Software vs. Hardware: The Google Factor

Lots of companies are making displays, thermostats and other plastic-and-silicon devices to bring homeowners information about how much power they're using and how to save (see The Smart Home, Part I).

Does it work? Apparently so. Early tests – such as a 6,600 household test conducted in Oklahoma City indicate that consumers will change their behavior when they are more aware of peak rates, average consumption rates and other factors. Industry advocates have long said that information can curb consumption by 5 percent to 15 percent.

"There is price elasticity for electricity. If you send people information, they will act on it," said Eric Dresselhuys, vice president and co-founder of Silver Spring Networks, which participated in the Oklahoma trials.

Until recently, that world has been dominated by startups, but that changed in a big way in February, when Google announced it was launching a new platform called PowerMeter to bring home energy usage to homeowners (see Google Gets Into Home Energy Management).

While Google hasn't made PowerMeter available to the public yet or said which utilities and companies it would work with to get the data it needs, its big step into home energy management has caused waves in the industry.

How the startups seeking to provide in-home energy monitoring software will adapt to Google's entry is yet to be determined. So far, most smart grid companies are praising the search giant for promoting energy monitoring – and noting that they're open to forming partnerships.

Adrian Tuck, CEO of Tendril, said his company is actively investigating ways to partner with Google's PowerMeter efforts. He may have an inside track – he was the only startup CEO invited to speak at a Google-General Electric smart grid briefing in Washington D.C. on Feb. 17.

But Ben Schuman, analyst with Pacific Crest Securities, pointed out that Tendril's plan to license its software to third parties is "a pretty Google-ish business model." (See Tendril Targets Meter Makers.) The fact that Google is promising to make PowerMeter free for homeowners who want to use it, and to make it technical specifications open to others who want to design software around it, could make it an even bigger threat.

Another home energy monitoring software maker that might be looking at Google as a partner or a competitor is Greenbox, the San Bruno, Calif.-based startup founded by the creators and designers behind Flash. Greenbox, which makes software to manage data from smart thermostats, appliances and household devices, tested out its Web-based home energy usage dashboard with customers in a pilot project with Oklahoma Gas & Electric and Silver Spring Networks.

4Home is another home energy software developer with partnerships to back it up. It has a deal with smart meter maker Sensus to develop home area network solutions, and its 4Home Energy system shown off at the Consumer Electronic Show in Las Vegas in January links its software to energy devices and technology from?smart meter company Echelon, SMC Networks and Radio Thermostat.

Others are looking at software that's backed up by hardware – and yet others have shifted from a hardware-centric approach to focusing more purely on software.

Agilewaves, for example, has created a Web-based "Resource Monitoring" system that monitors electric, gas and water usage in real time from a variety of third-party sources and links them through an integration panel located at the building. That is likely to be more expensive than handling data remotely. So far the company has been focusing on apartments, and is working on a pilot project with the U.S. Department of Housing and Urban Development. (It's also a supporter of power-line communications, which may be better suited to apartment housing, though it promises to work with wireless as well.) Agilewaves in some ways is emphasizing brainpower. The company's executives hail from NASA and it often stresses the dynamic capabilities and behavioral science baked into the software.

PowerMand, in a similar fashion, promises a hardware-software combination Web-based system to control home "demand response," systems that can power down or turn off air conditioners, refrigerators and other devices when utilities are facing overload. PowerMand is also part of the Intel Mafia, the ever-growing swath of startups headed up by a former blue shirt. CEO Dan Russell spent years in the motherboard and software groups at Intel.

Gridpoint, on the other hand, has moved from hardware to software. The 2003 startup began by making products that monitor electricity use in buildings and integrate electricity produced by solar power and other renewable sources into grid-usable power. But it shifted to a software focus with its SmartGrid platform, which promises to link "nodes," which talk to smart thermostats, lights and appliances within a house, to a utility's operations center.

Fueled with one of the larger investments in a smart grid startup ($120 million in September, on top of $105 million at the start of the year), Gridpoint is part of Xcel Energy's SmartGridCity initiative in Boulder, Colo., where it showed off an experimental SmartHome in September. Its ambitions stretch beyond the home – last year it teamed up with Duke Energy to test how plug-in electric cars interacted with the grid, and then bought electric car-charging management software developer V2Green for an undisclosed sum.

Positive Energy provides similar services – Web-based information to consumers, demand response services – but in a distinctly different manner. It works with utilities to send consumers information on their power consumption inside their bills.

All these companies will likely be considering different options for getting home energy data to the homeowner – and the utility might not be the only source. After all, if homeowners install equipment that can measure the energy being used by appliances, wall sockets and thermostats, do they need the utility?

In Google's case, "We're working with multiple partners, and looking at a number of ways to get the data, both from the utility directly and at home," Michael Terrell, program manager for Google's non-profit wing Google.org, said.

Even so, smart meters are likely to continue to be a major source of data for home energy monitoring – particularly because, unlike homeowner-installed systems, they will be coming to millions of households on the utilities' dime.

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Tags: agilewaves, google, greenbox, gridpoint, lawrenceberkeley, powermeter, silverspring, smartgrid, smartgridcity, tendril