First Mover Disadvantage in Smart Gridland

It's been proven that it works in chess and as everyone knows, like a charm in tic tac toe. In the business world, according to Wikipedia, first mover advantage: "... is the advantage gained by the initial occupant of a market segment. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match."

Well, as you know, in the heavily regulated utility sector, it's not exactly a cut-throat competition. In fact, it's not a competition at all. But that doesn't mean it's not worth watching who's out of the gate first with AMI and Smart Meter deployments, who's received Smart Grid Investment Grant (SGIG) funds and is now obligated to deploy something of significant size, and who's holding back, keeping their powder dry.

The earliest of early movers (you know who you are in that big state just north of the Rio Grande) who began their own experimenting long before the SGIGs were a twinkle in the current administrations' eyes are probably best positioned to make the right Smart Grid technology deployment decisions at the times and places of their choosing. But the new first movers, the 100 or so SGIG grantees, who are making deployments now of thousands or millions of residential Smart Meters, are, IMHO, in a less than optimal position.

They are choosing hardware, software and communications tech well before most of the relevant standards (including security) have settled. Are moving before their customers, in some cases, are fully in tune with what's going on and how it will impact their bills or their service. They've often asked for rate relief to fully fund these deployments and may well be asking for more in an unfortunately short amount of time when it turns out they've placed bets on the wrong vendor and standards horses.

From speaking with analysts, utilities, and some of their providers, my sense is: laggards may have a real advantage here. How's that you say? Here's how:

• As long as they are active and attentive laggards, waiting, watching and learning, they may come to thank their lucky stars that their SGIG proposals were not selected
• They can tinker with residential pilots that number in the tens or hundreds of meters, vs. thousands and millions
• They'll have a longer lead time to educate and prepare their customers for coming changes
• And laggard utilities will be able to select and deploy, with far more confidence than they can in early 2010, technologies based on a more mature, settled standards landscape

As the Latin proverb says, "Fortune favors the bold". Or maybe Bill Shakespeare has the words most appropriate here: "Discretion is the better part of valor." For the moment, hold your course laggards, but watch, learn, and get ready for your turn.

Photo Credit: CarbonNYC / David Goehring @ Flickr