Smart grid: How big is big?

By Elisa Wood

July 23, 2009

A Cisco executive attracted some eye rolling after commenting that smart grid could be “even bigger than the Internet.”http://www.cisco.com/web/strategy/energy/smart_grid_solutions.html

But the statement isn’t farfetched when you think about what smart grid encompasses: a convergence of three industry giants: information technology, telecommunications and the electric grid, the world’s biggest machine.

A report this week by Greentech Media made clear just how large an empire this triumvirate can create — and what it will mean to our society if it succeeds and if it fails.

The smart grid – which will cost an estimated $165 billion to build – may constitute the largest single information technology investment to reduce carbon dioxide emissions, according to “The Smart Grid in 2010: Market Segments, Applications and Industry Players” by David Leeds. http://www.greentechmedia.com/

It also represents one of the biggest business opportunities of the century, says the report. How big is big? “When you consider that the U.S. electric utility sector, with its annual revenues of roughly $300 billion, is 30% larger than the automobile industry and twice as large as the telecommunications industry, and then bring to mind the craze of dotcom investments and telecom merger & acquisition which occurred in the mid to late 1990s, a reasonable picture starts to emerge of what can be expected of in terms of smart grid investments and M&A in the next five to 10 years,” says the report.

Keep an eye on demand response because it’s likely the first smart grid “killer ap” to capture market penetration, even before smart meters, says Greentech Media. “The demand response market is now being referred to as a gold mine and industry analysts have called for this market to quadruple over the next five years,” says the report. The successful public offerings of demand response leaders, Comverge and EnerNoc, underscore the market’s maturity, according to the report. But what if society loses interest in smart grid? (It would not be the first time we’ve abandoned promising energy innovations.)

Without smart grid, forget about green energy, says the report. Renewables “will remain niche,” “a non-starter.” We need the smart grid to facilitate and integrate renewable energy because of its variable nature. After all, solar, wind and electric cars are nothing new. Photovoltaics have been around since the 1950s and wind and electric cars since the turn of the century. Smart grid offers to take them from “novelty to norm,” says the report. Green energy is “battle ready;” what it needs is smart grid infrastructure to support its introduction on a mass scale.

For all of smart grid’s benefits, it still faces uncertainty: If we build it will they come? Smart grid is premised on the idea that if consumers receive real-time information about their electricity usage, they will consume power more judiciously. That requires “re-imagining and re-engineering” our relationship with energy. “Changing North American consumption habits, especially those related to energy, which historically has been “dirt cheap,” cannot be assumed to be an easy assignment,” Greentech Media warns.

So whether the smart grid becomes an enormous business opportunity or an enormous bust may rest largely with human mindset. The question becomes not, how big is smart grid, but how big will we allow it to be.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Light-bulb Liars II: Mercury and CFLs

By Elisa Wood

July 16, 2009

The Washington Times ran a commentary July 11 that took a swipe at compact fluorescent lights. Titled “Light-bulb liars,” the article warns that broken CFLs are an “environment disaster in your family room” that “could poison the dog, the kid and the wall-to-wall rug.”

To underscore the gravity of CFL dangers, the article then takes us through the Environmental Protection Agency’s step-by-step mercury clean-up advice. http://www.washingtontimes.com/news/2009/jul/11/light-bulb-liars/?feat=article_top10_read&page=2

Here are a few things the article fails to say about CFLs, that enerystar.gov points out.

*True, they contain mercury, but a very small amount. They average 4 milligrams, compared with 500 milligrams in the old mercury-based thermometers, an amount equal to 125 CFLs.

*Advancements in CFL technology are reducing their mercury content. Some have mercury content as low as 1.4 to 2.5 milligrams.

*Coal-fired electric plants create a heck of a lot more mercury. CFLs are more efficient than conventional light-bulbs. So when we use CFLs we use less electricity, meaning grid operators and utilities can fire up coal-fired generators less frequently. If all of the CFLS sold in 2007 ended up in a landfill, they would deposit 0.16 metric tons of mercury. In contrast, coal plants emit 104 metric tons of mercury annually.

