Following a spate of hefty financings this year, culminating last week with Trilliant’s $40 million funding, it looks a bit like smart grid startups — companies that give the meters on homes and businesses the ability to communicate with utilities and other devices — are poised to take off. But for many of these firms, growth may be less of a rocket ride than a long, slow trudge uphill.
The smart grid, also called advanced metering infrastructure (AMI), is usually seen favorably by the utilities that do the actual work of installing new meters. But AMI startups, which sell to the utilities, might be better off marketing their ideas to the people who actually buy the electricity, as evidenced by a new recommendation from San Francisco’s Department of the Environment that the California Public Utilities Commission deny Pacific Gas & Electric’s request for $572 million to install advanced meters.
PG&E was already approved for $1.7 billion in funds, so the recommendation doesn’t exactly spell doom. But where PG&E wants to rush ahead and expand a program that it has been planning for several years, adding in the most current technology, San Francisco — arguably the most aggressive city in the nation, in terms of rebuilding the energy infrastructure — is pulling back on the reins.
The reason for the hesitation is that there is no proof yet that PG&E’s planned network will function as planned. The utility clearly stands to benefit, because any unexpected costs will be passed on to its customers. That state of affairs is true across the whole industry, says Henry Jones, CTO of the AMI startup SmartSynch. According to Jones, until large AMI networks are deployed, a risk of disappointment with their performance will remain.
If PG&E does get to build its network (a final decision on the funding comes in December), any failures in the technology, which is made by Silver Spring Networks, will impact the whole industry, says Jones. “With any new technology, there’s a hype cycle. It’s not clear that AMI has been through the part of the cycle where expectations are not met,” he told me.
It’s worth pointing out that SmartSynch has an interest in casting doubt on whether the sprawling mesh networks made by companies like Silver Spring will turn out to be a good investment; SmartSynch’s own technology instead beams information directly to the same carriers that power your cell phone, which cuts out the step for utilities of maintaining their own networks. And Jones also noted that his worst-case expectation of the AMI industry’s growth is still a fairly healthy 10 percent a year, plenty to keep SmartSynch humming along.
A PG&E spokesman, Paul Moreno, told me that any worries about either the performance of the network or getting funding are unfounded. “All [of the department's] concerns have already been vetted and expressed,” he told me.
According to Moreno, the program stands on its own merits: Of PG&E’s total 22,000 megawatts of capacity, the original version of the metering program was expected to help reduce demand by 400MW, about half a coal plant. The new version might reduce demand even more. And he dismissed concerns that the network wouldn’t work well, noting that test units of Silver Spring’s technology functioned well even in the rugged terrain around SF’s Mt. Davidson.
However, the possibility remains that part of the program will be nixed. That could be bad news for AMI startups, because utilities that are smaller or more conservative than PG&E are watching it and other proressive utilities, like Ontario’s Hydro One, to see what happens. “They’re having trouble making a clear case for the investment,” says SmartSynch’s Jones. Other municipalities, also, may follow SF’s lead in recommending against AMI deployments, at least until there’s hard data on how well they work.
No user resposed " Smart grid adoption could turn out to be slower than expected "