Energy innovation: Snails and Griddies

By Elisa Wood

May 31, 2012

Ask most people to describe vanguard energy technology, and they’ll name LED lights, certain forms of solar energy and new electric storage methods. But how about this – generating energy from a living body?

The Journal of the American Chemical Society is reporting a “real-life scientific tail of the first electrified snail.” Researchers have placed a fuel cell in a snail that generates energy using sugar naturally produced by the snail’s body.

Consider it the ultimate in distributed generation. The AMC sees potential for the tiny electrical devices “perhaps for future spy cameras, eavesdropping microphones and other electronics.”

The researchers induced a current in the living snail by inserting into its shell two electrodes made of carbon nanotubes. They coated the electrodes with enzymes to foster a chemical reaction. One pulled electrons from glucose in the snail’s body and another used those electrons to turn oxygen molecules into water. Researchers found that the enzymes generated electricity again and again in the snail, which lived for months with the implanted fuel cell.

Others have implanted electricity-producing biofuels in various animals, such as rats and rabbits, but only partially. This was the first time researchers generated electricity for an extended period of time without harming the animal, according to the journal.

“The snail with the implanted biofuel cell will be able to operate in a natural environment, producing sustainable electrical micropower for activating various bioelectronic devices,” the authors were quoted as saying.

At this point, it’s hard to say where this research will lead – whether it will prove quirky or profound. But it does underscore the diverse innovation that surrounds electric power, an industry that for its first 100 years saw little technological change. Industry insiders used to say Thomas Edison would find the electric light bulb virtually unchanged if he were reborn. That’s getting more difficult to assert.

Griddie Awards

With all this change, comes the need to educate consumers, especially if they must modify their behavior in some way. What good are electric snails if no one wants to use them?

That gets to the second topic of this week’s blog: Griddies. These are awards to be issued by the Association of Demand Response and Smart Grid at its annual meeting in Washington, DC, June 26-28, 2012.  The association started the contest this year in recognition of the need by the power industry to engage consumers in the new smart grid technologies. Rather than issuing a call for papers, it sent out a “Call for Creative,” seeking inspiring examples of work by marketing and communications departments, non-profit advocacy groups, technology companies, creative agencies, public relations firms, and professionals

The finalists are on the organization’s website and there is some truly consumer-catching work. In one of my favorites, this one from Reliant Energy, a rapper named Mega Watt shows us all of the smart energy devices in his mansion digs. He tells us he’s keeping it “real time” and sings part of his song “Power Strip.” In another that I liked, Green Mountain Power offers line-drawn cartoon that explains the significance of smart grid in a clear, appealing and succinct way.  Another by Reliant Energy has an amusing talking plug that asks questions online about energy and provides rewards to those that get them right.

These are just as few of the finalists. Take a look through at the list on the ADS website if you want to be amused and impressed at how far the once dull electric power industry has come.  The ADS plans to put the finalists up for a “town meeting vote’ at its gathering in June. Check back. We’ll list the winners at RealEnergyWriters.com.

Elisa Wood is a long-time energy writer. See samples of her work at www.RealEnergyWriters.com

Changing the energy game with the ‘power of one’

By Elisa Wood

May 23, 2012

Who among us has not eagerly described the smart meter to a non-energy person only to be greeted by a blank stare, or worse the retort: “Why would I want to track my electricity costs all day?”

You try to explain the profound applications: smart appliances that talk to the power grid, consumer clubs that sell energy savings, your car serving as a power plant. But the conversation then becomes one about fascinating toys, not a world change.

A new paper by Joseph Stanislaw, independent senior energy advisor at Deloitte, eloquently gets to the real meaning of smart grid. Moving beyond the gadget talk, he describes the bigger picture, how new energy efficiency and smart technologies will democratize energy.

Energy efficiency could have “a greater impact on the global energy picture than any other development,” according to the paper, titled Energy’s next frontiers: How technology is radically reshaping supply, demand and the energy of geopolitics.

“The breakthroughs have been stunning, and often elegant in their simplicity. Among the least appreciated technologies are those that empower companies and individuals to understand and manage—and thus significantly reduce—their energy consumption. Last year, venture capitalists invested $275 million—up 75% from 2010—in start-ups that make software and other technologies to manage energy use,” the paper says.

