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.