Will Utilities Become Software Developers?


Michael Kanellos

April 25, 2016

Utilities are in a pinch these days.

Energy consumption in the U.S. isn’t growing as fast as in the past, thanks in part to ongoing breakthroughs in efficiency and structural changes in the economy. Solar companies and others are directly competing against them in both the commercial and consumer market. Wall Street now casts a wary eye at large, long-term capital projects like nuclear plants.

Carbon regulations, with support on both sides of the political aisle, seem inevitable.

So what can they do?

Sell software.

Last month, Edison International announced it has spun up a new subsidiary, Edison Energy that will help customers manage their energy portfolios. The core of Edison Energy’s intellectual property derives from a series of startups the power giant has purchased over the past few years: Delta Energy Management, for instance, specializes in consulting and analytics for the energy industry.

PJM, meanwhile, recently showed off an application called DIMA (Dispatch Interactive Map Application) that effectively gives technicians in the field an up-to-the-moment view into existing problems so they can be resolved quicker. With a few clicks, field personnel can see which power lines are down, where incoming storms might have their largest impact and what actions can be taken to resolve problems quickly.

PJM uses the application internally for the benefit of its dispatchers now, but it has begun to explore ways to commercialize it. (around the 27:00 minute mark in the video.)

It’s an interesting trend, and one that could ultimately pave the way for smart homes and businesses. Why? Despite their dowdy reputation, utilities remain some of the most technically sophisticated organizations in our economy. Sure, few people would confuse a utility control room with a developer’s lounge at Facebook. Ping pong tables are scarce and the rooms are named things like “control room” instead of Godzilla or Theremin.

But take a look at what they accomplish. Electricity is one of the most pervasive commodities in our world and the overwhelming vast majority of it in real time. Electrons can’t be stored easily and inexpensively like data, food or water. Without utility software, you’d likely be plunged into darkness.

The technology they create, however, is often somewhat landlocked. They make it for themselves and the only people that experience the benefit of it live in the geographic zone in which they serve.

By turning into a software developer, utilities can go national.  Most of this utility software is not something you or I would buy. I doubt there are many iPhone apps lurking in the R&D labs at the Bonneville Power Administration. Instead, what might emerge are behind-the-scenes business applications that turn down your air conditioner to save money or software that makes microgrids more self-reliant. In other words, the kind of technology that will be needed for the Internet of Things but that startups and venture capitalists aren’t nearly as well positioned to create.

In some ways, the trend is already underway overseas. In 2014, German mega utility E.ON came out with a plan to split itself into two in the second half of 2016. One half owns the traditional power plants. The other half got renewables and digital technologies. Gas utilities in Japan began to promote fuel cells for home use a few years ago because it let them compete outside their territories.

The more you look at it, the more it appears that the so-called utility death spiral might just be a temporary transition period.

(Disclosure: I work for the company that sponsored the conference where PJM spoke, but had no involvement in the presentation or its content. Essentially, I was an attendee.)

This article was written by Michael Kanellos from Forbes and was legally licensed through the NewsCred publisher network.

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