Weekly Update

Google, Microsoft Perk Up Consumer Smart Grid Market

This week, New Zealand’s environmental agency warned that smart meters being rolled out by the nation’s utilities aren’t smart enough. The problem? The smart meters do a great job of communication with the utilities, but they don’t talk to consumers’ home devices. “Without HAN capability, the benefits from smart meters almost entirely accrue to the retailer,” Parliamentary Commissioner for the Environment Jan Wright told 3News. “Consumers will end up paying for meters that provide them with minimal benefits.”

Earlier this year, I posed the question, “Will consumers win with the smart grid?” and pointed to some evidence that most of the so-called smart grid initiatives undertaken by utilities were designed more to help energy suppliers than consumers. Three months later, there’s been a noticeable shift in the market to address this very issue.

Texas’ Oncor was the first utility to get egg on its face with the rollout of smart meters that didn’t offer enough benefits for residential customers. Oncor is now replacing the 600,000 smart meters it already rolled out with smarter advanced meters and finding a new home for the old meters in street lighting and other non-consumer applications. Now, Oncor’s going after stimulus funds to support the new-meter rollout, and it’s taken a decidely pro-consumer approach to publicizing the effort. “Our first considerations in seeking these stimulus grants are whether the funds will help consumers lower their electric bills or advance smart-grid initiatives to improve service and reliability,” Oncor CEO Bob Shapard said in a statement.

One utility that’s getting it right? German utility Yello Strom, which this week announced a partnership with Google’s PowerMeter energy management tool. The utility has some things going for it that U.S. utilities don’t — namely, a deregulated energy market and higher broadband-penetration rates — but it’s also taken an innovative, consumer-friendly approach to the smart meter itself. As Katie reports at Earth2Tech, Yello Strom “found only tools that focused on helping energy efficiency from a utility perspective. Not seeing anything they liked, or anything that would get consumers excited, they developed their own — the Sparzähler meter (or “savings meter”) — which looks like it would be at home in the window of an Apple store, is built off of Microsoft Windows CE, and has both a small web server and client inside.”

That’s a decidedly consumer-friendly approach — even if Yello Strom asks customers to pay for the device themselves. Without pulling other levers in the U.S. market, it’s unclear that such a strategy would have great appeal in the U.S. First of all, broadband access (which is what makes the Sparzähler meter work) is still at dismally low levels in the U.S. compared with other developed countries, and according to a GigaOM Pro report from Pike Research, a third of consumers say they’d be unwilling to pay anything for an energy information display.

Still, the market is changing quickly in favor of consumers; in part, the shift is one reason I think Google’s PowerMeter will lose in a head-to-head match with Microsoft’s Hohm. Microsoft says it plans to work with utilities to move into the control layer, allowing consumers to manage their devices, while Google’s approach primarily leverages the Prius Effect — the idea that more information encourages positive behavior changes. It’s a good start, but allowing consumers to ease up on their homes’ gas pedals is what will benefit them most. Microsoft seems well-positioned to deliver that benefit.

Question of the week

Would you rather use Google’s PowerMeter of Microsoft’s Hohm — and why?