Via The Energy Collective, a look at how today’s utility grid is our next personal computer, and Smart Grid may be the next Internet:
“Getting horizontal implies that today, something is vertical. So, what exactly does it mean to be vertical? Simply put, a “vertical” is the mechanism by which we focus segments of our business and related sales efforts. It is comprised of people who think alike, address common challenges, speak in common language, and most importantly, buy common things. It is central to most business strategies, and in most cases, it is not something that’s broadly understood by the average person. Under the right circumstances, vertical industries, products, and services can flip on their side and become “horizontal.”
This piece explores the similarities between data processing and the electricity industry, which is now undergoing the transition from a vertical to horizontal market, and the need for smart IT to complete the transition.
A Once Vertical Space — Remember “Data Processing”?
In the 1960s and 1970s, people who worked with computers were commonly known as data processors. Big iron boxes — sometimes the size of entire rooms — made by IBM, ICL, and Digital processed large amounts of information. To most people, data processing was seen as a form of “black magic” that cost a lot of money and where information went to be processed. Back then, data processing served primarily specific markets, like banks, insurance companies, and airlines — it was not mass-market.
Along Came Affordable Computers and … the Internet: Around the 1980s, the price of computing came down, and we saw the creation of the personal computer, which helped small businesses and the average person improve the efficiency of their operations and daily lives.
Later, local area networks, TCP/IP, and and huge investments in broadband infrastructure created what Thomas Friedman has called a “flat world” — a world where information is accessible regardless of who we are or where we live.
This combination of inexpensive processing and access to information changed the world. Innovators created web applications that enabled e-commerce, e-banking, social networking and more — now serving millions, for business and for pleasure.
This “democratization” of data processing and information access enabled applications that are truly horizontal — from Internet Explorer to social networks, which are utilized by people everywhere, at work and at play. Today, data processing — often called IT — is understood and accessed by many. It is horizontal.
What is a Horizontal Market? In horizontal markets, we focus on breadth of applications and the creation of tools and products that can be useful in multiple applications. Dominating a horizontal market can be difficult since the target audience for marketing purposes is typically huge and, well, un-targeted. Microsoft Windows is a great example of a product (or computing application) that dominates a horizontal space — used by everyone, from grade-school students to Fortune 500 executives, in fields ranging from medicine to aeronautics.
Is Electricity a Vertical or a Horizontal?
Modern society and today’s economy would not exist without electricity. It is pervasive in our daily lives, but most of us don’t spend much time thinking about it — unless our bills go up, our power goes out, or we work in an industry or market where energy costs put a significant strain on our company’s bottom line (like a commercial or industrial facility, for example).
To most of the world, energy is a vertical space that requires little thought beyond the piece of paper that arrives once a month in the mail with an “amount due” box printed on it. The fact that energy is generated, transmitted and distributed escapes most people. As consumers of power, we flip the switch, and things turn on. Utilities deal with the rest.
Today, electricity is a vertical.
Enter the Energy Information Age (i.e. Smart Grid) — Stage Left: Smart Grid is essentially the application of information technology to the generation, distribution, and consumption of electric energy. Among other things, Smart Grid brings energy information to the people; in fact, many who watched the Internet bloom in the nineties have reported feelings of déjà vu as Smart Grid enters the picture today.
Like data processing in the 1980s, most people know nothing about Smart Grid right now. However, as smart meters start to provide the average Jane with more information about her electricity consumption, that picture will change. In fact, we already have most of the puzzle pieces in place to enable everyone to be an active energy manager:
- The communications technology (wired and wireless) already exist.
- The control capabilities (IT and automation) exist.
- And soon, Smart Grid will provide the missing component — information (from smart meters).
The sum of these parts will breed the innovation of energy applications that break out of the vertical silo and meet mass-market needs.
The Age of Energy Democracy
Just as the Internet has enabled once-passive consumers of media to become their own authors of content, Smart Grid technologies and applications will open doors for people to take more control over their energy usage — and even generate their own power.
With more energy information available, Smart Grid applications will make it increasingly easy and beneficial for everyone to participate in some form of energy management. With Smart Grid capabilities at home, it will be possible for electronic devices to communicate with the grid and with one another to consume, generate, buy and sell power when it’s most cost-effective to do so — activities once reserved for power companies, alone.
Because electricity is consumed by all of the electronics in our lives — soon to include electric vehicles (EVs) — Smart Grid applications and innovation will be required in a number of industries, from consumer electronics to automobiles.
In a world where everyone can participate in the generation, consumption, buying and selling of power, energy management is no longer a vertical. In fact, many applications will be quite horizontal.
The Need for Smart IT:
With the potential for the energy vertical to flip on its side, there is a huge opportunity for innovation, particularly in IT and telecommunications. For Smart Grid and smart energy to “work,” all electronic devices must connect, and they must connect and communicate simply and intuitively.
To get there, we must stop thinking of energy as a vertical and begin innovating like the grid is our next personal computer, and Smart Grid is the next Internet.
If we think about the Internet applications that have transformed our lives since 1991, we can be sure that unimaginable innovations lie ahead in the democratization of energy, built upon the same entrepreneurial spirit that has changed our lives in the information age and reshaped the world we live in today.”
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