Microsoft, Consumer Data and Smart Grid

Phil Carson | May 27, 2010


Yesterday, I wrote about Microsoft Corp.'s avowed interest in "owning" the utility and the consumer and delivering behavioral data on the latter to the former.

That was my takeaway from an hour-long conversation with Jon Arnold, managing director for Microsoft's worldwide power and utilities industry practice.

Today, let's give Arnold himself the floor.

Arnold had recalled a 2006 email request from Bill Gates, Microsoft's chairman, for him to explain the company's utility-related work. How would Arnold write that memo today?

"If you look at that email and fast forward to today, there's certainly been a huge change," Arnold said.

One change is what he called "the consumerization of energy management," a handy lead-in to the latest news on Microsoft's Hohm portal, which provides energy management tools for homeowners. (Like any good techie, Arnold emphasized that Hohm is in its fourth revision - i.e., the company considers the initiative a priority.)

"If I had to write that email today to Bill, I'd say we're looking at what's happening at the distribution level, at the consumer level," Arnold said. "And what's happening at that level is going to make putting a man on the moon look like child's play."

"Because all of a sudden that distribution system, that consumer interface, becomes much more dynamic, with millions of endpoints," he said. "Once you factor in distributed generation, electric vehicles, two-way power flows, net metering and consumers getting paid to put power back onto the grid, it becomes extraordinarily complex."

"I'd talk about our work on software to manage that meter data, analytic tools for our partners and our utility customers to turn data into business intelligence for visualization, and glean customer insights from meter data," Arnold continued.

"And I'd say, Bill, the other thing that we're doing is that we've got a solution that makes the consumer an active participant in the energy value chain. Smart meters are the tools of the utility to optimize operations. But consumers need something that will unlock the value of smart meters. That's where we're heading with Microsoft Hohm."

"The first phase of Hohm is the consumer energy management portal. How much am I using? Where's it going? What do I do about it? And how do I compare to others? We've found that's a pretty big motivator," Arnold continued.

"Next we are working on the interfaces on smart thermostats, appliances, smart plugs, device connectivity in the home area network. That's on the roadmap for the next Hohm release."

Switching gears to more fundamental questions for the utility, Arnold said Microsoft has offered what it calls its "smart energy reference architecture."

"Utilities still struggle with integrating new technology with legacy, siloed systems," he explained. "We decided we needed to offer our customers a roadmap for the integration of these new technologies."

"We call it the 'smart energy reference architecture' because it's about more than just the grid," Arnold said. "We're building an energy ecosystem that breathes, that grows and contracts. You've got to have something that's very adaptable to new technology and a new regulatory environment. The idea behind the 'smart energy reference architecture' is that if someone has a better technology, you can plug them in."

Electric utilities typically have built "big iron" for decades of longevity, I interjected. As the industry moves to digital technology, is there a sense that it will have to become accustomed to shorter cycles of obsolescence? What would a new regulatory framework look like that allows for missteps or iterations of technology?

"There's been lots of conversation around 'accelerated depreciation' in some Congressional bills," Arnold said. "As you move towards the digital utility, the gear has to be treated a lot more like computer equipment than traditional utility assets."

"A lot of IOUs in the U.S. still run on the old, consumption-based model," he continued. "At scale, we have to solve the de-coupling issue. That means utilities get reimbursed for conservation the way they used to get reimbursed for consumption."

Hohm's methodology of placing a homeowner's energy use in a local context has been shown in studies to lead to perhaps 10 percent to 15 percent drops in consumption, though persistence of that behavior isn't well-established, I pointed out. Does that level of savings incentivize consumers to invest in smart appliances and home area networks?

Arnold responded that with prices likely to rise due to carbon price signals and emissions mitigation, not to mention constrained supply and rising demand, especially if the transportation fleet is electrified, behavior changes need to begin now.

"We're on a journey together - there are 6.8 billion people on this planet. We're heading to 9 billion in the near future. Resources are finite. We gotta get smarter at how we manage our energy and our costs. I can't tell you how much the price of power will go up. But we have to set the foundation today to be able to manage tomorrow. That 10 percent to 15 percent savings is probably going to grow."

Perhaps Arnold's imaginary memo to Gates this week should include a postscript: "Dear Bill, did you see the news? Apple Inc. just surpassed Microsoft in terms of market valuation. I'd suggest we step up our smart grid game."

Phil Carson
Intelligent Utility Daily


















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Connecting the Dots

Great post.  Microsoft is connecting the dots for product, data, and customer.  Amongst all of the complexity of the process, the consumer is the focal point.  I hope utilities can begin to focus on the customer so they can minimize the risk of entry.  Not all companies will be as nice when it comes to extracting value from the industry and utilities.  Thanks Phil, your article made my day.