Friday, April 30, 2010

Smart Grid Standards Must Come First

Technology adoption is all about standards. To succeed with consumers, one firm's gadget often has to work with other gadgets from other firms.

Technology moves so quickly that standards set by committees usually come too late. Instead, the industry organizes itself around de-facto standards championed by single firms with the clout to make them stick. For example, as Intel has done with microprocessors.

Early adopters who are using Smart Grid Investment Grants (SGIG) are currently choosing hardware, software and communications technology well before most of the relevant standards have been settled. This creates enormous *risk* in the minds of the public.  The possibility of selecting the wrong vendors or technologies is keeping a lot of people from participating, thereby delaying mainstream adoption of smart grid products and applications.

Smart grid standards would help remove this barrier to adoption and open the door to mainstream markets.  The only question is, who has the clout to establish a de-facto standard that the rest of the industry can follow and benefit from?

I was disappointed to read a recent article written by General Electric -- clearly one of the candidates capable of establishing a smart grid standard -- that said the key to smart grid adoption is education and awareness.  This claim was based on a report commissioned by GE Energy that surveyed consumers in the U.S. and Australia.  It found that 10% of the people surveyed know "something" about smart grid technology, and those people are overwhelmingly in favor of pursuing and adopting it as soon as possible.

GE's logic goes like this: we found that people who know about the smart grid concept support it…so if everyone knew about it, everyone would support it.

Innovators and early adopters (who make up about 16% of the smart grid market) are willing to accept high risk.  And the GE survey did a nice job of confirming the fact that innovators and early adopters are technology advocates and enthusiasts.  But the bulk of the smart grid market (known as the early and late majority) is risk averse and not willing to participate until standards and other risk-lowering factors have emerged.

I wouldn't recommend spending a lot of money promoting the smart grid concept until a minimal amount of standardization is in place.  You can't advertise or "educate" your way into a mainstream market.  Without the right mix of vendors, channels, products, services and standards, pragmatic and conservative customers simply won't buy in.

With emerging technologies and markets, sometimes raising awareness is the last thing you want to do.


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