With all the hype over smart grid and the Obama Administration throwing billions in stimulus money at it there is strategy confusion over just what is the goal in this exercise. Is this about expanding the use of renewable energy sources? Is it about energy efficiency? Is it about emissions reduction?
Some of the best writing about the players in this crowded space is being done today by blogs or online publications that blend news, analysis and commentary. A few examples include the Greentech Media folks including Jeff St. John, Ucila Wang, Mike Kanellos, and Frank Smith. See http://www.greentechmedia.com/. You can follow their “Top Ten” players and the reporting on progress, profits and the process of consolidation taking place in this crowded space. I recommend it. It’s good, but not sufficient to make sense of what is really going on and how the transformative power of HAN could swamp all the boats of these players.
Another new start-up entering this space is Green-Edison, www.green-edison.com where Richard Stavros, formerly of Public Utility Fortnightly is focused on the implications of green energy technology and policy and its impact on the electric power utility industry. I am a contributor to Green Edison because I think telling the story of the green energy transformation of the utility business is important and the involvement of many new IT players in this space has the potential—for both good and ill—to turn the utility business model upside down moving it from a average priced, regulated commodity energy delivery business to a real-time priced, largely unregulated distributed generation and self sufficiency business model where commodity energy is just one component in a bundle of services.
For investor owned utilities what is at stake is their control over access to the customer and the home gateway. If they lose control of that gateway access, utilities, as we have known them, become much less important in the energy future. Reduced to energy delivery and wires maintenance even the monopoly they hold is diminished as more and customers become self sufficient or buy energy as part of a bundled purchase from a third party provider. But the real disruptive threat to investor owned utilities in the future is not from the IT players or smart grid—it is from the aggregators and marketers who redefine the use of the home gateway to serve the needs and wants of customers NOT the utility or its equipment vendors.
Home Area Networks (HAN) give the power over energy supply, use and pricing to customers. Today most of the HAN players fall into several well defined niches either as software developers, network and IT equipment vendors, energy managers including the negawatt guys, or integrated players trying to do it all. Each of them sees home area networks as a way of delivering their product or service to the customer. For them HAN is a way to bridge the gap of gathering, analyzing, displaying and delivering some of the vast array of real-time information about energy use into the hands of customers. These players are selling IT gadgets and software. They are selling software or they are traders and risk managers profiting from the ability to convince end use customers to use less and then reselling those electrons or negawatts at a higher price. Again, this is good stuff, but it isn’t sufficient to convince most customers to change their behaviors. Certainly not before real-time pricing with higher prices for peak demand is imposed on us.
Home Area Network (HAN) is not about IT or energy— it is about giving customers control over their lives.
The biggest strategic risk to all the smart grid and IT players in the space today is they will forget the end game is all about customer ease of use and giving us the ability to live our lives the way we wish to do so.
HAN is both a delivery channel and a threat to all these IT and equipment vendors just as it will be to utilities because the power of the HAN is not in energy. HAN, well done, will combine information, convenience, security and choice to transform the way we go about our daily lives. HAN will integrate appliances, equipment, services and help us optimize them or just plain use them more easily. Just like cell phones enabled us to be in touch away from home or the office, like MP3 players let us organize music and carry it with us, like the Internet gave us access to a world of information worlds away at our fingertips in real-time, the real strategic purpose of HAN is to simplify the way we want to live our lives, make it easy to make choices, and let technology work for us rather than forcing us to learn a hundred programming tricks.
The race for HAN market leadership is on but the winners are not yet known. There is a wave of start-ups just out of the gate. They are sprinting to gain traction, get their product or software or process accepted as a standard, join alliances and scale their business through pilot projects and utility contracts.
Meanwhile, other players are watching the race letting the early leaders beat each other up, and watching the consolidation as bigger players buy out smaller ones. Some are technology agnostic—they may not care what the standards are—just tell me what they are so I can adapt my products and services to fit the interoperability standards. Others are working overtime to position their products or services to appeal to consumers in powerful ways. By focusing on adapting existing products to new uses leveraging the home are network, they players have the potential to own the customer and in so doing dominate the space.
Is there an I-Phone app for that?
- The sensor on the HVAC sent me a txt msg reminding me to clean the air filter.
- Can I reprogram my new GE home appliances to turn themselves on or off based upon my Comcast Home Energy Channel dashboard estimate of energy savings?
- By the way, I have a date with my wife tonight to watch a movie—what’s on her Netflix cue? No way, not that one I hate that guy. Yea, that one—she’s cute, download it to my HAN. Oops, busted!
- Ah, I see from this home security alert to my phone that the FedEx delivery truck just left a package on my front step, I’ll call my neighbor and ask her to hang onto it until I get home.
Meet George Jetson!
For the home area network to be the killer app is has the potential to be—it must focus on the customer and deliver information, convenience, security and service when we want it with an ease of use that rivals I-Pod. Anything less is just geek speak.