Technology Fuels Energy Sector's Rapid Evolution

At the well and at the light switch, energy technology is pushing boundaries.

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To generate fresh ideas and connect with wired consumers, industry stalwarts increasingly seek collaborations with a growing array of edgy startups that inject bold, creative thinking into staid, button-down boardrooms. SDG&E, Pacific Gas & Electric, and Commonwealth Edison, part of Exelon, are among the more than 70 utilities worldwide to partner with Opower, an Arlington, Va.-based company that seeks to "reinvent" utility engagement with customers through online tools, text messages, and home-energy reports.

[See At Chevron, Digital Technology Spouts Gusher of Savings.]

To be sure, there have been challenges and missteps along the way for energy companies. Worried about adverse health effects from smart meters, which wirelessly transmit energy usage data to utilities, a small but vocal chorus of homeowners has resisted the switch to these devices and demanded the right to retain old-fashioned analog meters. PG&E, SDG&E, and Duke are among the utilities that have faced such opposition. The energy sector was generally late to social media, which remains populated with Facebook user groups and Twitter feeds critical of major energy producers, and is just beginning to harness the vast potential of cloud computing, experts say.

Meanwhile, Stanislaw, the Deloitte advisor, emphasizes that innovation is not limited to the production side. Large corporate users of energy, from BASF to Walmart, are adopting sweeping measures to dramatically reduce consumption and costs. Walmart, for example, has implemented energy management systems that allow it to monitor usage in real-time and make adjustments instantly and remotely to stores and warehouses, he says.

While smart meters are a concept most consumers can easily grasp, Patricia DiOrio, director for IHS CERA and a power industry expert, emphasizes that smart grids involve far more than these devices. She sees a greater immediate impact on consumers from the "operational benefits" of smart grids, such as the ability to streamline the reading of power meters and identify and resolve outages more quickly, improvements she describes as "huge for utilities."

In fact, many advances within the energy sector are occurring behind the scenes, in remote oil and gas fields, on drilling rigs at sea and in the engineering of the grid, making it difficult for energy companies to recast themselves to the public as high-tech visionaries. For consumers, the experience of pumping gas or turning on the lights remains the sameā€”even as everything else about the energy business rapidly changes.