What PG&E Wants From Energy Management Tools: Neutral Ground

Among the utilities that have come forward lately to announce deals with energy management software makers — from San Diego Gas & Electric and TXU Energy (working with Google), to Xcel Energy and Sacramento Municipal Utility District (working with Microsoft) — one progressive utility has been notably missing from these early movers: PG&E. So we asked PG&E’s senior director of the Smart Energy Web, Andy Tang, this week what the company’s strategy is when it comes to home energy management software and working with third-party vendors. Tang tells us PG&E is waiting for the Open Smart Grid group to establish a single standard interface for energy management software before it starts working with third parties like Google and Microsoft and explains to us: “I don’t want to pick winners. I want to work on more of a neutral ground.”

From Tang’s perspective, with the influx of IT companies offering energy management tools, if there isn’t a very easy way for PG&E to seamlessly plug in the latest software tool using a standard method, it’s just gonna be too complicated and too much work for PG&E. PG&E can’t be in the business of IT development for third parties — there are only so many resources at the company, says Tang. He’s hoping that the Open Smart Grid group — which is made up by a diverse group of utilities and vendors — will help lay out enough standards so that most third parties will incorporate the standards into their software development.

From the perspective of a web company making energy software, an immediate question for PG&E might be: Internet protocol and programming languages are already largely standardized, so what more does a utility need? But Tang says, “When you dig into the details, there’s still a lot of work to do.” And while it might not be that complicated to integrate software into the utility system, a large part of relying on a standards group is so utilities like PG&E can try to remain more vendor neutral. Utilities have gotten in trouble (i.e., spent a lot of money) getting locked into smart meter vendors early on that quickly became out of date. PG&E is even taking a less vendor-centric approach to rolling out the smart meters themselves, doing deals with numerous smart meter makers like GE and Landis+Gyr. And clearly, PG&E doesn’t want to get locked into an energy management tool that proves less compelling than a competitor.

Companies like Google and Microsoft have a long history of working with open standards and likely don’t have a problem with the strategy of a utility like PG&E. But web companies and utilities work on different time scales, and we’re sure the energy software makers like Google and Microsoft are eager to work with a big utility sooner rather than later — creating a standard interface takes time. Microsoft and Google are particularly eager to move quickly ahead now that they’ve found themselves in competition.

All of this isn’t to say that PG&E will reject working with web firms and rely on developing it’s own energy software tools. Quite the opposite. Tang says the point of the standard is to work closely with third-party vendors that are skilled in developing consumer user interfaces, and he believes that “if we’re doing this on more of a neutral stance, the innovation can be a lot bigger.”

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