The Untapped Opportunity in the Smart Grid: Utility Applications

While a lot of the attention has been focused on gadgets, software and services that will convince the consumer to engage with home energy management, an untapped area for opportunity for startups and incumbent players alike will be utility applications. That was one of the themes that came out of our Smart Grid Bunker Session we held last week in San Francisco (see videos here) and which I’ve focused on for an article on GigaOM Pro (subscription required).

Here’s the idea: Utilities will be faced with managing 3,000 times more information on a daily basis when smart grids are built out, said Warren Weiss, Managing Director of Foundation Capital. This massive amount of data will force smart grid networks to ultimately be based on distributing computing and machine-to-machine networks, like most modern broadband and communications networks. That’s a big leap from the mainframe, point-to-point, often times manual, systems that utilities currently have, pointed out Andy Tang, Senior Director of the Smart Grid for PG&E last week.

For startups, smart grid companies and IT players this means utilities will need to buy applications and software layers that can help them manage that information and automatically control devices within the grid. Tang said that he’d seen a lot of power point presentations on tools that could automatically manage load, but not many ready-to-ship products yet. Weiss also said he’s been actively looking at applications that provide utilities automatic control and management of services.

Who will be able to sell these tools most effectively to utilities? Well, one thing’s for sure, the bigger the company, the more comfortable a utility feels with purchasing a product from them. Weiss explained it during our event as, the new startups will be smart to stand on the backs of giants to see — ie, partner up with a large, well-known player like Siemens (s SI), Cisco (s CSCO), or IBM (s IBM). For more specifics on utility applications and services that will be the next hot space check out our GigaOM Pro story.