Smart Grid Privacy: Is The Road to Ruin Paved With Good Consumer Market Intentions?

The following was written by Don McDonnell, CEO of the McDonnell Group.  The original article can be read online at:

ATLANTA – Oct 6, 2009 – Once the realm of energy wonks and technology nerds, Smart Grid entered the mainstream consumer consciousness at breakneck speed in 2009.  As major technology companies including Google, Cisco, and Microsoft thundered onto the Smart Grid trail in 2009, mainstream business and consumer media — interested in selling advertising and aggregating consumer eyeballs — have turned their attention in vast  majority to the consumer facing components of Smart Grid technology including smart meters, home area networks, and home energy automation. All in all this is a very positive development, but some privacy caution lights are flashing. These critical technology platforms are just one aspect of the larger range of technology and systems encompassed by the Smart Grid.

The industry faces an urgent need to refine and simplify a more realistic, clear, and consistent consumer benefit message around Smart Grid. Otherwise, Smart Grid faces the grave risk of becoming an ironic victim of its own media hype and fickle consumer market sentiment rather than evolving to meet its full potential to help transform the entire energy ecosystem for the better.   The narrowness of the majority of smart grid coverage, while not inaccurate in its individual pieces, is contributing as a whole to a perception that is skewed to the point of creating misconceptions that endanger support and understanding of the larger concept.

In spring, Wolf Blitzer lavished prime time “Situation Room” coverage on smart grid security and privacy issues. The Smart Grid is about a lot more than people hacking into smart meters or utility companies remotely controlling in-home appliance schedules. Yet these storylines have dominated Smart Grid consumer media coverage this year.

The security issue may be a welcome focus to smart grid opponents who see market developments as a threat to status quo energy market structures or to security focused integrators angling for a piece of the coming “smart grid systems pie.” But to those of us who support the Smart Grid as critical to the progress of energy, environmental and economic security for the future of the 21st Century, the alarmist tone and narrow focus of coverage is cause for concern.

Among more positive stories about smart meters and home networks, coverage has focused largely on consumers “losing or giving control” over their energy use to utilities — when in fact the Smart Grid accomplishes quite the opposite.  It empowers consumers to better control how, when, and how much they pay for energy. Smart Grid technologies help utilities use tools and systems that deliver environmentally sensitive electric service to consumers more efficiently, cost effectively, and reliably over the long term. And the Smart Grid is a vital link to future integration of distributed energy resources such as demand response, solar power, and electric vehicles.

Since our founding in 2005, we’ve advocated for Smart Grid technology on behalf of our clients and for the good of the utility market itself. We have always tried to present a balanced picture of Smart Grid challenges and opportunities.  Our position paper “Smart Grid Vision Meets Utility Company Reality” is a good example of this.  Yet misconceptions of the Smart Grid abound.  The Smart Grid is most definitely not about the utility company or the government telling people “when and how” to use electricity.  The Smart Grid doesn’t come in a box and you don’t buy it at the local big box store.  It’s not a consumer product in the traditional sense.  Yet, the Smart Grid is, at its core, a tool for consumer choice and empowerment.

On October 5th, 2009, The Wall Street Journal Opinion page ran a letter to the editor entitled “Please Leave My Appliances Alone” and suggesting that Smart Grid is a big government effort to tell everyone how and when to use electric power. Ironic, since the dominant forms of supply side based regulation — including “dumb” rates and “dumb” infrastructure actually are a socialized, big government approach via monopoly allocation.  Many of today’s regulatory structures artificially keep consumers in the dark about the daily and long term costs of energy, allocate often needlessly bloated fixed costs across all consumers by regulatory fiat, and do little in most cases to properly incentivize energy efficiency that would ultimately save American consumers and the U.S. economy billions of dollars per year.  This “government coming in my house to undermine my privacy and control my dishwasher” argument is a classic “red herring” fallacy.

Smart Grid market participants must communicate more clearly that the Smart Grid is a long-term transformational effort requiring investment and focus from all levels of government and industry. Above all, the industry must stop reinforcing shallow media perceptions that the Smart Grid is mostly about home automation technology. These stories contribute to an erroneous perception that Smart Grid is at best a luxury and at worst a media folly.

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