One of the many benefits of living in Silicon Valley is the proximity to innovation – game changing technologies or service models, creative people, and exciting new businesses.  Some people call it the world capital for innovation, which is an exaggeration, but not by much.  I’m an Executive in Residence at a technology incubator in Silicon Valley, and I see that the world does beat a path to this region.  The Valley is a hub of activity that attracts entrepreneurs and venture capital from around the world. 

Last week, I heard pitches from entrepreneurs based in Iceland, Malaysia, Denmark, and the USA.  There were some very interesting Smart Grid applications.  However, there aren’t enough pitches for Smart Grid innovations to convince me that Silicon Valley is fully apprised about the challenges and opportunities inherent to the Smart Grid.  In fact, I felt that the innovative spark had reached a new low as I listened to an entrepreneur make his pitch for a location-based smart phone application that would let you identify the type of underwear you are wearing.  Really???  The world’s climate is changing, causing disruptions in global food supplies and dislocations of populations.  Our ill-advised global dependence on oil is jeopardizing fragile economic recoveries.  And these bright minds can only come up with an idea to make it easy for us to let everyone around us learn about what we’re wearing.   Let’s file that under the “too much information” category. 

It’s also filed under the “bad news” category because it illustrates that significant parts of the entrepreneurial community are not engaged in the Smart Grid and developing the innovations that will solve important issues.  Issues such as improving the siting and energy intensity of clean renewable sources; improving the management of distributed generation  and microgrid assets; creating cyber secure or “hardened” distribution automation solutions;  developing  massively coordinated residential DR programs; and creating the best infotainment applications that educate energy consumers on the smartest ways to use energy, manage buildings, and transport things.

The good news is that Smart Grid investments in the USA rose by 88% over 2009 funding levels to a record $769M spread over 51 deals.  The deals range from network solutions to help utilities and other energy aggregators manage electricity production and consumption to Home Energy Management System (HEMS) plays that help consumers intelligently use energy.  Businesses in other countries are also putting significant investments into Smart Grid technologies – the big electronic firms in China, Japan, and South Korea, just like Cisco – have identified the Smart Grid as a big growth area – possibly bigger than the Internet. 

These trends hold the glimmer of hope that despite the lack of a national energy policy, investors are willing to take the plunge.  Some of that is most likely due to individual states like California creating markets through their energy policies.  The federal government delivered much needed stimulus to the Smart Grid market through the American Reinvestment and Recovery Act (ARRA), but this funding is now committed.  It will take a combination of more education to the entrepreneurial community about Smart Grid issues and opportunities and steady investment to ensure that the USA continues to be an innovation and technology leader in this strategic business sector.