Stanislaw explains how smart technologies are bringing about ‘the Power of One’ in the energy game.  No longer passive receivers, consumers and businesses become active choosers; hence they influence the kind of generation plants we build – or if we build them at all – simply by the way they use electricity. Our market signals, not central planning, shape the infrastructure we build.

The Power of One idea often gets lost in political discourse about energy. Debate tends to focus on wind power tax incentives, solar trade wars, the pros and cons of hydraulic fracturing and access to public lands to drill oil.

But when it comes to electricity, it will be the Power of One that changes the playing field most by giving the individual control over energy, much the way the Internet gave us control over information. As a result, even if governments fail to act effectively, corporations and individuals now have the ability to “make a radical difference in their own consumption—and thus to materially influence the broader energy game,” the paper says.

More specifically Stanislaw explains: “The new energy-related software and hardware on the market and in development—smart meters, smart appliances, demand management programs, and so forth—liberate individual actors from being at the mercy of broader forces.” This liberation, or shifting of control over energy decisions from nations to individuals, transforms what has come to be known as ‘the Great Game’ – the wrangling of nations over energy supply.

While the Great Game previously focused on oil, technology is the new prize.

“The ‘Great Game of the 21st Century’ is the technology continuum driving along the development curve from 1.0 to 2.0 to 3.0—with each version coming faster than the one before. The future is one of continuous research and development, informed investment job creation, and greater energy security—without sacrificing the environment,” the paper says.

Rapid-fire technology change heightens the need for sustainability planning by businesses, he adds. And the ability to collect and understand data  about energy becomes increasingly important. Whether the company makes shoes or semi- conductors, energy is part of its business. All companies become energy companies in a smart grid world.

Stanislaw describes a “virtuous energy cycle” that occurs for households and companies that pursue efficiency: They save money and protect the environment. Moreover, “the consumption of energy is no longer just an economic act—this is becoming a conscious act and an act of conscience. This will likely intensify in the coming years.”

Stanislaw’s paper is a good read. See it here.

Energy efficiency: What are the laggards thinking?

By Elisa Wood

May 17, 2012

Why do some states avoid creating policies that encourage consumers and businesses to save energy? What’s the psychology of the laggards?

A new report by the American Council for an Energy Efficiency Economy sheds some insight as it examines the states that consistently fall behind in the organization’s annual energy efficiency ranking.

The bottom states are: Alabama, Kansas, Mississippi, Missouri, North Dakota, Oklahoma, South Carolina, South Dakota, West Virginia, and Wyoming. The good news is that even these laggards are beginning to adopt policies to save energy, according to the report, “Opportunity Knocks: Examining Low-Ranking States in the State Energy Efficiency Scorecard.”

But they still have a lot of catching up to do. And why did they fall behind in the first place?

The report authors, who interviewed 55 stakeholders, found  one reason is a general  lack of awareness about energy efficiency’s benefits. Another is an aversion to government mandates. But one of the most fascinating barriers is a misperception about energy costs.

Industry folklore says that consumers in states with low electric rates have no motivation to save energy. This folklore discourages policymakers from putting time and money into energy efficiency programs. In truth, these states have good economic reasons to  encourage consumers to insulate, install better lighting, and undertake other energy savings measures.  It turns out that even though electric rates are low in these states, consumers are paying high monthly bills.

This may sound counterintuitive. But consider these numbers. In Alabama electric utilities charge 10.67 cents/kWh and households pay an average $147.69/month for electricity. Similarly, in South Carolina rates are 10.5 cents/kWh and monthly bills are $137.59/month. Compare Alabama and South Carolina to  Massachusetts and California, two states with aggressive energy efficiency efforts. Massachusetts’ electric rates are high, averaging $14.59 cents/kWh, but monthly bills  are low, only $97.34. California, too, has high rates of 14.75 cents/kWh and low monthly bills of $82.85. 

So electric rates are higher in Massachusetts and California, yet households in those two states pay less per month for power than households in Alabama and South Carolina. This is because they consume less power. Households in the efficient states have an edge; they need less electricity each month to secure the same level of comfort and service in their homes as those in Alabama and South Carolina. So there should be plenty of good motivation for households in the low-rate states to pursue efficiency measures.