The article also points out that CFLs are more expensive than conventional incandescent lights, but fails to say that they continue to operate far longer.

After I finished reading the Washington Times commentary, my eyes went back up to the title: “Light-bulb Liars.” Now the Times wasn’t referring to itself, was it? Okay, to say the paper lied might be a little harsh, but the article certainly engaged in hyperbole and sins of omission.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Using electricity to save the planet

By Elisa Wood

July 9, 2009

When it comes to energy efficiency, it used to be the big guys that mattered. Policymakers and market leaders focused on manufacturers, refiners and others that gobbled up lots of kilowatt hours.

It’s not surprising. Manufacturers create bang for the buck. Better motors, refrigeration or combined heat and power can lead to six-digit dollar savings — far more impressive than the $10 per month an aggressive household effort might generate.

An energy attorney once told me an interesting story in this regard. He asked his family to turn down the thermostat to save money; they said they would rather just skip ordering pizza once a month.

Household efficiency often doesn’t seem worth the effort. But a shift is occurring; efficiency efforts are increasingly focused on the residential sector.

In fact, a study released this week by the Electric Power Research Institute shows that homes, in aggregate, offer greater technical potential for energy savings and reductions in carbon dioxide emissions than stores or factories. And it does not require use of refrigerators that talk to the grid, glowing energy orbs, or other cutting edge technologies to significantly reduce emissions. Instead the report finds carbon reductions in switching out common home devices that use fossil fuels with those that use electricity.

EPRI looked at household activities that use energy: clothes drying, heating, cooling, cooking, warming pools. It then found electric technologies that allow us to perform these activities with less fossil fuel use; a heat pump for example might replace a natural gas furnace.

What electric devices did the best job replacing fossil fuel? EPRI’s short list for households includes heat pump clothes dryers, heat pump pool heaters, air source heat pumps for heating and cooling, ground source heat pumps for heating and cooling, heat pump water heaters and in the Northeast, electric instantaneous water heaters.

The report also cites what regions offer the most potential for energy savings. Not surprising (See my July 2 blog, “Energy bill could open Southeast’s EE market” www.realenergywriters.com), the South offers the most potential, followed by the Midwest, Northeast, and the West, when residential, commercial and industrial energy use is considered. For reductions in CO2 emissions, the potential is greatest in the Northeast, followed by the South, the Midwest, and then the West.

Of course, savings achieved by switching from fossil fuels to electricity will be even greater as the nation introduces more renewable energy into its power generation fleet. EPRI says a good next step might be study how great those savings could be.

For years the electric power industry has taken heat for being a polluter. Odd to think it could also be what saves the planet.

For more details see: “The Potential to Reduce CO2 Emissions by Expanding End-Use Applications of Electricity,” www.epri.com.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Energy bill could open Southeast’s EE market

By Elisa Wood

July 2, 2009

I live a kind of Tale of Two Cities, or rather tale of two regions. My work requires that I spend a lot of time covering the Northeast power markets, but I live in Southeast. So after reporting on the rich world of efficiency incentives available in places like Connecticut, Massachusetts and New York, wasn’t I surprised to find my local utility offers pauper’s fare, nothing more than an energy audit.

This is in keeping with a culture of inefficiency in the Southeast. For example, Energy Star appliances have achieved only 20% market penetration in the region, compared with a 30% penetration elsewhere.

But this culture could change soon because of the politics behind the proposed federal renewable portfolio standard. RPS opponents in the Southeast say the region can’t afford the standard because it lacks vast wind and solar resources http://www.renewableenergyworld.com/rea/news/article/2009/06/winning-dixie-drawing-in-the-southeastern-us.

