My Secret Hope for the Microsoft Thermostat
How GLAS could be the catalyst to broker residential power in real-time
Microsoft officially threw its hat into the ring of high-end, design-focused smart thermostats last summer with the GLAS, which just went on pre-order last week (beginning of January). Many of the features, like occupancy detection and grid-demand awareness, are table stakes established by startup players like ecobee and Nest. Looking past the fact that it is one of the highest-priced models out there, there are a couple of new features.
First, the hardware is built by Johnson Controls, an industrial behemoth. When thinking about new devices for the home, it’s always important to look at the product design and branding that users will have to interact with every day. I’m not sure I trust JCI to hash out the softer up-front customer and market needs, but I am very confident in their ability to design and manufacture robust hardware. After all, they already have their own line of thermostats and have experience designing touchscreens. The GLAS will also be one of the first devices to integrate Microsoft’s suite of consumer IoT technology, using the Microsoft IoT Core OS and Cortana, their Alexa/Google Home/Siri competitor. However, it is the potential to tie in to another Microsoft technology that has me more excited.
The New Energy Economy
Folks from around the energy industry are really keen on the idea of using smart homes as flexible assets. In previous thinking, a hot summer day with a heavy air-conditioning load meant that additional, more operationally expensive generation resources were brought on line to meet demand. More recent thinking has led utilities to offer rebates for the ability to either turn off or turn up the temperature of a customer’s thermostat. Imagine now that the customer and utility have an agreement that energy costs some fixed dollar amount per kilowatt-hour, X, during normal load and X+ during forecasted peaks. To incentivize the customer to not use power during that peak, the utility could pay the customer the savings between X+ and X. If the customer uses power during the peak, she pays the price of X+.
For this agreement to be amenable to both sides, the tracking of both energy/power consumption and rate must be highly accurate and in real-time. The same type of transaction could occur if a customer pushes solar back to the grid, allows the temporary discharge of batteries, or defers heating in a water heater until off-peak times. Taken even further, a customer could “sell” power to her neighbor if she’s out of town and he has to run the dishwasher during a peak. Blockchain is widely heralded as a key to these back-and-forth payments — due primarily to its ability to accurately, anonymously and agnostically track a high volume of contracts — but no particular technology or company has really solved the problem at residential scale.
About a month after the GLAS was unveiled, Microsoft announced the release of CoCo, the Confidential Consortium protocol. CoCo is designed to allow the sharing of information in a private and secure fashion and is built within the blockchain ecosystem Ethereum. At its outset, Ethereum expanded the concept of blockchain from managing financial transactions to a broader concept of contracts. A contract could be any type of agreement between two parties. A big company like Microsoft could use this contract notion in many ways: secure document sharing, software license management, or even job prioritization of Azure cloud services. In the energy space, Microsoft’s involvement in Ethereum could topple two of the biggest barriers to energy micro-transactions: flexibility and security.
Microsoft and Ethereum
First, Ethereum is inherently designed to be a flexible blockchain technology. Rather than just an application for monetary transactions like Bitcoin, Ethereum offers a programming language that allows pretty much any type of exchange to occur. For example, the NASDAQ is using blockchain to enable secure electronic voting for shareholders. What is needed is a blockchain marketplace that can operate with speed and accuracy and is able to handle the complexity of different units of exchange (dollars, kilowatt-hours) and players (neighbors, utilities, commercial/industrial customers).
In the energy space, Microsoft’s involvement in Ethereum could topple two of the biggest barriers to energy micro-transactions: flexibility and security.
The second item, legitimate security, is where Microsoft’s role as a firmly ensconced behemoth is an asset. Utilities are perennially criticized for being slow to adapt new technology, so they are not likely to jump into the wild west of Bitcoin or CryptoKitties on their own. A trusted partner known for deploying off-the-shelf or quasi-custom (think Sharepoint) enterprise-scale technology solutions could be just the right offering to draw utilities out of their comfort zone and deliver innovation to their customers.
In all likelihood, Ethereum integration into GLAS will never happen. Startups like WePower, focusing exclusively on blockchain solutions for the energy market, are already plowing ahead on this front and will force the hand of established energy-market players in the same way Nest’s success made Honeywell develop smart thermostats. But Microsoft has all the pieces to pull this off now. As Microsoft boss Satya Nadel said, “Longevity in this business is about being able to reinvent yourself or invent the future.”
Thank you for reading. If you have any questions or thoughts about this article, please reach out to Emilie Stone directly or to Emerson Stone on Twitter. If you have additional thoughts about the future energy economy and how that will impact our relationship with energy usage, we’d love to hear.