Another point of confusion involves the cost to society of investing in energy efficiency.  Because it’s generally categorized with other ‘green’ initiatives, energy efficiency is perceived as boutique and expensive.  To the contrary, it is cheaper to avoid energy use than to make new electricity, according to ACEEE.  Energy efficiency measures cost an average 2.5 cents/kWh while building a new power plant cost 6 to 15 cents/kWh. Because of this cost differential several states now mandate that utilities institute cost-effective energy efficiency before building new generation.

These are arguments, unfortunately, that might get lost in the din of an election year, one in which energy is shaping up to be a major issue. However, as is often the case, the states are leading the way and not relying on federal policy. Even the laggard states are picking up their pace when it comes to energy efficiency, as the ACEEE report describes. More here.

Elisa Wood is a long-time energy writer whose work appears in many top industry publications. See her articles at RealEnergyWriters.com

How to become energy efficiency’s #1

By Elisa Wood
May 10, 2012

It’s easy to get the impression that technology game-changers happen in a near flash. And the stories of Facebook, Google, Microsoft and Apple leave us thinking that genius pops right out of the dorm room.

But in the energy industry it’s not that easy. The innovation we see today often stems from years of late nights, deep discussion and hard negotiation.

Take, for example, the Massachusetts story. The American Council for an Energy Efficient Economy named it number one for energy efficiency in October. You may wonder, how did that happen? Why not California –  isn’t it the greenest of states?

But for Steve Cowell, chairman and CEO of Conservation Services Group,  it was no surprise to see Massachusetts rise to the top. Cowell has been on the inside of the state’s energy efficiency scene for decades, going back to when he worked for former Governor Michael Dukakis in the late 1970s. He was there when the groundwork was laid to bring Massachusetts where it is today.

Cowell cites a pivotal event in the mid-1980s A group of influential activists, thinkers and utility leaders converged in the state, ready to bring efficiency to the forefront.  Their names weren’t necessarily recognizable then, but today several are national leaders in the energy arena: Jon Wellinghoff, Steve Nadel, Rick Sergel, Peter Flynn, Doug Foy, Armond Cohen, Alan Nogee, Ralph Cavanaugh, Mary Beth Gentleman, Clare Moorhead, Timothy Stout, Bob King, Joseph M. Chaisson, Rachel Greenberg, Brad Steele.

And then there was John Rowe, CEO of Exelon, now arguably one of the power industry’s most influential figures. Back then, he headed a smaller utility called  New England Electric System (later absorbed by National Grid.) Rowe directed a legendary challenge to the group that would frame the region’s direction. “I’m the rat, show me cheese.” In other words, give utilities a financial incentive to pursue energy efficiency, and they will do it.

Cowell and the others found the cheese and they convinced utilities to direct large sums of money toward efficiency. The group spent three years creating a guiding document for New England called “Power to Spare.” This year marks the 25^th anniversary of its publication. Cowell described how the report led to today’s efficiency gains at Raab Associates’ monthly Restructuring Roundtable in Boston last month.

“Power to Spare” brought forward the then relatively novel idea of efficiency as a kind of power plant, a way to meet power demand by injecting efficiency rather than more megawatts into the grid.

The report also envisioned a day when New England would actually “bend the curve,” meaning those charts that show power demand forever rising would instead someday show it falling.

Cowell had his doubts that the bend would ever occur. After all, demand for power has been on the rise since Thomas Edison invented it. But in fact, the “Power to Spare” group saw its vision realized this year, on the report’s 25^th anniversary. The curve has bent downward, and analysts say the slow economy, alone, did not cause the reversal. They attribute as much as half to the LED lights, better motors, smart appliances and other efficient equipment that is decreasing demand for energy.

Bending the curve wasn’t easy; it took a lot of mental muscle, a host of innovations that sprang up in New England over the years. Some of the most significant innovation centered around the idea that efficiency is a true energy resource. It can be used instead of building new power plants.

In that vein, New England became known as the first place to let energy efficiency resources compete in a forward capacity market auctions. The region also pushed forward with mandates that utilities use all cost effective efficiency before building adding generation. In addition, New England instituted white tags, the system benefits charge, and the Regional Greenhouse Gas Initiative, a source of revenue for efficiency programs.

Power to Spare aimed to increase New England’s economic competitiveness. That, too, has happened, Cowell said. The region is emerging twice as fast from the economic downturn as the rest of the nation, while at the same decreasing its total energy consumption. “That is historic,” he said.

