"Smart Grid" hype

I will get excited when VentureBeat hosts a “Greenbeat” conference on mass-manufactured nuclear power modules. Then they will start making a real-world difference.

Meanwhile, the usual suspects convened to echo “Smart Grid” to one another. Vinod Khosla was cast as the “skeptic”, colorfully slashing the Smart Grid hype in this QandA at the 2009 VentureBeat green conference. Khosla says

he sees a “lot of fluff, a lot of ambiguity, not a lot of reality… in today’s smart grid discussions.”

Khosla refused to consider Silver Spring Networks as a “smart grid” investment. They just make electric meters — while the company is being promoted under the “smart grid” label.

Khosla has been looking for “smart grid” startups but hasn’t found any. He has dreary criteria like a “viable economic benefit to the consumer”. I was pleased that Khosla highlighted the most glaring weakness of the smart grid hype — it is a closed, proprietary hodgepodge of networks. The opposite of the open standards internet which allows a startup to reach customers with an first-version product for $50k.

There is work underway on the network standards issues, but I don’t expect any real-world progress for years. That is because the benefits to the utilities (and investors) of standards-adoption are very long-range, and only after a lot more capital investment. That is the typical problem with adopting standards into a large complex environment — an environment that cannot be shut down for experimenting or conversion.

Interestingly, Khosla identified storage as the #1 requirement to make the smart grid viable. Certainly affordable storage could reduce the very high cost of intermittent wind, solar — without storage you have to build an equal amount of polluting backup power, typically natural gas. Khosla just noted that storage makes “solar and wind better feeders for the grid”. Certainly storage does that, but at what cost? The only economic storage solution on the horizon is hydropower, which includes pumped water storage.

But Khosla is certainly correct if you can transform solar/wind into base load power by magical but economical storage then the grid will be much happier.

The key takeaway from Khosla’s short talk: Storage is the missing foundation that will make the Smart Grid a reality, and a more compelling opportunity for venture capitalists. He says he would be very interested in backing a storage solution that could make intermittent sources of energy like solar and wind better feeders for the grid — one that would also demonstrably lower costs for both consumers and utilities. As is, he says, the Smart Grid is sitting on a house of cards — it has no chance of encouraging conservation or cutting carbon emissions if it can’t properly store and use alternative energy in an economic way.

(…)

Before this can take place though, Smart Grid companies also need to accept that consumer behavior is incredibly difficult to change, Khosla said. While 5 percent of the population will take the time to check in on their energy use and make an effort to conserve, another 80 percent will ignore it entirely. “When you ask how many people will worry about interest rates on their credit cards, the answer is not many — they don’t know what they are paying,” he said. “The one thing that does change behavior is dramatic changes in pricing — going from $2 to $4 for a gallon of gas — that creates change.”

So tell me again, what does the consumer get from a “smart grid”? Will consumers buy Silver Spring meters if they are not subsidized by other taxpayers? That is not obvious to me. Look at the following marketing blurb:

Network infrastructure includes the Silver Spring Access Points (APs) and Relays that forward data from endpoints across the utility’s backhaul or WAN infrastructure into the back office.

The UtilityIQ application suite incorporates both utility applications such as advanced metering and outage detection as well as administrative programs for managing and upgrading the network.

The CustomerIQ web portal enables utilities to directly communicate usage, pricing, and recommendations to consumers. Silver Spring works with each utility to customize the information portrayed and to import utility-specific information such as rate schedules.

So Mrs. Consumer, why do you want to pay for that meter?