Smart Generation

As the grid gains the ability to plug-and-play interconnect with virtually any distributed energy resource, it will enable entirely new lines of business. I've mentioned just a few of the new possibilities below. Although it is still not clear who will provide these services – utilities? vendors? customers banding together as "energy independence districts?" – it is very clear that there is too much money on the table to be ignored.

·         Distributed generation

·         Distributed storage

·         Renewables on a massive scale

·         Microgrids

·         Grid-independent military bases, office parks and campuses

·         Plug-in hybrids as a storage resource

·         Independent power producers who sell to customers thousands
      of miles away

·         And many more

Smart Utilities

As we move to open standards, utilities will gain important new abilities. For one thing, they will be able to plug data from virtually any source into virtually any application. For instance, they will be able to take data from smart meters and use it for outage management, customer billing, load forecasting, asset management and much more.

As we standardize on ways to let devices talk to each other, utilities will also find themselves empowered to combine more easily operations and more effectively manage large service areas. I think you see what comes next – a wave of mergers and acquisitions. North American utilities will finally be able to gain the economies of scale that have revolutionized virtually every other industry.

Can you say Wal-Mart? How about Wal-Watt?

Smart Customers

The biggest revolution of all will be the gradual appearance of Smart Customers. Today's electricity consumers are, for the most part, entirely ignorant of how much electricity they really use, when they are using it, and what it really costs at different times of the day. For the most part, they cannot even imagine a world of choice in electricity services.

Some of us can still remember when the phone industry was in the same situation. Consumers had one choice in phone suppliers (AT&T). One choice in type of phone (rotary). And one choice in phone plans and pricing. At the height of Ma Bell's reign, it seemed inconceivable that anyone could break her monopoly. Or to imagine why anyone would want to bother.

Today, of course, phone consumers can choose from several technologies (landline, VoIP, cellular, satellite, push-to-talk), from dozens of product types (landline phones, roam phones, cell phones, PBXes, etc.), from hundreds of suppliers and from thousands of different pricing plans.

That day is coming to the electric power industry as well. It will be partially underway in places such as Texas within five years. It will be obvious to everyone within a decade. It will be mainstream within two decades.

The winners will be those who start planning today for that brave new world. Those who understand that to prosper in that world, you will need new, smarter business models.

Twenty years from now, those business models will look more like the phone industry than today's quasi-regulated, quasi-monopoly utilities. Many new fortunes will be made along the way. It's starting already. I invite you to study companies such as Comverge, EnerNOC, and GridPoint. Although it is not possible yet to know if those companies will be the ultimate winners, it is easy to see what they are trying to accomplish... namely, Internet-style rapid growth culminating in personal wealth for the founders.

Which brings us to one more thing that will soon be enabled: Smart Millionaires. Yes, brand new companies and brand new millionaires, minted right here in the (heretofore) humdrum, hasn't-changed-for-a-century electric power industry.