An ominous theory has been wafting through the air for sometime – gypsies like Google will eventually shrink the utilities to some dumb wires. A utility company will be like a skinny skeleton wearing other people’s fleshes. Before my imagination rolls down the gory trail, let me come to the point...
Recently I had the opportunity to speak at a DeTech meet, facilitated by DEFG and hosted by San Diego Gas & Electric. The topic was how the inclusion of third party companies will change the current business models for electric utilities. Intensely intriguing.
Smart Grid and associated technologies are essentially unveiling the electric utility industry out of their burkas. In the last three years, venture capital spending in the advanced metering technologies has been over $1.5 B. In 2010 alone, about $2.75 Billion has been spent on smart grid products around advanced metering, demand response and distribution grid management.
In HAN (Home Area Network) ecosystem alone, there are more than 200 vendors. The network providers such as Verizon are opening up their backyards. Demand side aggregators like Enernoc and CPower are mushrooming with froggy leaps. Google is up on its mission to “organize the world’s information” through the PowerMeter. Microsoft is using Hohm as their homing beacon to make inroads. Do not forget Opower. Galvin is up with Microgrids. The list runs on and on. Too many smarty pants in the room, - and utilities, like selfless hermits, are cannibalizing their sales through Distributed Generation, Demand Response and Energy Efficiency. Huh!
In HAN (Home Area Network) ecosystem alone, there are more than 200 vendors. The network providers such as Verizon are opening up their backyards. Demand side aggregators like Enernoc and CPower are mushrooming with froggy leaps. Google is up on its mission to “organize the world’s information” through the PowerMeter. Microsoft is using Hohm as their homing beacon to make inroads. Do not forget Opower. Galvin is up with Microgrids. The list runs on and on. Too many smarty pants in the room, - and utilities, like selfless hermits, are cannibalizing their sales through Distributed Generation, Demand Response and Energy Efficiency. Huh!
Remember the value net by Brandenburger and Nalebuff? It becomes really interesting as you start plotting the newbies against the four pillars of the net. Not only that the list for Complementors and Substitutors start hanging below the bottom, - but in cases, the line of demarcation seems really slim. Sometimes, an entity could fall into multiple pillars. Take the example of DR Aggregators – are they Substitutors or Suppliers? Both, really. How about Distributed Generation? Talk about twisted value nets.
The question is - what should be the go forward strategy for utilities - compete, co-operate or co-opetate? I think co-opetition will be the name of the game. We will wait and see.
