jueves, abril 19, 2012

Should Smart Grid Startups Depend Mostly on Utilities Executives Challenges?

Summary: To meet challenges faced by utility executives, smart grid startups are trapped by utilities as their only customer via a power industry architecture that was designed in the “Integrated Energy and Communication Systems Architecture (IECSA) project, circa 2003.” To avoid traps like those, an IEEE Systemic Code of Ethics has been suggested. The article is supported by 10 references.

I am very impressed with Eamonn McCormick’s Linkedin profile as an Enterprise Architecture consultant. On the contrary, no one should expect that I am an Enterprise Architect. I am certainly not. I recently discovered that I should call myself “Socio-Technical Electric Power Industry System Designer,” which in part differentiates me, for example, from Enterprise Architects.

In fact, the design work that has emerged through me [1], since 1996, is about the electric power industry as a whole and is calling for restructuring that will give rise to, for example, what I define as Second Generation Retailers – 2GRs [2] that will need the service of Enterprise Architects to develop competitive business model innovations [3].

I am also very impressed with the article [4], also written by Chi Lee, that Eamonn McCormick used to start the discussion “A Mission Oriented Smart Grid Architecture – Is it possible?” I just had the insight, that without any loss of generality, I can borrow the introduction of their article, as the status quo solution, while respecting their mission oriented smart grid architecture concept.

The argument given in several Greentechgrid ( www.greentechmedia.com ) articles to support that insight, is synthesized by then, as they write that the "… Smart grid spending has hit the doldrums. With stimulus money accounted for, utilities are working hard to manage their existing deployments and aren’t eager to start new projects. In the meantime, VCs are coming to terms with the fact that utilities are slow to adapt new technologies and subject to all kinds of reversals from customers and regulators. Home energy management, the smart grid segment that garnered a majority of VC cash back in 2008 or so, has yet to take off at all.”

In addition, Lee and McCormick ask and immediately respond themselves: “What does all this mean? One thing that this means is that the "bubble" days of Smart Grid is coming to an end and the "burden" of Smart Grid is going to fall back on the IT departments. Silicon Valley has failed to create a "silver bullet" and IT departments needs to seriously evaluate how they are going to address the long term Smart Grid challenge.”

As a result, they jumped to the question “Can IT departments create a mission oriented smart grid architecture?” Being professionals, they also wrote “[o]f course there are other major hurdles for Smart Grid but these challenges in particular cannot be easily addressed by our traditional IT architectures.”

However, saying YES to that question is nothing less that a thinking trap in which, for example, many IEEE members might fall, while thinking that they are fully satisfying the IEEE Code of Ethics. To avoid such a major hurdle trap, I have suggested an IEEE Systemic Code of Ethics [5]. Since the status quo has not come forward, I am very happy to be able to debunk their current smart grid development, without needing their direct response [6].

In hindsight, it now seems very simple to show where the trap is. Hitting the hyperlink “utilities are slow to adapt new technologies,” in their article’s webpage [4], I found the article "Guest Post: Smart Grid, Dumb Investor? Investing in the smart grid is difficult and riddled with potholes. Why? [7],” by Richard MacKellar, Managing Director at Chrysalix Energy Venture Capital.” MacKellar gave many important reasons why, but only one of them is sufficient enough to explain why Venture Capitalists are not investing: "...we prefer smart grid plays where electric utilities are not the only customer. A customer? Yes, but the only customer? No."

Utilities as the only customer to startups is where the thinking trap lies: the power industry architecture was designed as “Integrated Energy and Communication Systems Architecture (IECSA) project, circa 2003,” to meet the challenges faced by utility executives [8,9,10]. No wonder VCs find that it “… is difficult and riddled with potholes...” We need 2GRs startups that will develop business models without the interference of utilities, where a mission oriented 2GR architecture might be able to participate in an architecture competition.


[2] Second Generation Retailers, July 17, 2007, GMH Blog
[3] The Sixth Disruptive Technology, September 30, 2007, EWPC Blog.
[4] Market Solution to Our Energy Needs, Chi Lee and Eamonn McCormick, April 15, 2012, Renewablesplus Blog.

[10] Why Customers Will Be "Mad as Hell" With the Current Smart Grid, April 17, 2012, EWPC Blog.