Will Google take a multi-trillion dollar industry to the mat?
Google Said to Plan Energy Push With Tools for Utilities
and Forbes responded
As noted this is probably an alternative to the energy saving play Google made some years back http://www.google.com/powermeter/about/
However, even in the US there is a "bigger grid" where loads can be advantageously shed between states (because time-zones and weather events and hence demand are highly regionalised too).
If Google can also deliver demand intelligence (via some grid independent API) at the point of use they can effectively cut out the utility entirely (except as low-margin commodity provider).
They backed out of powermeter in late 2011, surrounded by rumours that the utilities did not want to play ball (i.e. share their client data with Google ) despite Big Data analytics being of obvious potential interest to their end-user clients.
If so the game-plan for the utilities may have back-fired as this new Google approach looks far better thought through and far more of a threat to the utilities.
If so the game-plan for the utilities may have back-fired as this new Google approach looks far better thought through and far more of a threat to the utilities.
But these articles miss the point !
Why ? - While united the Smart Energy Demand Coalition is far more interesting than any individual utility (because it represents an umbrella concept) , I believe Google is finding a path straight to the money!
Members of Smart Energy Demand Coalition might all want to watch Google:
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| SEDC Executive Members - An influential bunch (particularly in Europe) |
A little background - The Automatic Meter Reading (AMR) market is a $multi-billion land grab that is going on with big utilities, and big metering operations participating. Note: the smart meter industry is a tiny subset of AMR
However it is famously said that:
During a gold rush you want to be either the guy selling picks and shovels or the gal making the jewellery.
I believe (and suspect Google sees) that these players are all leaving most of the money on the table,
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| SEDC Associate Members - No less impressive Global Titans here too! |
This team looks pretty Smart to me to so how can Google Outsmart them ?
This play is more mature -
Absent deregulated markets utilities "own" their clients ( In the US location largely determines your utility provider) .
So deregulated markets face more competition than US counterparts (like uncompetitive providers of last mile ISP access in the US).
Maybe this is why the SEDC first sprang up in Europe as brain child of VaasaETT (The Global Energy Think Tank)
However, even in the US there is a "bigger grid" where loads can be advantageously shed between states (because time-zones and weather events and hence demand are highly regionalised too).
In this market the infrastructure provider is key and no utility can own the market. So Google can access this without co-operation or partnership from utilities, because those that will not sit at this table will lose!
And here is the winning play
If Google can also deliver demand intelligence (via some grid independent API) at the point of use they can effectively cut out the utility entirely (except as low-margin commodity provider).
The point is that however big the AMR market is, the main purpose of that market is to deliver efficiency and data intelligence to end users and support them better by smarter matching of supply to demand.
Almost universally providers of meter data also provide visualisations (charts) because it is easy.
Very few offer analytics (kWIQly clients are an exception), and we know Google is in this market. It is acting on intelligence delivered by analytics that is where the value lies.
Very few offer analytics (kWIQly clients are an exception), and we know Google is in this market. It is acting on intelligence delivered by analytics that is where the value lies.
The domain intelligence and pattern recognition that can unbundle value from these near infinite (and fast growing) data streams and then package it up as simple sophisticated solutions is worth a lot. It scales and reduces utilities back to what they are - a pure commodity play.
Prognosis
It is very simple and needs only a superficial understanding of how industrial disruption ( http://www.claytonchristensen.com/books/the-innovators-dilemma/ ).
Either existing industries (AMR, Utilities, Construction and Heavy machinery) will collaborate to deliver the value the markets (and Climate Change) are crying out for, or Google will pip them at the post.
The requirements are really quite simple -
1) Good real-time tariff APIs for end-users (via packaged intelligence) to know what energy costs and likely will cost
2) Ability to mine for energy saving opportunity in AMR data (pattern recognition)
3) Connectible plant that can exploit the opportunities so discovered automatically
Either this will be delivered piecemeal (and a later consolidation and sharing of protocols will happen) or it will be delivered via a protocol open to all from the start - which will freeze out Google as a commodity provider (except where they really have the specialised domain expertise ).
Punditry
As a big player in this field you need to prepare three things:
- A collaborative attitude with peers (utilities and network infrastructure must play well with competitors via open protocols etc - so that specialist service providers have access to the field)
- Emergent domain specialist operations (kWIQly is a bit too small just yet) must be hand-held to break into big markets (in land-grab markets first entrants that scale fast hold long term estate value)
- A dialogue with existing (commodity clients) that can up-sell and cross-sell new differentiated value propositions identified as suiting them from their energy data - this will reduce churn (enhance client retention) and convert their data into an asset - rather than leaving it unexploited in a database.
As a smaller niche player:
It's all about exposing value (eg via APIs) and creating value propositions that exploit network effects (Small businesses or startups that do not understand this concept need to) and being prepared to partner for growth (rather than trying to row organically) - because speed is of essence.
As Google
Define the Smart Demand/Supply interfaces to allow the niche products to bypass the utilities with readily installable Gizmos and cut out the middle man. (Maybe acquire these once they show traction)
Meanwhile provide a set of tools that utilities must use (or suffer the consequences) to ensure their adoption of your API's - Oh but you are doing that already !
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