Smart Grid will be bigger than the Internet?

There a number of strong parallels between the arc of information technology and the current trajectory of the smart grid.  While cause and effect are debatable, the fact is that a lot of the people driving changes in the clean tech world have IT backgrounds. It may be true that to the man with a hammer, the entire world looks like a nail.

Disclosure: This is what we are trying to do at EcoFactor. We use the Internet to help consumers automatically manage their home energy use through a SaaS (software as a service) platform.  Our industry experience has given us a front-row seat for both the historical revolution in IT and the impending one in the smart grid, and we see some specific parallels between the two. We’re not alone, but many trends in clean tech really do look a lot like the IT revolution.

Trend #1: The Internet changes everything

Remember CompuServe? Prodigy? AOL? At the dawn of what became the Internet, their “walled gardens” defined the online experience for millions of users. Today, the idea that your service provider told you what you could do with your connection seems quaint.

We see a number of efforts now to fence in the smart grid — to define and limit what can be done and who can do it. But just as the World Wide Web made such finger-in-the-dyke efforts futile last time, the Internet ‘s furious pace of innovation will again overwhelm those kinds of defenses.

The smart grid will enable automated energy management, automated dynamic price response, and a host of innovations we can’t yet imagine. It will reward companies that find innovative ways of leveraging diverse data sources, devices and technologies. And if those applications aren’t welcomed inside the walled gardens, the applications will simply route around them.

Ironically, these Internet-based products won’t just benefit consumers, they will benefit utilities, energy retailers, and home service providers, too. Terabytes of new data will offer grid managers greatly increased visibility into demand — and not just yesterday’s, but tomorrow’s — all the way down to the individual home level.

Trend #2: Consumer value and ease-of-use will drive the market

At the beginning of the PC revolution, early adopters bought Osbornes and KayPros and Apple IIs because they were innovative and cool. But those users had to put up with awkward interfaces and the need for considerable effort and expertise to keep them running. As long as even basic word processing required a mastery of command line syntax, there could be no mainstream consumer adoption of PCs. Getting past that barrier required both improved technology and a shift in philosophy: market growth means insulating consumers from the bits and bytes. It also means offering new applications (like browsers) that effectively leverage the connected world.

Many consumer-facing smart grid offerings today are, in effect, all about the bits and bytes. Home energy dashboards and reporting tools ask customers to know, care about and pay attention to the details of their energy consumption, but provide no easy way for consumers to take action and benefit from them. DR solutions ask consumers to accept discomfort in order to address grid-level problems like peak demand.

Today, new solutions allow consumers to maintain complete control over the temperature in their homes and achieve significant cost savings without ever thinking about therms or kilowatt hours or setback schedules — from any device, or automatically, and with no device at all. Just as the iPod and iTunes let users focus on the music, the winning smart grid applications will let users focus on the results, not the process.

Trend #3: The entrance of big tech speeds market maturation

Most early PC makers — Kaypro, Osborne, Apple — were just PC makers. As long as it looked like a not-ready-for-prime-time niche market, the giants in adjacent industries stayed on the sidelines. Just as IBM’s entrance into the PC market took that industry to the next phase of its evolution, today’s IT giants like Microsoft, Google, and Cisco are indicating their own perception that the smart grid market is ready to sustain the behemoths. In a sense, they have brought us to the end of the beginning of the smart grid.

As with the PC revolution, the presence of these blue chip companies legitimizes the industry for potential customers, and that legitimacy benefits not just the blue chip players, but competitors large and small. That said, the fact that the grid gains from Google’s entrance does not necessarily mean that the opposite is also true.  Mainframe giant IBM could not translate that strength into long-term dominance of the PC market; there is no guarantee that the IT giants will dominate the smart grid. But their presence will almost certainly propel it forward.

What does it all mean?

The Internet, the growing importance of the user experience, and the entrance of large tech companies should all be seen as good omens for the future of the smart grid.  These trends will lead to better products and services, which will in turn drive consumer adoption. And consumer adoption will be the key to fulfilling the environmental and economic potential of the smart grid.

Mitsubishi plugs in smart grid project

Mitsubishi Electric on Monday said it will invest about $76 million in a smart-grid project, part of a companywide push into equipment for modernizing the electricity grid.

The company will create two installations–a residential-size building and a commercial facility–which will have on-site power generation through photovoltaic panels and local energy storage with rechargeable batteries. The flow of energy will be managed and optimized by power electronics and smart meters to test the performance of the equipment.

Mitsubishi Electric said the projects are part of a corporatewide push to supply smart-grid technologies for the electric power industry and meet global demand for low-carbon energy.

In one experiment, Mitsubishi Electric will set up a mini-power station built around a four-megawatt solar array. It will include equipment, such as switches and smart meters, to manage the flow of energy and a battery.

The residential-scale system will feature a 200-kilowatt photovoltaic array with a home energy-management system, which uses a smart meter and network-connected appliances.

The home system recalls work being done by Panasonic in this area. The industrial giant is developing a line of energy systems for the home, including energy-efficient TVs and appliances, solar panels, batteries, fuel-cell hot water heating systems, and a home energy-management dashboard.

Samsung, another company well known for its electronics, last week announced that it plans to invest $20 billionin energy and health care over the next 10 years. Meanwhile, an executive from battery supplier BYD said last month that the company plans to supply a combination of equipment, including solar panels and batteries, to homeowners.

Data collected from these various research sites will be used to develop new products and architectures that could enhance the performance of existing Smart Grid technologies. Mitsubishi is placing particular emphasis on the photovoltaic segment of its business. It has identified China, India, North America and Southeast Asia as regions to target.

Several major Japanese corporations have taken a greater interest in the Smart Grid recently, including Toshiba (which landed a relevant partnership with SunPower in early March), Zhimizu and Kyocera. And South Korean giant Samsung also just announced that it will sink $20.6 billion into green technologies, with a special focus on solar.

But Smart Grid efforts aren’t only heating up in Asia. At the end of last month, General Electric joined forces with Nissan to research the impact electric and plug-in hybrid vehicles may have on national electric grids — and how predicted grid overload crises may be averted. Other U.S. corporations like Cisco Systems, IBM, Intel and Microsoft have also been vocal about offering Smart Grid products to utilities and homeowners alike.

However, with consumer-friendly plug-in cars like Nissan’s Leaf and General Motors’ Chevy Volt preparing to launch as early as this year, it seems like Smart Grid solutions to major challenges are needed now — not in several years.

Some analysts say that less than 10 electric cars on the same block could cause power outages. If this is true, Mitsubishi, General Electric, and the rest will need to race electric vehicle market adoption to make sure the grid can handle the next generation of transportation. This sounds dicier than it should be.