“I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need to be employed in dissuading them from it.”
– Adam Smith, The Wealth of Nations (1)
We all know that Google is incredibly future-oriented, and that, for all its problems, Microsoft, knows a lot about technology and markets. Why, then, did each shockthe ‘smart grid’ movement by announcing the phaseout of their home energy metering and control technologies (Microsoft’s Hohm and Google’s EnergyMeter)?
The deep meaning of this is less about technology than it is about politics.
Two PR Moments
You will learn nothing from the announcements from Google and Microsoft. Both companies’ PR departments broke the news as sanctimoniously as possible, using the language of planetary consciousness.
Google claimed that its device was really a charitable endeavor that originated in the company’s philanthropic arm. (Thank heaven for free cash.) For much of its lifetime EnergyMeter was managed by a former astronaut (honest), who said the company was “not trying to build a business model around it.”
Microsoft’s release is a contender for the record in concentrating words like sustainable, ecosystem, quality of life, climate, collaborative, etc., etc. into four fairly short paragraphs. Being Microsoft, however, it closed by touting the sustainability of its new hobby horse, the cloud, almost certain to be as insecure as Windows.
Second-hander business…. Where do-goodism reigns over bottom line discipline. Where perception is the main game. Remember Enron? Remember the wisdom of Adam Smith who saw bad results in his eighteenth-century day?
Penny-wise, Pound Foolish
There are more understandable reasons for the twin exits. Home area network (HAN) enthusiasts initially expected bill savings of 15 percent, but even the earliest and nerdiest adopters usually averaged around 3 percent (Greentech Media, June 24, 2011).
The rhetoric tells you a lot. Two years ago (June 16, 2009) GreenBiz.com heard from Google’s head of energy and climate policy:
Imagine if you walked into a grocery store, chose the food you want (no price tags), took it home and then, at the end of the month got the bill in the mail. That’s essentially what we are doing with electricity and gas right now.
The analogy works only if we assume that the only known food is oatmeal, if we disregard the fact that power rates are regulated and if we forget that most peoples’ bills are so predictable that they can easily budget for them. He noted that Google employees, not surprisingly, enjoyed beta testing their meters, saving as much as $10 a month and finding all sorts of subtle and unexpected patterns in their power use. I find the same sort of patterns when studying martinis. Problem is that a $10 saving probably won’t get you more than one quality martini in a nice bar, if that.
Worse still for the HAN folks, if you really want to save 3 percent there have long been low-tech ways to do it. A common one is to become a parent who harangues the kids when they leave lights on. Technology might not matter because companies like Opower that collaborate with utilities claim to get 3 percent use reductions for their utility clients.
Efficiency Gone Wild
One strategy is to send people power use reports and emails that nag them to conserve. Efficiency 2.0 has a similar tool that may take you back to childhood. It partners with utilities and school systems to put students in business selling CFLs instead of magazine subscriptions, and offers discount shopping coupons to households that exceed conservation quotas (Greentech Media, June 30). Consultants like Pike Research are cutting their projections of HAN penetration. And yet we keep seeing venture investment.
One headline in Greentech Media (June 20) said it all: “IControl raises $50 million more for $0 billion HAN market.” Most of what is getting ventured and invented seems to be more of the same, which people don’t seem to want very badly or whose results they can get in other ways. Our clue to an explanation comes from a “very secret startup” called
Nest Labs, Inc., which is said to get its funding from VC firms like Kleiner Perkins (Greentech Media, June 10). Nest is tied up with a shadowy residential control outfit called “Stealth Efficiency Co,” as scary a name as you can envision in this business.
Nest’s trademark filing is interesting. It claims to be creating
climate control system consisting of a digital thermostat that automatically sets climate conditions based on prior and historical patterns of climate settings selected by users; [a] climate control system consisting of a digital thermostat that can be controlled wirelessly from a remote location; software application for use on computers and hand-held devices to control climate and energy usage in businesses and homes from a remote location… (it will also have capability for) creation and transmission of messages and incentives to energy users to reduce their energy use.
This looks like the same utility-controllable appliance scheme that even California couldn’t force on people three years ago, with the added excitement of streaming propaganda and promotions that users probably can’t opt out of.
Conclusion
Outfits like Opower, Efficiency 2.0 and Nest will all live or die depending on their relations with utilities and regulators. They will make their money by partnering with regulated monopolies who can force their products on consumers, or at least force the consumers to pay for what they would rather do without.
And that’s why the same stuff keeps getting invented. The new age of electricity is going to look a lot like the old one, with the added dividend of electronic nagging.
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(1) Smith, Adam. An Inquiry Into the Nature and Causes of the Wealth of Nations. 1776. 2 vols. Edited by R. H. Campbell and A. S Skinner. Indianapolis: Liberty Fund, 1981, p. 456.
Active response to real time utility costs will only find voluntary consumer acceptance if: the consumer is actually exposed to real time electricity prices; the real time prices are significantly higher than average prices; the consumer is willing to trade the available savings for an predictable level of inconvenience; and, the consumer has a system which can be easily and intuitively programmed with a set of consumer generated decision criteria for automated demand response actions. Systems which permit utility, regulator or government decision making without the consumers’ agreement will not be accepted voluntarily; and, may be resisted aggressively.
Follow the money. Unfortunately, we don’t live in a Star Trek world of municipal nirvana. When the consumer savings, production/consumption chain efficiencies, and enterprises consuming and contributing to the “solutions” justify a positive business model, the demand-driven economy will take over and these grand plans will succeed.
Energy, water, and other services will have savings on leakage/waste, and better knowledge of demand to streamline production. Consumers will reap the benefits through lower pricing in exchange for connecting and enabling the data. Perhaps it is a government or VC injection that will trigger the move, but it is a “critical mass” of participants, information and knowledge along with some new business models in a low margin utility services industry that are needed to make all of this nirvana start to become real.
[…] Smart Grid Wiseup: Google and Microsoft Quietly Exit (energy efficiency vs. the hassle factor) “I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need to be employed in dissuading them from it.” […]