The top 10 trends from the year’s big smart grid show

One of the year’s largest smart grid conferences — DistribuTECH — closes today in San Antonio, Texas. The event is relatively unknown in IT and web circles, but it’s like the CES for utilities, power companies and the vendors that are trying to sell them stuff.

However, what interests me is that there seems to be a growing number of startups and entrepreneurs at the event, and that seems to be a sign that real innovation and new business models are actually starting to happen when it comes to adding digital intelligence to the power grid and managing energy data.

Here’s the top 10 trends that I took away from the event:

1). Managing big data: Managing large streams of energy data is fundamental to the future of the grid, as well as for helping consumers reduce their energy consumption. What methods the software companies use will also determine how well they’ll do in the industry. Startups like Opower and Tendril are essentially big data plays, using cloud computing tools and sophisticated analytics, and both companies released interesting news at the show. Oracle, touting its software and data management, had a huge booth on the floor. I chatted with both the newly acquired Ecologic Analytics (bought by Landis+Gyr) and eMeter (acquired by Siemens) and these companies manage the massive amounts of data that flow off of meters for utilities. Cloud computing is no longer a dirty word for utilities — in fact it’s likely the future of this business.

Cisco's connected grid router, ruggedized, inside

2). The Internet of Things: Beyond connecting meters and grid devices, the smart grid really extends to create the Internet of Things, connecting cars, home batteries, solar panels, light bulbs, thermostats, and consumer electronics like televisions and cell phones. The term the Internet of Things is oft-used in IT circles, but hasn’t really caught on in the smart grid and utility industries. But it will, and it will also provide new lines of business for the power grid vendors.

3). Prepaid electricity: Prepaid meters and electricity might not catch on in the U.S. all that quickly but throughout the world it is becoming a phenomenon — particularly in countries with low rates of credit card holders, and high percentages of populations that don’t have a steady income stream, like farmers. There were a couple startups at the show selling these meters and software systems, like PayGo, but I’m not sure this is a startup play at this

Prepaid energy and meters via PayGo

point. I’d expect the big meter companies to create their own solutions.

4). The year of the smart thermostat: I already did a slide show on this, but it seems like 2012 is the year that utilities, consumers and device makers are starting to really pay attention to smart thermostats. As one show attendee explained to me, it’s the low hanging fruit and the area where utilities can see the most “bang for buck.” Smart thermostats, which can be controlled by utilities, can help utilities shave off consumer power consumption when they need it (called demand response). Other players like Nest (which I didn’t see at the show) are looking to sell a coveted connected thermostat straight to consumers.

5). Energy storage batteries moving into commercial deployments: Battery makers made an appearance at the show, touting batteries that could provide energy storage and frequency regulation for the grid. Some are even selling batteries for homes, to connect with solar panels, and I could see many homes having their own batteries one day. Batteries for energy storage have long been discussed, but the problem has always been that they are one of the most expensive forms of energy storage. However, some power producers and utilities now have commercial battery farm deployments in place, so we’ll see this year how popular batteries for energy storage become.

6). Ditch the hardware, focus on software: After talking with a variety of home energy management startups, it feels like there’s been an acknowledgement that focusing on the hardware piece of home energy management hasn’t worked out all that well. And that software is a much better bet for most companies. EnergyHub did a slight pivot to focus more on software to manage smart thermostats and the company tells me that it’s having its best financial year to date. Tendril also doesn’t focus at all on hardware anymore, and is only focusing on creating an open platform for connecting devices. However Nest is the outlier in this, and is basing its business around its device.

7). The pivot: Constant reinvention is totally common in Silicon Valley and for startups. I feel like there’s a perception that it’s not that acceptable in the utility and power worlds. However, it’s becoming increasingly O.K. to openly discuss changing strategies and working out various business models. As the smart grid industry matures, the pivot is going to become a more common maneuver. Embrace change!

8). Cellular coming on strong: A few years ago the cell phone companies were charging utilities way too much to use their networks for the backbone of the smart grid. But today, phone companies like Verizon have changed their pricing strategy and are actively working with utilities on strategies around a per meter basis. As I wrote earlier this week, there’s no longer a big debate about what type of wireless to use, from cellular, to mesh, to WiFi to WiMAX. The network companies are offering them all to be flexible to the utility.

9). M&A still rolling: The smart grid is still one of the best places across the cleantech sector to sell a startup. Since the IPO market is pretty crappy right now, who could buy who was a topic of conversation at the show.

10). Go big or go home: This one comes courtesy of Tendril’s CEO Adrian Tuck who says that this year he sees a lot of potential consolidation in the energy data management space, and that he sees companies going big or going home. What do you think?

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