Energy Industry Waiting for its ‘iPhone Moment’

Powered by data and technology, the energy industry is poised to enter a new era, similar to the changes the telecom industry went through with the advent of smartphones, according to experts — if numerous challenges can be overcome.

It’s hard to remember, perhaps, but the iPhone’s 2007 debut was something of a watershed moment for the telecommunications industry — a moment when everything seemed to change. That was when consumers took a different approach to how they use, and what they expect from, their mobile phones, and when the telecom companies developed new ways of serving and interacting with their customers.

The electric and gas industries are still waiting for that “iPhone moment,” speakers on a panel discussion at New York Energy Week in late June agreed. That moment is getting close, experts say, as data and technology have already started to reshape the industry.

But challenges persist, including getting the industry, and its regulators, on board, not to mention getting customers to think about their energy providers differently.

Changes are underway already, according to Marisa Uchin, director of regulatory affairs and market development at software-as-a-service company Opower. “Certainly we’re in a different state of play today than we were, say, 10 years ago,” she said.

New technologies like advanced metering and smart thermostats from companies such as Nest are “driving a tremendous amount of data into the cloud,” she noted. “Our ability to work with data, and to gather insight and intelligence and use it in analytics and actually capture for the customer what is relevant for them, to help drive behavior, is extremely  powerful.” In fact, Uchin says, that’s going to be one of the biggest drivers behind a forthcoming transformation of the industry.

But, as Roland Risser noted, all of that data on its own won’t do anything. “Everyone talks about big data,” said Risser, the director of the U.S. Department of Energy’s Building Technologies Office. “But unless you turn it into useable information, it’s just numbers.” The key, he said, is “to make actionable information out of big data,” which he said is what companies like Opower are doing.

The first step is simply getting the data. “The question of access to data is a huge one,” said Seth Frader-Thompson, president of energy management software provider EnergyHub. “What we’ve seen on the service provider side is the beginning of some opening of walls, so service providers are beginning to be willing to share data with utilities.” He said he hopes to see a “reinvigoration” of the Green Button initiative, the industry-led effort aimed at allowing utility customers to have easy and secure access to their energy usage information.

The service provider community, Frader-Thompson said, is “desperate” for transparent data. “There are so many companies that would love to build transformational service around energy.” As just one example, he said, easy access to a residential customer’s energy usage would allow a solar provider to quickly come up with a customized quote showing what a solar installation might cost and what it would save. The customer could then easily make a decision on whether to install solar.

Data, when it’s done right, can help drive demand response programs, Uchin said. At Opower, “We are now in our third year of proving you can do mass-scale demand response across an entire customer base by providing simple personalized information which is really powerful.”

Another challenge is, of course, getting the regulators on board to allow the utilities to try new things. “Right now, companies need permission in many cases, if you want to do something at the aggregate level,” Frader-Thompson said. “You can innovate in a home in terms of a product you want to sell, but if you want to innovate in something at the market level, you need permission from lots of gate keepers. Being able to innovate without that permission is key.”

And government policy will continue to have a big impact on how the industry evolves, Uchin said. Programs that she thinks will help push the industry forward include New York’s Reforming the Energy Vision (REV) program and the EPA’s Clean Power Plan, if it’s adopted. “Things like efficiency, DR, intelligent products, these are going to be the way of the future, and the way the utilities are going to progress,” she added.

Risser said banks and other financial services companies need to get on board with reforming the utility industry, but he thinks the financial industry isn’t there yet. “I don’t think the financial institutions have gotten in the way they need to,” he said, noting that a few companies are embracing energy efficiency and related fields but that many are missing out. “It’s a huge opportunity. As an example, how do you value a building or industrial plant that is far more efficient than the one next door? How does that change the price you sell it or lease it for?” Financial companies that take things like that into account stand to make money, while also helping push the industry forward.

Ultimately, Uchin said, the utility industry may follow the path blazed by the telecom industry a few years ago. Before the widespread adoption of smartphones, “We didn’t really know the value of the network that was being provided to us by the telecom provider,” she said.

The energy industry is in the early stages of a similar transformation, Urchin said. “We’re not there yet, but as it perhaps becomes more distributed, and as people begin to understand their usage and how they can control it, we begin to learn the value of it. And it becomes more relevant.”

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