Grid ComForum: Information competition driving smart-grid

SANTA CLARA, CALIF. – The coming together of the information and communication technology (ICT) and utility industries is creating a large opportunity for change, but it’s asking for it from two industries that have never done anything spectacular together historically. Now, the stakes are higher than ever for the nation’s electricity grid, but utilities must be willing to overhaul their business, Allan Schurr, vice president of strategy and development for the global energy and utilities industry at IBM (NYSE:IBM) told Grid ComForum attendees today.

According to a study IBM did of CEOs in the utility industry in 2008, seven in 10 anticipated turbulent change and bold moves ahead of them. In the face of this, the utility industry demonstrated the highest degree of anxiety and the least confidence in their ability to manage it than any other industry. While this survey was taken in 2008, Schurr said the results remain the same today. This anxiety is driven by the fact that changes in the industry today are fundamentally different in their scope and speed than what they’ve had to deal with in the past. In many respects, they resemble changes the telecom industry has undertaken in the past as well.

For one, a sense of empowerment has given consumers a newfound desire to leverage provider choice options and actively manage their power usage. Utility execs say this is only a small portion of their market, but it’s really about two-thirds of the overall market, Schurr said, adding that its especially acute amongst younger people. Google Power Meter, which puts this ability in consumers’ hand is a direct outcome of this newfound consumer empowerment, he said.

Also important is that information competition has fed this consumer empowerment. More and more information has changed the dynamics in the utility industry, giving consumers more options for lower-cost communications, more cost-effective computing and open standards to strengthen the business case for technology innovations in energy and utility industries. These two factors combined is creating an opportunity for energy and utility organizations to think in act in new ways, Schurr said, starting with offering more pricing plans.

“Every telecommunications consumer in America has time-based pricing dating back 20 years, and they are not that stupid,” Schurr said, dispelling the myth that consumers won’t understand time-based pricing. “They can figure it out and they are tired of not having opportunities to reduce their bill.”

The parallel objectives of consumers and utilities are coming together in a participatory network, Schurr said. There have already been examples of utilities instituting smart grid but experiencing delays when consumers did not get what they were looking for. Schurr ended his presentation by calling for leadership from the utility space and initiatives to find out what’s working and how to create value.

“The grid has been smart enough in the past – and I doubt anyone can say it’s a dumb grid – but it’s not smart enough for what’s coming….The opportunity won’t pass,” Schurr said. “We’ll rally and come to the table. Global competition will force the US market to move. We have to rise to the challenge.