True or not, the Southeast was given a reprieve in the Waxman-Markey bill passed by the House June 26. If states cannot secure enough renewable energy to meet the standard, they can substitute with some energy efficiency. The bill requires that 6% of power come from renewables in 2012 rising to 20% by 2020. But states can substitute up to 25% of the requirement with energy efficiency. Moreover, a state governor may petition to increase the efficiency portion to 40%. http://www.usgbc.org/ShowFile.aspx?DocumentID=6070

So if the Southeast can’t – or won’t – develop enough renewable energy to meet the RPS, it can rely on energy efficiency to fulfill nearly half the requirement. As a result, we could see a broad new market for energy efficiency build up in the Southeast. The World Resources Institute underscored this possibility in a brief, “Southeast Energy Opportunities,” circulated last week. The Southeast has the potential to reduce total expected electricity use 11% by 2015, enough to meet most of the region’s new power needs through 2015, according to the brief. That may be why the Rocky Mountain Institute ranked six of the Southeast states in the top ten for energy efficiency potential.

Efficiency advocates see the Southeast as an important market because its households tend to heat and cool with electric energy. In fact, electricity consumption per person is almost 40% higher than the national average. Moreover, the region has the fastest growing population in the United States. Greater population equals more demand for electricity equals more power plants – unless the need is offset through efficiency.

Of course, none of this is set stone yet. By most reports the energy bill faces rough going in the Senate, which is expected to take it up in the fall. http://www.foleyhoag.com/NewsCenter/Publications/Alerts/Environmental/Environmental_Alert-070109.aspx.

So those of us in the Southeast may look northward with envy for awhile longer – but perhaps eventually the tale will take a turn.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Reality check: Is green arrogant?

By Elisa Wood

June 25, 2009

During a recent interview, a utility executive used the phrase “the arrogance of renewable energy.” He was talking about the need to keep costs in check and implying that green energy businesses do not.

The executive asked that I not attach his name to the phrase. He was afraid he would anger those in the renewable energy world with whom he does business. Not so long ago, utilities publicly criticized renewable energy without a second thought. His reticence to do so underscored to me just how powerful the green energy movement has become in the United States. From town councilors up to the US President, the political official is rare who does not back green energy.

To quote FDR, with power comes responsibility. In a world where green energy is receiving unprecedented public funds, the industry needs to ensure that public money is not squandered.

For energy efficiency, this means accurate measurement of savings, particularly in performance contracting. No fudging. Fortunately, the IT world increasingly offers technology that can pinpoint with accuracy if energy efficient motors, fans, lighting and other equipment lives up to its promise. http://www.onsetcomp.com/resources/white_papers.

Equally important, organizations like ASHRAE and the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) are looking for more meaningful ways to quantify energy savings.

Green designs that work in theory do not always work in practice. An empty building does always behave the same way as a building with people filling the space. That is why the US Green Building Council plans to require operational performance data on a recurring basis as a precondition for LEED certification. http://www.usgbc.org/Docs/News/MPRs%200609.pdf

“Today there is all too often a disconnect, or performance gap, between the energy modeling done during the design phase and what actually happens during daily operation after the building is constructed,” said Scot Horst, senior vice president of LEED, U.S. Green Building Council. “We’re convinced that ongoing monitoring and reporting of data is the single best way to drive higher building performance because it will bring to light external issues such as occupant behavior or unanticipated building usage patterns, all key factors that influence performance.”

Horst added: “Similar to the sticker on a new car that says the car will get 30 miles to the gallon — the car is calibrated to perform, but it’s also reliant on the driver’s habits.”

Meanwhile, ASHRAE is working on a prototype label, or “Building EQ” that measures energy use in a building in two ways. A new building initially receives an asset rating, based on its design. After its performance is monitored for a year and data is collected on actual energy use, the building becomes eligible for an operational rating http://www.ashrae.org/pressroom/detail/17194.

