5 reasons Google PowerMeter didn’t take off

Google officially shuttered its web energy tool PowerMeter Friday after the application failed to bring in enough users. For those who have watched PowerMeter’s slow slog over its two-year lifespan, the move to kill it isn’t all that shocking. But the application, which enabled people to monitor and manage their home energy consumption, does have an important legacy as one of the first examples of how the Internet and broadband will change the way people consume energy.

Here are some of the reasons why I think PowerMeter didn’t take off:

1. It’s early. The market for energy management tools is still in a really early stage. Consumers are largely unaware of the tools and technologies available to monitor and manage their own energy. The Consumer Electronics Association found that 64 percent of consumers are unaware of electricity management programs, and 66 percent of consumers aren’t familiar with the smart grid. Google (s goog) launched its PowerMeter tool in early 2009, when very few smart meters and smart grid network deployments had been installed in the U.S.

2. Opt-in, not opt-out. In this early stage of the market, it seems like programs that are opt-out (sent unless the customer says they don’t want it), not opt-in (only sent if the customer wants it), are the ones working. OPower has been successful largely because it connected with utilities early on, and OPower’s detailed energy bills and energy savings recommendations, are delivered to utility customers automatically. A utility is one of a few types of companies that can send its customers this type of information without getting an opt-in agreement, and the mailed OPower energy bills have a very high open rate, because they look just like a utility energy bill.

In comparison, utilities that agreed to participate with Google’s PowerMeter tool (like San Diego Gas & Electric) didn’t seem to be offering Google PowerMeter as an opt-out tool, or else the tool would have had a lot bigger userbase than it reportedly did. SDG&E had 11,000 customers using it, and is reportedly building its own tool.

3. Utility friend or foe? Since Google first launched PowerMeter, some utilities saw the tool as a threat to the relationship they have with their customers. Google’s brand is a whole lot bigger and more consumer-friendly than utilities, and Google has often jumped into industries and sought to disrupt them — from mobile with Android, to city-wide wireless with its Wi-Fi project (clearly with varying success).

At the same time, when Google first launched PowerMeter, it focused on connecting with data from smart meters, then later opened its API and connected with gadget makers to circumvent smart meters. Smart meters were in a very early stage then (and relatively still are), and are the end devices for utilities (utilities are behind their installments). I think this place in the middle ground was an awkward position, where they were originally dependent on utility relationships, but weren’t all that good at securing those relationships.

4. Direct to consumer. Perhaps Google would have been better served if it created PowerMeter to go directly to the consumer originally, but did it in its own algorithm-focused way. Earth Aid, for example, uses algorithms to take utility data straight from an online utility account if the consumer gives Earth Aid permission to link that account to its system, and Earth Aid doesn’t need utility partnerships. While Earth Aid also only had “tens of thousands of households actively using the Earth Aid beta,” as of February, this approach seems like it would be a more natural move by Google.

5. Google isn’t an energy company. Google didn’t ever really market PowerMeter, and PowerMeter came out of its philanthropic arm Google.org. It was an experiment, and one that didn’t work. Despite the amount of funding Google has been putting into clean power, Google isn’t an energy supplier or manager at heart. In contrast, OPower has raised over $50 million to invest in its energy management services. Google made a decision that it would only put a certain amount of resources and funding into PowerMeter, and beyond that, Google would pull back. Could Google have ironed out any kinks and raised the tool’s profile if it put more resources into PowerMeter? Google doesn’t care to find out — because energy isn’t at the core of what it does.