In March 2009, Sramana Mitra wrote an article in Forbes Magazine titled “The Smart-Grid Dilemma: Market forces are against smart-energy innovations.”
The article made a simple yet important point: “What do utilities make money on? Energy consumption. So, what incentive do they have to install smart meters in your house and make this a transparent process with variable pricing if that means it would eventually reduce your energy bill, hence their revenue?” In 2009, the market landscape and lack of customer demand made this an accurate statement.
On March 17th, 2011, the Federal Energy Regulatory Commission (FERC) released its final ruling on Demand Response Payment Structures. Some analysts have claimed that this ruling actually changes the market dynamics in favor of smart grid. It is very possible as adjustments of payment structures could induce consumer demand for smart grid attributes; i.e. the ability to earn money from load curtailment, better payment rates, purchasing energy efficient appliances and adjusting behavior to gain maximum value, i.e. minimum costs to the consumer. In a sense, the FERC ruling might actually create a customer based “pull” market dynamic where consumers demand these features and utilities oblige.
The more successful recent smart grid projects often included multiple partners in government, academia, and private industry coupled with a sense of customer buy-in and desire for the benefits that smart grid promises:
Austin Energy’s Pecan Street Project
Of course time will reveal what becomes of the push for Smart Grid and the efforts to radically change the North American power grid, which has been called the world’s largest interconnected machine, but it is safe to say that if customers see a benefit, they will as a collective group, begin to demand these improvements.
In 2009,Sramana Mitra saw no real customer centric force that could drive this change, in 2011 FERC might have actually created it.
