The Other Half of the Smart Grid Story

The Other Half of the Smart Grid Story

If … For every generated electron that travels through our transmission and distribution grid, there is an electron consumed in our homes, offices and factories  …

Then … The "grid" is only half the smart grid story.

For the past several years, the electric utility industry has been focused on smart grid; and for decades, the automation and controls industry has focused on the efficiency of greener buildings. These two industries have largely operated in silos, despite the literal connections between the electric grid and the electric devices that consume energy.

Despite a tremendous focus on smart grid, there is little attention paid to consumption. If the smart grid industry is so concerned about efficiency on the grid, they should be equally concerned about the way electricity is consumed beyond the grid.

Compared to other industrialized countries, the U.S. does a relatively poor job of automating and controlling how energy is used within buildings. In fact, data show that residential, commercial and industrial buildings consume 72 percent of all electricity in the U.S., and approximately 50 percent of that energy is wasted.

This is not only an unsustainable use of our resources, but it paints a dismal picture for the bottom lines of building owners, facility managers, and homeowners across the nation. And as electricity prices continue to rise, the problem will compound.

Fortunately, many buildings today already have in place some type of automation and control system, which is often used to ensure various systems (like HVAC and lighting) work at optimal efficiency. With some tweaking, these buildings could easily be adapted to connect with smart grid technologies for even greater performance and savings.

As utility companies explore smarter services and alternative pricing structures as part of their smart grid deployments, automation and control systems in homes, commercial facilities, and manufacturing plants will be essential for managing electrical usage and costs.

Who stands to win from expanding the smart grid focus to consumption areas beyond the grid?

  • Utilities: While utilities have many commercial customers enrolled in some sort of demand response program, "demand-side resources" only account for about 4 percent of North America's peak resource portfolio today, according to the North American Electric Reliability Corporation. With a greater focus on users -- and connectivity with their energy management systems -- utilities could have more leverage to control a greater percentage of their load and avoid unnecessary infrastructure costs in the long run.
  • End users: While energy costs are relatively low for Americans today, especially compared to the rest of the world, they will go up, and how high they go is outside of consumers' control. Innovations in grid modernization, information and communication technology, automation, and energy management systems have evolved so consumers can better manage their energy usage and costs for the first time. Connection to a smarter grid will significantly increase these opportunities by opening doors for more customized services and pricing models.
  • Information and communications technology companies: With tremendous opportunities for new technologies that will help energy consumers leverage smart grid information for their benefit, ICT companies are looking at a multibillion dollar opportunity. In fact, with an estimated 900 percent increase in the amount of data utilities will need to "communicate, manage, and analyze," the smart grid market is expected to grow from $12.8 billion today to $34.2 billion globally by 2020, according to Lux Research. The evolution of smart grid across multiple verticals and industries, enabled by sophisticated use and management of data, will be truly transformative for ICT-focused innovators and entrepreneurs.

The smart grid is quickly becoming more pervasive in our daily lives, touching everything from programmable thermostats to smart phones. But, connecting these dots -- from the grid to consuming devices -- means connecting the right technologies, as well as the right people. This innovation -- and the act of breaking down silos between opposite sides of the meter -- requires collaboration and new levels of understanding.

The ConnectivityWeek conference in Silicon Valley next month will focus on cross-industry collaboration to ensure the complete smart grid picture is being considered -- from generation to the numerous end-use segments that comprise electricity consumption. The conference will explore the business models, value propositions and technologies for delivering smart grid benefits, beyond the grid.

Image CC licensed by Flickr user OiMax.