So now that the curve is bent, energy consumption is down and the economy on the rise, is the work done? Hardly. Next Cowell would like to see ISO New England incorporate efficiency into its energy markets. And longer term, he envisions the region relying on self-contained microgrids that use locally generated renewable energy and combined heat and power. He admitted that it will take some doing, perhaps another 25 years of work. So we set up an appointment for a follow-up interview on May 1, 2037.  Check back in – I’ll let you know how it went.

Elisa Wood is a long-time energy writer whose work can be found at RealEnergyWriters.com

Critical need for energy savings and loan performance data remains unmet

By Kat Friedrich

Guest Blogger, Energy Efficiency Markets

A vast gap exists between the detailed information financial institutions need to support energy efficiency financing and the limited data they currently have. Several examples suggest these loan programs can succeed, but there are no large datasets supporting investment in energy efficiency.

Providing energy efficiency loans could give financial institutions new market opportunities. Unfortunately, their underwriters don’t have enough loan performance information to finance large volumes of energy efficiency projects yet. This lack of information inhibits the scaling up of energy efficiency retrofits in the residential and commercial sectors.

The small size of the market for energy efficiency loans inhibits market growth, said John Joshi, Managing Director and Business Strategist at Capital Fusion Partners. Investors seek liquidity; they want to be able to move their assets within a market. As the energy efficiency loan market grows, this lack of liquidity will no longer be an issue. Right now, “it’s a Catch-22,” Joshi said.

“We need strong political and regulatory support to make the market more viable,” Joshi said. “If it’s left to capital markets’ intervention, it will be a much slower process.” He said government financial support for renewable energy programs is key to opening this market.

“Investors want to compare apples to apples within transactions,” Joshi said. “They also want analytics so they can do scenario modeling.” Investors also ask third parties to participate in the analysis, so data needs to be accessible to a range of stakeholders.

When approving loans, underwriters need reliable data on the expected energy savings from energy improvements so they can factor this into their credit risk analysis. To consider an energy efficiency loan a safe investment, investors and rating agencies need reliable data on expected energy savings from efficiency installations in similar buildings in similar locations. They also need statistics on loan repayment. Much of this information is currently missing.

Kerry O’Neill, Senior Advisor at the Clean Energy Finance Center, said we need a national database where energy programs can share performance information for energy improvements in buildings. Many programs have done small evaluation, measurement and verification studies, but these are hard to generalize. The energy data needs to be combined with performance data on efficiency loans to provide a complete picture.  O’Neill suggested that a third-party nonprofit or nonprofit co-op model might work well, with foundation support.

O’Neill said that a recent study commissioned by the Deutsche Bank Americas Foundation compared energy savings estimates to actual savings in 21,000 multi-family rental units in New York City.  The results showed that the savings estimates were overstated by 40 percent. These findings suggest that underwriters can expect a large difference between estimated and actual savings. Because this study covered multifamily buildings in New York City, its numbers aren’t transferable to single-family homes or commercial properties.

John Byrne, Director of the Center for Energy and Environmental Policy at the University of Delaware, said a bond initiated by the Delaware Sustainable Energy Utility earned an AA+  rating from Standard and Poor’s (S&P) in large part because the program developers collected data from a variety of buildings. They used these data to develop financial savings estimates for the energy efficiency projects. As a result, energy service companies (ESCOs) were able to guarantee financial savings – not just energy savings. This financial guarantee changed the underwriters’ perspectives.

Byrne said the S&P underwriters asked for very specific data. They were interested in variables such as climate, the local economy, building type, and energy savings over time.

O’Neill said data from Pennsylvania’s Keystone Home Energy Loan Program shows energy efficiency loans are outperforming other unsecured debt. However, some investors raise the question of whether program participants are a self-selected group and are skeptical about generalizing these numbers. With larger data sets and analytics on performance, programs can address these investor concerns.

Byrne recommended organizing “education days” to bring the financial industry and the energy efficiency industry together. He has organized events like this before in Delaware and believes they are a successful way to explain the importance of collaboration and encourage organizations to share data.

“Until the industry addresses this issue of scarce data on energy savings and financial performance, it will continue to meet resistance from the financial community,” said O’Neill. “This will impact the rates and terms that can be secured, as well as the size of investment.”

Reposted with permission of the Clean Energy Finance Center, which works with stakeholders to develop policies and programs that drive investment in energy efficiency and small-scale renewable energy.