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.