Looking forward to the day smart grid dies

By Elisa Wood
May 25, 2011

The title of this blog might strike you as kind of weird, especially this week. After all, the Electric Power Research Institute made the news with a study showing that smart grid is going to be far bigger than we first thought.

Smart grid in simplest terms brings to the electrical grid the digital intelligence of computers and the Internet. Just seven years ago EPRI expected smartening the grid to cost $165 billion. But its new report says that the 20-year investment may be nearly three times as high, $476 billion. That’s a lot of new business for utilities, information technology companies, smart grid vendors, engineering firms, demand response providers, and the myriad of other enterprises that can help with this massive rebuild and reboot of the US power system.

Most important, the benefits to society will far outweigh the costs, possibly amounting to $2.028 billion, EPRI says. To put that in perspective, if we do not smarten the grid, the average electric bill will probably rise by 400 percent over the next two decades; if we do, it will likely go up by only 50 percent, according to Clark Gellings, EPRI fellow, quoted in a Fox News article.

Smart grid will bring enormous efficiency and new function to the way we generate, distribute and use electricity. I won’t go into details here but imagine (if you are old enough) the capabilities of today’s home computers compared with the typewriters they originally replaced. That’s the kind of technological leap smart grid promises for the entire electrical system.

So why has EPRI pushed up its estimate of smart grid costs? Inflation played a role. But the larger reason is that smart grid, well, just keeps getting bigger. Initially energy planners envisioned smart grid bringing better efficiency, reliability, security and other features to power production and delivery. But they’ve realized that smart grid can do a lot more than that. Smart grid can help integrate renewable energy, cut our electricity use, exploit full potential of the electric car and create new power storage opportunities.

Smart grid even appears to be paving the way for consumers to manage their energy use through energy home automation – should it take off. Skeptics say it won’t. They doubt any but hardcore conservationists or Scrooges will want to get into the nitty-gritty of aligning their home energy use with the rise and fall of power prices daily. But again, going back to the home computer analogy, the common refrain 30 to 40 years ago was that few people would bother buying a home computer. Maybe a computer would have value for writers, engineers or those with home offices. But otherwise why spend the money? And today, of course,hardly an American is without one. Most of us did not envision how much the computers could offer us back then; we may be short-changing smart grid the same way.

So now that I’ve explained the wonders of smart grid, why do I say I look forward to its demise?

Not long ago I listened to a Green Builder Media’s webinar with Guy Kawasaki, a VC and author of Enchantment: The Art of Changing Hearts, Minds, and Actions. Kawasaki talked about the kind of customer service and marketing that makes a business ‘enchanting.’ One word of advice, he said, is that builders should stop marketing themselves as ‘green.’ Why? Because being green, he said, is no longer a service that is above and beyond customer expectations. Its commonplace; the perception is that every builder is green or at least should be. (Note that he lives in California.)

Some day this will happen to smart grid. The big box stores will stop slapping ‘smart’ on appliances, since they will all be smart. Utilities will no longer install smart meters. Just meters. Studies will no longer appear measuring the size of the smart grid. Its intelligence no longer an oddity, we’ll drop the ‘smart’ adjective. When the smart grid simply is the grid, then this industry will have arrived.

See “Exporting US Energy Efficiency,” by Elisa Wood and Lisa Cohn athttp://www.realenergywriters.com/products/.

How the poor may boost clean tech

By Elisa Wood

May 19, 2011

It’s not surprising that a company liked Greenhouse Holdings, which builds eco-friendly infrastructure, would have a thriving California-based operation. But as John Galt, the company's executive chairman and founder, told Renewable Energy World magazine, the company is not just focusing on wealthy enclaves to grow its business. Greenhouse Holdings sees opportunity in poor countries, where little energy infrastructure exists, and is entering these markets ahead of the competition. “We’ve found a niche,” he said.

A recent paper by Clean Energy Group shows that nations like Africa and India serve not only as strong niche markets, but also as incubators to drive down technology costs. Once the prices come down, the technologies can expand into the developed world, opening the way for green energy to at last be fully cost competitive against the entrenched energy infrastructure.

Clean Energy Group explains that this is “reverse innovation,” a term coined by Jeffrey Immelt, General Electric’s CEO and Tuck Business School at Dartmouth in a Harvard Business Review article. It describes the path of not only energy technologies, but other advanced products as well.

