Smart Appliances Are Coming, But Where's the Smart Grid?

The smart grid -- like the smart home -- is another great technology idea left hanging in limbo. Until a smart grid standard is established and implemented, buying or building a smart anything could be an exercise in incompatibility.

Still, according to IMS Research , General Electric Co. (NYSE: GE) plans to begin shipping smart washers and dryers by the end of 2011 or early 2012, to be followed shortly by refrigerators. Although consumers can buy these products right away, their potential will not be realized until markets -- in this case, the US -- can agree on a smart grid communications standard.

The National Institute of Standards and Technology (NIST) is the US body that is overseeing the development of smart grid standards. In addition to communications, the standards body is addressing the capabilities, priorities, architecture, release plans, responsibilities, governance, and conformity issues associated with a massive utilities-related undertaking.

Phase 1 of NIST’s three-phase plan -- recognizing a set of existing standards that can be used in a smart grid roadmap -- has already been completed. A set of 16 initial standards, including some from the Institute of Electrical and Electronics Engineers Inc. (IEEE), the International Engineering Consortium (IEC), and the American National Standards Institute (ANSI), has been identified. Some of these will need further development.

The second phase -- establishing a standards panel to make recommendations -- has also been completed. Phase 3, which will look at product conformity, the smart grid framework, and establish testing and certification, is now underway.

Still, that's a long way from being completed. GE's appliances will each contain a port to which a communication module can later be inserted. This architecture, with external communication radios, allows GE to move forward with appliances that will be quickly, and fairly easily, modified to connect to the grid once the technology and communication standards are agreed upon, the company says.

"The fact that GE will have appliances in homes, ready to be updated (much like the HD-ready TVs that have been shipped) means we are witnessing the beginning of a smart appliance market," says Liz Cruz of IMS Research. IMS predicts that by the end of 2020 nearly 10 million appliances will have been installed in US homes.

I, for one, am not convinced consumers will buy a smart appliance based on the expectation of future use. How many people bought an HDTV before HD broadcasting services were available? NIST has set no timetable for the adoption of a standard, and even when that happens, a smart grid infrastructure will have to be built. "The next step and current missing piece of the smart appliance puzzle continues to be the utility companies," says Cruz.

Other manufacturers are taking a different approach to designing smart appliances. These companies are waiting for a firm agreement on communications technology standards so they can integrate the entire package within the appliance. The benefit of this approach is that it will require no action from the consumer to modify the appliance to connect to the grid. (This is one of the reasons the smart home has languished -- although there is a communications standard and supporting equipment, home owners have to be fairly savvy to make devices communicate with one another.)

Cruz says that dynamic pricing will create demand for smart appliances: "With dynamic pricing a financial incentive, and therefore consumer benefit, is created for purchase of smart appliances.”

Again, I'm not so sure. In spite of positive news coming out of the manufacturing and IT industries, there are still a number of economic indicators (such as employment figures) fueling continuing uncertainty in the consumer market. Appliances are big-ticket items, and buying one now for its untapped potential doesn't make sense. I think smart appliances will go the way of the digital television transition of a few years ago: Some enterprising company will develop a retro-fit kit and make a killing; or the government is going to provide retrofitting for next to nothing. Appliances will be upgraded as they break -- not because they're any smarter.