How Google's PowerMeter Will Affect the Smart Meter Industry


googlesmartmeterlogoGoogle, (s GOOG) with its billions in annual revenue and its constant noise about open standards and free access to information, is hard to ignore when it crashes into an unsuspecting industry. As cell phone companies, publishers, advertisers and software makers have all seen over the years, when Google sets its sites on your sector, the industry’s reaction is usually a mixture of fear and excitement. So now that Google’s given us a peeak at the software and online tools it’s developing for smart meters — PowerMeter — how are the companies that are building their own software and hardware to organize the energy information in our homes reacting?

While young startups that have built their businesses around energy management tools are largely applauding the attention, Google’s moves raise a lot of questions for this fledgling industry and could furthermore directly threaten the business models of some of the more entrenched smart meter companies.

On the face of it, the energy management startups appreciate the attention. More awareness of the sector means more smart meter adoption, and more customers. As Adrian Tuck, the CEO of home energy gear maker Tendril, told us, the largest risk for the smart meter industry is moving too slow. “The biggest brand possible just jumped in,” says Tuck, which will only speed up adoption and consumer demand.

Tendril’s reaction partly stems from its close relationship with Google — Google chose the startup to speak at its smart grid event with GE in Washington, D.C., next week, and Tuck describes the relationship between Tendril and Google’s PowerMeter as “dating.” Tendril shares Google’s view that open platforms will help speed adoption and make the consumer experience better — last week the startup said it’s opening up its API for third-party developers, and Google says it plans to release its PowerMeter API in a similar manner.

Other energy management startups that aren’t as closely aligned to Google as Tendril, are, for the most part, excited about the search engine bringing much-needed attention to the space. “It’s great to have Google on the energy-efficiency train,” said Agilewaves CEO Peter Sharer. “Over the past couple of years we’ve been largely swimming upstream.” Greenbox CEO Jonathan Gay expressed the same sentiment, saying he thinks Google will shine a spotlight on the sector and attract interest. Even a spokesperson for meter maker (s ITRI) Itron, Sharelynn Moore, said Google “adds enthusiasm and validation” to the industry.

But Google’s entrance into the space does raise a lot of questions for these firms. First off, will Google be a competitor or a partner? Gay said it’s too early to tell if the product will be competitive to Greenbox, but explains the two as follows: Google is building a platform, while Greenbox, which is focused on the software side of home energy management, is an application that can ride on that platform.

Google and the energy management startups also note that Google’s tools are just offering up energy information, and that there’s plenty of room for software that can analyze and better visualize the data as well as control appliances around the home. And hardware makers will be eager partners. Yet I also can’t help but think that the fact that Google will be offering its online tool and software for free will undercut some aspects of the new businesses, all of whom are struggling to figure out revenue drivers in a very nascent industry.

Perhaps a bigger question than whether Google is friend or foe is, who owns the relationship with the customer? Google’s longstanding online presence could mean energy customers turn to it for energy data info, while bypassing utilities and young startups that are also trying to build communities and aggregate eyeballs. Startups will be willing to play second fiddle to Google, but utilities have years of history with their customers and might not be keen on one of the Internet’s perkiest brands moving in. Cell phone companies felt the same way when Google expressed its intentions to work on mobile software.

Beyond the issue of customer loyalty, Google’s entrance into smart meter software brings in a heavy-hitter for companies that are looking for Internet Protocol to be the basis of the next-generation smart grid. While some companies are hoping IP will be the dominant standard, many older companies have built networks and technologies on different standards, and even proprietary standards. Incumbent smart meter companies like Itron, Landis+Gyr, Elster and Aclara (part of ESCO Technologies) have already expressed concern over language in the stimulus bill that emphasizes Internet protocol for the smart grid.

Itron’s Moore says that while it’s easy for a company like Google to say that consumers should be able to access energy data for free through the Internet, the current system is just not architected that way. There are issues with security, utilities controlling their own assets, and keeping costs down — IP is part of the smart grid network, but there are a lot of other factors in the network, she says. Google itself, has admitted to the technical challenges of free, open-standard energy info in its CPUC comments, but said:

While we recognize there are some limitations today on the ability of utilities to provide data to customers in this manner (even with AMI), we believe that advances in Home Area Network technologies will make this entirely possible in the near future.

You can bet that if Google was the sole architect of the smart grid it would build it like the Internet: based on IP. That’s something that the companies that have built a business based on their own protocols don’t want to see, and you can bet they’re thankful that Google is still just dabbling in the energy info space.

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