The last panel session at the Fujitsu smart grid symposium was from
the VC perspective.
The panel consisted of:
- Eric Wesoff, Senior Analyst, Greentech
- Steve Vassallo, Venture Partner,
- Tammi Smorynski, Director, Intel
- Josh Becker, General Partner, New
From left to right: Wesoff, Vassallo, Smorynski,
What is the killer application for smart grid? This question is
asked at every smart grid conference I go to. Most times, the answer is that after
automated metering infrastructure (if that is counted as an application rather
than an infrastructure), it is demand and response (DR). DR is based on a simple
idea that shaves the peak demand and adjusts the entire demand to stay within
the supply. If you press more, the usual answer is that it’s an application you
haven’t considered yet in your wildest dreams. I am not sure whether the home area
network (HAN) applications are considered killer, but there are many companies
in this space.
This session covered a lot of ground, but one thing that caught my
attention is the promising market for smart grid. A large number of startups
and established companies have entered the HAN space. Wesoff said the number is
tens if not hundreds. This is easy to explain. When you look at the entire
power grid, the transmission side involves a large capital investment and
specific expertise in high voltage transmission. It is not easy to obtain
either one. Even on the distribution side, it is still capital-intensive and
requires expertise in such areas as renewable power generation and
managing/integrating the power generated by renewable energies.
On the other side, automated metering infrastructure (AMI) and field
area network (FAN) are straightforward ICT applications requiring relatively little
capital and power expertise to implement. HAN appears to be very similar to
those two. Moreover, it seems to be easier to work in the HAN sector. We are familiar
with home appliances and can easily test them with monitoring and metering.
This also means the barrier to entry is not very high.
Incidentally, Vassallo’s firm invested in Silver Spring Networks
(AMI/FAN) and EnerNoc (DR), which is public.
Smorynski of Intel Capital was skeptical about the HAN market growing
into a viable market segment within smart grid.
Her points were two:
The average person does not care about
day-to-day or hour-by-hour power consumption as long as he or she is reasonably
happy with his or her electricity bills. The average person sets the energy
efficient setting once and forgets about it.
In a typical home, HVAC (air
conditioner and central heating) consumes the majority of power (some 60%).
Also, people may be sensitive to the use of lights. But after those two, there
is not much a consumer can do.
So the home energy management (HEM) sector does not seem to attract
much attention from the average Joe or Jane. So far, DR has been implemented
for commercial and industrial markets. The HEM market may move when DR includes
the majority of residential power consumption data. Even when that is the case,
will the average person at home stare at his or her energy consumption display
every ten to fifteen minutes? I know myself. If I get that kind of gadget, I
may stare at it quite often for the first two or three days and then forget
It remains to be seen if this analysis is right. One thing is true: no
simple and easy thing can win the market.