“When potential building tenants and owners have information on the properties they are interested in, they can understand the full cost of their investment and place a value on the energy efficiency of a building. ASHRAE’s label will help building owners differentiate their product in a technically sound manner while providing tenants with the tools they need to select energy-efficient spaces,” said Ron Jarnagin, who chairs the committee developing the label.

Accurate measuring and monitoring increasingly seems to be the name of the game in a world where use of public funds demands accountability. Performance labels are a far better alternative for the green energy world than labels of arrogance.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Has the clean energy economy arrived?

By Elisa Wood

June 18, 2009

We’ve seen many forecasts that show the clean energy industry boosting future US job growth. But a Pew Charitable Trust study released last week indicates that green job creation isn’t just a thing of the future; it’s been emerging for several years.

From 1998 and 2007, clean energy jobs increased by 9.1%, while total jobs grew by only 3.7% nationally, according to “The Clean Energy Economy.” http://www.pewtrusts.org. In all, clean technology accounted for 770,000 jobs in 68,200 businesses by 2007.

States showed a similar trend. The clean energy economy outperformed overall job growth in 38 states and the District of Columbia during the same period.

What’s interesting is that the growth occurred before the influx of federal stimulus funds for clean energy. So what will the clean energy job market look like after $85 billion makes its way into the economy? Lori Grange, interim deputy director of the Pew Center on the States, envisions nothing less than “explosive growth.”

The report also shows that Americans are clearly on board with the idea of pursuing energy efficiency. In 2007, alone, consumers purchased more than 500 million Energy Star® products, up 67% from the previous year.

As the economy recovers, what kind of jobs will the efficiency industry produce? Expect demand for workers “who make and distribute software and meters to monitor energy consumption and who manufacture and install efficient glass and lighting, along with service-related jobs that help companies and individuals improve home or business energy use,” the report says.

Regulators see the writing on the wall in New York, which intends to meet 45% of its energy needs from renewables and efficiency by 2015. They are concerned the state will lack enough clean energy workers. So the state public service commission this week approved $6.6 million to train workers for energy efficiency jobs.

The commission described the money as only a “bridge” until it can get federal stimulus dollars to further ramp up training, and said it hopes to avoid “bottlenecks” in programs caused by lack of workers.

True, the clean energy economy has been hurt like all sectors. Venture capital investments dropped in 2008, Pew says. But the downturn appears to be only a dip in what has been – and by all accounts will be — an upward trajectory in clean energy growth for several years.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Next: The wattcom boom

By Elisa Wood

June 11, 2009

I was at a meeting about three years ago where state energy commissioners and power plant developers were debating new market rules, some to take effect almost immediately, others five years out. A wise commissioner looked around the room and said something like: “All that matters are the immediate rules because everything will be different in five years. In fact, most of you won’t be working for the same company you are today.”

Lo and behold, he was right. When I think of the people at the meeting, most are already elsewhere – and only three years have gone by. Some of the companies they represented, major players in the fossil fuel arena, are struggling for survival. And where is the commissioner who made the statement? He now works for a wind energy developer.

Who will be the new, big market entrants in the next five years? Here is a clue: More and more energy announcements that come across my desk are not from energy companies. They are from IT companies: Google, Hewlett Packard, IBM.

This makes sense given that a necessary marriage between IT and energy must occur for the development of the smart grid and user-friendly energy efficiency devices. Clearly, the IT world sees opportunity in energy.

Farah Saeed, a senior consultant for Frost & Sullivan, put it this way: “In the coming years, competition expects to intensify as non-energy related IT focused companies expand their presence in the utility sector. Companies such as IBM, Cisco, Oracle, and HP acknowledge the fact that Internet-enabled grid applications present opportunities to serve the utility market. Networks developed to support AMI [advanced metering initiatives] technologies such as home area networking (HAN) and backhaul networks, as well as enterprise software to support asset management, invites the expertise of IT technology pioneers.”

I’m predicting a “wattcom” boom. Okay, maybe the name is corny. But catch up with me in five years – probably less. Let’s see who’s in the room.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.