The Question That Won't Go Away

Utilities are forging ahead with smart grid and smart metering programs amidst a tide of mixed signals from policymakers and regulators. Smart grid programs are difficult to define in ways that meet the expectations of all stakeholders, as any utility will tell you. To successfully transform the nation’s power delivery networks and usher in a functioning “energy Internet,” government and industry need to engage in sustained smart grid R&D investment, business model innovation and market design.

Arguably, the dimension of the smart grid that requires the most innovation—yet has received scarce attention from industry executives—is the need to create a new stable of pricing plans, service offerings, and communications infrastructure for customers, and then engage customers to embrace their critical role in the smart grid.

Although a transformed customer experience is difficult to monetize in avoided supply, operating cost and carbon abatement terms, it nonetheless is the most material and “bankable” smart grid outcome, from the perspective of customer support for new infrastructure investment. In addition to this, I would argue that the smart grid movement faces the danger of customer mutiny if utilities fail to quickly deliver new, highly tangible “apps” that translate to customer convenience, control of usage and spending, and emotional satisfaction that stems from a sense of empowerment not previously enjoyed.

The customer experience needs to be a front-burner issue for smart grid rollouts, because failing to meet customer expectations of things changing for the better will put further regulatory support for smart grid investment recapture at risk. Not to mention the missed opportunities for creating shareholder value that true energy internet services can create.

With the attention—and heightened expectations—created by the Economic Stimulus legislation and dialed-up efforts to accelerate system interoperability standards for smart grid programs, now is the time for industry to fully engage policymakers and regulators on the stickiest issues that enable industry to deliver a new customer experience; that is, define the business model for rewarding smart grid investment, and create the markets for actuating the viability of dynamic pricing and other new product offerings that translate into customer wins.