Two crucial questions for the smart grid

Who will own the data the industrial Internet generates, and how will users fare under an onslaught of optimization problems?

In a lively panel discussion at last week’s IEEE Industrial Electronics Society meeting in Montreal, two questions related to the smart grid (the prospective electrical distribution system that will set prices dynamically and let consumers sell electricity to other users easily) arose that I think we’ll hear much more about in coming years:

Who will own the data? One important feature of the smart grid will be integration with layers of software at the level of individual machines attached to it — everything from industrial furnaces to home clothes dryers. The idea is that these devices will constantly send data about their usage into a variety of optimization schemes that seek to balance energy usage by adjusting prices and advising power sources on expected demand.

If this data is valuable — and the smart grid’s proponents suggest it is — then someone will find value in capturing it. Who will claim it? Manufacturers might require licenses to decode data from their devices, and data clearinghouses might require that manufacturers license their standards in order to participate. Squabbles over data ownership could delay adoption and hurt systemwide gains.

Industrial users have presumably addressed this question in various ways. Readers who can put their hands on an industrial data usage agreement or two are welcome to send them my way.

Will users be overloaded by decision making? The smart grid promises to balance demand and let flexible users save money through dynamic pricing. Large electricity users already enjoy discounts for electricity at off-peak hours and adjust their work schedules accordingly, but this kind of pricing will soon be available to consumers, and at highly dynamic levels — imagine a display in your laundry room that tells you what it will cost to wash your clothes now and predicts the cost of washing them overnight instead. If the laundry isn’t urgent, the overnight cycle might be an easy choice, but consumers could be besieged by trade offs to which they’re nearly indifferent.

“The smart grid means lots of new decisions,” remarked Mo El-Hawary, an engineering professor at Dalhousie University. “Do I turn on that toaster now, or do I wait 10 minutes and save a few cents?”

Another engineering professor, Siddarth Suryanarayanan of Colorado State University, suggested that this will become an application for machine learning: train a system by letting it observe your preferences for a while and then let it make small decisions for you. “Look at Netflix,” he said, “watch 10 movies, and the next one it suggests is bang-on.” Appliance usage is often highly routinized: if, during a training period of 10 days, your revealed preference suggests you’ll wait an extra 10 minutes for coffee for savings of 15 cents, that’s likely to hold over longer periods.

Since dynamic electricity prices are themselves set by machine-learning and prediction algorithms, this would be a fascinating example of decision-making software that’s needed to act on the results of other decision-making software: a gigantic pyramid of artificial intelligence.

Join this discussion on Quora. My colleague Jim Stogdill asks: “What are some interesting real world examples of Internet of Things in industrial settings?”


This is a post in our industrial Internet series, an ongoing exploration of big machines and big data. The series is produced as part of a collaboration between O’Reilly and GE.

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  • Alex Tolley

    The real crucial question is – how will this make life easier, not more difficult for consumers? I’m appalled that the questions raised imply that consumers must treat their appliances as semi-intelligent systems, almost like animals. That we might have to pay to understand how our data is being used – possibly manipulated, against us, rather than transparently offering us easy, low cost service.

    Given that corporations are usually profit maximizers, how can the consumer be sure that the service provider isn’t cheating behind the manufactured complexity – it isn’t as though this is unknown behavior from telecom and financial firms.

  • Nrupal Akolkar

    Any tool / utility of Smart Grid should serve the purpose of ease in the following:
    data storage,
    retrieval,
    navigation, collection and representation..
    it should be user friendly and should be rich in common sense – humanly understandable

  • Dci21 Services

    I think the concept of a smart gird is too complicated to actually work. I don’t want my appliances controlled by someone else, that too much control and power. Second, the appliance software necessary lacks sufficient security to prevent misuse of the appliance by another organization. Its been shown that hackers can take over different appliances and cause them to malfunction with malicious code. (I read where the CIA already did this to the Russians) With so many components connected the smart grid it could be hacked into at various levels, most likely the end consumer would be the target and appliances would not work. In addition centralized production of electricity is very prone to disruption. Technology exists that can prevent the conduction of electricity through electrical lines effectively acting as a switch stop electrical flow. These types of nanotechnologies can be used for great good or misused. Also, I saw on the internet that software has been developed to find your password in windows and delete it, thereby giving someone access to the computer. Now I don’t know if this software is real, but the continued evolution of threats and counter measures leaves the consumer in a constant state of change and stress. Overall the economic disruption could be significant.

    What makes more sense is to have distributed generation by various means and have the excess power fed back into the grid. I would suggest that having as much stand alone power production that can isolated from outside communication, and therefore interference, would provide better security and end user reliability. If I had the resources I would think about having a natural gas fuel cell installed in my home and provide my own power. With natural gas so cheap the payback period should be reasonable let alone the reliability. If hurricane Sandy teaches us any lessons at all it should be one of self sufficiency when is comes to power supply.

    When it comes to interconnectivity of my house and appliances, I think of a line from the movie “War Games”, the only way to win is not to play the game.

  • pcoz

    Agree with Dci21 essentially. Most people in first world countries are not that hard up that they are going to want to be driven crazy by having to think about the difference in cost between using an appliance now and in 10 minutes time.

    You don’t have the price differential here to motivate people to want to change their behaviour. If it’s hot, I want to switch my air conditioner on and not swelter in the heat to save a dollar.

    All the ‘smart grid’ means as applied above is a reduction in living standard.