IBM CEO: The Consumer is the Key to the Smart Grid

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The smart grid won’t be a successful system until we engage the energy consumer. That was the gist of a speech by IBM’s CEO Sam Palmisano at the smart grid industry event the GridWise Forum in Washington DC on Tuesday. The grid is starting to get more connected to networks, sensors and smart software, enabling better management of energy production, distribution and consumption, but “the critical change, which will have transformational impact, will be reaching the consumer.”

So far in the evolution of the smart grid, the consumer has been largely unengaged. While a small section of the population has shown signs of a backlash against smart meters, most consumers just don’t care about managing and reducing their energy consumption. As IBM’s Guido Bartels told me last week, the consumer backlash over smart meters could even be seen as a blessing in disguise, given the smart grid industry should have had this discussion about an empowered consumer years ago.

Don’t expect Americans to just curb their energy-hungry lifestyles, said Palmisano. Not even with fancy home energy dashboards and home automation control (here’s 10 of those). Instead chips, software and networks will unleash an awe-inspiring amount of data about how the smart grid connects to the consumer, and smart analytics will be the key tool to finding productive ways of curbing energy consumption. For example, the algorithms written by a startup like Efficiency 2.0 use publicly available data, personal data and energy data in a mash-up to make highly tailored recommendations for energy consumers (to read more on this check out my article Smart Algorithms: The Future of the Energy Industry, GigaOM Pro, subscription required). Of course, IBM sells such analytics tools.

Palmisano, who led the creation of IBM’s “smarter planet” initiative that focuses on how IT and software can manage resources, explained how the smart grid compares to other systems that IBM has worked on, like transportation, healthcare, and banking. A successful system needs to have clarity of purpose, connectivity, real time knowledge of the status of the system and be able to be adapted in real time, said Palmisano. The smart grid “doesn’t meet these true tests of a system,” said Palmisano. It remains isolated and in silos in many ways.

For the smart grid to reach the the true definition of a holistic, successful system, Palmisano suggested four steps. First, the smart grid industry has started to develop standards, but it’s “gotta finish the job.” Second, the smart grid needs to be built around these tenants from the ground up, not tweaked after it’s up and running. Third, the smart grid industry needs much more collaboration, particularly international collaboration. Finally the smart grid needs more development of its policies and ethics.

We’ll be bringing you more from the GridWise Forum this week, so stay tuned.

For more research on the smart grid check out GigaOM Pro (subscription required):

Smart algorithms, the future of the energy industry

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