Smart grid + demand response = Intelligent energy management

This is a question I have been puzzling over for a couple of months, since I was briefed on a strategy evolution by one of the bigger names in the demand response technology and services arena, Comverge. That is, what's the real difference between smart grid solutions and demand response technologies?

For me, the distinction increasingly is blurring. They are all part and parcel of the same idea, the notion that we need to monitor and manage the various utilities that we all take for granted -- notably electricity and water -- in a much more mindful way. Indeed, one of my predictions for 2011 is that you will hear those terms used less and this term used more as the umbrella: intelligent energy management.

I'll get to Comverge's pitch in a minute but a new market sizing report from Pike Research underscores this notion. The report, called "Smart Grid Data Analytics," projects that the software and services that analyze all that data we will be collecting from smart meters and other intelligent endpoints will generate approximately $4.2 billion in annual revenue by 2015.

Here's how one of the report's authors, analyst Marianne Hedin, describes the market in a Pike Research press release:

"Smart grid utilities are evolving into brokers of information. The 'data tsunami' that will wash over utilities in the coming years is a formidable IT challenge, but it is also a huge opportunity to move beyond simple meter-to-cash functions into more robust business intelligence capabilities, true situational awareness with real-time optimization of their operations and even predictive analytics."

That theme of two-way intelligence pervades Comverge's shift in messaging, as well. Comverge's approach for Intelligent Energy Management builds on its traditional demand response applications to incorporate insight and that real-time, bi-directional exchange of data. It is a subtle shift, perhaps, but one that signals that we're shifting from the pilot phase of smart grid solutions into something more concrete.

Here's the difference, in a nutshell, as explained in Comverge's white paper about the topic:

"Newer informed demand response technologies help shape energy demand, predict available load, and then precisely shape that load. In particular, informed demand response enables distributed intelligence end-points, verifiable results, accountability and measurement, and comprehensive data analysis. Despite these advances, significant barriers to energy management remain. Customers still lack the avenue for two-way communication with energy providers that would enable them to use the data they receive to proactively manage their energy use."

I don't know about you, but the term "smart grid" has always been a little inaccessible to me, and not just because I wasn't used to using the word "grid" as part of my everyday vocabulary. I was sort of psyched a couple of months back when I heard GE Chairman and CEO Jeff Immelt refer to this concept as "digital energy," because it is obvious that more than the electricity distribution system needs to change.

The breathless excitement over smart grid solutions sort of implies that the most important thing is for infrastructure to get better. Sure, that's a critically important thing, but the most important part is the human factor, and our ability to make smarter decisions -- whether those decisions are automated on our behalf, according to parameters we have put in place, or whether we choose to act in real time on specific information. I'm not going to be able to change the terminology on my own, but keep a close watch on the terms that get used to describe these technologies throughout 2011.