Examining Analogies Between Internet and Smart Grid

In the summary paragraph of a perspective piece he wrote for Greentech Grid, John Steinberg, the CEO of EcoFactor, makes the following claim:

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.

For the most part, I agree with Steinberg, though, as the CEO of a software-as-a-service (SaaS) platform vendor offering consumer-oriented smart-grid solutions, he admittedly has a vested interest in promoting his argument.

I am perhaps not as sanguine as Steinberg on two points. In his commentary, he compares the early Internet service providers and their walled gardens — the likes of CompuServe, Prodigy, and AOL — with today’s utilities. His argument is that just as the Internet occasioned the demise of walled gardens and their purveyors, Internet-based technologies providing the communications infrastructure for the smart grid will bring about a similar fate for utilities that resist demands to provide consumers with third-party, energy- and money-saving applications and services.

To a point, I accept that argument. That said, I’m not entirely certain that the aforementioned service providers are completely analogous to today’s utilities. The utility sector is probably the most highly regulated of any industry in the Western world. Any change that comes to the industry will not happen overnight. While I agree that Internet technology will unleash tremendous innovation and valuable services for energy consumers, I suspect the pace of change in the utility sector will be significantly slower than what we experienced in the Internet ecosystem.

In a similar vein, Steinberg asserts that incursions into the smart grid by information-technlogy giants Google, Cisco, and Microsoft represent both validation of the smart-grid market opportunity and a sign that said market has reached a critical phase of maturation. I accept the first premise, but I am skeptical of the second.

Cisco, for example, recognizes the vast growth potential of the smart grid, but it has yet to find a means of tapping into it meaningfully.  Cisco will figure it out, I’m sure, but the company is still learning about the energy business and utilities. It’s a radically different space than anything Cisco has tacked previously, and I think the leadership is Cisco is realizing that it must listen and learn before it prescribes nostrums.

Meanwhile, Google and Microsoft are making similarly measured moves.

There’s real promise in the smart grid, and liberating change will come to the utility industry. However, as Gartner might say, technology vendors seeking fortune in the space should expect to travel through a trough of disillusionment before ascending a slope of enlightenment.

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