“This trend is far removed from purely academic theory. Rather, it is an operating strategy for major global corporations doing business in the developing world, with implications for how climate technology could develop. Put simply, reverse innovation means designing, creating, and manufacturing a product in a developing country. The product may initially be designed to meet developing world demands for lower cost, but global companies now use this ‘bottom of the pyramid’ market strategy to create products that are later exported to the developed world,” said the CEG paper, Moving Climate Innovation into the 21st Century: Emerging Lessons from other Sectors and Options for a New Climate Innovation Initiative.

GE’s cheap ($15,000) PC-based ultrasound machine is cited as an example. The company developed the medical device for use in China’s rural outposts where there was no conventional hospital ultrasound. Now the cheaper alternative has made its way to the developed world.

It may seem counter-intuitive but the conditions are often better for scaling up new technologies in poor countries than in rich nations, says the paper. Here’s why: there is no competition. Clean tech innovators in the third world are not, for example, trying to make inroads against cheap coal-fired electricity. They are simply providing electricity where there is none; they are filling a market need.

This fits in with the way disruptive technologies often emerge, according to Harvard Business School Professor Clayton Christensen. In the paper, Winning and Losing Bets on Green Technologies, he and co-authors say: “In contrast to wealthy nations where consumption of electricity and gasoline is ubiquitous, developing nations are an ideal place to commercialize green energy technologies. In these countries, there is so much non-consumption that green technologies need only be better than the alternative: nothing.”

In emerging economies, clean energy helps people better accomplish a job they are trying to do. For example, in Africa it’s better to charge your cell phone from a solar panel in your village than be forced to travel hours to the nearest city. In the West, this convenience is readily available through a vast, cheap and easily accessible grid, which is why government intervention is needed to integrate green energy into wealthy countries, the paper says.

The Obama administration is increasing support to US companies that want to export into these emerging niche markets. More details are here.

Elisa Wood has been writing about energy for more than 20 years. See more of her work at www.RealEnergyWriters.com.

Energy Efficiency and the annoying guy next door

By Elisa Wood
May 4, 2011

Who would have thought backyards would cause so much trouble for the North American energy industry? First came the NIMBYs, the not-in-my-backyard protesters who block power projects from being built near them. And now we have the GIMBBYs – the give-me-a-bigger-backyard homeowners who are unwittingly getting in the way of energy efficiency.

GIMBBYs aren’t worried about seeing wind turbines or transmission lines from their backyards as are the NIMBYs. It’s the guy next store that they don’t want to see. And GIMBBYs number many among us. A recent study conducted for the National Association of Realtors found privacy to be very important in selecting a home for nearly half of the Americans surveyed.

What’s this got to with energy efficiency? To gain privacy we move to homes that are further from work, schools and stores, suburban and rural outposts that offer us bigger backyards. By way of disclosure, before I go any further let me confess that I am a GIMBBY. I’d probably give up my lights, heat and air conditioning before my five acres of trees shielding me from others.

The Environmental Protection Agency calls big-backyard neighborhoods like mine “automobile dependent locations” and contrasts them with “transit-oriented” neighborhoods, places where you can hop a bus or easily walk to regular destinations. The agency recently looked at which kind of neighborhood uses the most British Thermal Units (BTUs), taking into account size and type of house, its energy efficiency, and vehicle use of its occupants. This is known as Location Efficiency.

The EPA’s findings indicate that location really is everything. Transit-oriented neighborhoods offered up more energy savings whether the houses were single family detached, single family attached or multi-family. This is significant because homes that share walls typically require less energy for heating and cooling. But that advantage was not significant enough to overcome driving distance for the big-backyard neighborhoods. Travel requirements pretty much trumped all, indicating that a home’s location is “a major variable for household energy consumption,” the EPA said.

“The takeaway here is that a location-efficient future does not necessarily mean a world of only multifamily housing. Far from it, location efficiency can enable greater housing choices, access to services, and more transportation options,” said Eric Mackres, communities program manager for the American Council for an Energy Efficient Economy in his blog.

So should all of us GIMBBYs pack up and move to the city? Clearly, that’s not going to happen. But our current housing development slump gives us time to reflect on how to design neighborhoods for the future. The graying of America is leading to an increasing number of childless households. And as the EPA study points out, these retirees often show a preference for “more walkable, vibrant urban places.” Demand will still exist for suburban homes with big backyards, but that demand is decreasing. So we may be entering a rare period when maximum energy efficiency and consumer desire go hand and hand. We may not have to look far afield to achieve significant energy savings; the answer might be in our backyards.

Elisa Wood’s white paper, “Exporting US Energy Efficiency,” is available atwww.RealEnergyWriters.com.