On June 1st I wrote about Android@Home in a post entitled “Who will control the Gateway to Utility Customers?” In it I argued that the debate about smart grids, renewable energy, emissions reduction and the other issues driving the utility industry today is a distraction BECAUSE the real battle being fought is for control of the gateway to customers. And when customers have choices we tend to exercise them—and nothing will be the same again.
In my email today was Jesse Bert’s Smart Grid Newsletter post about his recent visit with Accenture and their corporate ‘forecast’ (I use the term here advisedly) about when Accenture and others will make any money off the smart grid. It is a good read and the Accenture Slides they allowed Jesse to distribute in his post are very interesting. I recommend Jesse’s newsletter as always a thought provoking read.
I don’t quibble with the Accenture view that it is going to take 10-15 years before there is enough market penetration of the core components that make up the energy-focused smart grid before there is a tipping point where we finally climb out of this trough of disillusionment and get to the plateau of productivity (in Gartner-speak). I think they have a good working hypothesis about the build up and the learning curve of some key technologies. And remember, what Accenture sells is the IT services to re-wire all these moving parts into a used and useful enterprise system for its its clients.
I especially liked the Accenture slide (slide 3) on key characteristics of future utility operating models. It likely came right out of a standard Accenture pitch book presentation to utility executives trying to convince them they should outsource their IT/OT convergence implementation to Accenture. There is a box for everyone on this slide and the ‘one foot in today, one foot in tomorrow’ place for the fence sitters who have not yet decided anything. This slide came from the Accenture utility practice guys so it was very utility-centric.
Jesse has become progressively more pessimistic about smart grid in the tone of his writing. My sense was he liked the Accenture slides because they validated his view that smart grid was going to take longer than expected. But, come on people, the relatively short span since the first smart meter was installed is actually quite fast to transform an industry stuck in its ways for more than 100 years.
The problem I have with both the Accenture slides and the approach they describe and with Jesse’s commentary about them and his pessimistic ‘funk’ of late is that they both miss the point—smart grid is NOT the end game it merely enables the bigger game ahead.
Smart grid is not about energy it merely recognizes that energy powers the scalable potential of the technologies we crave. Those technologies require scale to be profitable and scale to connect enough sources of supply, methods of conversion, storage, substitution and use and the high performance computing capabilities to transform the data produced into useful, scalable, profitable, market share and wealth creating futures.
The salable growth of the smart grid future is controlling the gateway to customers aggregated by the millions into an ecosystem that is demand-driven, data-fed, technology-agnostic, plug-and-play ready, anytime, anywhere to enable us to live our lives and do our work as we choose. It is the internet of things lived large harnessing the power of technology and electric power needed to deliver the promise of smart grid benefits to customers without boundaries.
You know I’m right.
The transformative power of disruptive technology is that it changes our lives and business models presenting new choices. What we are seeing is disruptive technology using energy to enable the most potential for change and profits by disrupting our traditional central station utility business model that burned fossil or nuclear fuel all tightly regulated. Now technology is turning tradition on its head with distributed energy resources, solar panels on our rooftops, combining it with data from sensors in our appliances, using our PHEV auto battery as storage and selling what we don’t consume back to the power grid running that smart meter backwards.
It is still early and the most disruptive changes are yet to come. We expect to see dynamic pricing of services, bundling (think Comcast Triple Play now call Xfinity), and the networking of all things electronic to enable aggregation solutions. Utilities will face high voltage DC transmission interstate highways straddling the WECC, Eastern Interconnect and ERCOT making a North American market for renewable energy, demand response and customer aggregation. The big global scale players like GE, ABB, Siemens, Amazon, Microsoft, Google and others are acquiring the companies, technologies and footprint to deliver such global scaled services. These global giants will loom over utilities like Russian natural gas is to Europe both friend and enemy. Scale matters in this new world and no utility in America has it.
Along the way—maybe sooner than Jesse Berst and the Accenture folks think—we will find ways to use the technology we already have in mobile phones, broadband, cloud-based services and a thousand gadgets and apps to manage our energy appetites and uses to better fit our needs.
The Revolution in Energy is Taking Place on the Customer Side of the Smart Meter.
We are using existing technology to take control over our energy, communications, information, entertainment options, home security and other daily personal and business needs to make our lives easier, feel in control and bundle our services together to get the best deal.
Why are all those home area network vendors failing, Jesse? Because they are all VC-funded proprietary software and gadget makers trying to sell us another box we don’t want which alone is insufficient to solve the real need. Instead, the HAN winners are going to be the Apps developers who teach our iPhones to check the sensors to see if we turned off the lights, closed the garage door, turned down the thermostat and sent us an alert when the FedEx guy left a package on our doorstep.
The HAN winners are embedded technologies in the stuff we already have or will buy. The secret sauce is going to be networking all this stuff together and making it play nice without having the Geek Squad make a house call to reset the programmable thermostat to turn itself down.
Utilities want to be in control—and so do we. Utilities want to own or control the power supply, have private networks in their ratebase, and decide who gets access to their distribution system. As customers we don’t care about all of that but we can’t fight our utility company, or city hall alone. So we are going to use disruptive technology choices to aggregate into communities of buyers and sellers creating demand for services that big companies with scale can deliver. Let them fight with the utility so we don’t have to do so.
What about utility business models for the future?
The utility of the future must also learn to be an aggregator by focusing on the supply-producing potential of millions of customers and offering choices to attract them to the utility bundle instead of a competitors offering. Instead of building a new central station power plant maybe PG&E will one day offer to pay me to use my roof for solar panels aggregating a ‘million solar roofs’ as a virtual power plant.
The utility of the future will be an integrator of customer choices perhaps from suppliers like NRG, NextEra Resources power supply or integrating campus-sized or neighborhood-sided microgrids all seamlessly connected but securely severable in an emergency.
You get it don’t you?
What is delaying the tipping point for smart grid is not technology or customer interest in deploying it. What is holding smart grid back is the resistance to change from utilities, state regulators and the Federal Government clinging to their regulatory religion and clamoring for their stimulus grants and industrial policy subsidies to pick politically correct winners and losers instead of letting the market and customers decide.
- Survey Says Utilities are Losing Interest in Smart Grid (insightadvisor.wordpress.com)
- Climbing Out of the Smart Grid Trough of Disillusionment (insightadvisor.wordpress.com)
- What Do Energy Customers Want? (insightadvisor.wordpress.com)
- The Harpies of Our Smart Grid Future (insightadvisor.wordpress.com)
- Smart Grid Works for Utilities But Not Yet for Consumers (scientificamerican.com)
- Schneider Electric buys Telvent smart-grid software (news.cnet.com)
- Alternative Energy Dilemma: $500 Billion at Stake in Smart Grid (SBGSY, TLVT, ABB, ALSMY, SI, GRID) (247wallst.com)