grid Solutions is a reflection of the anticipated rise in worldwide energy consumption and the corresponding need for demand-side management services," Eaton said.
Marianne Hedin, senior analyst for Pike Research's Smart Industry Research Group, said Honeywell's new strategy makes "perfect" sense because it is combining its smart-grid staff, expertise and resources under one roof and looking to grow overseas.
"The international market for demand/response technology is just emerging. They are seeing that opportunity" and jumping in, Hedin said.
Automated or smart grid building maintenance technologies like the ones Honeywell sells work by automatically sensing high utility loads and raising air conditioning settings in the building by as little as one or two degrees. Resulting energy and cost savings can be significant, Hedin said.
She added that Honeywell's prospects for Smart-Grid jumped recently when it bought two software companies. Earlier this month it bought Inncom, a Connecticut-based automated building-control software company. And early last year it bought California-based Akuacom, another building-control software company that automatically resets HVAC systems based on data downloads from the utility firms.
"[Inncom]has a very sophisticated automated [energy] software platform. And Honeywell got that from that critical acquisition," Hedin said. Inncom's lodging customers include global hotel chains such as Hilton, Sheraton, Hyatt, St. Regis, Four Seasons and Radisson.
By focusing on international growth and utility companies, Honeywell hopes to bring more innovative offerings to market faster and to help building owners, who now rely on old, stressed and congested electrical infrastructure.
Dee DePass 612-673-7725