Smart Buildings

The Smart Grid is Dead, Long Live Smart Grid

The literal meaning of the expression “The King is Dead – Long Live the King is that the king has died, and it is hoped that the new king will live a long time. But the reasoning for the statement goes deeper. A speedy succession, to the throne was needed to avoid a power vacuum and prevent chaos and social unrest so the moment one king died; the next-in-line was declared king instantly. Reflecting on what has happened in the Smart Grid business over the last two years this expression does strike a chord, the business is of course not dead, but it clearly has not yet fully delivered against expectations and is stagnating. It is vital that a practical solution is found. There is a major dilemma out there because the “King” substitute for Utilities now needs to operate within a distributed framework losing some authority, whilst at the same time being expected to […]

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The literal meaning of the expression “The King is Dead – Long Live the King is that the king has died, and it is hoped that the new king will live a long time. But the reasoning for the statement goes deeper. A speedy succession, to the throne was needed to avoid a power vacuum and prevent chaos and social unrest so the moment one king died; the next-in-line was declared king instantly. Reflecting on what has happened in the Smart Grid business over the last two years this expression does strike a chord, the business is of course not dead, but it clearly has not yet fully delivered against expectations and is stagnating. It is vital that a practical solution is found. There is a major dilemma out there because the “King” substitute for Utilities now needs to operate within a distributed framework losing some authority, whilst at the same time being expected to invest heavily but does not have the means to do so; unless they hike up charges which will not be allowed. If you wanted to conjure up a scenario that makes life difficult for the “King” this would take some beating. So the Utilities need some allies and whether they can see it or not the only people that can deliver for them at the moment are the owners of Smart Buildings. Now enter the Smart Building Controls companies to help fuse the 2 sides together. They see a big market for their systems business and an even bigger one for their EMSCO business also linked to virtual power through interfacing Smart Buildings with Smart Grid. The Smart Building owners pick up the bill for interfacing their BEMS (Building Energy Management Systems) with demand control, reduce consumption and produce a revenue stream by providing renewable and or relatively clean energy back to the utility companies. The utility companies can reduce their spend on replacing their coal fired plants and will then have money to invest in Smart Grid. Well possibly, but it does require the Utility companies to operate a new business model and they may fight against this because they naturally would prefer to keep the one thing that has kept them in power for the last century. Is there another alternative? Well yes they could form alliances with the IT / Communications companies and let them share the Big Data territory. Better we think to settle for working with your customer, maintain control but wholeheartedly accept the business model built up on distributed power. Given these facts the best solution to keep them in power is to partner with their largest customer the owners of Smart Buildings. They can deliver distributed clean power and control energy demand. At the same time they can also improve the efficiency and control of energy consuming devices such as lighting, heating and ventilation and conserve energy, further reduce base load demand and transmission losses. That relieves them of a lot of responsibilities and they retain control longer. If the Utility companies take advantage of the value added services that will be available to them through operating what will become the Internet of Energy (IOE), they will prosper, trading up from a highly capital intensive low margin business to a high growth high tech business. Well that’s how this scenario depicts it but that depends on how well they reinvent themselves. It only requires both parties to work together to realize the benefits to them and all the stakeholder consumers through reducing carbon emissions. As our report http://memoori.com/smart-buildings-2012 clearly demonstrates, not only can interfacing a rudimentary Smart Grid with Smart Buildings provide for a relatively small investment, an attractive ROI, but also there are no major obstacles to overcome. There is an overwhelming case for joining them together and the majority of the investment required will come from the private sector.

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