Huge Value Destruction as Disruptive Technologies Impact the Smart Power Service

Jose Antonio Vanderhorst-Silverio | Jan 31, 2010

        

Realizing Smart Grid Value Without Deploying Smart Meters is a highly relevant piece of news on the Smart Grid Observer of January 25^th, 2010. That news fully supports the argument of the EWPC article Forget Demand Side Management (DSM); Think Demand Side Innovation (DSI). That is clear evidence of a DSI disruptive technology that is bound to generate huge value destruction, unless state governments work proactively with key stakeholders to minimize the ongoing damage.

 

I have argued in numerous occasions that what I see as the homogeneous Smart Grid is bound to greatly hurt American ratepayers and taxpayers through the inaction of state governments. Four representative posts of arguments can be found in the following articles:

 

1. Why Today's Utilities May Soon Be Obsolete (and What May Replace Them) [a comment under that article by Dr. Richard Tavors posted in Smart Grid News].

 

2. Huge States’ Costs as Utilities are Unable to Cross the Home Energy Management Chasm

 

3. Strong Evidence of Why Utilities as We Know Them Will Fail

 

4. The Deadly Sin of State Regulators on the Smart Grid

 

This is something else that I suggest to start handling the situation. Under a very interesting discussion in a LinkedIn group about realizing value without smart meters, I wrote the following:

 

Although the concept of a Smart Grid (SG), in particular a homogeneous grid that requires that every customer have a smart meter, is not very clear yet, this discussion has evolved nicely. Instead of writing about the SG as the whole system, I suggest a better term for the emergent system might be a Smart Power Service (SPS). The SPS is different from the Traditional Power Service in that demand is not longer an externality. I agree that the process towards the SPS started a long time ago, but it has become increasingly important as we shift from the guarantee of cheap energy to that of cheap information. 

So one of the key architecting characteristics of the SPS is demand integration to the power system. To do that, I have proposed a paradigm shift to the emerging Electricity Without Price Control Architecting Framework (EWPC-AF), which is introduced in the EWPC Blog post “States that Implement a Heterogeneous Grid are Poised to be the Winners,” that can be found in the hyperlinkhttp://bit.ly/6R5tDP

Under the EWPC-AF there are two structuring levels. The energy policy level separates the SPS in two subsystems: a regulated delivery subsystem which I understand should evolve as the SG, and a business system, in which emerges the architecting competition level.

In that second level, (Second Generation) Retailers compete to develop ongoing business models, following the well know Silicon Valley Model, which may change this discussion from one to regulate the need to deploy smart meters to another about letting the market realize SPS value, while empowering the customer to freely decide.

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