The smart grid is finally being built, and with it will come hundreds of new companies and models that threaten to disrupt the way utilities currently do business, according to a panel of smart grid experts speaking today at the Green:Net conference in San Francisco. They highlighted the importance of standards, cautioned that utilities will need to find a way to deal with petabytes of data coming in from homes and businesses, and warned that utilities will need to find new ways of connecting with consumers and adding services if they don’t want to be disintermediated from the value chain.
Eric Dresselhuys, EVP of Silver Spring Networks, said that the big change underway right now is that the smart grid is actually happening. We don’t really know what’s going to take place over the next 2-5 years, he said, but the right infrastructure will give birth to hundreds of new companies and enable consumers to change their relationship with energy.
Brian Huey, head of business development for Sprint Nextel’s M2M Smart Grid, Utilities division, said the grid as it stands today is like the pre-Internet area in that there are isolated pockets of networks that can’t easily intercommunicate. “We need the smart grid to go through an Internet modernization,” he said. However, the standardization effort needs to be considered carefully, according to Allan Schurr, VP strategy and development at IBM, who warned against “overstandardization.” Laura Ipsen, SVP and GM of the smart grid division at Cisco, noted that the standards need to be global.
Huey championed the role of open standards to interconnect the network which enabled products to talk to each other on the grid. These standards must link the home area network which contains devices and energy management software with the scalable networks between the homes, and also connect the utility and the energy generation providers.
Another challenge associated with the development of the smart grid is helping utilities deal with what Huey said could become petabytes of information each day. Utilities also need to figure out if they want to become a dumb pipe or offer value-added services to consumers that utilities can monetize. Huey compared the opportunity to the cell phone industry, noting that it took a while for cell phone companies to open up their networks, which stymied innovation for years. However, once the networks did become open the cell phone companies had to learn how to offer services that developers and consumers would continue to pay for so they wouldn’t become a dumb pipe. Schurr agreed, saying the tech challenges are still there but they may be overwhelmed by the changes in the business models.