Three Important Takeaways for Success in the Smart Grid Ecosystem

Published: Mon 05 Jan 2015
A blog entry by Christine Hertzog

Contributed by:

Christine Hertzog
Managing Director
Smart Grid Library

Christine Hertzog's Blog

The market opportunities are quite promising. The USA’s electricity ecosystem is transforming as new Smart Grid technologies, regulatory policies, and capitalization mechanisms disrupt the status quo. It should be a no-brainer for companies to enter this business sector, but there’s a troubling statistic based on actual history across many sectors.   For every success, there are about four failures. My consulting firm has conducted market assessments and implemented market entry strategies for domestic and international companies interested in breaking into the US electricity ecosystem. Here are three observations to help vendors ensure successful entry into this dynamic sector:

  • There is no “one size fits all” market entry strategy. The USA is a very large market. Energy opportunities and challenges are influenced by geography and meteorology. That in turn influences state energy policies and utility objectives. Regulatory policies are particularly balkanized, with state-based public service or utility commissions providing oversight of some utilities, but not all of them. Instead of a nationwide strategy, you may be better served with an entry strategy differentiated and prioritized by state and type of utility.

 

  • Demonstrate your interest with local investments. The USA has always been open to embracing new technologies from other countries, but a local presence in the states where you want to initially conduct business can be a real advantage, particularly after the Great Recession. Even in the state that contains Silicon Valley – which is geographically agnostic when it comes to innovation adoption - the California Energy Commission’s Electricity Program Investment Charge (EPIC) program evaluation process awards points to companies that have made investments in the state. This program provides funding to bridge the technology adoption chasms between innovators and early adopters, and it can be a critically important finance option when other sources can’t or won’t take the risks on emerging technologies.

 

  • It’s a marathon, not a sprint. The electric utility sector is very conservative in its embrace of new technologies or services, and its not alone. Water and gas utilities are similarly slow to adopt innovations. Your market entry strategy should be prepared to invest in education and evangelism, particularly if your solution is disruptive, or if your company is new to the sector.  Success in other business sectors is relevant, but not an absolute guarantee of success with utilities. Education develops familiarity with a solution and its provider. Evangelism helps find your initial customers.

 

This advice applies to vendors of Smart Grid and Smart Infrastructure hardware and software products and services. There’s no overnight success in this ecosystem – it takes persistence and patience. The good news is that market entry success is definitely achievable for companies that build realistic objectives, budgets, and time expectations into their strategies.