There’s no question that most of the glory in the era of connected devices comes from the devices themselves. The versatile smartphones in our pockets, of course, but also Nest thermostats and home appliances that can autonomously order new supplies. These are the “things” making up the Internet of things, and they are, admittedly, pretty cool.
But none of this—the sensors, the software, the smarts—could happen without our venerable electric grid, which powers most of our electronic devices. At Fortune’s Brainstorm E conference in Austin, Texas on Tuesday, executives sought to emphasize just how important the otherwise overlooked grid is to our Internet-connected future.
“The distribution grid is an enormous trillion-dollar asset. You could argue that it’s the largest machine on earth and a fascinating facilitator of all these connected devices,” Dan Yates, founder and chief executive of Opower, told conference attendees. Opower, based in Arlington, Virginia, provides cloud-based services to help utilities save energy from their own operations.
Nick Akins, chief executive officer of American Electric Power (AEP), concurred. While the energy source mix will change and more large consumers and affluent consumers will develop their own energy sources, the grid itself will retain its starring role, he noted.
“Even rooftop solar customers don’t disconnect. You can’t start pumps and motors with solar,” Akins said.
The comments came during the “Wired Energy Consumer” panel at Brainstorm E.
But there wasn’t universal agreement. Suzanne Shelton, chief executive of the Shelton Group, said she expects pools of privately-generated power to grow.
“I think it’s possible that the grid will be viewed as a backup by affluent customers and big companies. In a world in which I generate a lot of my own power, there will be a trend toward privatization.” The Shelton Group is a marketing firm focused on energy sustainability and efficiency issues.
To be fair, even the die-hard grid fans agreed that the machine is evolving. What started out as a one-way highway sending electricity to customers will increasingly act as a two-way conduit that returns customer usage data and other information back to energy providers. That, clearly, raises a new set of issues. Though the physical security of the grid and power generation sources has long been a priority for the energy industry, data security is a relatively new concept.
Utilities have to ensure not just reliability but defensibility, Akins noted. “We work closely with government agencies on making sure data security is there… Four years ago we had three to four people working on cybersecurity. Today we have a whole floor of people.”
But the efficiencies of using smart technologies throughout the energy consumption pipeline are clear. Opower has saved 8 terawatt-hours of energy usage, or about $1 billion dollars for consumers, according to Yates. To which Ben Bixby, director of energy products for Nest Labs (GOOG), responded: “Sexy devices may yet have a role, too. Nest saved 4 terawatt-hours of power.”
For more on the Internet of Things, please check out the video below.
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Update: This story was updated to correct Opower’s headquarters. It is based in Arlington, Virginia, not Arlington, Texas.