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GE Energy Survey - What's the Hold-Up with Smart Grid?

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July 07, 2010

GE Energy Survey - What's the Hold-Up with Smart Grid?

By Jon Arnold (ICP)
Co-founder, Intelligent Communications Partners
A few months back, I wrote about highlights from a consumer survey commissioned by GE Energy. That survey was done in March, and the main finding was that 79 percent of those sampled were not familiar with the term "smart grid." That may seem surprising in today's environment - you'd think that by today this would be a household word. I think that's largely true. I'm sure we'd all agree that smart grid has ascended aggressively into the public consciousness over the past few months.

I'd say that's especially true this week, with the heat wave rolling through the Northeast - you just know there will be brownouts at some point. In fact, here in Toronto we're getting similar weather and that's exactly what's been happening. The local power outages are front page news today in our leading national daily, the Globe & Mail. There's no denying that the aging energy infrastructure is catching up to us, and the ugly oil spill in the Gulf is creating all kinds of anxiety about our energy ecosystem.
Well, the latest GE Energy consumer energy really confirms how quickly things have changed. Highlights from their June survey were just released, and the data points clearly show that consumers want to be part of the solution. Just consider a few findings:
- 88 percent are willing to use smart devices like meters and thermostats
- 88 percent feel that investing to improve energy infrastructure is "essential"
- 85 percent feel the U.S. would gain competitive advantage with a smarter grid
- 70 percent feeling utilities should invest in a smarter grid instead of building new power plants
While these are rather general findings, with a sample of 1,000, I'll take these as being pretty reliable. As a seasoned marketing researcher, I'm well aware of how survey findings can be spun to support a particular point of view, but these high level findings jibe pretty well with my take on how many people feel about these issues.
A lot has happened over the past few months, but I really think the BP mess has heightened our attention about the need for a better long term energy plan. This sets a whole series of related ideas in motion, and smart grid is central to a lot of these implications. When most new markets emerge, the impetus is supply-side driven. If the solutions providers push hard and long enough, eventually this captures the market's attention, and momentum shifts to being demand-driven. Only at that point will the conditions exist for a sustainable market.
Given my roots, I liken this to the early days of VoIP. This began as a hobby and was never viewed as a bona fide replacement for the PSTN. Vendors were very much the early drivers, and telcos bought as much equipment as they could justify, but were not early believers in VoIP, as it represented too much of threat to their cash cow legacy business. True demand did not materialize until other players brought VoIP to the masses - namely cablecos and pureplays like Vonage (News - Alert). It's taken almost 10 years, but there's little doubt today that VoIP is the future for landline telephony, and market demand from subscribers is very real.
In my mind, the GE survey results tell me that these conditions are in place now from the consumer side for smart grid. They are aware of smart grid, they're ready to deploy smart devices, and want to be active participants in making the U.S. smarter about both energy usage and generation. Those are pretty good building blocks to have in place, and it just begs the question - what's the hold up?
We all know that incorporating smart grid technology is a long term process, and that utilities are being cautious lately about rolling out programs. I think this is a short term bump in the road, and spending cycles will pick up again. However, recent pullbacks shouldn't be attributed to a lack of interest from consumers. Sure, there are politics involved, and utilities are not fast movers, but when you have this level of willingness out there, that's a buying signal to me.
If things hold up too long, that support might fade, and then utilities will really be behind the eight ball. The real issue, of course, is the lack of competition. As noted earlier, VoIP's growth really came from outside the telecom space. Utilities don't have to worry so much about new players coming in to create the market, so they can afford to move at their own pace. That's their choice, but we'd all like to see things move faster so they can support these desires from consumers and endear themselves as long term partners.
In time, I believe various forms of alternatives will emerge, and if utilities take their customers for granted, I'm certain there will be repeats of VoIP to some degree. I'd much rather see utilities step things up a bit and build on this receptiveness, and I think the benefits will come back their way faster than expected. Good things usually happen when people are ready to change and you give them the tools, and I think that's the key takeaway from GE's survey.
What do you think?

Jon Arnold (News - Alert) is co-founder of Intelligent Communications Partners (ICP), a strategic advisory consultancy focused on the emerging Smart Grid opportunity. To read more of his Smart Grid articles, please visit his columnist page.

Edited by Erin Monda
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